ARCHIVED - Telecom Order CRTC 2003-358

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Telecom Order CRTC 2003-358

  Ottawa, 2 September 2003

Bell Canada

  Reference: Tariff Notices 753/A/B/C (National Services Tariff)

Ex parte application


The Commission denies the above-referenced ex parte application1 by Bell Canada, dated 27 January 2003 and amended on 21 February 2003, 19 March 2003 and 30 May 2003.


In reviewing the Phase II cost information provided in support of Tariff Notices 753/A/B/C (TN 753) the Commission found a number of costing methodology irregularities. These irregularities are the result of a failure to correctly apply the directives set out by the Commission in Inquiry into Telecommunications Carriers' Costing and Accounting Procedure Phase II: Information Requirements for New Service Tariff Filings, Telecom Decision CRTC 79-16, 28 August 1979 in the economic study of the specific service proposed in TN 753.


The major irregularities are discussed below.
  a) The Commission considers Bell Canada's study life estimate to be
     inappropriate, by comparison with customer specific arrangement
     (CSA) contract lives which are typically five years in length or less;
  b) The Commission considers Bell Canada's frequency of the capital
     injections over the study period to be inappropriate and expects that the
     demand will typically occur at the beginning of the contract;
  c) The Commission considers Bell Canada's treatment of advertising
     expenses to be inappropriate. The Commission is of the view that
     advertising expenses should apply to the service regardless of whether it
     is a component of a CSA or provided on a stand-alone basis;
  d) The Commission considers Bell Canada's exclusion of portfolio
     expenses, which are non-service specific expenses causal to groupings
     of services, to be inappropriate; and
  e) The Commission considers Bell Canada's use of corporate-average
     expenses rather than contract-specific expenses to capture certain
     operating expenses to be inappropriate. The Commission expects that
     most operating expenses associated with Bell Canada's CSA contracts
     will be greater than the corporate-average expenses.


The Commission further notes that a confidential Commission staff letter dated 18 July 2003 (the staff letter) addressed costing methodologies generally applicable to customer specific arrangements proposed by Bell Canada. In the staff letter Bell Canada was advised of the costing methodology procedures to be applied by the company in the development of imputation test results for CSAs.


Were Bell Canada to apply the proper Phase II costing methodologies in this case, the Commission does not consider that the proposed service would be shown to generate sufficient revenues in excess of costs to justify approval of the proposed tariff. Accordingly, the application is denied.


In order that the application may be available for public examination consistent with the CRTC Telecommunications Rules of Procedure, the company is directed to file with the Commission, within two business days of the date of this order, a hard copy of the application for the public examination room at the Commission's headquarters in Gatineau, and an electronic version for the Commission's web site.
  Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site:

1 An ex parte application, is an application that has been filed with the Commission without notice to the public and, as such, is not placed on the public record when initially filed. An ex parte decision is one in which the Commission disposes of an application solely on the basis of the applicant's submissions. Section 61(3) of the Telecommunications Act allows the Commission to make an ex parte decision where it considers that the circumstances of the case justify it. In Review of regulatory framework, Telecom Decision CRTC 94-19, 16 September 1994, the Commission set out several considerations to be balanced in any determination to permit ex parte tariff filings, including the public interest in the effective operation of the competitive marketplace and the public interest in an open regulatory process.

Date Modified: 2003-09-02

Date modified: