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Telecom Decision CRTC 2003-36
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Ottawa, 5 June 2003
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Saskatchewan Telecommunications
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Reference: 8660-C12-07/02 and 8663-S22-01/99
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Applicability of interim quality of service rate adjustment mechanisms and related matters
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In this decision, the Commission concludes that it is appropriate for Saskatchewan Telecommunications (SaskTel) to be subject to the same interim quality of service rate adjustment mechanisms as those applicable to other incumbent local exchange carriers (ILECs). These mechanisms provide for rate adjustments to retail (residential and business) customers and competitors if an ILEC fails to meet the quality of service standards.
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The Commission directs SaskTel to commence implementing the interim quality of service rate adjustment mechanism for retail customers on 1 July 2003. The Commission also directs SaskTel, coincident with the initiation of competitive local exchange activity in its territory, to commence reporting on its quality of service performance results for services to competitors and to simultaneously implement the interim competitor quality of service rate adjustment mechanism.
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Background
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1.
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In Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34) and amended by Erratum: Telecom Decision CRTC 2002-34 - Appendix 3, Telecom Decision CRTC 2002-34-1, 15 July 2002 (Decision 2002-34-1), the Commission concluded that regulatory changes were required to address concerns regarding the incumbent local exchange carriers' (the ILECs') unsatisfactory quality of service performance during the first price cap regime. The Commission, therefore approved, on an interim basis, new quality of service mechanisms to establish incentives for the ILECs to comply with the quality of service standards for services provided to both retail customers and competitors. The interim quality of service mechanisms established in Decision 2002-34 as amended by Decision 2002-34-1, provided that retail customers and competitors could receive rate adjustments.
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2.
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In Saskatchewan Telecommunications - Transitions to federal regulation - Reporting quality of service, Telecom Decision CRTC 2002-53, 30 August 2002 (Decision 2002-53), the Commission directed Saskatchewan Telecommunications (SaskTel) to commence filing quarterly reports on its quality of service performance results on 1 October 2002. The Commission also indicated its preliminary view that SaskTel should be subject to the interim quality of service rate adjustment mechanisms for retail customers and competitors that were established in Decision 2002-34 as amended by Decision 2002-34-1, and directed SaskTel to show cause, by 16 September 2002, why it should not be subject to those interim mechanisms.
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3.
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The Commission received comments from SaskTel dated 16 September 2002 and a clarification dated 20 September 2002. The Commission also received joint comments from Aliant Telecom Inc., Bell Canada, MTS Communications Inc. and TELUS Communications Inc. (collectively, the companies) dated 30 September 2002. SaskTel submitted reply comments dated 8 October 2002.
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Applicability of interim quality of service rate adjustment mechanisms
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4.
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In its comments, SaskTel submitted that it had consistently expressed the view that it should be subject to the same quality of service standards and reporting requirements that applied to the other ILECs. Consistent with that position, SaskTel did not provide any argument against the Commission's preliminary view that it should be subject to the same interim quality of service rate adjustment mechanisms established in Decision 2002-34 as amended by Decision 2002-34-1.
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5.
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Other parties did not comment on whether SaskTel should or should not be subject to the same interim quality of service mechanisms as established for the other ILECs.
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6.
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The Commission notes that SaskTel agreed with its preliminary view set out in Decision 2002-53. The Commission finds that the interim quality of service mechanisms established in Decision 2002-34 as amended by Decision 2002-34-1, should apply to SaskTel for both retail customers and competitors.
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Date of commencement for the interim retail quality of service mechanism
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7.
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In Decision 2002-34 as amended by Decision 2002-34-1, the Commission provided for a rate adjustment to retail customers in the event that the ILEC's retail quality of service performance results, as reported by the ILECs, fell below the approved quality of service standards. The ILEC's annual rate adjustment to its retail customers was calculated based on the retail quality of service performance results over a twelve-month period, commencing 1 July 2002 for the ILECs who were party to the decisions.
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8.
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SaskTel submitted that, based on Decision 2002-34 as amended by Decision 2002-34-1, the other ILECs would calculate their first annual rate adjustment based on their retail quality of service performance results from 1 July 2002 to 30 June 2003. SaskTel further submitted that if it were to base its first rate adjustment calculation on the period ending 30 June 2003, its calculation would be based on a much shorter period than the one year applicable to the other ILECs.
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9.
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SaskTel argued that a longer tracking period would present a more accurate reflection of the quality of service provided by the company without the results being unduly influenced by events beyond the company's control. SaskTel submitted that some factors influencing a telephone company's performance in the delivery of service to its customers would be beyond the reasonable control of the company and could not reasonably be foreseen or prevented. According to SaskTel, these factors could include severe weather conditions, fire, flood, strikes, the unintentional or intentional destruction of the company's facilities, and acts of public authorities, as well as seasonal variations. In SaskTel's view, this was one of the reasons the Commission adopted an annual performance average methodology in the interim retail quality of service mechanism. SaskTel submitted that it would be appropriate to commence implementing the interim retail quality of service mechanism for SaskTel on 1 July 2003, coincident with year two of the interim retail quality of service mechanism for the other ILECs. In SaskTel's view, that would provide for the most equitable treatment of SaskTel relative to the other ILECs.
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10.
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SaskTel submitted that if the Commission's intention was to apply the interim retail quality of service mechanism to SaskTel during any period ending 30 June 2003, some modification to the mechanism would be required. That modification would need to take into account the fact that SaskTel was not required to report its retail quality of service performance results prior to 1 October 2002. SaskTel added that it would be most appropriate to average its quality of service performance results over twelve months in accordance with the interim retail quality of service mechanism established in Decision 2002-34 as amended by Decision 2002-34-1.
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11.
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The companies agreed with SaskTel that an interim retail quality of service mechanism applied over a period less than twelve months would not be desirable.
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12.
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The Commission notes that, in Decision 2002-34 as amended by Decision 2002-34-1, it determined that the interim retail quality of service mechanism was to be based on a full year of retail quality of service performance results. The Commission considers that this approach should be applicable to all ILECs that are subject to the regime.
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13.
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The Commission concludes that it would be appropriate to apply the interim retail quality of service mechanism to SaskTel commencing coincident with the start of the other ILECs' second year under the interim retail quality of service mechanism. Accordingly, the Commission directs SaskTelto commence implementing the interim retail quality of service mechanism effective 1 July 2003.
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14.
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In their comments, the companies also submitted that in Decision 2002-34 as amended by Decision 2002-34-1, the time period for collecting retail quality of service performance results that is the basis for any rate adjustment was not specified and that there was uncertainty with the exact term of the initial time period. The companies suggested that the Commission determine this initial time period to end on 31 December 2003, for both SaskTel and the companies. The companies submitted that its suggestion has several advantages and no discernible disadvantage, as follows:
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- the initial time period that is the basis for rate adjustment would end at the same time for all ILECs subject to Decision 2002-34;
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- reporting on a calendar year would be consistent with the reporting period for the overall price cap regime;
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- the ILECs would be provided with time to react to any changes between the interim and final quality of service rate adjustment mechanisms; and
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- a longer initial time period that is the basis for rate adjustment would provide both the ILECs and the Commission with greater experience in managing the quality of service rate adjustment mechanisms.
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15.
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The companies further submitted that any rate adjustment that would be provided to its retail customers would be unchanged since any rate adjustment would be based on a longer initial time period. For example, any rate adjustment would be based on eighteen months of retail revenues, rather than twelve months.
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16.
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The Commission finds that comments provided by the companies relating to the extension of the time period or the use of a calendar year for collecting the retail quality of service performance results to be used in the calculation of any rate adjustment are outside the scope of this proceeding.
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Date of commencement of the interim competitor quality of service mechanism
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17.
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The Commission received no comments relating to the time period for collecting SaskTel's competitor quality of service performance results that would be the basis for any rate adjustment for competitors.
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18.
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The Commission notes that the other ILECs have been filing, on a quarterly basis, their competitor quality of service performance results for several years. As established in Decision 2002-34, the other ILECs have remitted to competitors, rate adjustment payments where the quality of service standards were not met, beginning with the results from third quarter 2002.
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19.
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The Commission notes that the reporting of competitor quality of service performance results by an ILEC occurs only after a competitor has entered the ILEC's local market. The Commission notes the absence of local competitors in SaskTel's territory at this time.
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20.
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The Commission considers that, given the absence of local competitors in SaskTel's territory, the appropriate time for SaskTel to commence implementing the interim competitor quality of service mechanism is on the initiation of competitive local exchange activity in its territory. The Commission is of the view that SaskTel should implement the interim competitor quality of service mechanism as soon as it receives an order, for which competitor quality of service performance is currently measured and subject to the rate adjustment mechanism, from a local exchange competitor.
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21.
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Accordingly, the Commission directs SaskTel to commence reporting on competitor quality of service results and to implement the interim competitor quality of service mechanism on the initiation of competitive local exchange activity in SaskTel's territory.
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Secretary General
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This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca
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Date Modified: 2003-06-05