ARCHIVED - Order CRTC 2001-643

Order CRTC 2001-643

Ottawa, 13 August 2001

Canadian Alliance of Publicly-Owned Telecommunications Systems final 2001 Carrier Access Tariffs

Reference: Tariff notice 13

The Commission approves final 2001 Carrier Access Tariffs (CATs) rates effective 1 January 2001 and directs the use of proxy minutes for the billing and collection of CAT revenues.

Pursuant to Order CRTC 2001-209, dated 9 March 2001, the Canadian Alliance of Publicy-Owned Telecommunications Systems (CAPTS) filed, on behalf of its members, proposed interim 2001 Carrier Access Tariffs (CATs) under Tariff notice 13 on 23 April 2001.

CAPTS requested interim 2001 CATs because it had not agreed on forecast minutes with Bell Canada, and CAPTS and Bell Canada were still reviewing options to terminate their billing and collection agreements.

Bell Canada supported CAPTS' request for interim 2001 CATs, but submitted that its 2001 forecast minutes for Kenora Municipal Telephone System and Thunder Bay Telephone should be used to set the interim CAT rates.

CAPTS re-filed TN 13, on 6 June 2001, to correct certain CAT calculations. CAPTS' revised proposed interim 2001 CATs ranged between $0.0171 and $0.0344 per minute.

Interim or final CAT rates

CAPTS and Bell Canada both submitted that the CATs should only be made interim until actual minutes become available during the first quarter of 2002, at which time, the 2001 CATs would be finalized.

Under the CAPTS/Bell Canada proposal, the risk for both the CAPTS member companies and Bell Canada would be eliminated because the minutes used to set the final CAT rates would also be used for the billing and collection of CAT revenues.

However, the Commission is concerned that under this proposal, the 2001 CATs would not be finalized until sometime in 2002, after the independent telephone companies' new regulatory framework and revenue-based contribution collection mechanism are in place.

According to Telecom Decision CRTC 99-5, Review of contribution regime of independent telephone companies in Ontario and Quebec, dated 21 April 1999, CAT rates should be set based on forecast minutes and then actual minutes would be used for the billing and collection of CAT revenues.

The Commission considers that circumstances have changed significantly since Decision 99-5 was issued in April 1999. In particular, toll minutes have become increasingly more difficult to forecast, resulting in increased risk for both the CAPTS member companies and Bell Canada.

When Decision 99-5 was issued, the Commission expected that the independents and their toll provider would be able to forecast toll minutes reliably. The record of this proceeding shows that this is not the case. Further, the companies are unable to agree on 2001 forecast minutes for two of four companies.

Prior to Decision 99-5, proxy minutes were used to set the CAT rates and then the same proxy minutes were also used for the billing and collection of CAT revenues.

The Commission is of the view that the CAPTS/Bell Canada proposal has the same result as using proxy minutes; the risk for the parties would be eliminated.

Given the Commission's desire to finalize CAT rates sooner rather than later and the increased difficulty in forecasting minutes, the Commission directs the companies to use the forecast minutes approved below as proxy minutes for the purposes of billing and collection of CAT revenues for the year 2001.

Conversation and direct access line minutes

CAPTS provided 2001 forecast minutes for all member companies. Bell Canada provided its 2001 forecast minutes for Kenora and Thunder Bay Telephone. In reply comments, CAPTS identified that its 2001 forecast minutes were, in fact, the 2000 actual minutes.

Given the Commission's determination to use proxy minutes, the issue of forecast minutes becomes less relevant because the minutes used to set the CAT rates will also be used for the billing and collection of CAT revenues.

Based on the supporting explanations provided by CAPTS with its 2001 forecast minutes, the Commission considers CAPTS' 6 June 2001 forecast minutes to be reasonable and has used this forecast to determine the contribution and direct toll rates.

Contribution requirements

CAPTS' proposed 2001 contribution requirements were filed in accordance with Decision 99-5. The companies proposed the lower of the contribution requirement based on the Phase III calculation and the previous year's approved contribution requirement adjusted for local rate increases.

CAPTS also identified that, due to the introduction of a Network Access Tariff, it had excluded any network broad service category (BSC) surpluses from the calculation of the companies' contribution requirements.

According to Telecom Decision CRTC 96-6, Regulatory framework for the independent telephone companies in Quebec and Ontario (except Ontario Northland Transportation Commission, Québec-Téléphone and Télébec ltée), dated 7 August 1996, the contribution requirements should include any network BSC surpluses.

Therefore, the Commission considers that any network BSC surpluses should be included in the company's contribution requirement. The Commission notes that, while three companies have network BSC surpluses, only Dryden Municipal Telephone System (Dryden MTS) is affected because the other two companies are limited by the previous year's contribution requirement cap. Including Dryden MTS's network BSC surplus in its CAT calculation reduces its contribution requirement by approximately $14,100.

The Commission has reviewed the contribution requirements for each company and finds the proposed 2001 contribution requirements appropriate and reasonable, subject to the adjustment for Dryden MTS's network BSC surplus noted above.

Direct toll components

CAPTS provided the direct toll components for all companies and identified that Bruce Municipal Telephone System (BMTS) and Dryden MTS had year-over-year increases in their 2001 direct toll components in excess of 5%. CAPTS provided the required explanations in support of the increases.

The Commission has reviewed and accepts the explanations provided by BMTS and Dryden MTS.

Accordingly, the Commission approves the CAPTS' direct toll components.

Termination of billing and collection agreements

The Commission notes that part of the rationale for proposing interim CAT rates was that CAPTS and Bell Canada were still reviewing their options to terminate their billing and collection agreements. One option is to include any compensation as part of the 2001 direct toll component of the CAT.

In Decision 99-5, the Commission determined that the direct toll component should be unbundled to the extent of removing those services, such as billing and collection, which could be provided by other toll providers.

The Commission considers that if compensation for the termination of the billing and collection agreements is included in the direct toll components, then other toll providers would pay for the termination of a service they did not require or use through higher direct toll rates.

Therefore, the Commission directs that compensation for the termination of the billing and collection agreements cannot be included in the direct toll components of the CATs.

Implementation

In light of the above, the Commission:

a) approves the final 2001 company-specific contribution and direct toll rates listed in the appendix of this order, effective 1 January 2001;

b) directs CAPTS to issue amended CAT tariff pages within 15 days;

c) directs CAPTS to use its 6 June 2001 forecast minutes as proxy minutes for the billing and collection of CAT revenues;

d) directs CAPTS to proceed with billing adjustments as expeditiously as possible; and

e) directs CAPTS to provide, by 31 October 2002, actual 2001 rates of return for the regulated portion of the company when it files actual 2001 Phase III results, and in the event a company has over-earned, the amount that will be refunded to the toll provider(s).

Secretary General

This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca

Appendix

Canadian Alliance of Publicly-Owned Telecommunications Systems member companies

Final 2001 contribution rate

Final 2001
direct toll rate

Bruce Municipal Telephone System

$0.0179

$0.0139

Dryden Municipal Telephone System

$0.0056

$0.0110

Kenora Municipal Telephone System

$0.0137

$0.0207

Thunder Bay Telephone

$0.0152

$0.0098