ARCHIVED - Telecom Decision CRTC 2003-12

Telecom Decision CRTC 2003-12

Ottawa, 18 March 2003

See also: 2003-12-1

Rates for co-location floor space, Direct Connection service, Wireless Access Service: Line-side Access services, and Wireless Service Providers Enhanced Provincial 9-1-1 Network Access service

Reference: 8638-C12-62/02

In this decision, the Commission approves revised rates for co-location floor space, Bell Canada's line-side wireless access service (WAS) telephone number rate and wireless service provider enhanced provincial 9-1-1 network access service. This decision also initiates proceedings to review the costs and rates for the Direct Connection service and line-side WAS for Aliant Telecom Inc., MTS Communications Inc., Saskatchewan Telecommunications, and TELUS Communications Inc.

Introduction

1.

In Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34, the Commission reduced the mark-up on Phase II costs included in the rates for Category I Competitor Services from 25% to 15%. The Commission found that a 15% mark-up on these services' Phase II costs, that were subject to mandated cost-based pricing, would provide sufficient contribution towards the recovery of that incumbent local exchange carrier's (ILEC's) fixed common expenses and the embedded cost differential.

2.

In Decision 2002-34, the Commission provided its preliminary view with respect to rates for each of the following services:

The Commission established a process to provide parties with the opportunity to comment on the Commission's preliminary views.

3.

In addition, the Commission made all tariff rates interim, effective 1 June 2002, with the expectation that any rate changes to the Category I Competitor Services rates would become effective retroactive to that date.

4.

Comments were filed on 2 July 2002 by Bell Canada, Aliant Telecom Inc. (Aliant Telecom), MTS Communications Inc. (MTS), Saskatchewan Telecommunications (SaskTel) (collectively, the Companies), TCI, Call-Net Enterprises Inc. (Call-Net), AT&T Canada Corp., on behalf of itself and AT&T Canada Telecom Services Inc. (collectively, AT&T Canada), Microcell Telecommunications Inc. (Microcell), and Rogers Wireless Inc. (RWI).

5.

The Companies and TCI filed reply comments on 15 July 2002.

Co-location floor space rates

Background

6.

The Commission, in Decision 2002-34, expressed its preliminary view that it would be appropriate to use the floor space rate of $14.90 per square metre, based on MTS' Phase II costs plus a 15% mark-up, for each ILEC. The Commission considered that this rate would recover each ILEC's Phase II costs and would provide sufficient contribution to aid in the recovery of each ILEC's fixed common costs and embedded costs. The Commission also noted that the floor space rates adopted for TCI in Alberta included use of the required bay space. The Commission additionally expressed the preliminary view that TCI's half-bay floor space rates in Alberta should be revised to $12.95 for Category I, $10.36 for Category II, and $6.48 for Category III.

Parties' comments

Call-Net

7.

Call-Net stated that the Commission's use of MTS' Phase II costs as a proxy for other ILECs implicitly assumed the presence of alternative uses for the ILEC's vacant central office (CO) floor space. Call-Net submitted that in Co-location, Telecom Decision CRTC 97-15, 16 June 1997 (Decision 97-15), the Commission concluded that the ILECs had vacant CO floor space with no alternative uses.

8.

Call-Net submitted that, based on the ILECs' submissions in the proceeding leading to Decision 97-15, the fixed common costs associated with floor space had two components, the embedded costs of land and buildings and the operating expenses. Call-Net submitted that neither the embedded cost of land and buildings nor the operating expenses were causal to co-location floor space. Call-Net proposed that floor space rates for ILECs other than MTS be based on the operating expenses per metre filed in the proceeding leading to Decision 97-15. Call-Net argued that, in this way, the floor space rates would make a contribution towards the fixed and common costs based on the entrants' usage of floor space. In Call-Net's view, the entrants' usage of floor space would have no effect on the amount of those operating expenses. Call-Net further submitted that a zero-mark-up on the operating expenses would be appropriate in determining floor space rates, since rates based on operating expenses would already consist entirely of fixed common cost recovery.

9.

Call-Net proposed, with respect to TCI, that the rate for a half-bay be based on the sum of the operating expenses per one-half square metre, plus the bay costs (plus 15% mark-up) per one-half square metre as a full bay occupied approximately one square metre.

10.

Call-Net submitted, with respect to MTS, that the Phase II costs plus a 15% mark-up would be appropriate.

AT&T Canada

11.

AT&T Canada argued that the Commission's preliminary view on floor space rates should represent the upper limit as to what should be charged for co-location floor space. AT&T Canada submitted that the proposed rates were based on the costs MTS filed during the proceeding leading to Decision 97-15 and reflected vacant CO space that was used as office space. AT&T Canada argued that CO floor space was not suited for office space without substantial modification and, as such, MTS' incremental costs estimates could be over-inflated. AT&T Canada submitted that if the proposed rates were based on the Commission's preliminary view, they would still be too high as there were no incremental costs to the ILEC associated with leasing this space.

TCI

12.

TCI stated that it had proposed tiered half-bay rates for its virtual co-location arrangements in the proceeding leading to Decision 97-15. TCI stated that when it filed its physical co-location tariffs for Alberta pursuant to Decision 97-15 it had included, in error, its tiered half-bay rate structure. TCI further stated that no carrier had ever been charged these half-bay rates for any physical co-location arrangement.

13.

TCI submitted that using the Alberta tiered half-bay rates set out in Decision 2002-34 would in effect allow full bay rates to exceed the physical co-location floor space rates of $14.90 per square metre with the exception of Category III space. TCI submitted that the concept of this tiered rate structure was contrary to the rationale for establishing a cost-based approach for physical co-location floor space. TCI proposed to file revised tariff pages that would reflect the floor space rate of $14.90 per square metre for both physical and virtual co-location arrangements in Alberta and British Columbia.

14.

TCI also noted that it planned to file an amendment to its physical and virtual co-location tariffs to discontinue the tiered rate structure in Alberta.

The Companies

15.

The Companies stated that while the Commission's preliminary rate of $14.90 per square metre might serve as a suitable proxy for cost recovery purposes, a more appropriate basis for determining future rental rates would be to use market-based rates for equivalent floor space in each ILEC's territory. The Companies argued that it would be more appropriate to establish co-location floor space rates based on marketplace rates for floor space associated with buildings used to house data centres, carrier switching centres, carrier hotels and other similar applications. The Companies submitted that these types of buildings would have the characteristics that facilitate co-location such as high security surroundings, high load bearing construction, uninterrupted power supply and high performance heat, ventilation, and air conditioning systems.

16.

The Companies submitted that co-location floor space rates set in consideration of commercially available alternatives would provide a more accurate reflection of the cost co-location users should incur for access to CO space. The Companies additionally stated that setting ILEC-specific rates based on these alternatives would help encourage the growth of carrier hotels.

TCI's reply

17.

TCI submitted that the Commission should reject Call-Net's and AT&T Canada's assertions that there was no cost for CO floor space. TCI indicated that like MTS, it had alternate uses for CO floor space for training centres, conference rooms, and call centres. TCI submitted that there were incremental costs associated with providing CO floor space for co-location. TCI indicated that it had provided its space planning information to inter-exchange carriers, which identified the amount of space occupied for non-central office functions, in compliance with The Coalition for Better Co-location - Part VII application for general relief with respect to the co-location regime, Order CRTC 2001-780, 26 October 2001.

18.

TCI reiterated its intention to file revised tariff pages to reflect the floor space rate of $14.90 per square metre for both physical and virtual co-location arrangements in Alberta and British Columbia and to amend its physical and virtual co-location tariffs in order to discontinue its tiered rate structure in Alberta.

The Companies' reply

19.

The Companies submitted that Call-Net's proposal was flawed because floor space rates should be estimated based on the market rate or opportunity cost. The Companies disagreed with Call-Net's contention that there was a lack of alternative use for CO floor space. Additionally, the Companies noted that Call-Net's proposal was based on expense estimates from a seven-year old study and argued that, given the age of these estimates, it would be inappropriate to use them to determine the rates for co-location floor space.

20.

The Companies submitted that the Commission should retain the floor space rental prices established in Decision 97-15. In the alternative, the Companies submitted that, if the Commission found the market-based rate for Manitoba of $14.90 per square metre to be appropriate, the Commission should also apply the market-based approach for the other ILECs. The Companies further submitted that floor space rates for these other ILECs should be determined based on market-based rates in each ILEC's territory. The Companies proposed that until market-based rates for each ILEC's territory were determined, the floor space rates should be based on Decision 97-15 rates less 8%, for each ILEC.

Commission's findings and determinations

21.

The Commission notes that its preliminary view that the floor space rate should be $14.90 per square metre was developed based on MTS' floor space rates approved in Decision 97-15 less 8%. This equated to MTS' Phase II cost estimate provided in the proceeding leading to Decision 97-15 plus a 15% mark-up. MTS' Phase II cost estimate was established based on comparable rental floor space rates for similar quality space and included the associated operating expenses. In that proceeding, in contrast with the other ILECs, MTS indicated that it had adopted the practice of moving its personnel into vacant central office space and, accordingly, the use of CO floor space would cause the company to acquire floor space elsewhere in the company at market-based rates.

22.

The Commission concluded in Decision 97-15 that, with the exception of MTS, ILECs generally had vacant CO floor space with no alternative uses, and accordingly, the Phase II costs associated with the use of this floor space for co-location purposes would be zero.

23.

The Commission notes that in this proceeding, while proposing the adoption of market-based floor space rates for each ILEC based on comparable alternatives, except for MTS, the Companies did not present evidence to support any change to the Commission's initial finding in Decision 97-15 that the causal cost associated with CO floor space was generally zero.

24.

The Commission notes that TCI indicated that, consistent with MTS, it had alternative uses for CO floor space, and would incur incremental costs as a result of providing CO floor space for co-location. The Commission notes, however, that TCI indicated that it had no objection to using the Commission's preliminary proxy rate of $14.90 per square metre.

25.

The Commission considers, based on the record of this proceeding, that the causal costs associated with the use of vacant CO floor space for all ILECs, except MTS and TCI, is generally zero. The Commission, however, considers that an appropriate contribution is required for the use of CO floor space.

26.

The Commission considers that the floor space rate of $14.90 per square metre, reflecting MTS' Phase II cost plus a 15% mark-up, would provide each ILEC an appropriate compensation for the use of vacant CO floor space, including the associated operating expenses. The Commission notes that this floor space rate should further be subject to the I-X constraint, consistent with the directive set out in Decision 2002-34. The Commission therefore approves the floor space rate of $14.56 per square metre, retroactive to 1 June 2002, for each ILEC.

27.

The Commission notes, with respect to TCI's floor space rates, that the half-bay rates for physical co-location service were never used in Alberta. The Commission therefore finds appropriate TCI's proposal to withdraw the tiered half-bay rate structure for purposes of physical co-location service in Alberta.

28.

The Commission notes TCI's proposal to withdraw the tiered half-bay rate structure for virtual co-location service in Alberta. The Commission notes that these tiered half-bay rates are currently used for virtual co-location arrangements in Alberta and that its preliminary view of the half-bay rates set out in Decision 2002-34 reflects the floor space rate for a half-square metre along with the estimated bay costs for a half-square metre plus a 15% mark-up, which is consistent with Decision 97-15 rates for virtual co-location arrangements. The Commission therefore considers it inappropriate for TCI to withdraw the tiered half-bay rate structure for virtual co-location service in Alberta. The Commission considers its preliminary view of half-bay rates for TCI-Alberta, as set out in paragraph 237 of Decision 2002-34, less the I-X constraint to be appropriate. Accordingly, the Commission approves half-bay rates for TCI-Alberta of $12.66 for Category I, $10.13 for Category II and $6.33 for Category III, effective 1 June 2002.

29.

The Commission directs each ILEC to issue, forthwith, revised tariff pages reflecting the above changes to the co-location floor space rates, with an effective date of 1 June 2002. The Commission further directs each ILEC to provide all customers affected by these rate reductions with rebates forthwith.

DC Service

Background

30.

In Decision 2002-34, the Commission expressed its preliminary view that it would be appropriate to adopt revised DC service rates for each ILEC based on updated Phase II costs plus a 15% mark-up. The Commission further indicated that it would be appropriate to base the revised DC service rates on the DC Phase II cost estimates received from the ILECs in the year 2000 (the 2000 DC service cost studies). The Commission considered that these rates would recover each ILEC's Phase II costs and would provide sufficient contribution to aid in the recovery of each ILEC's fixed common costs and embedded costs.

Position of parties

Call-Net's comments

31.

Call-Net stated that the 2000 DC service cost studies, provided by the ILECs in their 28 January 2000 DC rate proposal, were not subject to the same level of detailed scrutiny as that to which the loop and primary exchange service (PES) cost studies had been subject. Call-Net submitted that adjusting the mark-up from 25% to 15% would not ensure that rates would reflect cost-based rates.

32.

Call-Net stated that it was not sure whether accounting or economic equipment lives had been used in the 2000 DC service cost studies. Call-Net noted that in Restructured bands, revised loop rates and related issues, Decision CRTC 2001-238, 27 April 2001 (Decision 2001-238) and Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000 (Decision 2000-745), the Commission had endorsed the use of approved accounting lives. Call-Net submitted that accounting lives should also apply to the DC service costs. Call-Net argued that if the equipment lives used in the DC service cost studies were based on economic lives and not the Commission's approved accounting lives, the DC costs would be overstated.

33.

Call-Net indicated that TCI's DC service cost studies did not include a productivity offset and hence should be subject to the productivity offset of I-X established in Decision 2002-34 for Category I Competitor Services that do not explicitly incorporate productivity gains. Call-Net further submitted that, in setting TCI's DC rates to be effective 1 June 2002, it would be necessary to modify the 2000 costs for two and a half years of productivity gains (i.e., from January 2000 to June 2002).

34.

Call-Net stated that the 2000 DC service cost studies and the record of the proceeding leading to Decision 2001-238 suggested that traffic sensitive costs of certain remotes and host-remote links were included in both the unbundled loop service and DC service cost studies. Call-Net submitted that, as a result, there would be double-recovery of these costs. Call-Net further submitted that if such costs were included in the loop costs, they would also be recovered by retail exchange service rates, and should therefore be excluded from the costs used to set DC service rates.

35.

Call-Net argued that further examination of the costing data should be required before the Commission established final DC service rates. Call-Net submitted, however, that such a review should not be permitted to delay the implementation of those DC rate reductions indicated by its analysis. Call-Net argued that based on past experience, any such examination would likely take months to conclude. Call-Net submitted that immediate reductions in the order of 20% to 30% to the DC service rates would be appropriate.

Microcell's comments

36.

Microcell submitted that it supported the Commission's preliminary view that the mark-up on the DC service rates should be reduced to 15% across all ILECs. Microcell stated that it was not in a position to comment on the validity of the Phase II costs used to determine these rates.

AT&T Canada's comments

37.

AT&T Canada submitted that in the recent proceeding associated with Trunking Arrangements for the Interchange of traffic and the point of interconnection between local exchange carriers, Public Notice CRTC 2001-126, 19 December 2001 (PN 2001-126), it had proposed that the local and toll interconnection regimes be harmonized. AT&T Canada further submitted that while lower DC rates were appropriate and the DC rates proposed by the Commission in Decision 2002-34 would bring the rates closer to cost, it continued to support its proposal as set out in the PN 2001-126 proceeding. AT&T Canada noted that the rates proposed by the Commission reflected the ILECs' own cost estimates plus a 15% mark-up. AT&T Canada submitted that these rates should therefore be considered the upper bound and should remain interim pending a full review of the ILECs' cost studies.

TCI's comments

38.

TCI submitted that in the proceeding initiated by PN 2001-126, it had proposed an alternative interconnection regime whereby the end-office termination rate would exclude the transport costs from a host switch to a remote switch and the associated switching costs. TCI stated that under its proposal, local service rates would have to be adjusted to include the above-mentioned costs that would be excluded from the DC charges.

39.

TCI further submitted that, if its proposed interconnection regime was accepted, it would file new costing information and proposed rates for both DC and local services. TCI also submitted that in the absence of an adjustment to local service rates, TCI would file a tariff notice in accordance with the Commission's preliminary view with respect to DC rates.

TCI's reply

40.

TCI stated that economic lives had been used in the 2000 DC service cost studies. TCI submitted that this was consistent with the procedures generally prescribed for Phase II studies. TCI argued that accounting lives were adopted in cost studies only where the Commission explicitly ordered the use of accounting lives as in the case of the unbundled loop cost studies. TCI further argued that, in respect of its 2000 DC service cost study, the Commission had made its decision knowing that the economic lives had been used by TCI.

41.

Regarding Call-Net's allegation that productivity was not included in the 2000 DC service cost study, TCI argued that it had included capital productivity gains by using growth technology costs. TCI submitted that in the case of expenses, explicit productivity adjustments had been made, as required, for specific cost changes such as those for process improvements and also for general productivity changes.

42.

TCI submitted that the Commission, in Decision 2002-34, had noted that Category I Competitor Services should reflect productivity gains on a going-forward basis but not retroactively as Call-Net suggested.

43.

TCI also argued that it had not included the same costs in the DC and unbundled loop rates. TCI submitted that the costs of a host-remote link for an access remote were included in the unbundled loop rates and the costs associated with a host-remote link for a switching remote were included in the DC rates.

44.

TCI argued that the Commission should reject Call-Net's request for further reductions to the DC rate as Call-Net was rearguing its position in the proceeding leading to Decision 2002-34 for rate reductions in respect of all competitor services, which was rejected by the Commission.

The Companies' reply

45.

The Companies submitted that Call-Net's request to reduce DC service costs and to alter equipment lives should be rejected. The Companies submitted that they disagreed with Call-Net's claim that the Commission's preliminary view concerning DC rates was incorrect and that the DC rates should be lowered further. The Companies stated that the Commission had all the parameters used by the Companies to develop the DC costs on which the preliminary DC rates were determined. The Companies submitted that the Commission had assessed the reasonableness of all the parameters used, including equipment lives, to determine the DC costs.

46.

The Companies submitted that Call-Net's assertion that certain loop costs were included in the DC costs was wrong and should be rejected. The Companies stated that, for the most part, the facilities used for loops were different than those used to provide the DC functionality. The Companies submitted that, in the case of the umbilical between the central office and its remotes, the facility provided both unbundled local loop and DC functionality. In such cases, the DC functionality considered long distance traffic and the unbundled local loop excluded facilities associated with long distance traffic.

47.

The Companies stated, in respect of TCI's comments concerning alternative interconnection regimes, that their proposals on this matter had been detailed at length in the proceeding initiated by PN 2001-126.

Commission's findings and determinations

48.

The Commission notes that the DC service rates set out in paragraph 242 of Decision 2002-34 were approved on an interim basis, retroactive to 1 June 2002, in Interim rates for Access Tandem service and Direct Connection service, Telecom Order CRTC 2002-384, 24 September 2002 (Order 2002-384). The Commission notes that these rates reflect the 2000 DC service cost studies plus a 15% mark-up and represent reductions from the previously-approved uniform DC rate of $0.003 per-minute-end.

49.

The Commission notes, however, that the 2000 DC service cost studies were not subject to the normal level of scrutiny by parties and the Commission.

50.

The Commission notes that the 2002 revised cost studies filed by the ILECs on 9 December 2002 and 16 December 2002 associated with the Access Tandem (AT) service, in the context of the current AT proceeding initiated pursuant to paragraph 251 of Decision 2002-34, had significant cost decreases when compared to the initial 1996 cost studies (filed in the proceeding leading to Unbundled Rates to Provide Equal Access, Telecom Decision CRTC 97-6, 10 April 1997). The Commission further notes that the current cost relationships between the DC costs submitted in the 2000 service cost studies and the AT costs submitted in the recent 2002 cost studies are significantly different from the initial cost relationships between these two services as reported in the 1996 cost studies. The Commission is, therefore, unable to determine at this time whether the ILECs' proposed 2000 DC cost estimates reflect the appropriate current costs for the DC service.

51.

In light of the above, the Commission considers it appropriate to initiate a detailed review of the updated DC service costs for each ILEC. Accordingly, the Commission directs each ILEC to file revised cost studies associated with the DC service, within 60 days of this decision.

52.

The Commission does not, however, consider it appropriate to adopt immediate reductions for the DC service rates, as suggested by Call-Net. The Commission notes that lower DC rates have just recently been adopted on an interim basis. In the event that the DC rates are modified at the end of the DC review proceeding, they may be approved retroactively to as early as 1 June 2002.

53.

The Commission notes, in respect of TCI's and AT&T Canada's comments concerning alternative interconnection regimes, that these proposals are being addressed in the context of the proceeding initiated by PN 2001-126.

54.

In respect of Call-Net's request to subject TCI's DC charges to the I-X constraint on a going-forward basis, the Commission has reviewed TCI's 2000 DC service cost study, as filed in Attachment 1 to the response to interrogatory TELUS(CRTC)05Jan00-11, and finds no evidence to indicate that explicit productivity gains were included in that study. The Commission therefore approves the DC rates set out in paragraph 242 of Decision 2002-34, as adjusted for the I-X constraint, i.e., $0.00209 per minute-end for TCI-Alberta and $0.00181 per minute-end for TCI-B.C., retroactive to 1 June 2002. The corresponding changes to Appendix I of Decision 2002-34 will be reflected in Follow-up to Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34 - Service basket assignment, Telecom Decision CRTC 2003-11
issued today.

55.

The Commission directs TCI to issue, forthwith, revised tariff pages reflecting the above changes to its DC rates, with an effective date of 1 June 2002. The Commission further directs TCI to provide all customers affected by these rate reductions with rebates forthwith.

WAS: Line-side Access services

56.

The Commission, in Decision 2002-34, set out its preliminary view regarding
Bell Canada's telephone number rates applicable to both line-side WAS Access telephone number service and paging/TNA services (collectively, line-side WAS). This preliminary view was based on Bell Canada's Phase II costs estimates filed in support of Tariff Notice (TN) 5903, plus a 15% mark-up. The Commission considered that these rates would recover Bell Canada's Phase II costs and would provide sufficient contribution to aid in the recovery of Bell Canada's fixed common costs and embedded costs.

57.

In its comments, RWI submitted that it agreed with the Commission's preliminary view regarding Bell Canada's revised rates for line-side WAS. RWI requested that the Commission require the other ILECs to file revised line-side WAS rates with supporting Phase II cost studies plus a mark-up of no greater than 15%. RWI argued that this would be consistent with the Commission's preliminary view regarding Bell Canada's line-side WAS rates.

58.

The Commission notes that Bell Canada did not provide comments with respect to the Commission's preliminary view regarding the revised line-side WAS rates. The Commission notes that Bell Canada's line-side WAS cost study filed in support of TN 5903 did not explicitly reflect productivity gains. The Commission therefore considers it appropriate to adopt the revised line-side WAS rates for Bell Canada as set out in paragraph 244 of Decision 2002-34, but adjusted for the I-X constraint. The Commission approves revised line-side WAS rates for Bell Canada of $0.0580 per active number and $0.0150 per reserved number, retroactive to 1 June 2002.

59.

The Commission directs Bell Canada to issue, forthwith, revised tariff pages reflecting the above changes to its line-side WAS rates, with an effective date of 1 June 2002. The Commission further directs Bell Canada to provide all customers affected by these rate reductions with rebates forthwith.

60.

The Commission notes that in Telecom Order CRTC 97-1961, 30 December 1997, (Order 97-1961) the Commission approved, on an interim basis, the use of TCI-Alberta's line-side WAS rates for TCI-B.C., MTS, Aliant Telecom-Nova Scotia, and Aliant Telecom-Newfoundland. Interim line-side WAS rates were also approved for Aliant Telecom-P.E.I. pursuant to this order. In Order 97-1961, the Commission noted the evidence filed in the proceeding initiated by Bell Canada TN 5903. This evidence indicated that significant cost reductions associated with the provision of network and number elements for the wireless access service had occurred due to the digital evolution of the network, the deployment of fibre optics and updated traffic assumptions. The Commission considers that further cost reductions associated with the provision of network and number elements for the wireless access service have likely occurred over the past five years, since the issuance of Order 97-1961.

61.

The Commission further notes that Bell Canada's line-side WAS telephone number and access channel service rates approved in this decision are considerably lower than those of other ILECs. For example, Bell Canada's approved line-side WAS telephone number rate is $0.0593 per active number, while the other ILECs' rates for the same rate element are all at $0.14 per active number or higher.

62.

In light of the above, the Commission considers that the line-side WAS rates for Aliant Telecom, MTS, SaskTel and TCI no longer reflect Phase II costs plus a 15% mark-up. The Commission considers, on a preliminary basis, that it would be appropriate to adopt Bell Canada's line-side WAS telephone number and access channel service rates approved in this decision for these ILECs in the absence of new cost studies. The Commission directs each of Aliant Telecom, MTS, SaskTel and TCI to show cause within 20 days from the date of this decision why each company should not adopt Bell Canada's rates for line-side WAS telephone number and access channel service rates approved in this decision. In the alternative, each of Aliant Telecom, MTS, SaskTel and TCI can indicate within 20 days from the date of this decision that it will file updated cost studies in support of revised cost-based line-side WAS telephone number and access channel service rates. Any such study, along with the proposed revised rates, is to be filed within 90 days of the date of this decision.

63.

The Commission notes that if Bell Canada's rates are adopted for Aliant Telecom, MTS, SaskTel and TCI, each of these ILECs would, similar to Bell Canada, be permitted to recover the associated revenue losses through the form of a draw-down on the deferral account.

Wireless Service Provider Enhanced Provincial 9-1-1 Network
Access Service

64.

The Commission expressed, in Decision 2002-34, its preliminary view that it would be appropriate to adopt the rate of $0.0263 per wireless telephone number for TCI's Wireless Service Provider (WSP) Enhanced Provincial 9-1-1 network access service in both Alberta and British Columbia. The Commission indicated that TCI's rate for this service, if based on Phase II costs plus a 15% mark-up, would be no more than $0.0263 per wireless telephone number.

65.

In its comments, Microcell submitted that it agreed with the Commission's preliminary view that the mark-up on the WSP Enhanced Provincial 9-1-1 service for TCI should be reduced from 25% to 15%. Microcell argued that this would bring the mark-up in line with the Commission's new mandated mark-up on similar near-essential Competitor services. Microcell requested confirmation that the Commission's new rate of $0.0263 per network access service (NAS) was based on the original Phase II cost plus a mark-up of 15%.

66.

In its comments, RWI submitted that it supported the Commission's preliminary views regarding the WSP Enhanced Provincial 9-1-1 service rate of $0.0263 per NAS which was based on Phase II costs plus a mark-up of 15%. RWI requested the Commission to direct Bell Canada to revise its WSP Enhanced Provincial 9-1-1 service rate if it was based on Phase II costs plus a mark-up greater than 15%, and to provide a supporting cost study.

67.

In its comments, TCI submitted that on 7 March 2002, it filed Tariff Notice 41 for the Commission's approval which proposed the amalgamation of TCI General Tariff CRTC 18001 item 570 and TCBC General Tariff CRTC 1005 item 197-C into a new tariff, TCI General Tariff CRTC 21461 item 201. TCI further indicated that it would file proposed rate reductions as directed in Decision 2002-34, and would subsequently file amendments to TN 41 incorporating the proposed reduced rates.

68.

The Commission notes that its preliminary view of TCI's WSP Enhanced Provincial 9-1-1 network access service rate of $0.0263, applicable in both provinces, was based solely on TCI-B.C.'s WSP Enhanced Provincial 9-1-1 service costs plus a
15% mark-up. The comparable WSP Enhanced Provincial 9-1-1 service rate for TCI-Alberta, using TCI-Alberta's Phase II costs plus a 15% mark-up, would be $0.0254 per NAS.

69.

The Commission notes that the cost studies of WSP Enhanced Provincial 9-1-1 services for both TCI-Alberta and TCI-B.C. did not explicitly reflect productivity gains. The Commission therefore considers it appropriate to adopt WSP Enhanced Provincial 9-1-1 service rates for each of TCI-Alberta and TCI-B.C., that reflect the associated Phase II costs plus a 15% mark-up and adjusted for the I-X constraint. The Commission therefore approves the WSP Enhanced Provincial 9-1-1 network access service rates of $0.0248 per NAS for TCI-Alberta and $0.0257 per NAS for TCI-B.C., retroactive to 1 June 2002.

70.

In the case of Bell Canada, the Commission notes that Bell Canada's current WSP Enhanced Provincial 9-1-1 service rate of $0.02 per NAS is inconsistent with the rate change specifications for Category I Competitor services set out in Appendix 1 of Decision 2002-34. The Commission accordingly directs Bell Canada to adopt the rate of $0.0180 per NAS for its WSP Enhanced Provincial 9-1-1 service, reflecting Bell Canada's current costs plus a 15% mark-up and the application of the annual I-X constraint.

71.

The Commission directs TCI and Bell Canada to issue, forthwith, revised tariff pages reflecting the above changes to the WSP Enhanced Provincial 9-1-1 service rates, with an effective date of 1 June 2002. The Commission further directs TCI and Bell Canada to provide all customers affected by these rate reductions with rebates forthwith.

72.

TCI is further directed to issue amendments to TN 41 forthwith in order to incorporate the above rate changes.

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