ARCHIVED - Order CRTC 2001-644

Order CRTC 2001-644

Ottawa, 13 August 2001

Ontario Telecommunications Association final 2001 Carrier Access Tariffs

Reference: Tariff notice 72

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 CATs revenues.

Pursuant to Order CRTC 2000-1164, dated 21 December 2000, Ontario Telecommunications Association (OTA) filed, on behalf of its members, proposed interim 2001 Carrier Access Tariffs (CATs) under Tariff notice 72 on 31 January 2001.

OTA requested interim 2001 CATs because it had not negotiated an agreement with Bell Canada concerning the 2001 forecast minutes, and OTA and Bell Canada were still reviewing their options to terminate their billing and collection agreements.

Bell Canada supported OTA's request for interim 2001 CATs, but submitted that its 2001 forecast minutes should be used to set the interim CAT rates.

OTA re-filed TN 72, on 11 May 2001, to correct certain CAT calculations and include revised 2001 forecast minutes. OTA's revised proposed interim 2001 CATs ranged between $0.0536 and $0.1287 per minute.

Interim or final CAT rates

OTA and Bell Canada agreed to proceed with interim CATs until the actual minutes become available during the first quarter of 2002, at which time, the 2001 CATs would be finalized.

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

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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 based on forecast minutes and the 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 OTA 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.

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 OTA/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.

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Conversation and direct access line minutes

In response to Commission interrogatories, OTA and Bell Canada provided revised 2001 total market forecast minutes for each OTA member company, along with explanations for changes between the 2001 forecast minutes and the 2000 actual minutes. AT&T Canada Telecom Services Company and Call-Net Enterprises Inc. (for Sprint Canada Inc.) provided similar company-specific information.

Based on an analysis of the 2001 forecast minutes and the 2000 actual minutes, the Commission notes that OTA and Bell Canada agreed on the general direction of the change for 12 of the 18 OTA member companies. However, there was little agreement on the magnitude of the changes.

Given the Commission's determination above 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 detailed company-specific explanations provided by OTA for the changes in its 2001 forecast minutes, the Commission considers OTA's 11 May 2001 forecast minutes to be reasonable and has used this forecast to determine the contribution and direct toll rates.

Contribution requirements

OTA's 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.

The Commission has reviewed the contribution requirements for each company and finds the proposed 2001 contribution requirements to be appropriate and reasonable.

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Direct toll components

OTA provided the direct toll components for all companies and identified that only Roxborough Telephone Company Limited had a year-over-year increase in its 2001 direct toll component in excess of 5%. OTA provided the required explanation in support of the increase.

The Commission has reviewed and accepts the explanation provided by Roxborough.

In Order CRTC 2001-509, dated 5 July 2001, the Commission approved revised depreciation life characteristics for People's Telephone Company of Forest Inc., which included a different depreciation life for the fibre optic transmission system account than was proposed. While the change in depreciation life did not impact People's contribution requirement, it does reduce People's direct toll component by approximately $4,800, or a reduction of $0.0002 in its proposed direct toll rate.

Accordingly, the Commission approves the OTA's direct toll components, subject to the depreciation adjustment for People's noted above.

Termination of billing and collection agreements

The Commission notes that part of the rationale for proposing interim CAT rates was that OTA 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.

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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 OTA to issue amended CAT tariff pages within 15 days;

c) directs OTA to use its 11 May 2001 forecast minutes as proxy minutes for the billing and collection of CAT revenues;

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

e) directs OTA 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

Appendix

Ontario Telecommunications Association member companies

Final 2001 contribution rate

Final 2001 direct toll rate

Amtelecom Inc.

$0.0548

$0.0419

Brooke Telecom Co-operative Ltd.

$0.0672

$0.0340

Execulink Telecom Inc.

$0.0605

$0.0237

Gosfield North Communications
Co-operative Limited

$0.0446

$0.0295

Hay Communications Co-operative Limited

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$0.0452

$0.0431

Huron Telecommunications
Co-operative Limited

$0.0352

$0.0392

Lansdowne Rural Telephone Co. Ltd.

$0.0638

$0.0188

Mornington Communications
Co-operative Limited

$0.0570

$0.0330

Nexicom Telecommunications Inc.

$0.0412

$0.0384

Nexicom Telephones Inc.

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$0.0745

$0.0256

North Frontenac Telephone Corporation Ltd.

$0.0671

$0.0324

North Renfrew Telephone Company Limited

$0.0426

$0.0156

People's Telephone Company of Forest Inc.

$0.0508

$0.0194

Quadro Communications Co-operative Inc.

$0.0979

$0.0308

Roxborough Telephone Company Limited

$0.0376

$0.0237

Tuckersmith Communications
Co-operative Limited

$0.0263

$0.0273

Westport Telephone Company Limited

$0.0540

$0.0191

Wightman Telecom Ltd.

$0.0437

$0.0246