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Telecom Order CRTC 2003-351
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Ottawa, 27 August 2003
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Saskatchewan Telecommunications
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Reference: Tariff Notice 49
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2003 Annual price cap filing
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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), 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).
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2.
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In Decision 2002-34, the Commission directed that, starting in 2003, the ILECs were to file their annual price cap filings by 31 March. In a letter dated 25 March 2003, the filing deadline for the year 2003 price cap filings was extended to 2 May 2003.
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3.
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The Commission received an application by SaskTel dated 2 May 2003 proposing tariff revisions to meet its 2003 price cap commitment.
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SaskTel's application
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4.
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In its application, SaskTel proposed revisions to its General Tariff - Basic Services, item 110.44, Digital Network Access (DNA) service. In particular, SaskTel proposed to decrease the contracted monthly rates for DNA - DS-1 access in rate bands 2 and 3 by between 24.3% and 25.4%.
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5.
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SaskTel submitted that the proposed tariff revisions would ensure that the service basket index (SBI) would not exceed the service basket limit (SBL) for the other capped services basket.
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6.
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SaskTel requested that the proposed tariff revisions become effective on 1 June 2003.
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7.
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SaskTel filed an imputation test in support of the proposed rate changes.
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8.
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SaskTel submitted that the proposed tariff revisions complied with all of the pricing constraints set out in Decision 2002-34 and would ensure that it met its price cap obligations for 2003.
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9.
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The Commission received no comments with respect to this application.
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Commission analysis and determinations
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Costing issues
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10.
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The Commission notes that for a new service or a rate decrease, the proposed rates must be supported by and satisfy an imputation test. The Commission also notes that the imputation test is the accepted method, under the current regulatory regime, of determining whether the proposed rates would be anti-competitive.
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11.
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The Commission finds that the proposed rates pass the imputation test.
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Compliance with pricing constraints set out in Decision 2002-34
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12.
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In Decision 2002-34, the Commission applied a number of constraints to the rates for services in the other capped services basket, in order to provide customers of those services with price protection.
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13.
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The pricing constraints which apply to services in the other capped services basket include:
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· a basket constraint, operating through the SBL for that basket, which must be
updated annually by the rate of inflation less the productivity offset;
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· a rate element constraint limiting rate increases for a service to 10% per year; and
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· 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 should not generally be permitted to be
further de-averaged within a band.
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14.
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The Commission finds that the proposed tariff revisions comply with the basket constraint requirement that the SBI not exceed the SBL for the other capped services basket. As SaskTel proposed no price increases to other capped services, the rate element constraint limiting rate increases to 10% is not pertinent.
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15.
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Accordingly, the Commission is satisfied that the proposed tariff revisions are consistent with the pricing constraints established in Decision 2002-34.
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16.
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The Commission notes that SaskTel's rates for DNA service are to remain interim pending completion of the proceeding initiated by Competitor Digital Network Access service proceeding, Telecom Public Notice CRTC 2002-4, 9 August 2002.
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17.
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In light of the foregoing, the Commission approves on an interim basis the proposed rates for DNA service. The revisions take effect as of the date of this order.
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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: 2003-08-27