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ARCHIVED - Telecom Order CRTC 2004-171

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Telecom Order CRTC 2004-171

  Ottawa, 27 May 2004
 

MTS Communications Inc.

  Reference: MTS Tariff Notices 526, 527 and 528
Bell Canada Tariff Notice 811 (National Services Tariff)
 

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. (MTS), Saskatchewan Telecommunications and TELUS Communications Inc.

2.

The Commission received applications by MTS and Bell Canada, on behalf of MTS, dated 31 March 2004, proposing tariff revisions to meet MTS's 2004 price cap commitment.
 

MTS's and Bell Canada's applications

3.

In their applications, MTS and Bell Canada proposed revisions to the following tariff items:
 
  • MTS, General Tariff,
 

- item 475, Rate schedule for primary exchange service;

 

- item 710, Exchange measurement - Telephone services facilities;

 

- item 900, Foreign exchange service;

 

- item 2600, Mobile telephone service;

 
  • MTS, Supplementary Tariff Special Services and Facilities,
 

- item 5100, Channels for occasional radio program service;

 

- item 5500, Channels for interexchange voice grade facilities;

 

- item 5600, Channel charges;

 

- item 5700, Teleroute 200 service;

 
  • MTS, Supplementary Tariff - Voice and Data Equipment,
 

- item 14070, Loops and facilities equipment; and

 
  • Bell Canada, National Services Tariff, item 301, Digital Network Access (DNA service).

4.

In particular, MTS proposed the following tariff revision to a service in the single and multi-line business local exchange services basket:
 
  • increases the monthly rates for the non-contract and the contract options for individual line business service in all bands ranging between 3% and 9.5%.

5.

MTS noted that the proposed increases to the individual line business service rates would also affect the rates for Semi-public telephone rates and Conference access service, as individual line service is a component of these services.

6.

MTS 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. MTS also submitted that the proposed rate increases did not exceed the 10% individual rate element constraint.

7.

MTS proposed the following tariff changes to services within the other capped services basket:
 
  • increase the rates for Exchange measurement - Telephone services facilities by approximately 10%;
 
  • increases in the rates for Foreign exchange service ranging between 5.6% and 10%;
 
  • increase the rates for Mobile telephone service by 10%. The monthly rate would increase from $35.00 to $38.50 and the per-minute usage rate would increase from $0.90 to $0.99;
 
  • increase the rates for Channels for occasional radio program service. The local channel rates would increase by approximately 10% and the increases in the interexchange channel rates would range between 7.1% and 10%;
 
  • increases in the rates for Channels for interexchange voice grade facilities ranging between 8.33% and 10%;
 
  • increase the rates for Channel charges by approximately 10%;
 
  • increases in the rates for Teleroute 200 service ranging between 9% and 10%;
 
  • increase the rates for Loops and facilities equipment by 10%;
 
  • reductions in the monthly access rates for DNA at DS-1 speeds ranging between 0.4% and 14.3%;
 
  • change the current DS-1 access service DNA rate band designation for Brandon from Band 3 to Band 1, resulting in rate decreases ranging between 30% and 44.2%;
 
  • change the current DS-3 access service DNA rate band designation for Winnipeg from Band 2 to Band 1, resulting in rate decreases ranging between 11.0% and 20.5%; and
 
  • change the current DS-3 access service DNA rate band designation for Brandon from Band 3 to Band 2, resulting in rate decreases ranging between 9% and 10.1%.

8.

MTS filed an imputation test in support of its proposed rate reductions to DNA service.

9.

MTS submitted that the proposed tariff revisions would ensure that the SBI would not exceed the SBL for the other capped services basket. MTS also submitted that the proposed rate increases did not exceed the 10% individual rate element constraint.

10.

MTS proposed tariff changes to the following uncapped service:
 
  • increase the monthly rental rates for Channels for occasional radio program service, miscellaneous equipment associated with program transmission by approximately 10%.

11.

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

12.

MTS 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.

13.

The Commission received no comments with respect to these applications.
 

Commission analysis and determination

 

Costing issues

14.

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.

15.

The Commission notes that in MTS's imputation tests filed in support of its DNA service rate reductions in Bands D and F, the company imputed the per-band average monthly loop rates it had proposed in its 25 November 2003 application to review and vary, among other decisions, MTS Communications Inc. - Reclassification of Band D exchanges to Band F and related rate issues, Telecom Decision CRTC 2003-70, 17 October 2003. The Commission has not yet rendered a determination on this application.

16.

The Commission notes that the currently approved loop rates in Bands D and F are lower than the rates imputed by MTS. The Commission finds that, had the approved loop rates been imputed by MTS, the proposed DNA rates would have passed the imputation test with a higher margin than was shown in MTS's imputation test results.
 

Compliance with pricing constraints set out in Decision 2002-34

17.

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.

18.

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.

19.

The Commission notes that MTS's proposed increases to the individual line business primary exchange service rates 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.

20.

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.

21.

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.

22.

The Commission notes that the proposed increases to the monthly rates for Channels for occasional radio program service, Channels for interexchange voice grade facilities, Channel charges, Teleroute 200 service, Exchange measurement - Telephone services facilities, Foreign exchange service, Loops and facilities equipment, and Mobile telephone 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 other capped services basket.

23.

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.

24.

The Commission notes that there are no upper pricing constraints which apply to uncapped services. The Commission therefore finds that MTS's proposed increases to the monthly rental rates for Channels for occasional radio program service, Miscellaneous equipment associated with program transmission are acceptable.

25.

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

26.

The Commission notes that MTS'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.

27.

In light of the foregoing:
 
  • the Commission approves the proposed rates for individual line business primary exchange service, Channels for occasional radio program service, Channels for interexchange voice grade facilities, Channel charges, Teleroute 200 service, Exchange measurement - Telephone service facilities, Foreign exchange service, Loops and facilities equipment, and Mobile telephone service; and
 
  • the Commission approves on an interim basis the proposed rates for DNA service.

28.

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: