ARCHIVED - Telecom Decision CRTC 2002-50

Telecom Decision CRTC 2002-50

Ottawa, 27 August 2002

TELUS Communications Inc. - Rate structure for toll transit service

In this decision, the Commission determines that TELUS Communications Inc. should amend its tariff to apply a rate structure for toll transit service on originating toll calls in Alberta that is identical to the rate structure applied throughout the rest of Canada for the same service.

1.

In CRTC denies TCI and TCBC proposals to modify transit services, Order CRTC 2001-745, 28 September 2001 (Order 2001-745), the Commission directed TELUS Communications Inc. (TCI) to show cause as to why it should not amend its tariff provisions for Alberta in order to provide toll transit service (TTS) in a manner that is consistent with the tariff provisions that apply throughout the rest of Canada.

2.

TCI filed its response on 26 October 2001. Comments were filed in response to TCI's position by Microcell Telecommunications Inc. (Microcell) and by Call-Net Enterprises Inc., on behalf of itself, AT&T Canada Corp. and AT&T Canada Telecom Services Company (Call-Net et al.). On 20 December 2001, TCI filed reply comments.

Background

3.

TTS, a service offered by the incumbent local exchange carriers (ILECs), provides competitive local exchange carriers (CLECs) and interexchange carriers (IXCs) the option of delivering toll traffic to each other via the ILECs' network.

4.

ILECs bill an IXC the access tandem and direct connection charges when the IXC uses TTS to deliver terminating traffic to a CLEC. In all ILEC operating territories, except Alberta, ILECs bill an IXC the access tandem and direct connection charges when a CLEC uses TTS to deliver originating toll traffic to that IXC. The ILECs remit the direct connection charge to the CLEC when they are billed for that charge. These charges are calculated on the basis of per minute rates.

5.

In contrast, in Alberta, TCI does not collect any charges from the IXC for transiting originating toll traffic from the CLEC to the IXC. Instead, TCI charges the CLEC a monthly transit charge per trunk for transiting that traffic through its network. The CLEC must then recover the monthly transit charge from the IXC.

TCI's Position

6.

In response to Order 2001-745, TCI indicated that the current TTS rate structure remained the most appropriate and efficient option for Alberta.

7.

TCI submitted that only the CLECs have the information necessary to bill each IXC for transiting their originating toll traffic. TCI argued that the CLECs are not financially penalized by the current rate structure for TTS in Alberta. In TCI's view, the CLECs in Alberta are able to recover the costs for direct connection and the monthly transit charges through the rates set out in their tariffs.

8.

TCI explained that the monthly transit charges that it collects from CLECs for TTS were based on TCI's access tandem rates. TCI noted that this monthly transit charge compensates it for the costs incurred in establishing separate trunks for the purpose of transiting originating toll traffic from a CLEC to TCI.

9.

TCI further argued that moving to a different rate structure could result in service disruption and additional costs to the CLECs. TCI estimated that it would have to incur $400K to upgrade all of its switches in addition to significant costs in modifying its process and billing systems in Alberta. TCI submitted that it could need up to six months to implement the necessary changes.

10.

TCI argued that, should it be required to change its rate structure, it should be allowed to recover, through its rates for TTS service in Alberta, the costs of implementing the changes plus a mark-up.

Interveners' Position

11.

Microcell and Call-Net et al. supported a uniform rate structure for TTS across Canada and disagreed with TCI's claim that changing the rate structure would impose hardship or additional costs on competitors.

12.

Microcell and Call-Net et al. submitted that the different rate structure for TTS in Alberta creates unnecessary confusion for the CLECs and the IXCs in managing the different arrangements. They further submitted that the rate structure in Alberta has caused the CLECs to incur additional costs. In their view, the benefits to competitors of a uniform rate structure across Canada outweigh the costs they would incur in adjusting to a new rate structure.

13.

Call-Net et al. noted that, in Alberta, TCI bills the CLECs a fixed monthly transit charge and that, in contrast, CLECs can only bill the IXC a direct connection charge, based on the volume of traffic. In the view of Call-Net et al., this rate structure does not allow CLECs to be fully compensated for the monthly transit charge they pay to TCI.

14.

Call-Net et al. argued that TCI's inability to measure the volume of toll transit calls should not preclude TCI in Alberta from charging the IXCs an access tandem rate that is based on the volume of traffic. Call-Net et al. noted, in this regard, that with the billing information that CLECs provide to TCI on a monthly basis, TCI has the information about the volume of traffic and could bill the IXCs accordingly.

Microcell and Call-Net et al. were generally of the view that competitors should not be liable for the costs incurred by TCI to change the rate structure. In Microcell's view, an increase in TCI's access tandem rate would be appropriate, should the Commission allow TCI to recover such costs.

Commission Analysis and Determination

16.

The Commission notes that CLECs that opt to use TTS in Alberta and elsewhere in Canada, must establish two different billing methods to ensure they receive compensation for the costs associated with the routing of originating toll traffic to IXCs.

17.

The Commission is not persuaded by TCI's argument that the current rate structure for TTS in Alberta remains the most appropriate and efficient option. The Commission notes that the approved tariffs of the CLECs typically only include a rate for direct connection. The Commission further notes that in Alberta, the CLECs must recover both the monthly transit charge, paid to the ILEC on a per trunk basis, as well as their costs for direct connection. The Commission finds that this rate structure does not ensure that CLECs will be adequately compensated.

18.

In the Commission's view, a uniform per minute rate structure across Canada would simplify TTS procedures for all parties involved and give the CLECs a fair opportunity to recover their costs. The Commission also considers that CLECs can expect to achieve cost savings from consolidation of their methods and procedures.

19.

Furthermore, the Commission considers that the benefits of a uniform rate structure for the industry outweigh the costs that TCI would incur to change the rate structure in Alberta. Accordingly, the Commission directs TCI to adopt a rate structure for TTS service in Alberta that is consistent with the rate structure for British Columbia and the rest of Canada. The Commission further directs TCI to issue, no later than 120 days from the date of this decision, tariff pages reflecting the change in the rate structure for Alberta.

20.

In the Commission's view, the $400K that TCI would incur to upgrade its switches is not a material amount. Furthermore, the Commission notes that since TCI already has the necessary process and billing systems in place in British Columbia, the transition to a new rate structure in Alberta could be accomplished without undue difficulty. Accordingly, the Commission finds that it is not necessary to compensate TCI for the costs associated with moving to the new rate structure.

Secretary General

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