ARCHIVED - Order CRTC 2001-702

Order CRTC 2001-702

Ottawa, 17 September 2001

Cochrane Public Utilities Commission's final 2001 Carrier Access Tariff

Reference: 8695-C12-09/99

The Commission approves Cochrane's final 2001 Carrier Access Tariff (CAT) rate effective 1 January 2001 and directs the use of proxy minutes for the billing and collection of CAT revenues.

On 18 December 2000, the Cochrane Public Utilities Commission advised the Commission that it had been unable to implement Phase III costing and requested that the basis for its 2001 Carrier Access Tariff (CAT) be the same as previous years, which is equivalent to Northern Telephone Limited's CAT.

Positions of parties

O.N.Telcom submitted that, without Phase III costing, there is no basis to determine Cochrane's total CAT revenues and that an increase in minutes increases Cochrane's CAT revenues.

O.N.Telcom proposed limiting Cochrane's total CAT revenues that it can receive in 2001 to the amount it actually received in 1999.

Cochrane submitted that it would be inappropriate to decrease the CAT rate because minutes can fluctuate and there are also significant costs associated with the recently established call centre and the customers Cochrane acquired from Northern.

O.N.Telcom replied that the acquisition of customers from Northern and the costs associated with the call centre do not justify a contribution mechanism that has no effective upper limit. Further, Telecom Decision CRTC 99-5, Review of contribution regime of independent telephone companies in Ontario and Quebec, dated 21 April 1999, limited the annual contribution requirements of the independent telephone companies (ITCs) at 1999 levels.

Setting the 2001 total CAT revenues

Given the Commission determination in Decision CRTC 2000-745, Changes to the contribution regime, dated 30 November 2000, that the ITCs will use Phase II costing to determine their contribution requirements starting in 2002, the Commission does not consider it appropriate to require Cochrane to produce Phase III results for a cost-based CAT just for the year 2001.

However, given the national trend toward decreasing contribution requirements, the Commission is concerned about the increasing levels of total CAT revenues that are being paid to Cochrane.

The Commission notes that it was not the intention of Telecom Decision CRTC 98-13, Regulatory framework for Abitibi-Consolidated and Cochrane Public Utilities Commission, dated 1 September 1998, to allow Cochrane to receive increasing amounts of CAT revenue, as minutes grew. The mechanism of using Northern's CAT from the previous year was an interim measure to be used until Cochrane developed its own Phase III costing.

While Cochrane chose to withdraw from the proceeding that led to Decision 99-5, the Commission advised Cochrane, in paragraph 238 of the Decision, that the determinations made as a result of the proceeding would be applicable to Cochrane, notwithstanding its decision to no longer participate in the proceeding.

Given the fact that the contribution requirements of the ITCs in Ontario and Quebec have been limited to 1999 levels, except for one-time items such as the ice storm, the Commission sees no reason why Cochrane should not also be limited to its 1999 level, in accordance with Decision 99-5. The Commission notes that, based on the record of this proceeding, Cochrane received $795,000 in total CAT revenues in 1999.

Therefore, the Commission approves a 2001 total CAT revenue of $795,000 for Cochrane.

Contribution requirement and direct toll amount

Given the fact that a CAT rate is comprised of a contribution rate and a direct toll rate, the 2001 total CAT revenue must be broken down into a contribution requirement and a direct toll amount.

Given the introduction of Cochrane's billing and collection in 2000, the Commission considers the 2000 CAT breakdown to be more appropriate than the 1999 CAT breakdown.

Based on the 2000 CAT breakdown of 74.46% contribution and 25.54% direct toll, the Commission approves a final 2001 contribution requirement of $592,000 and a final 2001 direct toll amount of $203,000.

Minutes

In Orders CRTC 2001-642, 2001-643 and 2001-644, dated 13 August 2001, the Commission approved the use of proxy minutes for the billing and collection of CAT revenues for Northern, the Canadian Alliance of Publicly-Owned Telecommunication Systems and the Ontario Telecommunication Association, respectively.

Given the fact that this is the last year for the minute-based recovery of contribution and the fact that proxy minutes have been approved for other ITCs for 2001, the Commission sees no reason why Cochrane cannot also use proxy minutes for the billing and collection of its CAT revenues in 2001.

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

Based on the explanations provided, the Commission considers O.N.Telcom's 11 June 2001 forecast minutes to be reasonable and has used this forecast to determine the contribution and direct toll rates.

Implementation

In light of the above, the Commission:

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