ARCHIVED - Telecom Decision CRTC 2003-17

Telecom Decision CRTC 2003-17

Ottawa, 18 March 2003

Saskatchewan Telecommunications

Reference: Tariff Notices 31/A and 40

2002 Annual price cap filing

In this decision, the Commission approves, in part, applications filed by Saskatchewan Telecommunications (SaskTel) proposing rate changes pursuant to Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002. The Commission also approves, with some exceptions, the remainder of SaskTel's rates on a final basis.

Introduction

1.

In Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34), the Commission established the price regulation regime that is now applicable to the following incumbent local exchange carriers (ILECs): Aliant Telecom Inc., Bell Canada, MTS Communications Inc., Saskatchewan Telecommunications (SaskTel) and TELUS Communications Inc. (collectively, the ILECs).

2.

In Decision 2002-34, the Commission directed the ILECs to file their 2002 annual price cap filings, including updates to the price indices, on 1 August 2002. In Decision 2002-34, the Commission also made all of the ILECs' tariff rates interim, effective 1 June 2002, to ensure that the annual price cap period for 2002 would reflect a full year, with the expectation that any rate changes approved for the ILECs to meet their price cap commitment would become effective retroactive to that date.

3.

In Decision 2002-34, the Commission noted that in Price Cap Regulation and Related Issues, Telecom Decision CRTC 97-9, 1 May 1997 (Decision 97-9), it had determined that exogenous factor adjustments would be considered for events or initiatives that met the following criteria:

· they are legislative, judicial or administrative actions which are beyond the control of the company;

· they are addressed specifically to the telecommunications industry; and

· they have a material impact on the Utility Segment of the company.

4.

The Commission concluded in Decision 2002-34, after seeking comments from interested parties, that there was a continued requirement for exogenous adjustments. In Decision 2002-34, the Commission retained the criteria established in Decision 97-9 for the identification of an exogenous event modified to measure materiality in relation to the total company rather than the Utility Segment.

5.

The Commission received applications from SaskTel, dated 1 August 2002 and 2 January 2003, which proposed tariff revisions to meet its 2002 price cap commitment and reflected the impact of two proposed exogenous factor adjustments relating to the revenue-percent charge for the revenue-based contribution regime and a new capital tax applicable to SaskTel's telecommunications assets approved by the Saskatchewan legislature.

6.

The Commission received comments from Call-Net Enterprises Inc. (Call-Net), on 15 August 2002 and AT&T Canada Corp., on behalf of itself and AT&T Canada Telecom Services Inc. (collectively, AT&T Canada), on 3 September 2002. The Commission also received comments from the Rural Municipality of Meeting Lake No. 466 on 10 January 2003 and Mr. Ken N. J. Pilon on 14 January 2003.

7.

SaskTel filed reply comments on 13 September 2002. In its reply comments, SaskTel stated its agreement with the submission filed by Bell Canada on 13 September 2002, in response to AT&T Canada's and Call-Net's comments, which addressed all the ILECs' 2002 annual price cap filings.

8.

In part I of this decision, the Commission addresses SaskTel's exogenous factor proposal. In part II of this decision, the Commission addresses the proposed tariff revisions. Lastly, in part III of this decision, the Commission addresses specific requests made by AT&T Canada and Call-Net.

Part I - SaskTel's exogenous factor proposal

9.

In its application, SaskTel submitted that two events qualified for exogenous factor adjustment treatment in respect of its capped services. The first was related to the interim revenue-percent charge approved in Interim 2002 revenue-percent charge, national subsidy requirement and procedures for the revenue-based contribution regime, Order CRTC 2001-876, 14 December 2001 (Order 2001-876). The second was related to changes to The Corporation Capital Tax Act passed by the Saskatchewan legislature to introduce a tax upon SaskTel's telecommunications capital.

10.

SaskTel argued that both the interim 2002 revenue-percent charge and the provincial tax applicable to SaskTel's telecommunications capital were events that satisfied the criteria for exogenous treatment. SaskTel submitted that both were initiated as the result of legislative, judicial or administrative actions, were addressed specifically to the telecommunications industry, and had a material impact in relation to the total company.

11.

SaskTel stated that the Commission had first established the revenue-percent charge in Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000 (Decision 2000-745). SaskTel noted that pursuant to Decision 2000-745, companies under price cap regulation could recover, in 2001, the revenue-percent charge of 4.5% through an exogenous factor adjustment, while companies not under price cap regulation could apply to recover the revenue-percentage charge applicable to their Utility segment revenues.

12.

SaskTel stated that in Order 2001-876 the Commission had approved 1.4% as the interim 2002 revenue-percent charge. SaskTel argued that the Commission had determined that 1.4% of an ILECs contribution eligible revenues was a material cost because it retained the exogenous treatment of the interim 2002 revenue-percent charge in Decision 2002-34.

13.

SaskTel subsequently indicated that, in Final 2002 revenue-percent charge and related matters, Telecom Decision CRTC 2002-71, 22 November 2002, the Commission had approved 1.3% as the final 2002 revenue-percent charge.

14.

SaskTel stated that on 28 June 2001 the Saskatchewan legislature had enacted amendments to The Corporation Capital Tax introducing a tax equal to 0.9% of SaskTel's telecommunications capital (the provincial capital tax). SaskTel indicated that for the purposes of this tax, telecommunications capital was defined as the gross investment in the local loop and local switching functionality in Saskatchewan, including aerial, underground and buried copper plant, underground duct and conduit, pole lines, and switching hardware and software.

15.

SaskTel argued that the 0.9% provincial capital tax had a material impact on the company as a whole as the associated $7.4 million expense represented 7% of its 2001 consolidated net income.

16.

SaskTel noted that it was made subject to federal regulation during the first price cap period in SaskTel - Transition to federal regulation, Decision CRTC 2000-150, 9 May 2000. SaskTel submitted that one of the conditions established in SaskTel's transitional regulatory framework reflected its commitment not to increase rates for any of its Utility segment services. SaskTel argued that this condition prevented it from recovering the costs associated with the 4.5% revenue-percent charge in 2001 or the 1.4% interim 2002 revenue-percent charge which became effective on 1 January 2002. SaskTel argued that this condition has prevented it from increasing rates to offset the costs of the provincial capital tax.

17.

SaskTel submitted that the Commission's determinations in Decision 2002-34 to continue to permit the ILECs to incorporate exogenous adjustments within their price cap models and its directions regarding the interim 2002 revenue-percent charge presented SaskTel with its first opportunity to recover the ongoing costs associated with the revenue-percent charge and the provincial capital tax.

18.

SaskTel stated that in Decision 97-9, the Commission had established the principle of cost-causality in relation to the assignment of exogenous adjustments. SaskTel argued that two methods of assignment of the exogenous factor adjustments were necessary due to differences in cost causality between the revenue-percent charge and the new capital tax.

19.

SaskTel submitted that the revenue-percent charge should be allocated among the baskets and sub-baskets of capped services based on revenues. SaskTel argued that its proposal was consistent with the assignment of the initial revenue-percent charge in Decision 2000-745.

20.

SaskTel submitted that the provincial capital tax had proportionately more impact on the services subject to pricing constraints, since the tax applied only to copper plant, related support structures and local switching assets, which were used almost exclusively by the services subject to price cap regulation. SaskTel proposed to allocate the corporate expense associated with the provincial capital tax between capped and uncapped services and among the capped services baskets based on the number of network access services (NAS).

21.

SaskTel argued that its allocation methodology was consistent with the principle of cost causality. In support of its proposal, SaskTel submitted that:

· it was not practical to associate specific assets with specific services;

· the majority of the capital tax is related to assets associated with copper and support structure; and

· the vast majority of network accesses that are provided using copper loops also use switching resources.

22.

SaskTel proposed to allocate $6.3 million of the provincial capital tax expense to the capped services baskets for 2002.

23.

SaskTel proposed to incorporate the exogenous adjustments for the final 2002 revenue-percent charge and the provincial capital tax expense into the service basket limits (SBLs) of each of the following capped services baskets: residential local services in non-high cost serving areas (non-HCSAs), residential local exchange services in non-HCSAs, residential local exchange services in high-cost serving areas (HCSAs), single and multi-line business local exchange services and other capped services.

24.

In particular, SaskTel proposed to further allocate the provincial capital tax expense associated with residential local services in non-HCSAs and residential local services in HCSAs to residential local exchange services in non-HCSAs and HCSAs sub-baskets respectively.

Parties' comments

25.

Parties did not comment on SaskTel's exogenous factor adjustment proposal.

Commission analysis

Criteria for exogenous treatment

26.

The Commission considers that the final 2002 revenue-percent charge and the provincial capital tax came about as a result of legislative, judicial or administrative actions that were beyond the control of SaskTel. The Commission also considers that the revenue-percent charge and the provincial capital tax were specifically addressed to the telecommunications industry.

27.

The Commission notes that Decision 2000-745 permitted the ILECs subject to price cap regulation to recover the 4.5% revenue-percent charge applicable to capped services through an exogenous factor adjustment. The Commission recognizes that it implicitly ruled on the significance of the material impact on these ILECs when it retained the exogenous factor treatment for the interim 2002 revenue-percent charge in Decision 2002-34. The Commission finds that the revenue-percent charge would have commensurate material impact on SaskTel.

28.

The Commission considers that the corporate provincial capital tax expense of $7.4 million is material in relation to SaskTel's consolidated net income.

29.

In light of the above, the Commission considers that both the final 2002 revenue-percent charge and the provincial capital tax meet the definition of an exogenous event established in Decision 2002-34.

Application of the exogenous factor adjustments

30.

In Decision 2002-34, the Commission indicated that the basis for assigning exogenous adjustments would be determined on a case-by-case basis and directed the ILECs to file a proposal, with supporting rationale, with each application for an exogenous adjustment stating the preferred basis of assignment.

31.

The Commission notes that SaskTel proposed to allocate the final 2002 revenue-percent charge among the capped services baskets and sub-baskets based on the revenues in each of the capped services baskets and sub-baskets. The Commission considers that SaskTel's proposal is acceptable as it reflects the basis on which the company incurs the expense.

32.

The Commission notes that the provincial capital tax is applied to copper plant, support structures and local switching assets, assets that are predominantly used to provide capped services. The Commission notes that SaskTel proposed to allocate the provincial capital tax expense to the capped services baskets using non-weighted NAS data. The Commission notes that other approaches available to SaskTel included an allocation based on revenues or an allocation based on weighted non-residential NAS. The Commission considers that a revenue-based allocation would result in costs being allocated to services that make little or no use of the facilities to which the capital tax applies. The Commission further considers that using a higher weighting factor for non-residential NAS would unfairly allocate a disproportionate amount of the provincial capital tax expense to business customers since roughly the same investment in copper plant, support structures and local switching per NAS is required to provide residential, business, or Centrex services. The Commission therefore finds that SaskTel's proposal to allocate provincial capital tax expense to the capped services baskets based on non-weighted NAS is reasonable as it best reflects the basis on which the company incurs the expense.

33.

The Commission notes that SaskTel proposed to allocate all the provincial capital tax allocated to the residential local services in HCSAs and non-HCSAs baskets to the residential local exchange services in HCSAs and non-HCSAs sub-baskets. The Commission notes that the services contained in the residential optional local services sub-baskets are provided using local switching facilities. As a result, the Commission considers that the provincial capital tax expense associated with residential local services in non-HCSAs and residential local services in HCSAs should be allocated to both the residential local exchange services and residential optional local services in non-HCSAs and HCSAs sub-baskets, respectively.

Conclusion

34.

The Commission finds that the costs associated with the final 2002 revenue-percent charge and the provincial capital tax expense for 2002 are to be allocated to the capped services baskets in accordance with the table presented below:

For the year 2002 (millions)

Revenue- percent charge

Provincial capital tax expense

Total additional costs

Total Capped Services

$ 3.6

$ 6.3

$ 9.8

Residential Services

$ 2.3

$ 4.8

$ 7.1

Residential Services in non-HCSAs

$ 1.3

$ 2.8

$ 4.1

Basic residential services

$ 0.7

$ 1.4

$ 2.1

Residential optional services

$ 0.6

$ 1.4

$ 2.0

Residential Services in HCSAs

$ 1.0

$ 2.0

$ 3.0

Basic residential services

$ 0.5

$ 0.9

$ 1.3

Residential optional services

$ 0.6

$ 1.1

$ 1.6

Business Services

$ 0.6

$ 1.2

$ 1.9

Other Capped Services

$ 0.6

$ 0.3

$ 0.8

Note: Totals may not balance due to rounding

Part II - SaskTel's pricing proposal

35.

In its applications, SaskTel proposed revisions to the following tariff items:

· General Tariff - Basic Services, item 82, Definitions, item 100.10, Rate Group Classifications, item 100.12, Rate Band, item 100.30, Extended Area Service, items 110.10 and 110.12, Network Access, items 110.28 and 110.30, Multi-line Access service, item 110.32, Direct-in-Dial service, item 110.40, Digital Network Access (DNA) service, item 150.15 SmartTouch Subscription service, item 200.20 Centrex service II, item 300.05, Smart Bundles, item 400.05 Exchange Radio Telephone service, and item 400.20, Northern Radio Telephone service; and

· General Tariff - Competitive Services, item 550.08, MessageManager.

36.

In particular, SaskTel proposed the following tariff changes to services within the single and multi-line business local exchange services basket:

· increases of 10% to the monthly access rates for business network access service in HCSAs;

· increases of either 4.4% or 9.3%, to bring the monthly rates for business multi-line network access service in HCSAs to $47.00 per month, and an increase of 10% to bring the monthly rates for rotary dial option for business multi-line network access service to $43.45;

· an increase of 9% to the rates for Northern Radio Telephone service;

· an increase of 10% to the rates for Exchange Radio Telephone service; and

· an increase of 10% to the rates for Direct-in-Dial service.

37.

SaskTel submitted that the proposed tariff revisions would ensure that the service basket index (SBI) does not exceed the SBL for the single and multi-line business local exchange services basket.

38.

SaskTel proposed the following tariff changes to services within the other capped services basket:

· reductions ranging from 3.3% to 8.2% to the contracted monthly rates for the initial 4 DS-1 access in DNA rates bands 2 and 3; and

· reductions ranging from 1.0% to 2.7% to the contracted monthly rates for 28 DS-1 access in DNA rates bands 2 and 3.

39.

SaskTel submitted that the proposed tariff revisions would ensure that the SBI does not exceed the SBL for the other capped services basket.

40.

SaskTel proposed the following tariff changes to services within the residential optional local services sub-baskets in HCSAs and non-HCSAs:

· increases to the rates for SmartTouch Subscription service for residential customers by $0.80 per month for the second feature and by $1.00 per month for each additional feature; and

· increases to the rates for Smart Bundles, which include two SmartTouch features, by $0.80 per month to align the bundle rates with the rates for the stand-alone features.

41.

SaskTel proposed the following tariff changes to uncapped services:

· an increase of $2.85 per month to the contracted rate for Centrex service II in HCSAs;

· an increase of $2.00 per month to the Centrex Multi-line Access charge in HCSAs, to maintain the relationship among access charges in HCSAs;

· an increase of 10% to the rates for MessageManager access service for business customers; and

· an increase of $1.00 to the monthly rates for SmartTouch Subscription services for business customers for the third and each additional feature.

42.

SaskTel also proposed tariff revisions that would permit the existing rate group classifications to be mapped into the rate bands defined by the Commission in Restructured bands, revised loop rates and related issues, Decision CRTC 2001-238, 27 April 2001.

43.

SaskTel requested that the proposed tariff revisions for DNA become effective 1 June 2002, that the proposed tariff revisions for Centrex service II become effective 10 February 2003 and that all other proposed tariff revisions become effective 1 February 2003.

44.

SaskTel submitted that the proposed tariff revisions complied with all of the pricing constraints set out in Decision 2002-34. SaskTel also submitted that the proposed tariff revisions would ensure that it met its price cap obligations for 2002.

Parties' comments

45.

AT&T Canada submitted that one clear objective of the ILECs' annual price cap proposals appeared to have been to obstruct competition. AT&T Canada stated that the ILECs have proposed price increases for business local services in rural areas where there was little, if any, competition. AT&T Canada stated that, in contrast, the ILECs have proposed significant rate reductions to the access and link components of DNA service and, in some cases, to Megalink, Digital Channel and Digital Exchange Access services. AT&T Canada argued that the ILECs have targeted the required rate reductions in such a way as to undermine any potential advantage the creation of competitor-DNA service might have offered competitors. AT&T Canada submitted that the proposed rate reductions would squeeze the margins available to competitors through the use of the newly established competitor-DNA service.

46.

The Rural Municipality of Meeting Lake No. 466 argued that affordable telephone service in rural communities was vital and requested that the Province of Saskatchewan require SaskTel to reconsider the proposed rate increases.

47.

Mr. Pilon argued that rate increases applicable only to rural area customers should be denied.

Reply comments

48.

In its reply comments, SaskTel stated that it concurred with the positions put forward by Bell Canada regarding the issues raised by AT&T Canada related to the proposed rate changes in each of the ILECs' 2002 price cap filings.

49.

Bell Canada's position, with respect to AT&T Canada's concerns that the ILECs' rate proposals were anti-competitive, was that the proposed DNA rates are supported by documentation demonstrating that they satisfy the imputation test. Bell Canada stated that the imputation test was the accepted basis to determine whether a rate change is anti-competitive. Bell Canada submitted that the proposed DNA rates could therefore not be considered to be anti-competitive.

Commission analysis

Costing issues

50.

The Commission notes that for a new service or a rate decrease, the proposed rates must satisfy the imputation test. The Commission considers that the imputation test is the accepted method, under the current regulatory regime, of determining whether the proposed rates would be anti-competitive.

51.

The Commission finds that the proposed DNA service rates pass the imputation test.

Compliance with the pricing constraints set out in Decision 2002-34

52.

In Decision 2002-34, the Commission applied a number of constraints to the rates for services in the residential optional local services in non-HCSAs and HCSAs sub-baskets, the single and multi-line business local exchange services basket and the other capped services basket, in order to provide customers of those services with price protection.

53.

The pricing constraints which apply to services in the residential optional local services in non-HCSAs sub-basket include:

· a basket constraint, operating through the SBL for the residential local services in non-HCSAs basket, which must be updated annually by the rate of inflation less the productivity offset; and

· a rate element constraint limiting increases to the monthly rate for a feature to $1.00 per year.

54.

The Commission notes that the only pricing constraint which applies to services in the residential optional local services in HCSAs sub-basket is a rate element constraint limiting increases to the monthly rate for a feature to $1.00 per year.

55.

The Commission notes that the proposed increase to the monthly rates for SmartTouch Subscription service does not exceed the limit of $1.00 per feature per year. The Commission finds the proposed tariff revisions comply with the basket constraint requirement that the SBI not exceed the SBL for the residential local services in the non-HCSAs basket.

56.

The pricing constraints which apply to services in the single and multi-line business local exchange services basket include:

· a basket constraint, operating through the SBL for that basket, which must be updated annually by the rate of inflation;

· a rate element constraint limiting rate increases for a service to 10% per year; and

· a provision, in order to prevent an ILEC from decreasing rates in more competitive areas and increasing rates in less competitive areas of the same band, that rates for single and multi-line business local exchange services would not be permitted to be further de-averaged within a band.

57.

The Commission notes that the proposed increases to the monthly rates for business network access service, business multi-line network access service, Exchange Radio Telephone service and Northern Radio Telephone service do not exceed the rate element constraint of 10%. The Commission finds that the proposed tariff revisions comply with the basket constraint requirement that the SBI not exceed the SBL for the single and multi-line business local exchange services basket.

58.

The Commission also finds that the proposed tariff revisions comply with the Commission's prohibition, set out in Decision 2002-34, against further de-averaging of rates for business local exchange services within a band.

59.

The pricing constraints which apply to services in the other capped services basket include:

· a basket constraint, operating through the SBL for that basket, which must be updated annually by the rate of inflation less the productivity offset;

· a rate element constraint limiting rate increases for a service to 10% per year; and

· a provision, in order to prevent an ILEC from decreasing rates in more competitive areas and increasing rates in less competitive areas of the same band, that rates for other capped services would not be permitted to be further de-averaged within a band.

60.

The Commission notes that SaskTel proposed a rate increase to Direct-in-Dial service under the assumption that it was part of the single and multi-line business local exchange services basket. In Follow-up to Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34 - Service basket assignment, Telecom Decision CRTC 2003-11, 18 March 2003, the Commission rejected SaskTel's proposal to move Direct-in-Dial service from the other capped services basket to the single and multi-line business local exchange services basket. Accordingly, the Commission has considered the proposed increase to Direct-in-Dial service as part of SaskTel's proposal for the other capped services basket.

61.

The Commission finds that the proposed rate decreases to DNA service are sufficient to ensure that the SBI is at or below the SBL for other capped services. While the proposed rate increase to Direct-in-Dial service does not exceed 10%, the Commission finds that, if approved, it would increase the SBI above the SBL, in contravention of the basket constraint for other capped services. Accordingly, the Commission is not prepared to approve the proposed rate increase for Direct-in-Dial service.

62.

Accordingly, the Commission considers that SaskTel's proposals are consistent with the pricing constraints established in Decision 2002-34, with the exception of its proposal for a rate increase to Direct-in-Dial service.

Part III - AT&T Canada and Call-Net's requests

AT&T Canada's request for a fixed margin between retail and wholesale rate

63.

AT&T Canada submitted that price reductions applied to services with retail and wholesale counterparts, such as DNA service, should be similar in magnitude so as to protect against anti-competitive targeted pricing strategies by the ILECs aimed at squeezing or eliminating the margins available to their competitors. AT&T Canada argued that a link between retail and wholesale pricing would ensure that the ILECs could not use the price cap formula to squeeze the competitors' margins.

64.

SaskTel agreed with Bell Canada's submission that the Commission should reject AT&T Canada's proposal to link the pricing of wholesale and retail rates. Bell Canada stated that Decision 2002-34 specified that rates for competitor-DNA service should be based on Phase II costs plus a 15% mark-up. Bell Canada submitted that retail rates were based on margins determined by market conditions and conformity with the price cap rules, including the imputation test. Bell Canada argued that AT&T Canada's proposal to link the pricing of wholesale and retail rates would inhibit competition between retail providers of DNA service because it would prevent the ILECs from responding to competitive pressures.

65.

The Commission notes that it explicitly required the ILECs to file rates for a competitor-DNA service based on Phase II costs plus a 15% mark-up. The Commission considers that AT&T Canada's request to establish a link between price reductions to services with retail and wholesale counterparts is inconsistent with Decision 2002-34.

Call-Net and AT&T Canada's request for DNA and Digital Channel services rates to remain interim

66.

Call-Net and AT&T Canada requested that the rates for DNA service and Digital Channel services be approved on an interim basis. Call-Net and AT&T Canada argued that until a decision has been issued in the proceeding initiated by Competitor Digital Network Access service proceeding, Telecom Public Notice CRTC 2002-4, 9 August 2002 (Public Notice 2002-4), the precise components and configurations that will make up the final competitor-DNA service and potentially related services are unknown. Call-Net and AT&T Canada submitted that the retail DNA service and Digital Channel services could serve as the basis for the competitor-DNA service. Call-Net and AT&T Canada submitted that interim approval would allow any associated rate reductions that might result from the Public Notice 2002-4 proceeding to apply on a retroactive basis to 1 June 2002.

67.

SaskTel supported Bell Canada's position that, as competitor-DNA service rates will not be linked or dependent on retail rates, the retail DNA service rates should be approved on a final basis.

68.

The Commission notes that among the issues being considered in the proceeding initiated by Public Notice 2002-4, are whether specific rate elements of DNA service and Inter-Office Digital Channels should be included in the newly established competitor-DNA service, and whether the reduced rates for any additional service components that might be added to competitor-DNA service at the conclusion of the proceeding should be approved retroactive to 1 June 2002. The Commission further notes that, in the meantime, competitors will be subscribing to potential competitor-DNA service components at DNA service and Inter-Office Digital Channels rates. Accordingly, the Commission finds that it would not be appropriate to grant final approval to the retail rates for DNA service and Inter-Office Digital Channels at this time.

Commission directions

69.

In light of the foregoing:

· the Commission directs SaskTel to:

- include the $4.1 million in costs allocated to residential local services in non-HCSAs as an upward exogenous adjustment to the SBL for that basket;

- include the $2.1 million in costs allocated to residential local exchange services in non-HCSAs as an upward exogenous adjustment to the SBL for that basket;

- include the $1.3 million in costs allocated to residential local exchange services in HCSAs as an upward exogenous adjustment to the SBL for that sub-basket;

- include the $1.9 million in costs allocated to single and multi-line business local exchange services as an upward exogenous adjustment to the SBL for that basket; and

- include the $0.8 million in costs allocated to other capped services as an upward exogenous adjustment to the SBL for that basket;

· the Commission denies the proposed rates for Direct-in-Dial service;

· the Commission approves, on an interim basis, the proposed rates for DNA service;

· the Commission approves, on a final basis, the proposed tariff revisions to Definitions, Rate Group Classifications, Rate Band Structure, Extended Area Service and the proposed rates for business network access service, multi-line access service, SmartTouch Subscription service, Centrex service II, Smart Bundles, Exchange Radio Telephone service, Northern Radio Telephone service and MessageManager service;

· the Commission approves, on a final basis, the remainder of SaskTel's rates other than (i) the rates for DNA service and Inter-Exchange Digital Channels, which will remain interim, and (ii) the rates for competitor services. The Commission notes that SaskTel's proposals regarding rates for competitor services are addressed in 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, Telecom Decision CRTC 2003-12, 18 March 2003 and in Rates for Competitor Services, Telecom Decision CRTC 2003-13, also issued today;

· the Commission directs that the approved rates for DNA service are to take effect on 1 June 2002. The approved rate increases to business network access service, multi-line Access service, SmartTouch Subscription service, Centrex II service, Smart Bundles, Exchange Radio Telephone service, Northern Radio Telephone service and MessageManager service are to take effect at a date to be determined by SaskTel, which is to be no earlier than 1 February 2003, except for Centrex service II, which is to be no earlier than 10 February 2003. SaskTel is to issue revised tariff pages forthwith; and

· the Commission directs SaskTel to provide all customers affected by rate reductions approved in this decision with rebates forthwith.

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