ARCHIVED - Telecom Decision CRTC 2003-19

Telecom Decision CRTC 2003-19

Ottawa, 20 March 2003

Primus Telecommunications Canada Inc. - Part VII application regarding primary inter-exchange carrier tariffs

Reference: 8661-P11-01/02

In this decision, the Commission approves Primus Telecommunications Canada Inc.'s (Primus Canada) application to initiate a proceeding to review the primary inter-exchange carrier (PIC) processing rates.

The Commission denies Primus Canada's request to adopt, on an interim basis, Bell Canada's PIC processing rates for all incumbent local exchange carriers.

1.

The Commission received an application from Primus Telecommunications Canada Inc. (Primus Canada), dated 28 March 2002, filed pursuant to Part VII of the CRTC Telecommunications Rules of Procedure. The application requested a review of primary inter-exchange carrier (PIC) processing rates for the following incumbent local exchange carriers (ILECs): Bell Canada, MTS Communications Inc. (MTS), Saskatchewan Telecommunications (SaskTel), TELUS Communications Inc. (TCI) and Aliant Telecom Inc. (Aliant Telecom) (collectively, the ILECs).

2.

PIC processing rates apply when an alternate provider of long distance service (APLDS) requests that a local exchange carrier (LEC) either establish or change the PIC selection associated with the LEC's customer's access line.

3.

On 19 April 2002, the Commission received comments from Aliant Telecom, Bell Canada, MTS, and SaskTel (collectively, the Companies) and from Call-Net Enterprises Inc. (Call-Net). On 29 April 2002 comments were received from TCI.

4.

Primus Canada filed reply comments on 9 May 2002.

5.

In its application, Primus Canada submitted that high PIC processing rates had hampered APLDS' ability to compete in certain ILECs' territories. The applicant noted that there was a wide disparity in the rates for PIC processing amongst the ILECs. Primus Canada submitted that it had been several years since these rates were reviewed and that efficiency improvements had undoubtedly caused a decrease in the costs for these services.

6.

The applicant stated that between 1997 and 2001 the Commission had implemented price reductions for services used by competitors, except services provided by SaskTel because SaskTel didn't come under federal jurisdiction until 2000. Primus Canada noted that fixed-rate loop services charges had decreased between 63% and 85%, unbundled local loop rates had decreased between 20% and 65% and the direct connection service rates had decreased by 43%. Primus Canada submitted that, in light of these changes, the Commission should initiate a proceeding to review the rates for PIC processing.

7.

The applicant requested that the ILECs be required to file revised Phase II cost studies for the following PIC processing tariff components:

8.

Primus Canada requested that the process to review the PIC processing rates permit interested parties to pose interrogatories to the ILECs on the revised Phase II studies.

9.

Primus Canada further requested that, on an interim basis, the Commission set the ILECs' rates for PIC processing at the same level as Bell Canada's existing PIC processing rates. The applicant requested, in the alternative, that the Commission make each ILEC's PIC processing rates interim immediately so that retroactive adjustments to the final rates could be made.

10.

In its comments, Call-Net supported Primus Canada application for a review of PIC processing rates. Call-Net submitted that the current rates were based on Phase II studies that were filed seven to eight years ago and were not reflective of today's economic costs. Call-Net requested that the Commission direct all ILECs to file and implement, on an interim basis, PIC processing rates equal to 50% of Bell Canada's existing rates. Call-Net further submitted that retroactive adjustments could be made once final rates are set following the filing of revised Phase II cost studies, as requested by Primus Canada.

11.

In their comments, the Companies and TCI submitted that the Commission should deny Primus Canada's application. The Companies and TCI argued against a separate process to review the rates for PIC processing. The Companies and TCI submitted that the proceeding leading to Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34), had considered issues associated with the appropriate price mechanism for competitor services in general, including PIC processing, and Primus Canada could have raised its concerns in that proceeding.

12.

The Companies and TCI noted Primus Canada's request that the Commission make Bell Canada's existing rates for PIC processing interim for each ILEC immediately and argued that Primus Canada had not provided any justification in support of its request to impose Bell Canada's PIC processing rates on the other ILECs.

13.

In reply, Primus Canada submitted that, in the price cap review proceeding, no evidence had been submitted specifically dealing with the elements of PIC processing, and that the proceeding had not been an appropriate forum for reviewing the costs of providing specific competitor services.

Commission determination

14.

The Commission notes that, for all of the ILECs except SaskTel, the initial cost studies supporting the current PIC processing rates were filed in the proceeding leading to Unbundled rates to provide equal access, Telecom Decision CRTC 97-6, 10 April 1997. As a result, the PIC processing rates have not been reviewed for more than five years. The Commission notes that these initial cost studies were based on a five-year study period which included the years 1996 to 2000. The Commission considers that given the length of time that has elapsed since these costs were reviewed, it is reasonable to expect, as Primus Canada argued and as the ILECs did not dispute, that the ILECs have experienced efficiency improvements which should result in reductions to the costs to provide PIC processing services. With respect to SaskTel, the Commission notes that its rates were approved when it came under Federal regulation in 2000, that they have not yet been supported by a Phase II cost study, and that it is appropriate to establish PIC processing rates for SaskTel based on Phase II costs.

15.

In light of the above, the Commission considers that a review of the PIC processing rates for all ILECs is appropriate. Accordingly, the Commission approves Primus Canada's request for a review of such rates. In Primary inter-exchange charges review, Telecom Public Notice CRTC 2003-2, issued today, the Commission initiates a proceeding to review the PIC processing rates of the ILECs.

16.

The Commission notes Primus Canada's request that the Commission make Bell Canada's rates for PIC processing interim for each ILEC immediately. The Commission also notes that Call-Net requested that the Commission immediately direct all the ILECs to file and implement, on an interim basis, PIC processing charges that are equal to 50% of Bell Canada's current rates. The Commission notes that the ILECs' rates for PIC processing were made interim effective 1 June 2002 in Decision 2002-34. The Commission considers that neither Primus Canada nor Call-Net provided compelling reasons to support their requested interim rate levels. The Commission, accordingly denies these requests.

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