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Telecom Order CRTC 2003-507
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Ottawa, 15 December 2003
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Bell Canada
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Reference: Tariff Notice 6728
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Local Link Package
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1.
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The Commission received an application by Bell Canada, dated 10 February 2003, to revise General Tariff item 680, Centrex III - Local Link Package. Bell Canada proposed to increase the monthly rate per access line by $2.00 for the non-contracted service and by $1.00 for small and medium business customers who contracted for a one-year service period. The company noted that, since Local Link Package was categorized as an uncapped service, this proposed price increase had no impact on the company's price cap indices.
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2.
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In Telecom Order CRTC 2003-97, 3 March 2003 (Order 2003-97), the Commission gave interim approval to Bell Canada's application.
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3.
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The Commission received comments from AT&T Canada Corp., now Allstream Corp. (Allstream) dated 12 March 2003. Reply comments were received from Bell Canada on 24 March 2003.
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Allstream's comments
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4.
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Allstream requested that the Commission rescind the interim approval given in Order 2003-97 and reclassify Local Link Package as an other capped service.
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5.
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Allstream submitted that Bell Canada's proposal was an anti-competitive strategy to subsidize targeted rate reductions to large business customers by increasing rates to small business customers who had less competitive choice. Allstream argued that this proposal demonstrated that the price cap classification of Local Link Package should be changed from an uncapped to an other capped service, thereby subjecting these services to specific pricing constraints.
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Bell Canada's reply
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6.
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Bell Canada stated that, if customers of Local Link Package found that the price was too high, they had the options of subscribing to Centrex services provided by competitors or other services such as business local exchange services. Bell Canada submitted that, contrary to Allstream's claim, the proposed increases should have the effect of promoting local competition. The increases would provide competitors with an opportunity to win over more customers and/or to increase rates for their equivalent services, thereby improving the prospects of competitors.
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7.
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With respect to Allstream's request that the service be reclassified as an other capped service, Bell Canada stated that the Commission had first classified Centrex services as uncapped in Price cap regulation and related issues, Telecom Decision CRTC 97-9, 1 May 1997, and affirmed that classification in Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34).
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Commission's analysis and determination
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8.
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With respect to Allstream's request to reclassify Local Link Package as an other capped service, the Commission notes that this service is a Centrex service. At paragraph 455 in Decision 2002-34, the Commission noted that an important consideration underlying its approach in the initial price cap regime was to provide regulatory protection to customers of primary exchange service where market forces were not sufficient to so do. In this connection, the Commission noted that Centrex service is a premium business service that is used as a substitute for single-line and multi-line business local exchange services. The Commission stated that as the decision made these latter services subject to a basket constraint and a rate element constraint, the Commission did not consider it necessary to subject Centrex services to such constraints and classified them as uncapped services. The Commission considers that Allstream provided no evidence to support a change of this determination.
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9.
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Accordingly, the Commission does not consider that the price increases are anti-competitive.
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10.
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In light of the above, the Commission approves on a final basis Bell Canada's application.
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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: 2003-12-15