ARCHIVED - Telecom - Commission Letter - 8663-C12-200318130 - Amendments to Public Notice CRTC 2003-8, Review of price floor safeguards for retail tariffed services and related issues, Telecom Public Notice CRTC 2003 10, 8 December 2003 (Public Notice 2003-10)

Our File: 8663-C12-200318130

Ottawa, 13 May 2004

To: Interested Parties

Re: Amendments to Public Notice CRTC 2003-8, Review of price floor safeguards for retail tariffed services and related issues, Telecom Public Notice CRTC 2003-10, 8 December 2003 (Public Notice 2003-10)

Dear Sir/Madam:

On 30 April 2004, the Commission received an application from Aliant Telecom Inc., Bell Canada, MTS Communications Inc., Saskatchewan Telecommunications, Télébec, société en commandite, TELUS Communications Inc., and TELUS Communications (Québec) Inc. (the Companies) with respect to supplemental interrogatories issued by Commission staff on 23 April 2004.

The Companies requested that the Commission rescind certain supplemental interrogatories which they considered to be beyond the scope of Public Notice 2003 10. The Companies further requested that the time permitted to respond to the remaining supplemental interrogatories, which they consider to be within the scope of Public Notice 2003 10, and to file final argument, be extended to 25 May 2004 and 14 June 2004, respectively. In this event, they proposed that reply argument would be filed on 28 June 2004. The Companies requested that in the event that the Commission does not rescind the supplementary interrogatories that the Companies believe are beyond the scope of Public Notice 2003 10, the Commission should amend the scope of the Public Notice to provide parties with full and complete notice of the case to be met. This would include disclosure on the record of the proceeding of the briefing papers and other materials used by staff experts to develop the new proposals contemplated by the interrogatories. Further, they submitted that the amended public notice should establish revised procedures to give parties a meaningful opportunity to test these new proposals. The Companies argued that these amended procedures ought to be along the lines of the ones contemplated in Public Notice 2003 10 with respect to the issues to be addressed in comments and should also include an oral hearing.

In the opinion of the Companies, the interrogatories identified in an attachment to their letter of 30 April 2004 contemplate new proposals that amount to different, more restrictive pricing constraints on the Companies relative to the preliminary views set out in Public Notice 2003-10 upon which the parties were permitted to comment. The Companies argued that the scope of the issues in Public Notice 2003 10 was delineated so that parties would be able to file evidence in accordance with the scope of issues and test all of the evidence on these issues.

The Companies stated that the supplemental interrogatories include a series of interrogatories where new definitions of bundling were advanced by Commission staff based on a TELUS training manual, which, according to the Companies, nobody regarded as congruent with the CRTC's definition, and preliminary definitions made in an interrogatory response filed in a different proceeding. They stated that their evidence filed in this proceeding and the evidence of their witnesses was based on the Commission's existing definitions. The Companies further stated that introducing new definitions means that evidence filed in this proceeding must be revisited.

The Companies noted that three of these interrogatories involve reclassifications of categories of Competitor services. The Companies stated that their evidence was based on existing classifications and that it is not procedurally fair that staff propose that these classifications be changed.

By letter dated 30 April 2004, The Coalition for Competitive Telecommunications Pricing (the Coalition) submitted comments regarding the remaining procedure in the Public Notice 2003 10 proceeding.

The Coalition stated that it received no notice from the Commission of proposals in the staff interrogatories. They further stated that the Coalition or other parties not in receipt of the staff interrogatories have not been given any opportunity to comment on these potential new rules and restrictions even though it is abundantly clear from the record of the proceeding to date that Canadian business and residential consumers will be directly affected, perhaps profoundly, by any pricing reforms the Commission may adopt in this proceeding. The Coalition stated that a number of the Commission's supplemental interrogatories address proposed pricing rules or conditions beyond the proposed framework advanced by the Commission in Public Notice 2003 10.

The Coalition stated that it reserves on whether it wishes the opportunity to respond to the Commission's supplemental interrogatories containing new pricing proposals, or whether it wishes to have such interrogatories struck from the record of this proceeding for want of adequate notice and opportunity to comment.

The Canadian Cable Television Association (CCTA), LondonConnect Inc. (LCI) and Allstream Corp. and Call-Net Enterprises Inc. (the Competitors) filed comments by letters dated 4 May 2004, 6 May 2004 and 6 May 2004, respectively, in response to the application filed by the Companies.

CCTA submitted that the Commission should deny the application in its entirety. CCTA noted that among the 24 specific interrogatories that the Companies seek to have removed from the record of the proceeding, almost all specifically address matters regarding the nature and application of an imputation test or safeguard for a bundled service offering that includes tariffed services. CCTA further noted that even where reference to an imputation test or bundled service safeguard is not explicit in the interrogatory, the matter raised would impact the application of such a test or safeguard.

CCTA noted that certain of the supplemental interrogatories refer to the Companies' 30 January 2004 evidence and to responses made by the Companies to interrogatories that had been addressed by the Commission. CCTA stated that as the Companies must consider their evidence and responses to be relevant to the record of this proceeding, it follows that it is within the scope of the proceeding that the Commission has the right to pursue matters that arise from such filings.

With respect to the delays proposed by the Companies, CCTA stated that the time-lines which have been established for the remainder of the proceeding are consistent with the schedule that the Commission had previously established for responses to interrogatories and submission of final argument. CCTA stated that it would be prepared to support the Companies' request for further procedures only on the condition that the Commission impose an immediate moratorium on the Companies' bundling of residential local telephone service.

LCI stated that it has no objection to the extensions of time requested by the Companies for filing interrogatory responses, argument and reply to 24 May, 14 June and 28 June, respectively. LCI stated that it strongly opposes the Companies' attempts to artificially limit the scope of the proceeding and their proposal for an oral proceeding.

With regard to the scope of the proceeding, LCI stated that there is virtually no issue regarding a) the construction or formulation of imputation tests or price floors for the Companies' services and bundles, b) the nature of potential safeguards applying to the use of volume and term contracts by the Companies, or c) bundling rules generally, that could be considered to be beyond the scope of the proceeding.

LCI submitted that, with two minor exceptions, the supplemental interrogatories identified by the Companies as being outside the scope of the proceeding are very obviously within the scope of the proceeding. With respect to the two minor exceptions, LCI stated that they agree with the Companies that two interrogatories addressed to the Companies which deal with the classification of services as Competitor services are strictly speaking, outside the scope of the proceeding, as they deal with the classification of Competitor services. Nonetheless, in LCI's view, dealing with the potential anomaly in the current proceeding, as opposed to a follow-up proceeding, would have no material adverse impact on the Companies' interests.  With regard to the series of interrogatories addressing an alternate definition of a tariffable bundle, LCI stated that an alternative definition of a "tariffable bundle" was proposed in response to The Companies(CRTC)20Feb04-10 PN 2003-10. LCI stated that presumably the Companies (excluding TELUS Communications Inc. and TELUS Communications (Quebec) Inc.) did not think that the proposal they were making in the context of the interrogatory response was beyond the scope of the proceeding.

With regard to concerns raised by the Coalition, LCI stated that presumably the Coalition has had the opportunity to use the time since 30 April 2004 to assess and formulate positions on the matters raised in the new interrogatories. LCI stated that current practices are perhaps not ideal from the perspective of providing reasonable notice to each party of the proposals or issues raised in interrogatories addressed by the Commission to other parties. LCI suggested several steps that the Commission may wish to implement, on a going-forward basis, to provide copies of Commission staff interrogatories to all interveners.

The Competitors submitted that there is no question but that in Public Notice 2003 10 the Commission has given the Companies ample notice of the scope of the subject matter of this proceeding. The Competitors stated that it has been settled law since at least 1982 that the Commission need not provide affected parties with notice of each and every particular rule or combination and permutation of rules that may be imposed upon them - let alone an advance indication of its probable decision - provided it has given the parties ample notice of the scope of the subject matter of the proceeding. They also stated that, in any event, the issuance of the supplemental interrogatories, which are within the scope of the proceeding, provide additional notice in respect of issues in the proceeding.

The Competitors noted that they would not be opposed to the Commission granting the Companies and all other parties a modest extension of not longer than two weeks to the time for responding to the supplemental interrogatories with a consequential extension for the filing of the final and reply comments.

The Companies filed their reply on 10 May 2004 responding to the arguments put forward by the other parties and reiterating the requests that they made in their application. Among other things, the Companies expressed the view that, in Public Notice 2003-10, the Commission created a legitimate expectation that all pricing policies and options to be considered by the Commission would be clearly defined by 30 January 2004, the date for parties' initial submissions.

The Commission notes that in reaching its determinations, it has considered all of the submissions filed by the parties, which are summarized above.

Commission determinations

Scope of interrogatories

The Commission notes that the scope of the issues within the proceeding initiated by Public Notice 2003 10 was explicitly stated in paragraph 41 of that public notice in a broad manner to ensure that the Commission would be in a position to explore and examine modifications to the existing imputation test and service bundle pricing rules, and possible pricing safeguards regarding term and volume contracts, in addition to those proposed by the Commission. Moreover, the scope of the proceeding was stated to include any other aspect of the current regulatory framework regarding the imputation test and bundling rules, and any other related retail tariffed service pricing safeguards.

The Commission notes that the supplemental interrogatories referred to in Attachment 1 of the Companies' letter specifically address matters regarding the nature, application and implementation of the imputation test, service bundle pricing rules, and pricing safeguards related to term and volume contracts and related issues.

More specifically, interrogatories in relation to the imputation test deal with the potential imputation of rates for certain Competitor services in an imputation test, as contemplated in paragraph 26 of the Public Notice.

Supplemental interrogatories in relation to the service bundling rules address (1) the appropriateness, interpretation and enforcement of the definition of a tariffable bundle provided in response to The Competitors(The Companies)20 Feb04-3 PN 2003-10; and (2) alternate formulations of the pricing safeguards, including related conditions.

With respect to the definition of a tariffable bundle to which a pricing safeguard would apply, the Commission notes that the Companies(excluding TELUS Communications Inc. and TELUS Communications (Quebec) Inc.) also addressed another interrogatory on the issue of the definition of a bundle. Further, the record to date reveals that parties may be using different definitions for the purpose of determining which bundles require tariff approval.

The alternative service bundling rules, including the related conditions, identified in the supplemental interrogatories arise from responses to interrogatories by the Companies or otherwise relate to elements of the safeguards, including conditions, proposed in paragraphs 36, 37 and 38 of Public Notice 2003 10 or to the impact of potential restrictions on bundles in cases where an appropriate safeguard cannot be determined.

Supplemental interrogatories relating to pricing safeguards for volume and long term contracts relate to responses to interrogatories filed by the Companies or otherwise relate to an alternate formulation of the safeguards contemplated in paragraph 40 of the Public Notice.

Finally, the Commission notes that the purpose of The Companies(CRTC)23April-102c) and TELUS(CRTC)23April04-106c) and The Companies(CRTC)23April04-103 and TELUS(CRTC)23April04-107 is to identify those Competitor services for which rates may be imputed under any revised imputation test that may be adopted by the Commission in this proceeding. The Commission considers that the question of how the services referred to in the above interrogatories ought to be treated under any modifications to the imputation test is within the scope of this proceeding. Therefore, to better reflect the purpose of these interrogatories:

1. The last sentence of The Companies(CRTC)23April04-102(c) and TELUS(CRTC)23April04-106(c) is clarified by the following modification:

If not so identified, comment, with respect to the imputation of rates in the imputation test, on the appropriateness of treating the service in the same manner as other Competitor services for which rates are subject to imputation in the imputation test which may be adopted in this proceeding, given that the Commission determined that the service is a bottleneck service.

2. The Companies(CRTC)23April04-103(a) is clarified by the following modification:

(a) Comment, with respect to the imputation of rates in the imputation test, on the appropriateness of treating Bell Canada's AIN Interconnection Service in the same manner as other Competitor services for which rates are subject to imputation in the imputation test which may be adopted in this proceeding, given that the Commission has determined that TELUS' INI CAT is to be imputed in support of a service that relies on the functionalities that underlie the provision of INI.

3. The last sentence in TELUS(CRTC)23April04-107 is clarified by the following modification:

Comment, with respect to the imputation of rates in the imputation test, on the appropriateness of treating TELUS' INI Service in the same manner as other Competitor services for which rates are subject to imputation in the imputation test which may be adopted in this proceeding, given that the Commission has determined that TELUS' INI CAT is to be imputed in support of a service that relies on the functionalities that underlie the provision of INI.

Based on the foregoing, the Commission finds that all supplemental interrogatories, as clarified, are within the scope of this proceeding.

Modifications to existing procedure

The Commission notes that the supplemental interrogatories were, in accordance with general practice, addressed by Commission staff. The Commission confirms that the interrogatories in question in fact do not revise the preliminary views it expressed in the Public Notice or otherwise reflect any view of the Commission regarding the disposition of the issues in this proceeding.

The Companies requested that, in the event that the Commission decided not to rescind the interrogatories in question, it should issue an amended Public Notice. As part of this proposal, the Companies argued that all parties must be able to address additional written interrogatories and conduct cross-examination in relation to the supplemental interrogatories. The Coalition argued that all parties must be afforded the opportunity to revisit and revise all of their submissions in light of the alternative proposals put forward in the Commission staff interrogatories.

According to these arguments, it would appear that no alternative options could be explored in an interrogatory in response to submissions filed on the record of the proceeding without all parties being afforded an additional opportunity to ask further interrogatories on that option, to conduct cross-examination, and in the case of the Coalition's argument, without being able to revise original submissions. This could result in a never-ending proceeding.

As discussed above, the scope of the proceeding was intended to be broad. The Public Notice explicitly defined the scope of the proceeding to encompass any modification to the imputation test and bundling rules and any other related retail tariffed service pricing safeguard. Moreover, the Public Notice did not modify, expressly or impliedly, the longstanding practice of the Commission to explore in response to submissions filed various alternative options, for example by way of interrogatories, prior to the filing of final submissions.

In addition, the Commission notes that the Companies (excluding TELUS Communications Inc. and TELUS Communications (Quebec) Inc.) in fact proposed an alternative option in their response to The Companies(CRTC)20Feb04-10. Under this option, the Companies would be permitted to offer a generally-available or customer-specific bundle without explicit Commission approval provided that the price for the bundle exceeds the sum of the general tariff prices for tariffed service components of the bundle.

With respect to the concern expressed by the Coalition that it has no opportunity to comment on the supplemental interrogatories, the Commission notes that the Coalition will have a full opportunity to file final submissions in relation to the issues addressed in the supplemental interrogatories. Parties are not precluded from revising their initial position in their final submissions.

It is a longstanding practice in Commission proceedings that all interrogatories are not necessarily addressed to all parties. In fact, only a portion of the supplemental interrogatories that were addressed to the Companies were also addressed to the CCTA, Rogers, the Competitors and LCI. It was considered that the Companies and these parties were in the best position to answer these interrogatories based on their submissions filed to date, the types of interrogatories addressed by these parties and/or to which they responded, and the experience of these parties as Canadian carriers. The fact that interrogatories are addressed to certain parties means that those parties are required to put their position on the record.

Moreover, the Commission notes that all parties had full notice that supplemental interrogatories would be addressed to certain parties. By letter dated 16 April 2004, all parties were advised that supplemental interrogatories would be distributed to certain parties shortly. Further, by letter dated 27 April 2004 all parties were informed of when, and the parties to whom, the supplemental interrogatories were distributed. Finally, references to these interrogatories were posted on the Commission's website the following business day and copies of the supplemental interrogatories are available on the public record. In addition, the Commission notes that all parties are to be served with copies of all responses to interrogatories.

In any event, the Commission notes that no party who filed submissions in this proceeding would be refused the opportunity to file a response to a supplemental Commission interrogatory to which the party is in a position to respond. If any such party wishes to file responses to the supplemental interrogatories concerning alternative options that were addressed to Rogers, LCI and the Competitors they may do so by 28 May 2004, serving copies on all parties by that date.

With respect to the request by the Companies for disclosure of Commission staff briefing papers and other materials relating to the supplemental interrogatories, the Commission notes that staff briefing papers and other staff documents containing analysis have consistently been retained in confidence. The Commission notes that no reports or briefing materials or other materials containing advice or opinions for consideration by the Commission were prepared for the purpose of the development of the staff supplemental interrogatories.

In light of all of the foregoing, and taking into account all of the circumstances of this proceeding including the nature of the issues being examined, the Commission finds that the opportunity to address additional written interrogatories to parties, to orally cross-examine parties, and/or to file revisions to initial submissions, in relation to the various issues explored by Commission staff in its supplemental interrogatories, would appear to be neither necessary nor appropriate based on the record to date. In the Commission's view, the opportunity to file final and reply comments provides all parties a full and meaningful opportunity to present their views.

Accordingly, the Commission concludes that no additional modifications to the process are warranted, other than an extension of the time allowed for filing responses to interrogatories as set out below.

The Commission considers that it would be appropriate to allow an additional two weeks for filing responses to the supplemental interrogatories. Accordingly, parties are to file and serve on all parties their responses to the supplemental interrogatories by 28 May 2003. In addition, the dates for filing and serving on all parties final and reply argument are hereby revised, respectively, to 11 June 2004 and 25 June 2004.

All documents are to be actually received, and not merely sent, by the dates indicated.

Yours sincerely,


Diane Rhéaume
Secretary General

c.c. Dem Magmanlac, CRTC, (819) 953-6638

Date modified:

2004-05-13