ARCHIVED - Decision CRTC 2001-618
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Decision CRTC 2001-618Our file: 8678-C12-11/01 and 8624-B20-01/00 Ottawa, 28 September 2001 To: Interested Parties
On 13 September 2001, the Commission received a letter from Bell Canada, Aliant Telecom Inc., MTS Communications Inc. and Saskatchewan Telecommunications (the Companies), seeking confirmation of a number of matters in relation to Decision 2001-582. By letter dated 14 September 2001, TELUS Communications Inc. (Telus) sought clarification on the local competition determination in Decision 2001-582 and supported the Companies' request. Telus also requested that sections of the evidence filed by Rogers Communications Inc. (RCI) be ruled outside the scope of the proceeding. Comments were received from Group Telecom on 14 September 2001 and from Call-Net on 18 September 2001. RCI filed its comments on 20 September 2001. In a letter dated 19 September 2001, Call-Net requested that the Commission once again direct the Companies to provide a full response to The Companies(Call-Net)26Jun01-1007(d). Telus filed reply comments on 27 September 2001. Bell confirmed that it did not intend to file reply comments. Scope issues Overview The Commission, as detailed below, finds that much of the disputed evidence is within the scope of the proceeding. The Commission finds that, in general, evidence proposing (1) changes to the imputation test methodology, (2) new quality of service indicators, and (3) changes to the affiliate rule and to the local competition framework, is substantially integrated with the discussion of issues that are relevant to the proceeding, such as the state of local competition, the definition and treatment of capped services, and the appropriateness of including a quality of service component in the price regulation regime. Accordingly, excluding sections of evidence in this regard is not appropriate, as it would result in the loss of important information relevant to consideration of issues that are within the scope of the proceeding. Imputation Test The Companies have noted that Decision 2001-582 stated that "changes to the imputation test are not being considered in this proceeding". The Companies submitted that certain parties have made proposals that appear to be at odds with this determination. Call-Net acknowledged that Decision 2001-582 effectively excluded section 10.1 of its evidence. However, Call-Net submitted that other portions of its evidence relating to the imputation test are within the scope. For example, Call-Net argued that paragraphs 212-218 do not propose changes to the imputation test, and relate to the activities of in-territory affiliates which is relevant to the state of competition within markets for local services, and consequently to the pricing flexibility determinations to be made in this proceeding. Group Telecom argued, among other things, that it has not proposed changes to the imputation test, but rather, a temporary or permanent change in the information requirements and criteria for approval that apply in the case of promotions. The Commission confirms that it does not intend to change the imputation test methodology in this proceeding. Accordingly, that portion of Call-Net's evidence in section 10.1 that proposes changes to the imputation test will not be considered. Changes to the imputation test methodology are outside the scope of this proceeding. However, the Commission notes that the application of the imputation test, and the impact of the imputation test on local competition are within the scope of the proceeding. The Commission finds that evidence with respect to the imputation test, except that which proposes changes to the imputation test methodology, is within the scope of the proceeding. Further, consistent with the Commission's determination in Decision 2001-582 that the rules governing promotions are within the scope, the evidence submitted by Call-Net and Group Telecom related to promotions is also within the scope of the proceeding. The Commission notes that, in paragraph 37 of PN 2001-37, the Commission stated that monitoring and information reporting requirements should be re-assessed in the price cap review. The Commission notes that the imputation test exemption for promotions is one of the rules governing information requirements for tariff filings set out in Decision 97-9. As such, evidence on promotions, including evidence as to whether an imputation test should be required for promotions, is within the scope of this proceeding. Quality of Service The Companies have requested confirmation that paragraph 12, bullet 3, sections 9.2.1 and 9.2.2 (paragraphs 185 - 197) and Appendix 1 of Call-Net's evidence are outside the scope of the proceeding. Call-Net has submitted that on the basis of Decision 2001-582, paragraphs 185 - 197 are outside the scope of the proceeding. Consistent with its ruling in Decision 2001-582, the Commission confirms that evidence proposing new quality of service indicators is not within the scope of the proceeding. Consideration of the adequacy of service quality, whether in relation to existing quality of service indicators, or to services for which there are no indicators, is, of course, within the scope of the proceeding. Such consideration relates to whether it is necessary to include a quality of service component in the price regulation regime. Accordingly, evidence in this regard is within the scope of the proceeding. Affiliate Issues The Companies have requested confirmation that section 5.0 of Group Telecom's evidence, and paragraphs 212 - 214 and 217 - 218 of Call-Net's evidence are outside the scope of the proceeding. The Companies have noted, among other things, that Decision 2001-582 determined that "the activities of in-territory affiliates are relevant to the state of competition within markets for local services, and consequently to the pricing flexibility determinations to be made in this proceeding." The Companies state that they assume that new rules regarding the activities and prices of affiliates are not at issue in this proceeding. Group Telecom submitted that the matters raised in its evidence regarding in-territory affiliates are fully within the scope of the proceeding. Group Telecom argued, among other things, that the only reason to consider the activities of in-region affiliates is that they can provide a means of circumventing competitive safeguards or other regulatory requirements. Call-Net submitted, among other things, that the portions of its evidence being referenced clearly go to the heart of the pricing flexibility enjoyed by the ILECs and that the specific ILEC behaviour sought to be constrained by Call-Net's proposal is the pricing of services below a price floor. The Commission confirms its determination in Decision 2001-582 that the activities of in-territory affiliates are relevant to consideration of the state of competition within markets for local services, and consequently to the pricing flexibility determinations to be made in this proceeding. Accordingly, evidence in this regard is within the scope. The Commission also confirms that the determination of new rules for affiliates is not within the scope of this proceeding, and that, accordingly, evidence proposing new rules for affiliates is not within the scope of the proceeding. Local Competition The Companies have stated that they remain unclear as to whether and to what extent the Commission intends to re-examine the fundamental framework put in place for local competition. The Companies stated that they prepared their evidence "based on the assumption that the Commission had already made certain key determinations in Decision 97-8. The fundamental framework was based on the view that local competition should be facilities-based, with competitors relyling increasingly on use of their own facilities, and made fundamental distinctions between the pricing rules for specified essential services and all other services". Telus has also asked whether the Commission intends to vary Decision 97-8. Call-Net submitted, among other things, that the Commission need not define the scope of its proceedings by exhaustively listing every element of the existing regime that might be affected by its determination, but rather, must provide notice of what issues are within the scope of the current proceeding. Call-Net suggested that the Commission explicitly rule Call-Net's carrier services proposal to be within the scope of the proceeding. In paragraph 19 of PN 2001-37, the Commission sought proposals on what determinations should be made with regard to the elements of the new price regulation regime, including: (a) the components of a price cap formula, including the appropriate measure of inflation, the level and applicability of a productivity factor, and the treatment of any exogenous factor; (b) the definition and treatment of capped and uncapped services; (c) the service basket structure; and (d) the length of the price cap period. The Commission confirms its view that, while local competition should in the long term be facilities-based, with competitors relying increasingly on use of their own facilities, significant reliance on resale and unbundling will continue to be necessary on a transitional basis (cf. Local competition: Sunset clause for near-essential facilities, Order 2001-184, 1 March 2001). The Commission confirms that the definition of "essential service" contained in Decision 97-8 and the current classification of certain services as "essential" is not under consideration in this proceeding. The Companies, Telus and various competitors have made submissions in their evidence with respect to the appropriate treatment of competitor services. AT&T Canada and Call-Net, for example, propose additional incumbent local exchange carrier (ILEC) services for consideration as "competitor services". Various competitors also propose different pricing approaches for "competitor services", including, for example, a discount from the rate otherwise determined. With respect to whether pricing rules for essential services are under consideration in this proceeding, the Commission notes that services found to be essential services in Decision 97-8 are also "competitor services" (Implementation of price caps and related issues, Telecom Decision CRTC 98-2, 5 March 1998). In Decision 2001-582, the Commission stated that "with respect to the competitor services cost mark-up, this issue is being considered as part of the issue of possible changes to the current treatment of competitor service rates." The Commission has also determined that it is necessary to examine competitive conditions in local markets to determine the extent of pricing flexibility that may be granted to ILECs, given the reliance competitors will continue to place on ILEC facilities on a transitional basis. Therefore, insofar as pricing rules for competitor services are clearly within the scope of this proceeding, policy issues and evidence relating to the pricing of essential services are also within the scope. Accordingly, the Commission confirms that evidence respecting ILEC services used by competitors, including, for example, Call-Net's carrier services proposal, are within the scope of this proceeding. Contribution Telus submitted that paragraphs 39 - 56 of RCI's evidence relating to the residential subsidy requirement and to Decision 2000-745 are outside the scope of the proceeding based on the language of paragraph (g) of Decision 2001-582. This paragraph stated, in part, that "[t]he Commission is not contemplating fundamental changes to the determinations in Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000)." RCI submitted that its proposal is intended to redress an imbalance between the three main stakeholder groups resulting from the initial price cap plan, to restrict rate increases in high cost service areas, and to address the negative effects of providing ILECs with too much pricing flexibility under the initial plan. RCI provided numerous references in support of its position, including paragraphs 17, 19, 26 and 27 of PN 2001-37. The Commission notes that implementation issues for 2002 in relation to the subsidy requirement will be determined in this proceeding, and that it has invited proposals on the appropriate treatment of rates in high-cost serving areas (paragraphs 26 - 27, PN 2001-37). In light of the above, the Commission considers that paragraphs 39 - 56 of RCI's evidence are within the scope of the proceeding. Other issues Decision 2001-582 directed the Companies to provide a response to The Companies(Call-Net)26Jun01-1007(d) as amended by Call-Net in its letter of 23 July 2001. The Companies have stated that a further response has already been provided by letter dated 27 August 2001, and that it assumes that the revised supplemental response fully complies with the Commission's direction. The Commission notes that the Companies were directed to provide a full response to the interrogatory in a staff letter dated 8 August 2001. Further to a deficiency request made by Call-Net, the Companies were directed by the Commission, in Decision 2001-582, to provide a response. The Commission finds that the Companies' response is inadequate. For example, the statement of Nexxia's pricing policy, contained in the revised supplemental response, neither confirms nor denies whether Nexxia has ever resold Bell's tariffed services below tariff rates. Accordingly, the Commission directs the Companies to provide a full and detailed response to each part of interrogatory The Companies(Call-Net)26Jun01-1007 d) (as per Call-Net's amended request in its letter of 23 July 2001), including an explicit response as to whether Nexxia has ever resold Bell's tariffed services below tariff rates with all relevant and supporting details (including itemization of which services and at what prices). This response is to be filed, serving copies on all parties, by 9:00 a.m. on 1 October 2001. Yours sincerely,
Ursula Menke c.c.: Valerie Plaskacz, CRTC (819) 997-4589 Date Modified: 2001-10-01 |
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