ARCHIVED - Telecom Costs Order CRTC 2002-7

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Telecom Costs Order CRTC 2002-7

Ottawa, 16 May 2002

British Columbia Old Age Pensioners' Organization, Council of Senior Citizens' Organizations of B.C., Federated Anti-Poverty Groups of B.C., Senior Citizens' Association of B.C., West End Seniors' Network, Consumer's Association of Canada, End Legislated Poverty and Tenant Rights Action Coalition application for costs - Public Notice CRTC 2001-37

Reference: 4754-195 and 8678-C12-11/01

Background

1.

By letter dated 27 November 2001, the British Columbia Old Age Pensioners' Organization (BCOAPO), Council of Senior Citizens' Organizations of B.C., Federated Anti-Poverty Groups of B.C., Senior Citizens' Association of B.C., West End Seniors' Network, Consumers' Association of Canada, End Legislated Poverty and Tenants Rights Action Coalition (BCOAPO et al.) applied for costs with respect to their participation in the proceeding initiated by Price cap review and related issues, Public Notice CRTC 2001-37, 13 March 2001 (PN 2001-37).

Position of the parties

2.

BCOAPO et al. submitted that it met the criteria for an award of costs set out in section 44(1) of the CRTC Telecommunications Rules of Procedure (the Rules).

3.

BCOAPO et al. noted that it had made special efforts to reduce its costs by co-ordinating their intervention with other consumer groups and the City of Calgary in respect of the filing of evidence, and in respect of cross-examination and argument.

4.

By letter dated 28 November 2001, Rogers Wireless Inc. (RWI) noted that it did not object to BCOAPO et al.'s application but asserted that the appropriate respondents to the application were the incumbent local exchange carriers (ILECs) as they would be the primary beneficiaries of the price cap regime.

5.

By letter dated 7 December 2001, TELUS Communications Inc. (TCI) indicated that it did not oppose BCOAPO et al.'s request. TCI reserved its right to comment on the costs claimed by BCOAPO et al. in its bill of costs, particularly with respect to TCI's portion of shared costs.

6.

By letter dated 12 December 2001, Aliant Telecom Inc. (Aliant Telecom), Bell Canada, MTS Communications Inc. (MTS), and Saskatchewan Telecommunications (SaskTel) (collectively, the Companies) provided their response to BCOAPO et al.'s application. The Companies stated that, with two exceptions, they did not oppose BCOAPO et al.'s claim for costs.

7.

The Companies also opposed RWI's position that only the ILECs should be named respondents for costs to BCOAPO et al.'s application. The Companies took the position that both competitors and ILECs will benefit from the price cap regime and had a similar level of interest in the outcome of the proceeding.

8.

The Companies objected to any claim for costs by BCOAPO et al. on account of their expert witnesses, Ms. Barbara Alexander and Dr. Trevor Roycroft. The Companies relied on the same arguments they had previously made, with respect to Ms. Alexander and Dr. Roycroft, in the costs application filed by Action Réseau Consommateur (ARC), the Consumers' Association of Canada, Fédération des associations coopératives d'économie familiale and the National Anti-Poverty Organization (ARC et al.) with respect to the PN 2001-37 proceeding.

9.

With respect to the expert witness, Ms. Alexander, the Companies submitted that she did not participate in the proceeding in a responsible manner and that she did not contribute through her evidence and interrogatory responses to a better understanding of the issues by the Commission.

10.

The Companies submitted that the evidence put forward by Ms. Alexander contained a number of unsubstantiated and misleading claims on the effect of price cap regulation on service quality in some American states. The Companies further asserted that Ms. Alexander's evidence also included a poorly explained and incorrect formula that was the foundation of her proposed penalty system for telephone companies failing to meet quality of service standards. With respect to her responses to interrogatories, the Companies argued that in response to questions regarding the forms of regulation and service quality in certain American states, Ms. Alexander either did not answer the question that was asked or indicated that she simply had no evidence to support her conclusions.

11.

In the case of the expert witness, Dr. Roycroft, the Companies asserted that, while he participated in a responsible manner in the proceeding, Dr. Roycroft did not further the Commission's understanding of the issues.

12.

In particular, the Companies submitted that Dr. Roycroft's analysis cannot be given any weight because of three flaws: 1) the state level data used to estimate total factor productivity (TFP) growth was unreliable; 2) the methodology used to estimate TFP growth was overly simplistic and, in some cases, wrong; and 3) the regression results were neither plausible nor credible.

Reply comments

13.

BCOAPO et al. filed reply comments addressing the issues raised by the Companies with respect to their expert witnesses. BCOAPO et al. stated that they adopted the arguments that ARC et al. submitted in their cost application.

14.

With respect to Ms. Alexander, BCOAPO et al. submitted that the Companies' allegations focused solely on relatively minor aspects of her testimony regarding quality of service. According to BCOAPO et al., Ms. Alexander provided the Commission with the only independent outside expertise on approaches to quality of service under price caps or alternative forms of regulation. BCOAPO et al. asserted that all of the errors the Companies asserted existed in Ms. Alexander's evidence were either not in fact errors or were so minor that they did not detract from the points that she was attempting to make in her evidence. With respect to her responses to interrogatories, BCOAPO et al. submitted that Ms. Alexander responded to the best of her ability based on all of the relevant information in her possession.

15.

With respect to Dr. Roycroft, BCOAPO et al. submitted that the Companies' objections seem to be based solely on an analytical disagreement with this expert's work. BCOAPO et al. noted that the study, which the Companies objected to, was published in two refereed journals.

16.

With respect to the three flaws that the Companies asserted existed in Dr. Roycroft's evidence, BCOAPO et al. submitted that: 1) Dr. Roycroft used data collected by the U.S. Federal Communications Commission (FCC); 2) Dr. Roycroft used TFP calculation methodology that was developed by FCC staff and which was conservative in its estimate of TFP growth; and 3) Dr. Roycroft's regression analysis calculated changes in TFP growth attributable to regulation and other factors that were consistent with observed changes in average TFP growth.

17.

BCOAPO et al. also noted that the piece of Dr. Roycroft's evidence that the Companies objected to comprised only a small part of his evidence and participation in the proceeding, and in fact Dr. Roycroft did not bill BCOAPO et al. for the report objected to by the Companies.

18.

BCOAPO et al. submitted that for the Commission to disallow the costs claim for the entire amount submitted on account of the two experts, as requested by the Companies, would be inappropriate even if the Commission accepted the Companies' arguments. In ARC et al.'s view to disallow any claim for costs based on minor errors in an expert's evidence would have a chilling effect on public interest interventions in Commission proceedings.

Commission determination

19.

The Commission notes that it has previously disallowed or reduced claims for costs where, in the Commission's view, the expert evidence did not contribute to a better understanding of the issues by the Commission. However, the Commission finds that such action would not be appropriate in this case.

20.

With respect to Ms. Alexander, the Commission notes that, in this proceeding, parties were asked to file submissions and evidence regarding quality of service. Ms. Alexander's report was the only rate component plan filed with the Commission that was not generated by a member of the telecommunications industry.

21.

In the Commission's view, Ms. Alexander answered all interrogatories to the best of her ability and corrected any minor errors in a timely fashion.

22.

The Commission finds that any errors in Ms. Alexander's work are not significant and do not impact on the Commission's ability to assess its potential utility to address quality of service issues.

23.

In the Commission's view, Ms. Alexander's work does further its understanding of quality of service issues.

24.

In the case of Dr. Roycroft, the Commission finds that his analysis provides the Commission with some insight regarding TFP growth experienced in the United States, and insight with respect to productivity in a second price cap period.

25.

The Commission, therefore, finds that BCOAPO et al. meets the criteria for an award of costs under section 44 (1) of the Rules.

26.

With regard to the respondents to this cost application, the Commission has considered the arguments provided by RWI on the issue of appropriate respondents, and the cost orders referred to by RWI. However, the Commission finds that, as it determined in Telecom Costs Order CRTC 96-17, 23 August 1996, while the main beneficiaries of a price cap regime are the ILECs, those companies in competition with the ILECs also have a significant interest in the outcome of the proceeding.

27.

Accordingly, the Commission finds that the Companies, TCI, AT&T Canada Corp. (AT&T Canada), GT Group Telecom Inc. (Group Telecom), RWI, and Call-Net Enterprises Inc. (Call-Net) are the appropriate respondents.

Directions as to costs

28.

The Commission approves BCOAPO et al.'s application for costs in this proceeding.

29.

For the reasons set out above, the award of costs to BCOAPO et al. shall be paid by the named respondents in the following proportions:

AT&T Canada

1%

Call-Net

1%

Group Telecom

1%

RWI

2%

Bell Canada

55%

Aliant Telecom

5%

MTS

5%

SaskTel

5%

TCI

5%

30.

The costs awarded herein shall be subject to taxation in accordance with the Rules.

31.

The costs awarded herein shall be taxed by James Wilson.

32.

BCOAPO et al. shall, within 30 days as of the date of this order, submit a bill of costs and an affidavit of disbursements directly to the taxing officer, serving a copy on the respondents for costs.

33.

The respondents for costs may, within two weeks of receipt of those documents, file comments directly with the taxing officer in response to the claim for costs, serving a copy on BCOAPO et al.

34.

BCOAPO et al. may, within two weeks of receipt of any comments submitted by the respondents for costs, file a reply to such comments with the taxing officer, serving a copy on the respondents.

35.

All documents to be filed or served by a specific date must actually be received, and not merely sent by that date.

Secretary General

This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca

Date Modified: 2002-05-16

Date modified: