ARCHIVED - Telecom - Commission Letter - 8638-C12-30/99 - Vidéotron CommunicationsInc.'s Request for Commission Staff Opinion

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Our file: 8638-C12-30/99

Ottawa, 25 April 2001


Mr. Frans Luc Vandendries
Director, Regulatory Affairs
Vidéotron Communications inc.
300, avenue Viger Est
Montréal, Québec
H2X 3W4

Dear Mr. Vandendries:

Re: Vidéotron Communications Inc.'s Request for Commission Staff Opinion

On 13 November 2000, Vidéotron Communications Inc. requested an opinion from Commission staff regarding the eligibility of its affiliate Vidéotron Telecom (1998) ltee (Vidéotron) for the exemption established by paragraph 32 of Telecom Decision CRTC 99-9 (Decision 99-9) from the DAL surcharge. The company submitted that the specific issue was whether a non-ILEC company that uses a DAL but undertakes to calculate, remit and report contribution on all minutes carried on that DAL, would be eligible for the exemption from the DAL surcharge.

The company noted that Decision 99-9 allows an exemption from the DAL surcharge for those non-ILEC companies who can affirm by affidavit that they do not use any DALs. Further, the company noted that those companies that do not use contribution-exempt DALs would be penalized if there were no exemption from the DAL surcharge, as the DAL surcharge levies contribution indirectly on a company's DAL traffic.

The company submitted that Vidéotron does not promote the use of DALs in its interexchange network but noted that DALs remain useful as a network access solution for some clients and business applications. At a customer's request, Vidéotron installed one DAL trunk between its interexchange switch and that specific customer's PBX. The company noted that this DAL is used to originate long distance traffic only and does not carry any local or terminating long distance traffic. The company submitted that due to this one DAL, Vidéotron pays the DAL surcharge on all of its switched minutes.

As a solution to this problem, Vidéotron proposed to maintain the use of the DAL in its network but, in order to qualify for the exemption from the DAL surcharge, to declare all of the minutes carried on that DAL in its monthly report to the CFA, and to remit contribution payments directly with respect to that traffic. The company noted that this approach is similar to that applied by Bell Canada to its own DAL traffic.

The company therefore requested an opinion as to whether Vidéotron's proposed approach of levying contribution directly on its DAL traffic and including its DAL traffic in its monthly reports to the CFA, while maintaining the use of the DAL in the network, would be consistent with the DAL surcharge exemption regime established by the Commission in

Decision 99-9.

Commission Staff Opinion

In Competition in the Provision of Long Distance Voice Telephone Services and Related Resale and Sharing Issues, Telecom Decision CRTC 92-12,

12 June 1992, the Commission set out a DAL surcharge that applied to non-ILEC carriers only, whereas ILECs were expected to pay contribution on their DAL minutes. The non-ILEC DAL surcharge was adopted because non-ILEC carriers, at the time, indicated that they were unable to count the number of DAL minutes. This position was maintained by APLDS in the proceeding leading to Decision 99-9.

Decision 99-9 established a DAL surcharge exemption for APLDS that do not use any DALs. In Commission staff's opinion, allowing Vidéotron to pay per-minute contribution on its DAL, in lieu of applying the DAL surcharge to non-DAL minutes, would be inappropriate. It would involve changing the per-minute contribution rules as they applied to APLDS for Vidéotron only, on a retroactive basis, potentially giving advantage to Vidéotron over other APLDS in similar circumstances.

Further, in Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000, the Commission introduced a new revenue-based contribution regime effective 1 January 2001. Although the per-minute regime is to continue, on an interim basis, for the first three months of 2001, the contribution liability for each telecommunications service provider, including Vidéotron, will be calculated for the fiscal year 2001, using the final revenue percentage charge established by the Commission approximately mid-year. A reconciliation will be performed and adjustments made to reflect this final revenue percentage charge.

In the circumstances, Commission staff is of the view that Vidéotron's proposed approach would be inconsistent with the DAL surcharge exemption regime established by the Commission in Decision 99-9.

Yours sincerely,

Scott Hutton
Director, Efficiency and Expenditure Analysis
Telecommunications (819) 997-4573

c.c.: Pamela Cormier, CRTC, (819) 953-9675

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