ARCHIVED - Order CRTC 2001-217
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Order CRTC 2001-217 |
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Ottawa, 14 March 2001 |
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CRTC grants conditional approval to Québec-Téléphone's business rate restructuring proposal |
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Reference: Tariff Notices 280, 281, 281A and 282 |
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On 1 August 2000, Québec-Téléphone filed Tariff Notices 280, 281 and 282 requesting that the applications be treated in conjunction with one another. |
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TN 280 proposed to establish a uniform rate for QuébecTel's single line business (SLB) and multiline business (MLB) services calculated based on a weighted average of the existing rates. QuébecTel's supporting rationale was that: (1) MLB customers have indicated that the current rate differential is inappropriate given that both MLB and SLB services are almost identical; (2) other telcos such as Bell Canada no longer make a distinction between SLB and MLB rates; and (3) the current rate differential serves to impede economic development in QuébecTel's territory. |
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TN 281 proposed to create a cost-based rate structure for the company's business service. QuébecTel's supporting rationale was that: (1) Bell Canada has a similar business band structure in its exchanges which border QuébecTel's territory; (2) business rates should reflect costs; and (3) it could use the resulting margin from the business rate restructuring to prepare for the introduction of local competition. |
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TN 282 proposed a $2.10 rate increase for both the company's single line residential and its new Band C services. QuébecTel's supporting rationale was that: (1) historically, its residential and business rates were established based on value of service pricing which is no longer appropriate since the Commission is moving towards cost-based pricing; (2) its residential rates are not compensatory; (3) the rate increase will bring rates closer to cost; and (4) approving the rate increase at the same time as the business rate restructuring will ensure that the result will have no impact on QuébecTel's contribution requirement. |
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On 10 November 2000, QuébecTel filed TN 281A updating its cost study. QuébecTel also filed a letter related to TN 282 requesting that: (1) the Commission proceed with TNs 280 amd 281; (2) any action on TN 282 be postponed; and (3) it be granted approval for the use of its 1998 excess earnings, currently being held in a deferral account pursuant to Order CRTC 2000-860, to offset the revenue shortfall resulting from the business rate restructuring. |
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The Commission notes that it received approximately 15 written comments and numerous petitions containing a total of approximately 15,616 signatures opposing the residential rate increase aspect of QuébecTel's proposals. |
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The Commission considers that it would be inappropriate to authorise QuébecTel to proceed with its business rate restructuring while allowing the company to fund it through a local residential rate increase and/or the use of the excess earnings held in the deferral account for the following reasons: |
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a) It would be inconsistent with Order 2000-860, where the Commission determined that the excess earnings should be returned to subscribers. In Order 2000-860, the Commission indicated that it may consider allowing the use of excess earnings and imputed accumulated interest to defer or reduce the need for residential local rate increases during the transition period prior to the introduction of price caps; and |
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b) based on the 2001 forecasted financial results submitted by QuébecTel in TNs 280, 281 and 282, the Commission considers that the business rate reductions can be funded through efficiency gains without violating the contribution cap established in Order 2000-860. |
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On the basis of the record of this proceeding, the Commission considers that it would be appropriate to allow QuébecTel to proceed with its business rate restructuring provided that it is not funded through a local residential rate increase or the use of the excess earnings currently held in the deferral account. The Commission is satisfied that the proposed business rates (i.e., Band A at $39.95; Band B at $45.90 and Band C at $58) remain compensatory. |
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In light of the above, the Commission approves the changes proposed by QuébecTel to its business rates under TNs 280, 281 and 282 subject to the condition that the business rate restructuring not be funded through the excess earnings currently held in the deferral account or a residential rate increase. The Commission denies the $2.10 single line residential rate increase proposed under TN 282. Accordingly, should QuébecTel wish to proceed with its business rate restructuring proposal, it is to issue the tariff pages pertaining to the business rate restructuring proposed under TNs 280, 281 and 282. |
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Secretary General |
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Order CRTC 2001-217-1 This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca |
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