ARCHIVED - Telecom Decision CRTC 2002-70

Telecom Decision CRTC 2002-70

Ottawa, 7 November 2002

Thunder Bay Telephone - Application to review and vary certain aspects of Regulatory framework for the small incumbent telephone companies, Decision CRTC 2001-756, 14 December 2001

Reference: 8662-T8-01/02

In this decision, the Commission approves the application filed by Thunder Bay Telephone to review and vary the amount of Thunder Bay Telephone's total subsidy requirement for the years 2003, 2004 and 2005 determined in Regulatory framework for the small incumbent telephone companies, Decision CRTC 2001-756, 14 December 2001.

Background

In Regulatory framework for the small incumbent telephone companies, Decision CRTC 2001-756, 14 December 2001 (Decision 2001-756), the Commission determined that it was appropriate to allow small incumbent local exchange carriers (ILECs) to use a proxy approach to determine their total subsidy requirement (TSR) in lieu of using Phase II costing studies. The amount of TSR was calculated by applying the appropriate proxy subsidy rate to the residential network access services (NAS) located in high-cost service areas (HCSAs).

In Decision 2001-756, the Commission defined an HCSA as a wire centre that had less than 8,000 NAS. A wire centre was defined as follows:

a) A wire centre is generally defined as encompassing an area where loops requested to provide services are all terminated on a frame in a building housing switching equipment or a switch remote that replaced a switch, located in a building or in the vicinity of a building;

b) A wire centre would be the most technically practical point where competitive local exchange carriers would co-locate in order to use unbundled loops;

c) Generally, a wire centre is associated with one or more NXX; an area that uses the same NXX (or the same set of NXXs) is generally in one wire centre;

d) For small independents, an exchange is generally served by one wire centre; and

e) Areas served by outside plant modules (e.g., DMS-1U) will not be considered as being served from a wire centre, unless the device was used to replace a switch.

In Decision 2001-756, the Commission determined, based on the information provided by Thunder Bay Telephone, that Thunder Bay Telephone's proposed Lithium, MacKenzie, Kakabeka, Neebing, and Slate River areas did not meet the definition of wire centres. The Commission, therefore, included the Lithium and MacKenzie NAS in the Court wire centre and the Kakabeka, Neebing and Slate River NAS in the Vickers wire centre. The Commission found, however, that neither the Court wire centre nor the Vickers wire centre qualified as HCSAs. Accordingly, the Commission excluded the residential NAS located in the Lithium, MacKenzie, Kakabeka, Neebing and Slate River areas from the calculation of Thunder Bay Telephone's TSR. The Commission determined that the TSR to be paid to Thunder Bay Telephone would be $612,900 per year for the years 2003, 2004 and 2005.

Thunder Bay Telephone's application

On 28 May 2002, Thunder Bay Telephone filed an application, pursuant to section 62 of the Telecommunications Act, requesting that the Commission review and vary the TSR for Thunder Bay Telephone for each of the years 2003, 2004 and 2005, that was determined in Decision 2001-756.

In its application, Thunder Bay Telephone submitted that there was substantial doubt as to the correctness of Decision 2001-756 due to an error of fact resulting from its inadvertent failure to provide specific information regarding the characteristics of the Lithium, MacKenzie, Kakabeka, and Slate River areas. Thunder Bay Telephone argued that the Lithium, MacKenzie, Kakabeka and Slate River areas were in fact wire centres that qualified as HCSA for the purpose of calculating the TSR. Thunder Bay Telephone submitted that, as a result of its inadvertent error, the Commission had erroneously excluded the residential NAS of these four wire centres, thereby understating the TSR by $513,000 for the years 2003, 2004, and 2005.

Thunder Bay Telephone argued that the MacKenzie, Kakabeka and Slate River areas qualified as wire centres, as defined by the Commission, since step-by-step switching equipment had previously been located in a building structure in each of those areas. Thunder Bay Telephone further argued that the Lithium switching centre also qualified as a wire centre since it was located in a building and would be one of the most technically practical points where competitive local exchange carriers would co-locate in order to use unbundled loops in that area.

Thunder Bay Telephone submitted that the Lithium, MacKenzie, Kakabeka, and Slate River wire centres qualified as HCSAs for the purpose of calculating its TSR since these wire centres had a total of 5,302, 1,764, 1,806 and 919 NAS, respectively.

The Commission did not receive any comments on this application.

Commission determination

Based on the information provided by Thunder Bay Telephone in this application, the Commission finds that the Lithium, MacKenzie, Kakabeka and Slate River areas clearly meet the definition of a wire centre. Given that each of these wire centres has a total number of NAS of less than 8,000, the Commission also finds that these wire centres qualify as HCSAs.

The Commission considers that, if the information provided by Thunder Bay Telephone at this time had been filed in the proceeding leading to Decision 2001-756, the residential NAS in each of the four wire centres would have been included in the calculation of Thunder Bay Telephone's TSR. The Commission therefore concludes that, due to Thunder Bay Telephone's inadvertent failure to provide the necessary information in the proceeding leading to Decision 2001-756, there is substantial doubt as to the original correctness of the Commission's determination of Thunder Bay Telephone's TSR for the years 2003, 2004 and 2005.

Accordingly, the Commission approves Thunder Bay Telephone's application.

The Commission hereby revises Thunder Bay Telephone's TSR determined in Decision 2001-756 for the years 2003, 2004 and 2005, to include an additional $513,000 per year. The revised TSR amounts are as follows: