ARCHIVED - Telecom Order CRTC 2002-412

Telecom Order CRTC 2002-412

Ottawa, 31 October 2002

Revised interim rates for Access Tandem service

Reference: 8638-C12-67/02

In this decision, the Commission approves, on an interim basis, revised access tandem rates, retroactive to 1 June 2002, for Aliant Telecom Inc., Bell Canada, MTS Communications Inc., and Saskatchewan Telecommunications.

1.

The Commission received an application by Aliant Telecom Inc. (Aliant Telecom), Bell Canada, MTS Communications Inc. (MTS), and Saskatchewan Telecommunications (SaskTel) (collectively, the Companies), dated 4 October 2002, to lower the access tandem (AT) rates that were approved, on an interim basis, in Interim rates for Access Tandem service and Direct Connection service, Telecom Order CRTC 2002-384, 24 September 2002 (Order 2002-384).

2.

No comments were received with respect to this application.

3.

In their application, the Companies submitted that there were certain errors in the Phase II cost studies that formed the basis for the interim AT rates approved in Order 2002-384 (the interim AT rates). The Companies noted that the correction of these errors would result in lower Phase II costs of AT services.

4.

In particular, the Companies identified four problems with their Phase II cost studies. First, they indicated that the capital costs for switching had been miscalculated for Aliant Telecom, Bell Canada and SaskTel. Second, they noted that Aliant Telecom's capital costs had not adequately reflected the price discounts available to the company for equipment. Third, they acknowledged that for Aliant Telecom and MTS some capital unit costs had been inadvertently applied to the wrong demand driver, resulting in an overstatement of capital cash flows. Fourth, the Companies noted that SaskTel's operating expenses had been overestimated due to a misinterpretation of its activity-based costing data.

5.

In their application, the Companies provided a new Phase II cost study that corrected these errors. Consequently, the Companies requested reductions to the existing interim AT rates.

Commission analysis and determination

6.

The Commission notes that in Regulatory Framework for Second Price Cap, Telecom Decision CRTC 2002-34, 30 May 2002, it initiated a process to review the AT service rates (the AT proceeding). The Commission further notes that the AT proceeding is ongoing and that the Phase II cost study submitted in support of this application will be evaluated in that proceeding.

7.

In Order 2002-384, the Commission, in approving the interim AT rates, noted that the record in the AT proceeding would not close until 28 February 2003. However, the Commission found that the proposed AT rates were significantly lower and that a reduction of the rates on an interim basis would enhance competition in the inter-exchange market.

8.

The Commission notes the revised interim AT rates proposed in this application for each of the Companies are lower than the interim AT rates approved in Order 2002-384. The Commission considers that approval of the revised interim AT rates would translate into additional cost savings to toll competitors operating in the territories of Aliant Telecom, Bell Canada, MTS and SaskTel.

9.

Consistent with its determination in Order 2002-384, the Commission considers that the revised interim AT rates should be effective 1 June 2002.

10.

In light of the above, the Commission approves on an interim basis, retroactive to 1 June 2002, the revised AT rates set out below:

AT rates, based on connection time

Company

AT rate per connection minute, per end

Aliant Telecom - New Brunswick

$0.00099

Aliant Telecom - Newfoundland

$0.00142

Aliant Telecom - Nova Scotia

$0.00133

Aliant Telecom - Prince Edward Island

$0.00078

Bell Canada

$0.00148

MTS

$0.00167

SaskTel

$0.00246

11.

The Commission directs the Companies to issue revised tariff pages forthwith reflecting the rates for the AT 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