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ARCHIVED - Telecom Order CRTC 2004-169

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Telecom Order CRTC 2004-169

  Ottawa, 27 May 2004
 

Bell Canada

  Reference: Tariff Notices 6802, 6803 and 6803A
 

2004 Annual price cap filings

1.

In Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34), the Commission established the price cap regime that is now applicable to the following incumbent local exchange carriers (ILECs): Aliant Telecom Inc., Bell Canada, MTS Communications Inc., Saskatchewan Telecommunications and TELUS Communications Inc.

2.

The Commission received applications by Bell Canada, dated 31 March 2004, proposing tariff revisions to meet its 2004 price cap commitment. Bell Canada filed amendments to Tariff Notice 6803 on 7 April 2004.
 

Bell Canada's applications

3.

In its applications, Bell Canada proposed revisions to the following General Tariff items:
 
  • Item 70.2, Rates schedules for primary exchange (local) service - Business Service; and
 
  • Item 500, Direct inward dialing (DID).

4.

In particular, Bell Canada proposed the following tariff revision to a service in the single and multi-line business local exchange services basket:
 
  • increase the monthly rates for measured line business primary exchange service from $38.40 to $41.95 in all applicable bands.

5.

Bell Canada submitted that the proposed tariff revisions would ensure that the service basket index (SBI) would not exceed the service basket limit (SBL) for the single and multi-line business local exchange services basket. Bell Canada also submitted that the proposed rate increases did not exceed the 10% individual rate element constraint.

6.

Bell Canada proposed the following tariff revisions to services within the other capped services basket:
 
  • introduce a minimum contract period (MCP) option for DID arrangements. Reductions range from 10% to 50% depending on the contract period selected (1-, 2-, 3-, 4- or 5-year options); and
 
  • introduce the same MCP options that were proposed for DID for Multiple Appearance Directory Numbers service and Direct Access Features, where a telephone number is required.

7.

Bell Canada noted that these MCP options would only be available to customers where the associated access is also provided under contract.

8.

Bell Canada filed an imputation test in support of its proposed rate reductions to DID service.

9.

Bell Canada submitted that the proposed revisions would ensure that the SBI would not exceed the SBL for the other capped services basket.

10.

Bell Canada requested that the proposed tariff revisions become effective on 1 June 2004.

11.

Bell Canada submitted that the proposed tariff revisions complied with all the pricing constraints set out in Decision 2002-34 and would ensure that it met its price cap obligations for 2004.

12.

The Commission received no comments with respect to these applications.
 

Commission analysis and determination

 

Costing issues

13.

The Commission notes that for a new service or a rate decrease, the proposed rate 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.

14.

The Commission finds that the proposed rates pass the imputation test.
 

Compliance with pricing constraints set out in Decision 2002-34

15.

In Decision 2002-34, the Commission applied a number of constraints to the rates for services in the single and multi-line business local exchange services basket and the other capped services basket, in order to provide customers of those services with price protection.

16.

The pricing constraints which apply to services in the single and multi-line business local exchange services basket include:
 
  • a basket constraint, operating through the SBL for that basket, which must be updated annually by the rate of inflation;
 
  • a rate element constraint limiting rate increases for a service to 10% per year; and
 
  • 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 business local exchange services should not generally be permitted to be further de-averaged within a band.

17.

The Commission notes that the proposed increases to the monthly rates for measured line business primary exchange service do not exceed 10%. The Commission finds that the proposed tariff revisions comply with the basket constraint requirement that the SBI not exceed the SBL for the single and multi-line business local exchange services basket.

18.

The Commission also finds that the proposed tariff revisions comply with the Commission's prohibition against further de-averaging rates for single and multi-line business local exchange services within a band.

19.

The pricing constraints which apply to services in the other capped services basket include:
 
  • a basket constraint, operating through the SBL for that basket, which must be updated annually by the rate of inflation less the productivity offset;
 
  • a rate element constraint limiting rate increases for a service to 10% per year; and
 
  • 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 business local exchange services should not generally be permitted to be further de-averaged within a band.

20.

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 Bell Canada proposed no price increases to other capped services, the rate element constraint limiting rate increases to 10% per year is not pertinent.

21.

The Commission also finds that the proposed tariff revisions comply with the Commission's prohibition against further de-averaging rates for other capped services within a band.

22.

Accordingly, the Commission finds that the proposed tariff revisions are in accordance with the Commission's determinations in Decision 2002-34.

23.

In light of the foregoing, the Commission approves the proposed revisions. The revisions take effect as of 1 June 2004.

Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca

Date Modified: 2004-05-27

Date modified: