ARCHIVED - Telecom - Commission Letter - 8661-C12-200310087 - Bell Canada Tariff Notice 6747, TELUS Tariff Notice 111, and Part VII application filed by Call-Net Enterprises Inc. for a review of Compensation Per Call
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LetterOttawa, 7 August 2003 BY E-MAIL To: Distribution List File: 8661-C25-04/02 Staff opinion on the termination dates of the equal access start-up cost recovery charge of the incumbent local exchange carriers The opinions and statements expressed herein constitutes a staff opinion and not a decision of the Commission. By letter dated 9 August 2002, Call-Net Enterprises Inc., on behalf of itself, Call-Net Communications Inc., Call-Net Technology Services Inc. and Sprint Canada Inc. (Call-Net) requested Commission staff to provide an opinion as to when the equal access (EA) start-up cost recovery charge established in Competition in the Provision of Public Long Distance Voice Telephone Services and Related Resale and Sharing Issues, Telecom Decision CRTC 92-12, 12 June 1992, (Decision 92-12) would terminate. Call-Net submitted that it was the Commission's intention for the EA start-up costs to be amortized over a 10-year period starting the day Decision 92-12 was released. Call-Net noted that since Decision 92-12 was issued on 12 June 1992, it followed that the EA start-up cost recovery charges should only apply until 11 June 2002. Aliant Telecom Inc. (Aliant Telecom), Bell Canada and MTS Communications Inc. (MTS) (collectively, the Companies) responded on 28 August 2002 and argued that Call-Net's request for a staff opinion on this matter was unnecessary, procedurally improper and an abuse of the regulatory process. The Companies noted that the Commission had recently addressed this matter in the public proceeding leading to CRTC denies Call-Net's application to discontinue the tariffs for the recovery of start-up costs, Order CRTC 2001-28, 18 January 2001, (Order 2001-28), in which Call-Net sought to have the tariffs for the recovery of EA start-up costs discontinued. The Companies argued that in seeking to have Commission staff issue a staff opinion supporting its position, Call-Net was not seeking to have staff clarify or interpret a Commission decision, rather Call-Net was asking staff to express disagreement with a decision already rendered by the Commission. The Companies argued that the appropriate course of action would be for Call-Net to have filed a request for a review and vary of that prior decision. TELUS Communications Inc. (TCI) responded on 9 September 2002 and argued that the matters raised by Call-Net had been addressed by the Commission in Order 2001-28. TCI submitted that Call-Net's letter was an attempt to secure the relief that it had previously sought and which was subsequently denied by the Commission in Order 2001-28. AT&T Canada Corp., on behalf of itself and AT&T Canada Telecom Services Company (collectively, AT&T Canada) responded on 9 September 2002. AT&T Canada indicated that it concurred with Call-Net's position that the final date for the recovery of the EA start-up costs was the 10-year anniversary of Decision 92-12 and that it supported Call-Net's request for clarification of this matter. AT&T Canada submitted that Call-Net was not trying to review and vary Order 2001-28 but rather attempted to have the Commission confirm the precise end-dates of each ILEC's respective tariff. Staff considers that in its application, Call-Net sought an interpretation as to when the 10-year amortization period associated with the EA start-up cost recovery charge would expire; whether it would be on the 10-year anniversary of the effective date of the initial EA tariffs or the implementation date of those tariffs. The application is different from Call-Net's previous application that was dealt with by the Commission in Order 2001-28, since it does not seek to have the charge terminated prior to the expiry of the 10-year amortization period. Furthermore, the application does not call for the Commission to consider whether its decision in either Decision 92-12 or in Order 2001-28 is incorrect. Therefore, in staff's view, the application does not involve a review and vary of Decision 92-12 or Order 2001-28. Staff notes that the Commission did not implement a tracking mechanism in Decision 92-12 to monitor the recovery of the EA start-up costs, but rather it determined that the alternative providers of long distance services would pay 30% of the EA start-up costs and that a fair and reasonable period for the amortization of the EA start-up costs would be ten years. Call-Net argues that the 10-year amortization period began on the date Decision 92-12 was issued. As noted by Call-Net in its application, in the public proceeding leading to Order 2001-28, the Companies and TCI argued that the EA start-up cost recovery revenues only started when EA associated with trunk-side interconnection became available, which according to them was 1 July 1994 for Aliant Telecom and Bell Canada, 31 October 1994 for TCI, and 15 June 1995 for MTS, and that accordingly, the EA start-up cost recovery tariffs should be maintained until 1 July 2004 for Aliant Telecom and Bell Canada, 31 October 2004 for TCI, and 15 June 2005 for MTS. Staff considers that in establishing the 10-year amortization period for the recovery of the EA start-up costs, the Commission intended that the portion of the EA costs to be recovered from alternative providers of long distance services would be, paid by these services providers over a 10-year period. Staff notes that the ILECs recovery of the EA start-up costs effectively began only with the availability of trunk-side interconnection. Staff notes that the delays in the implementation of EA, and trunk-side interconnection in particular, occurred as a result of the time required to negotiate and resolve significant technical and operational issues associated with the interconnection arrangements. For example, according to Bell Canada, the acquisition, modification and testing of a new carrier access billing system took 12 months to implement, while the development and testing of a primary interexchange carrier system took an additional 6 months to implement. In light of the foregoing, staff considers that the implementation date of the EA tariff in each ILEC territory is the appropriate commencement of the 10-year amortization period. Accordingly, for each ILEC other than Saskatchewan Telecommunications (SaskTel), staff considers it appropriate to terminate the EA start-up cost recovery tariff on the 10-year anniversary of the implementation date of the EA tariffs. The expected EA termination dates for these ILECs are 1 July 2004 for Aliant Telecom and Bell Canada, 31 October 2004 for TCI and 15 June 2005 for MTS. Staff notes that a different mechanism was adopted by SaskTel to recover its EA start-up costs. SaskTel's start-up cost recovery procedures were established by the Province of Saskatchewan and were based on the recovery of the actual costs of start-up related to the implementation of long distance competition in the province. In the public proceeding leading to Order 2001-28, SaskTel indicated that long distance competition was introduced in Saskatchewan during 1996 and the actual costs of start-up and the recovery of those costs from competitors had been tracked since that time. Staff therefore requests that SaskTel provide its current tracking information, including actual start-up costs incurred, actual competitor trunk-side demand and actual EA start-up cost recovery revenues received to date, and to further indicate its anticipated EA tariff termination date, by 25 August 2003. SaskTel may also comment on why its EA start-up cost recovery charge should not terminate when it has recovered 30% of the costs incurred, regardless of whether a 10-year period has passed since the charge was first imposed. Interested parties may file comments regarding SaskTel's submission by 10 September 2003, serving a copy on SaskTel. SaskTel may file replies by 24 September 2003. Where a document is to be filed or served by a specific date, the document must be actually received, not merely sent, by that date. Yours sincerely,
c.c.: Yvan Davidson CRTC (819) 953-5414
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