ARCHIVED - Telecom Decision CRTC 2002-63

Telecom Decision CRTC 2002-63

Ottawa, 15 October 2002

Follow-up to Decision 2001-767: MTS' revised service improvement plan: Expedited consideration of the proposed capital expenditures for 2003 and 2004

Reference: 8638-C12-58/01

In this decision, the Commission approves MTS Communications Inc.'s (MTS) capital expenditures related to its service improvement plan (SIP) for the years 2003 and 2004. The Commission will issue a separate decision, at a later date, which will consider all other issues related to MTS' SIP.

1.

The Commission received an application by MTS Communications Inc. (MTS) dated 28 June 2002, requesting approval of its revised service improvement plan (SIP) which was filed pursuant to Public Notice CRTC 2001-37 - Price cap review and related issues - Disposition of MTS service improvement plan, Decision CRTC 2001-767, 19 December 2001 (Decision 2001-767). In addition, MTS requested expedited approval of its entire SIP proposal. Manitoba Keewatinowi Okimakanak (MKO) filed comments on MTS' application on 28 August 2002. MTS filed reply comments on 9 September 2002.

Background

2.

In Telephone service to high-cost serving areas, Telecom Decision CRTC 99-16, 19 October 1999 (Decision 99-16), the Commission defined a basic service objective (BSO) which sets out the basic components of telephone service that the Commission would attempt to ensure is available throughout Canada. In addition, the Commission directed all incumbent local exchange carriers (ILECs) to file, for the Commission's approval, SIPs designed to improve service or extend service to unserved premises with a view to extending the BSO to a greater number of Canadians. The Commission further required that the ILECs' SIPs incorporate least-cost technology.

3.

In Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34), the Commission established a framework that Bell Canada, Aliant Telecom Inc. (Aliant Telecom) and TELUS Communications Inc. (TELUS) should apply when extending service to unserved premises. Specifically, the Commission set out the following requirements: (i) a capital cost of $25,000 for both permanent and seasonal premises, including a $1,000 customer contribution; (ii) a 100% take rate in calculating the total cost for each locality; (iii) an instalment plan for the $1,000 customer payment; and (iv) an instalment plan that would enable customers to pay for large construction charges over a reasonable period of time.

Request for expedited approval

Position of parties

5.

In its application, MTS requested that the Commission give its entire revised SIP expedited consideration. MTS submitted that its SIP proposal was consistent with the Commission's directions in Decision 2001-767 and that expedited consideration was necessary for MTS to proceed with the proposed projects scheduled for 2003.

6.

In its comments, MKO submitted that approval of MTS' revised SIP for 2005 through 2007 should be withheld because it failed to meet the requirements of Decision 2001-767. MKO submitted that MTS had failed to adequately consult stakeholders, to explore options for current and future needs of the remote and isolated communities and to address quality of service issues in MKO communities. However, in order to avoid excessively delaying MTS' construction efforts, MKO recommended approval of 2003 and 2004 capital expenditures at this time.

7.

In reply, MTS reiterated that its revised SIP is compliant with the Commission's directions in Decision 2001-767. MTS submitted that MKO failed to demonstrate why the Commission should not approve MTS' SIP in its entirety. MTS further submitted that its proposed SIP would address the service problems identified by MKO and that any delay in the approval of its SIP would prevent it from addressing these service problems in a timely manner.

Commission determinations

8.

The Commission considers that additional time will be required to examine MTS' entire SIP proposal. However, in order to permit construction efforts to proceed in a timely manner, the Commission considers it appropriate to rule on MTS' proposed capital expenditures for 2003 and 2004 in this decision. The Commission will consider the remaining issues, including capital expenditures for the years 2005 to 2007, quality of service, consultation with stakeholders, and funding, at a later date.

MTS' capital expenditures for 2003 and 2004

Position of parties

9.

For the year 2003, MTS proposed to invest $12.63 million for improved telephone service to underserved customers. These capital expenditures are as follows: (a) $6.37 million to replace analog microwave radio facilities and $5.00 million for associated site and diesel upgrades; and (b) $1.26 million to replace stand-alone digital switches. MTS also proposed to invest approximately $0.68 million to expand service to unserved areas.

10.

For the year 2004, MTS proposed to invest $9.73 million for underserved customers. These capital expenditures are as follows: (a) $3.15 million to replace analog microwave radio facilities and $3.40 million for associated site and diesel upgrades; and (b) $3.18 million to replace stand-alone digital switches. Again, MTS proposed to invest approximately $0.68 million to expand service to unserved areas.

Replacement of analog microwave radio facilities in 2003 and 2004

11.

MTS submitted that the analog microwave facilities that it proposes to replace are unable to handle data traffic at reasonable bit rates and have become increasingly unreliable for facsimile transmission and robust data transmission. MTS further submitted that these facilities are the cause of customer complaints regarding the quality and reliability of voice, data and facsimile services.

12.

MTS proposed to carry out two replacement projects in 2003 and 2004: Radisson - Churchill Phase II FOTS [fibre optics transmission system] and Thompson - Lynn Lake Digital Radio. MTS also proposed capital expenditures for site and diesel upgrades that are required to meet safety and environmental requirements, as well as, capital expenditures required to recondition tower anchors to accommodate the installation of new radio antennas.

Replacement of stand-alone digital switches in 2003 and 2004

13.

MTS proposed to upgrade a number of switches in 2003 and 2004. The switch upgrade will allow MTS to provide call management services, including calling line identification, call display blocking, and call trace.

Service to unserved premises in 2003 and 2004

14.

MTS proposed to spend approximately $0.68 million in each of 2003 and 2004 to extend service to unserved premises. MTS indicated that approximately 130 customers would receive service in each year. MTS applied the requirements that the Commission set out in Decision 2002-34 to Bell Canada, Aliant Telecom and TELUS for the extension of service to unserved premises.

Commission analysis and determinations

15.

The Commission finds that MTS' proposed capital expenditures for 2003 and 2004 are based on the use of least-cost technology and are consistent with the BSO as required in Decision 99-16. The Commission also finds that MTS has complied with the requirements that the Commission set out in Decision 2002-34 for the extension of service to unserved premises. Accordingly, the Commission approves MTS' proposed capital expenditures for 2003 and 2004.

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