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Telecom Decision CRTC 2002-9

Ottawa, 12 February 2002

CRTC directs Aliant Telecom Inc. to submit individual-company price cap summaries in tariff notices

Reference: NewTel tariff notice (TN) 657, and NBTel TNs 862 and 865

Summary

Recently, Aliant Telecom Inc. (Aliant Telecom) filed three tariff applications on behalf of NewTel Communications Inc. (NewTel) and NBTel Inc. (NBTel), two of Aliant Telecom's regional telecommunications companies. The three filings included amalgamated price cap summaries for all four of Aliant Telecom's regional telcos. The Commission asked Aliant Telecom to submit separate summaries for NewTel and NBTel. Aliant Telecom noted that amalgamated information appeared to be sufficient for Commission rulings on previous applications.

However, the Commission stated that, in all the specific examples cited by Aliant Telecom, the Commission was satisfied that the applications, in fact, complied with individual-company price cap criteria under the current price cap regulatory regime.

The Commission determines that, at this time, the amalgamation of company-specific information would provide Aliant Telecom with additional pricing flexibility that would be beyond the flexibility established under the price cap regime. In this decision, the Commission directs Aliant Telecom to submit individual price cap summaries for the three recent tariff applications, as well as any other tariff application that has been filed on an amalgamated basis.

1.

On 29 June 2001, Aliant Telecom Inc. (Aliant Telecom) filed NBTel Inc. (NBTel) tariff notice (TN) 862 and NewTel Communications Inc. (NewTel) TN 657, providing for changes to the late payment and non sufficient funds charges. Aliant Telecom included a price cap summary that was prepared on an amalgamated basis.

2.

On 28 September 2001, Aliant Telecom filed NBTel TN 865 to revise NBTel's General Tariff regarding rate increases for directory assistance. TN 865 included a price cap summary that was also prepared on an amalgamated basis for Aliant Telecom.

3.

By letter dated 1 November 2001, Aliant Telecom was requested to file a separate price cap summary for NBTel that reflects the proposed rate increases for directory assistance.

4.

By letter dated 7 November 2001, the Commission asked Aliant Telecom to provide price cap summaries for NBTel and NewTel that reflect the proposed increases in the non sufficient funds charges.

Aliant Telecom's submissions

5.

In a letter dated 28 November 2001, Aliant Telecom submitted that the use of amalgamated indices complies with the objectives and principles of the price cap regime, and is fully consistent with the Commission's stated views on the treatment of pricing rules for amalgamated companies.

6.

Aliant Telecom further submitted that requesting company-specific indices for NBTel, or any of the pre-Aliant Telecom companies, is not consistent with the Commission's determinations in three previously approved tariff notices that supplied only amalgamated indices and is not consistent with three additional price cap filings that Aliant Telecom submitted in response to Commission directions.

7.

Aliant Telecom stated that at no time for any 2001 price cap filings has it proposed to use company-specific indices. In fact, according to Aliant Telecom, on every occasion when it has submitted 2001 price cap indices, it has submitted only amalgamated indices. Each of these occasions is listed below.

2001 annual price cap filing

8.

On 30 March 2001, Aliant Telecom filed amalgamated indices in its 2001 annual price cap filing. The price cap indices and the service band limits of the pre-Aliant Telecom companies were calculated as the revenue weighted average indices using the revenue weights from the 2000 annual price cap filings.

NBTel TN 860 and NewTel TN 650

9.

On 10 April 2001, Aliant Telecom filed the above identified tariff notices to increase the monthly rates for individual line residence primary exchange service in New Brunswick and Newfoundland. Aliant Telecom submitted only amalgamated price cap indices. Aliant Telecom noted that it received no questions from the Commission on the calculation of the price cap indices filed with the applications.

NewTel TN 653

10.

On 7 May 2001, Aliant Telecom filed for rate changes for certain Megalink service components. The attachment to the filing included the calculation of the Aliant Telecom amalgamated price cap indices.

11.

Again, Aliant Telecom noted that it did not receive any questions from the Commission on the calculation of the price cap indices associated with this application.

12.

In Order CRTC 2001-472, dated 18 June 2001, the Commission approved this application and made no mention of any requirement for company specific price cap indices.

Order CRTC 2001-434-1

13.

On 5 June 2001, the Commission issued order CRTC 2001-434-1, MTT - Provincial 9-1-1 service, that amended paragraph 15 of Order CRTC 2001-434, dated 31 May 2001, to indicate that Aliant Telecom "is directed to make the appropriate modifications to its price cap index and service basket limits, and to amend its actual price cap index and service band indices." These changes were required to reflect the exogenous adjustment for the $0.19 change to Maritime Tel & Tel Limited's network access service monthly rates as directed in paragraph 6 of Order 2001-434.

14.

On 13 June 2001, Aliant Telecom filed modified amalgamated indices in response to this order. Aliant Telecom stated that it received no questions from the Commission on the revised amalgamated indices. According to Aliant Telecom, if the Commission did not accept the amalgamated Aliant Telecom indices, it would have, within a reasonable timeframe, identified to Aliant Telecom that its filing did not satisfy its requirements.

Island Telecom Inc. TN 554

15.

On 5 June 2001, Aliant Telecom filed Island Telecom Inc. TN 554 requesting an increase to the monthly rate for individual line residence primary exchange service. In support of that filing, Aliant Telecom submitted revised amalgamated price cap indices to reflect the proposed rate increase.

16.

Aliant Telecom again noted that it did not receive any questions from the Commission on the calculation of the price cap indices associated with this application.

17.

The Commission approved the application in Order CRTC 2001-484, dated 21 June 2001, and made no mention of any requirement for any additional price cap indices information.

Decision CRTC 2001-372

18.

In Decision CRTC 2001-372, dated 22 June 2001, the Commission denied Aliant Telecom's request for exogenous treatment of the additional costs incurred in Newfoundland and Labrador to advance Aliant Telecom's construction plan. The Commission directed Aliant Telecom to re-file the price cap index and its sub-basket limits to exclude the exogenous factor associated with the advancement of the Newfoundland and Labrador Network Enhancement Plan.

19.

In response to this decision, on 28 June 2001, Aliant Telecom filed revised amalgamated indices to reflect the directions in the decision.

20.

Aliant Telecom again noted that it received no questions or commentary from the Commission on the revised amalgamated indices.

21.

In its 28 June 2001 submission, Aliant Telecom also noted the Commission's letter of 10 March 1999, concerning the amalgamated TELUS Communications Inc. (TCI) and TELUS Communications (Edmonton) Inc. (TCEI) price cap indices. According to Aliant Telecom, in that letter, even though the Commission expressly noted that TCI's costs could be recovered from TCEI's customers, it approved the amalgamation.

Commission determinations

22.

The Commission notes that prior to issuing its letter of 10 March 1999, it conducted a public proceeding to determine when and how the regulatory rules and regimes that were established separately for TCI and TCEI should be combined. In its 10 March 1999 letter, the Commission included the condition that TCEI could not increase its rates by more than 10%, notwithstanding that, under the amalgamated price cap indices, there would be room to increase the TCEI rates by more than 10%.

23.

The existing price cap regime does not allow for amalgamated price cap indices for the individual pre-Aliant Telecom companies. No order or decision has been issued by the Commission approving Aliant Telecom's use of amalgamated price cap indices.

24.

In all the instances cited above by Aliant Telecom involving price increases, the Commission was satisfied that Aliant Telecom had, in fact, complied with individual price cap indices.

25.

However, with respect to TNs 657, 862 and 865, in the Commission's view, the amalgamation of the company-specific indices at this time would provide additional pricing flexibility to Aliant Telecom beyond that which is allowed under the current price cap regime.

26.

The Commission notes that the issue of price cap amalgamation is being considered in the price cap review proceeding.

27.

In view of the foregoing, if Aliant Telecom wishes the Commission to consider further TNs 657, 862 and 865, or any other tariff filing that has been filed on an amalgamated basis, Aliant Telecom is directed to submit individual price cap indices within 15 days of the date of this decision. In addition, when filing a tariff application requiring the inclusion of price cap indices, Aliant Telecom is directed to submit individual price cap indices.

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