ARCHIVED - Order CRTC 2001-779

Order CRTC 2001-779

Ottawa, 26 October 2001

La Compagnie de Téléphone de Warwick - Application to review and vary a portion of Order 2000-1159

Reference: 8662-S10-02/01

The Commission approves, in large part, the application to review and vary a portion of Order CRTC 2000-1159 for Warwick with the following adjustments:

1. re-allocation of 50% ($15,408) of regulatory activity expenses from the direct toll component to the contribution requirement; and

2. approval of an adjusted final 1999 direct toll component of $566,817 with a corresponding rate of $0.0342 per minute.

The Commission directs Warwick to issue revised tariff pages reflecting this determination and to proceed with billing adjustments to toll carriers as quickly as possible.

1.

On 11 May 2001, the Commission received an application filed on behalf of La Compagnie de Téléphone de Warwick pursuant to section 62 of the Telecommunications Act to review and vary a portion of Order CRTC 2000-1159, SATAT - Final 1999 Carrier Access Tariffs and network (¼ mile) tariffs, dated 19 December 2000.

2.

The review and vary application sought to obtain an order:

i) approving the detailed explanations for increases in Warwick's direct toll expenses;

ii) varying the final 1999 Carrier Access Tariff (CAT) requirement for Warwick by substituting the final CAT from the order with Warwick's original proposal in the 1999 CAT proceeding; and

iii) adjusting Warwick's final 1999 contribution rate from $0.0784 to $0.0775 and final 1999 direct toll rate from $0.0208 to $0.0352.

3.

In the order, the Commission did not accept the general proposal of the Société d'administration des tarifs d'accès des télécommunicateurs (SATAT), which SATAT called the global approach, to have the three distinct components of contribution, direct toll and network approved as a total requirement. As a result, the Commission assessed the company's proposals for the final 1999 CAT and network (¼ mile) tariff on the basis of the three distinct components. The review and vary application described Warwick's circumstances, indicating that ". [a]mong the member companies of SATAT, the result of the Commission's denial of SATAT's global approach was particularly harsh for Warwick."

4.

The Commission did not approve increases in direct toll where no explanations were provided.

5.

In the review and vary application, Warwick provided detailed explanations for the increases in its 1999 direct toll component.

6.

Bell Canada, as an interested party to the proceeding, submitted that SATAT chose to ignore Commission directives in Telecom Order 99-1111, dated 30 November 1999, to provide detailed explanations for increases in the direct toll component. Bell Canada also argued that SATAT disclosed no foundation to change Order 2000-1159 on the basis of a review and vary application.

7.

Bell Canada did not comment on the validity of the detailed explanations provided in the review and vary application.

8.

The Commission notes that the direct toll portion of an independent's CAT is derived using the Phase III methodology. The costs are allocated to the toll broad service category. The direct toll component of the CAT is intended to allow the independent telephone companies to recover their legitimate and reasonable expenditures.

9.

The Commission is of the view that the explanations provided in the review and vary application justify legitimate and reasonable expenditures by Warwick in 1999 to allow the toll carriers to provide toll services in its local territory.

10.

As a result, the Commission finds that the detailed explanations of Warwick's circumstances in the review and vary application result in substantial doubt as to the correctness of the original decision.

11.

Therefore, the Commission considers it appropriate to vary a portion of Order 2000-1159 as it relates to Warwick's CAT.

12.

In Order 2000-1159, the Commission adjusted the proposed final 1999 CATs by reallocating 50% of the regulatory related activity expenditure increases from the direct toll component to the contribution requirement for the purpose of calculating the final 1999 CATs. It stated that ". the regulatory activities described [.] relate as much to the local side of the business as they do to the toll side and should therefore be allocated accordingly."

13.

In its review and vary application, Warwick allocated 100% of the regulatory related activity expenditure increases to the direct toll component. The Commission is of the view that its original decision to reallocate 50% of the regulatory related activity expenditures continues to be correct.

14.

Therefore, the Commission reallocated 50% ($15,408) from the direct toll component to the contribution requirement for the purpose of calculating the final 1999 CAT for Warwick.

15.

Accordingly, the final 1999 contribution requirement of $1,320,743 and rate of $0.0784 as well as the network (¼ mile) requirement of $43,028 and rate of $2.4849 remain unchanged from Order 2000-1159.

16.

However, with the detailed explanations, the final 1999 direct toll component is revised to $566,817 with a corresponding final 1999 rate of $0.0342 per minute.

Implementation

17.

In light of the foregoing, the Commission orders that Warwick issue revised tariff pages reflecting this determination within 15 days of the date of this order and to proceed with billing adjustments to toll carriers as expeditiously as possible.

Secretary General

This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca