ARCHIVED - Telecom Decision CRTC 2002-32

Telecom Decision CRTC 2002-32

Ottawa, 29 May 2002

Bell Canada - Proposed rate increases for DS-1 and DS-3 Digital Network Access Links

Reference: Tariff notice 738 (National Services Tariff)

1.

The Commission has received an application by Bell Canada dated 27 September 2001, to revise its National Services Tariff item 301, Digital Network Access (DNA), to reflect rate increases to the monthly rates for DNA links.

2.

Bell Canada proposed to increase the DNA monthly rates for DS-1 links from $60 to $85 and for DS-3 links from $100 to $110.

3.

Bell Canada submitted that its proposal, in addition to generating incremental revenues, would result in better price positioning of the links relative to each other as well as introduce a measure of differentiation between the current low speed DS-0 link and the higher-speed DS-1 link.

4.

The Commission received comments from Call-Net Enterprises Inc. (Call-Net), Primus Telecommunications Canada Inc. (Primus Canada), AT&T Canada Corp. and AT&T Canada Telecom Services Company (AT&T Canada), Rogers Wireless Inc. (RWI) and Microcell Telecommunications Inc. (Microcell), (collectively, the intervenors). The intervenors opposed the application.

5.

The intervenors submitted that they rely heavily on DNA services including DNA links to provide service to end-customers. Most of the intervenors argued that frequently, there are no competitive alternatives available. AT&T and Call-Net stated that approval of the proposed rate increases would directly increase their costs of providing service which would further impede the development of competition. RWI and Microcell submitted that approval of the proposed rates would significantly increase the costs of a wireless service provider, without any improvement in the services received.

6.

Primus Canada argued that a 42% increase in DS-1 link rates without the filing of any meaningful supporting data is completely anti-competitive. In Primus Canada's view, Bell Canada's costs to provide the service do not appear to have increased and no improvements to the Link service have occurred to justify a rate increase.

7.

Call-Net submitted that it would be inappropriate for the Commission to consider the significant rate increases while the proceeding Price cap review and related issues, Public Notice CRTC 2001-37, 13 March 2001 (PN 2001-37 proceeding) is underway. Similarly, RWI stated that it is alarming that Bell Canada has filed this application seeking to generate additional revenues at this time.

8.

In reply, Bell Canada submitted that its application fully complies with existing regulatory requirements and should therefore be approved as filed. Bell Canada also submitted that it is totally unreasonable to expect it to withhold all price changes for the vast majority of its services until the Commission's decision in the PN 2001-37 proceeding, is issued.

9.

Bell Canada noted that the DNA link component has been categorized in the Competitive segment and submitted that the Commission should not depart from the regulatory regime set up in Price Cap Regulation and Related Issues, Telecom Decision CRTC 97-9, 1 May 1997 (Decision 97-9). As this component is not contained in the Utility segment, no price cap constraints apply to changes to these rates. Furthermore, an imputation test is not required because the company is not proposing to decrease any rates. Bell Canada stated that there are no separate rules in place for Competitive segment services that allegedly are "not adequately competitive".

10.

Call-Net requested that the Commission initiate a process to assess the feasibility of rating all DNA links across all incumbent local exchange carrier territories in the same way as Central Office Links, on the basis of a one-time distance sensitive charge subject to a maximum distance.

11.

In response, Bell Canada noted that such a process is unnecessary. Bell Canada noted that in Final Rates for Unbundled Local Network Components, Telecom Decision 98-22, 30 November 1998 wherein the Commission approved the rate structure for Type A and Type C connecting links.

Commission's findings and conclusions

12.

Given that the rates, terms and conditions with respect to the DNA service are under consideration in the PN 2001-37 proceeding, the Commission is of the view that it would be inappropriate to initiate a separate proceeding as requested by Call-Net.

13.

The Commission notes Bell Canada's submission that the DNA link has been categorized in the Competitive segment. The Commission, however, notes that the regulatory regime established in Decision 97-9 does not address the rate treatment applicable to Competitive segment services. The disposition of tariff applications for rate changes with respect to Competitive segment services is made on a case-by-case basis.

14.

The Commission recognizes the extent to which the intervenors rely upon DNA links.

15.

The Commission is not persuaded by Bell Canada's argument that rate increases should be approved on the grounds that the proposed rates would result in a better price positioning of the links relative to each other. The Commission also finds that there is insufficient evidence to justify the rate increases as Bell Canada failed to submit cost evidence to demonstrate that the current DNA Link rates are too low.

16.

Accordingly, Bell Canada National Services Tariff 738 is denied.

Secretary General

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