ARCHIVED - Telecom Order CRTC 2002-384

Telecom Order CRTC 2002-384

Ottawa, 24 September 2002

Interim rates for Access Tandem service and Direct Connection service

Reference: 8638-C12-62/02, 8638-C12-67/02, 8740-T42-0494/02 et 8740-T46-4182-/02

In this decision, the Commission approves on an interim basis revised direct connection and access tandem rates, retroactive to 1 June 2002.

In Regulatory Framework for Second Price Cap Period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34), the Commission expressed the preliminary view that the incumbent local exchange carriers (ILECs) should adopt rates for direct connection (DC) service equal to the Phase II costs of providing that service plus a 15% mark-up (the proposed DC rates). In that decision, the Commission initiated a proceeding calling for comments on its preliminary view (the DC proceeding).

In Decision 2002-34, the Commission also directed the ILECs to file updated cost studies and revised rates for access tandem (AT) service, and initiated a proceeding to allow parties to comment on the ILECs' updated cost studies and revised AT rates (the AT proceeding).

In Decision 2002-34, the Commission determined that the current rates for DC service and AT service were to be made interim, effective 1 June 2002.

In the DC proceeding, the Commission received comments from Aliant Telecom Inc., Bell Canada, MTS Communications Inc. and Saskatchewan Telecommunications (collectively, the companies), AT&T Canada Corp. and AT&T Canada Telecom Services Company (collectively, AT&T Canada), Call-Net Enterprises Inc. (Call-Net), Microcell Telecommunications Inc. (Microcell), Rogers Wireless Inc. and TELUS Communications Inc. (TCI).

The companies and TCI filed updated cost studies and revised AT rates as directed in Decision 2002-34. In a Commission letter dated 6 August 2002, the AT proceeding was extended to allow interrogatories and requests for disclosure and further responses to interrogatories. The Commission received comments from AT&T Canada, Call-Net, GT Group Telecom Services Inc. (Group Telecom), the companies and TCI.

Positions of the parties

Direct connection service rates

In its comments, Call-Net noted that the proposed DC rates were based on cost studies that had not been subject to detailed scrutiny. Call-Net argued that the ILECs' Phase II costs were overstated and should not be used to establish the final DC rates. In this regard, Call-Net identified a number of shortcomings in the cost studies and argued that immediate reductions of 20 to 30% to the proposed DC rates were required. Call-Net requested that the Commission approve these rate reductions on an interim basis, effective as of 1 June 2002.

AT&T Canada noted that the proposed DC rates were based on the ILECs' own estimates of their Phase II costs. AT&T Canada submitted that, pending a full review of the ILECs' cost studies, the proposed DC rates should only be approved on an interim basis.

In reply, the companies and TCI denied that there were any shortcomings in their cost studies as alleged by Call-Net and AT&T Canada. The companies and TCI submitted that Call-Net's proposal for reductions in the proposed DC rates should be rejected.

On 19 July 2002, Call-Net requested that the Commission direct the companies to file, within 10 days, tariff applications reflecting the revised AT rates filed by them in response to Decision 2002-34 and that it approve these applications on an expedited basis. Call-Net also requested that the Commission approve, on an expedited basis, the revised AT rates filed by TCI under tariff notices 494 and 4182.

Call-Net noted the revised AT rates were significantly lower than the current AT rates and submitted that it was extremely important to implement these lower rates as soon as possible in order to avoid significant billing adjustments in the future. Call-Net requested that the revised AT rates be approved on an interim basis, effective 1 June 2002. AT&T Canada and Group Telecom supported Call-Net's request for expedited interim approval of the revised AT rates.

In reply, the companies and TCI opposed the interim approval of the revised AT rates on a retroactive basis, as this would cause them to incur additional processing costs. In this regard, the companies and TCI explained that a retroactive interim approval would require them to make two retroactive adjustments since, pursuant to Decision 2002-34, the final rates are also to be applied retroactively.

Commission analysis and determination

The Commission notes that the record in the AT proceeding will not close until 28 February 2003. The Commission also notes that a number of costing issues raised by the parties in the DC proceeding will require further examination.

The Commission notes that the proposed DC and the revised AT rates are lower than the current DC and AT rates, and significantly so, for most ILECs. While the Commission recognizes that the ILECs will incur additional processing costs if it grants interim approval to the proposed DC and the revised AT rates retroactive to 1 June 2002, it considers that such approval will enhance competition in the inter-exchange market.

The Commission however considers that, in the absence of supporting cost information, it would not be appropriate to reduce the proposed DC rates by 20 to 30%, as suggested by Call-Net.

In light of the above, the Commission approves on an interim basis, retroactive to 1 June 2002, the proposed DC rates and the revised AT rates, including those set out in TCI Tariff Notices 492 and 4184. The applicable interim rates are, therefore, as follows:

AT and DC rates, based on connection time

Company

AT rate
per connection minute, per end

DC rate
per connection minute, per end

Aliant Telecom - New Brunswick

$0.00392

$0.00267

Aliant Telecom - Newfoundland

$0.00554

$0.00131

Aliant Telecom - Nova Scotia

$0.00404

$0.00216

Aliant Telecom - Prince Edward Island

$0.00330

$0.00219

Bell Canada

$0.00152

$0.00128

MTS

$0.00411

$0.00276

SaskTel

$0.00414

$0.00439

TCI - Alberta

$0.00224

$0.00214

TCI - British Columbia

$0.00230

$0.00185

The Commission directs the companies and TCI to issue, forthwith, revised tariff pages reflecting the rates for the AT service indicated above, with an effective date of 1 June 2002.

The Commission further directs the companies and TCI to issue, forthwith, revised tariff pages reflecting the rates for the DC service indicated above, with an effective date of 1 June 2002.

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