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ARCHIVED - Telecom Order CRTC 2004-172

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Telecom Order CRTC 2004-172

  Ottawa, 27 May 2004
 

TELUS Communications Inc.

  Reference: TCI Tariff Notices 141 and 142
Former TCI Tariff Notices 526, 527, 528, 529 and 530
Former TCBC Tariff Notices 4206, 4207, 4208, 4209 and 4210
 

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. (TCI).

2.

The Commission received applications by TCI, dated 31 March 2004, proposing tariff revisions to meet its 2004 price cap commitment.

3.

The Commission received comments from Allstream Corp. (Allstream), dated 30 April 2004, and reply comments from TCI, dated 14 May 2004.
 

TCI's applications

4.

In its applications, TCI proposed revisions to the following tariff items:
 
  • former TCI General Tariff,
 

- item 350, Interexchange foreign exchange service;

 

- item 355, Interexchange off-premise service;

 

- item 360, Interexchange private line service;

 

- item 365, Interexchange tie trunk service;

 

- item 385, Channels for data transmission;

 

- item 425, Exchange service;

 

- item 485, Integrated services digital network - Basic rate interface (ISDN-BRI) service;

 

- item 495, Integrated services digital network - Primary rate interface (ISDN-PRI) service;

 

- item 500, Digital Network Access (DNA);

 

- item 615, Local channel service (Outside the city of Edmonton);

 

- item 625, Local channel service (in the city of Edmonton);

 
  • former TELUS Communications (B.C.) Inc. General Tariff,
 

- item 32, Exchange rates;

 

- item 104, Extension line mileage - voice;

 

- item 104-A, Extension line mileage - data;

 

- item 106, Interexchange line mileage - voice;

 

- item 106-A, Interexchange line mileage - data;

 

- item 159, Tie trunk and tie line service;

 

- item 400, Private line service - voice/local channels;

 

- item 400-A, Private line service - data/local channels;

 

- item 447, Digital network access;

 

- item 465, Integrated services digital network - Basic rate interface (ISDN-BRI) service;

 

- item 470, Integrated services digital network - Primary rate interface (ISDN-PRI) service;

 
  • TCI General Tariff,
 

- item 512, Hot line service;

 

- item 516, Signal transmission service; and

 

- item 520, OCN Digital Network Access.

5.

In particular, TCI proposed the following tariff revisions to services in the single and multi-line business local exchange services basket:
 
  • In Alberta, TCI proposed the following rate modifications:
 

- increases to the monthly rates for Business individual line service ranging between 3.9% and 5.9%;

 

- increases to the monthly rates for Business multi-line service ranging between 3.9% and 6%;

 
  • In British Columbia, TCI proposed the following rate modifications:
 

- increases to the monthly rates for Business single line - individual service ranging between 3.9% and 9.9%;

 

- increases to the monthly rates for Business single line - individual measured service in Band C and sub-bands of Bands D, E, F and G ranging between 1.3% and 10%; and

 

- increases to the monthly rates for Business multi-line service - small business or standard, and information system access (ISA) service - small business or standard, ranging between 3.8% and 6%.

6.

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

7.

In particular, TCI proposed the following tariff revisions to services within the other capped services basket:
 
  • In Alberta, TCI proposed the following rate modifications:
 

- increases of 10% to the monthly rates for the distance mileage and the link charge components for voice and data channels within Alberta;

 

- increases of 10% to the monthly rates for contract and non-contract options for ISDN-BRI service;

 

- amendments to ISDN-PRI service as follows:

 

i) combine the individual service elements for public switched telephone network (PSTN) termination and PRI signalling for ISDN-PRI service into one element entitled PRI Port and Signalling, and introduce rate reductions ranging between 7% and 22%;

 

ii) modify the rate structure for Retain directory number service to charge $2.45 per number;

 

iii) introduce a new volume discount offer associated with 250 or more ISDN-PRIs;

 

iv) eliminate the $25 service charge for PSTN links;

 

v) replace the reference to "ISDN-PRI access" with "ISDN-PRI system group" and add wording to clarify that the service charge would not apply if the feature was installed in conjunction with the initial installation of each ISDN-PRI system group;

 

- amendments to DNA service as follows:

 

i) decreases of 5% to the contracted monthly DS-1 and DS-3 access rates in Band 1;

 

ii) decreases to the contracted monthly DS-1 access rates in Band 2 for quantities of "1 to 4, each" ranging between 23% and 29%, and for quantities of "max., each 28" ranging between 6% and 8%;

 

iii) decreases of approximately 25% to the contracted monthly DS-3 access rates in Band 2 for the "first" DS-3;

 
  • In British Columbia, TCI proposed the following rate modifications:
 

- increases of 10% to some of the rates for Extension line mileage - voice, Extension line mileage - data, Interexchange line mileage - voice, Interexchange line mileage - data, Tie trunk and tie line service, Private line service - voice/local channels, and Private line service
- data/local channels;

 

- increases of 10% to the monthly rates for contract and non-contract options for ISDN-BRI service;

 

- amendments to ISDN-PRI service as follows:

 

i) amend the ISDN-PRI DS-1 access component in order to explicitly identify the existing approved monthly rates and service charges for the non-contracted DS-1s;

 

ii) decreases to the PSTN connectivity rates for all contract terms in rate Bands A and B ranging between 3.0% and 8.7%;

 

iii) introduce a new volume discount offer associated with 250 or more ISDN-PRIs;

 

iv) add a note to clarify that the PSTN connectivity contract rates per month are based on the associated contract term of the ISDN-PRI accesses;

 

v) revise "Note 5" in order to clarify that the service charge applies per ISDN-PRI system and is not applicable if a feature is installed with the initial installation;

 

vi) change the name of "call display plus" to "calling line identification";

 

- amendments to DNA service as follows:

 

i) decrease the contracted monthly DS-1 access rates in Band 0 by 5%;

 

ii) decreases to the contracted monthly DS-1 access rates in Band 2 for quantities of "1 to 4, each" ranging between 23% and 29%, and for quantities of "max., each 28" ranging between 6% and 8%;

 

iii) decrease the contracted monthly DS-3 access rates in Band 1 by 5%;

 

iv) decreases of approximately 25% to the contracted monthly DS-3 access rates in Band 2 for quantity "first DS-3";

 
  • In Alberta and British Columbia, TCI proposed the following rate modifications:
 

- increases of 10% to the monthly rates for the Business off-hook and the Automatic connect-ringdown module components of Hot line service;

 

- increases of 10% to the monthly rates for Signal transmission service; and

 

- decreases to the monthly rates for the access components of all OCN DNA speeds ranging between 1.3% and 50%.

8.

TCI filed imputation tests in support of its proposed rate reductions to ISDN-PRI service, DNA service and OCN DNA service.

9.

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

10.

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

11.

TCI 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.
 

Allstream's comments

12.

Allstream noted that TCI had proposed reductions to DNA service rates associated with higher transmission speeds and was offsetting them by increases in the rates for lower speed analogue data services. Allstream further noted that the ILECs are the dominant providers of higher capacity data services and argued that the proposed DNA rate reductions would be more properly viewed as price positioning for an evolution of a higher speed data network capable of supporting the next generation of services.

13.

Allstream submitted that, in order to avoid a re-monopolization of the next generation of telecommunication services, the Commission should look beyond the price cap rules when determining the appropriateness of allowing TCI's proposed DNA reductions.

14.

Allstream argued that the proposed reductions were anti-competitive. Allstream submitted that the Commission could address this by ensuring that all the underlying components of the local access and transport facilities and services used for the provision of next generation services were available to competitors.
 

TCI's reply

15.

TCI submitted that Allstream's allegations that TCI's proposed rates reductions to its DNA service were anti-competitive were without merit and should be dismissed. TCI further submitted that Allstream did not object directly to any of its proposed rate increases.

16.

TCI noted that all proposed rate reductions have been supported with Commission-required cost studies showing that the imputation tests have been met. TCI submitted that the imputation test is the Commission's accepted method, under the current regulatory regime, of determining whether the proposed rates would be anti-competitive. TCI further submitted that all of its proposed rate increases were in accordance with the Commission's pricing constraints and met both the rate element constraints as well as the SBL for the other capped services basket.
 

Commission analysis and determination

 

Costing issues

17.

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.

18.

The Commission finds that the proposed rates for ISDN-PRI, DNA service and OCN DNA service all pass the imputation test.
 

Compliance with pricing constraints set out in Decision 2002-34

19.

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.

20.

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.

21.

The Commission notes that the proposed increases to the monthly rates for Business single line - individual service, Business single line - individual measured service, Business multi-line service - small business or standard, ISA service - small business or standard, Business individual line service, and Business multi-line 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.

22.

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.

23.

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.

24.

The Commission notes that the proposed increases to ISDN-BRI, Hot line service, Signal transmission service, Interexchange foreign exchange service, Interexchange off-premise service, Interexchange private line service, Interexchange tie trunk service, Channels for data transmission, Local channel service (outside the city of Edmonton), Local channels service (in the city of Edmonton), Extension line mileage - voice, Extension line mileage
- data, Interexchange line mileage - voice, Interexchange line mileage - data, Tie trunk and tie line service, Private line service - voice/local channels and Private line service - data/local channels do not exceed 10%.

25.

The Commission notes that TCI has proposed to amend the rate structure for Retain directory number to charge $2.45 per number. Currently, the first nine numbers are provided free of charge and subsequent numbers are provided in blocks of 10 at a charge of $24.50 per block.

26.

The Commission notes that TCI's proposal to change the rate structure for Retain directory number service to a flat monthly charge per number will result in a rate increase to most customers of this service. The Commission also notes that TCI failed to quantify the increase in revenues that would result from the proposed rate structure and to reflect it in its price cap model. The Commission considers that the proposed rate structure should have been supported with this information and is therefore not prepared to approve this particular tariff revision at this time.

27.

The Commission finds that the remaining proposed tariff revisions comply with the basket constraint requirement that the SBI not exceed the SBL for the other capped services basket.

28.

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.
 

Allstream's comments

29.

The Commission notes Allstream's request that the Commission should look beyond the price cap rules when determining the appropriateness of allowing TCI's proposed DNA reductions and should make all the underlying components of the local access and transport facilities and services available to competitors.

30.

The Commission considers that Allstream's request to make the underlying components of the local access and transport facilities and services available to competitors is beyond the scope of whether the applications satisfy the price cap constraints established in Decision 2002-34. Moreover, the Commission notes that similar requests made by Allstream are being addressed in various other ongoing proceedings, including the proceeding initiated by Competitor Digital Network Access service proceeding, Telecom Public Notice CRTC 2002-4, 9 August 2002 (Public Notice 2002-4).

31.

Accordingly, the Commission finds that, with the exception noted in paragraph 26 above, the proposed tariff revisions are in accordance with the Commission's determinations in Decision 2002-34.

32.

The Commission notes that TCI's rates for DNA service are to remain interim pending completion of the proceeding initiated by Public Notice 2002-4.

33.

In light of the foregoing:
 
  • the Commission approves, with the exception of the proposed rate structure for Retain directory number,the proposed rates for Business single line - individual service, Business single line - individual measured service, Business multi-line service - small business or standard, ISA service - small business or standard, Business individual line service, Business multi-line service, ISDN-BRI, Hot line service, Signal transmission service, Interexchange foreign exchange service, Interexchange off-premise service, Interexchange private line service, Interexchange tie trunk service, Channels for data transmission, Local channel service (outside the city of Edmonton), Local channel service (in the city of Edmonton), Extension line mileage - voice, Extension line mileage - data, Interexchange line mileage - voice, Interexchange line mileage - data, Tie trunk and tie line service, Private line service - voice/local channels and Private line service - data/local channels, and ISDN-PRI; and
 
  • the Commission approves on an interim basis the proposed rates for DNA service and OCN DNA service.

34.

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: