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ARCHIVED - Telecom Order CRTC 2004-240

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Telecom Order CRTC 2004-240

  Ottawa, 19 July 2004
 

Bell Canada

  Reference: Tariff Notices 808 and 808A (National Services Tariff)
 

Digital network access

1.

The Commission received an application by Bell Canada, dated 17 February 2004 and amended on 12 March 2004, to revise National Services Tariff item 301.3, Digital Network Access (DNA).

2.

Bell Canada proposed rate reductions for DS-3, OC-3 and OC-12 access, and OC-3 and OC-12 intra-exchange channels. It also proposed the elimination of the link charges for these access services.

3.

Bell Canada noted that it had submitted information relating to its price cap indices, a cost study and the associated imputation test in support of the proposed rate reductions with Tariff Notice 6794, which was filed at the same time as this application.

4.

Bell Canada indicated that it would notify affected customers of the proposed changes by means of a billing insert or a customer letter.

5.

The Commission received comments dated 18 March 2004 from Microcell Solutions Inc. (Microcell) and Futureway Communications Inc., doing business as FCI Broadband. Bell Canada filed reply comments on 29 March 2004.
 

Parties' comments

6.

Microcell supported the proposed rate reductions. Microcell noted that reducing retail DNA rates to bring them closer in line with their associated costs would be consistent with the principles of competitive equity and just and reasonable rates.

7.

FCI Broadband requested that the Commission deny the application or, at the very least, not approve it until after the Commission issued its decision in the proceeding initiated by Competitor Digital Network Access service proceeding, Telecom Public Notice CRTC 2002-4, 9 August 2002 (Public Notice 2002-4). FCI Broadband submitted that while Bell Canada had stated that its proposal satisfied the imputation test and complied with the price cap parameters, it had not offered any other evidence regarding the need for these reductions or any justification for their magnitude. FCI Broadband further stated that the magnitude of Bell Canada's proposed rate reductions would exert considerable downward pressure on the retail rates of all digital access and intra-exchange services.

8.

In reply to FCI Broadband's comments, Bell Canada submitted that this application needed to be seen in conjunction with Tariff Notice 6794. Bell Canada stated that, by lowering the rates for fibre-based DNA services it would be able to address some of the pricing deficiencies of its analogue channels and meet the pricing constraints set out in Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34). The company further stated that it had demonstrated that the proposed rates met established pricing constraints and satisfied the imputation test. Bell Canada submitted that Tariff Notices 808 and 6794 were fully compliant with the Commission's determinations in Decision 2002-34 and that no other justification was needed.
 

Commission analysis and determination

 

Costing issues

9.

The Commission notes that for a new service or 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.

10.

The Commission finds that Bell Canada's imputation test demonstrates that the proposed rate for DNA service exceeds the costs to the company of providing the service. The Commission, however, does not consider it appropriate that the proposed rate for the OC-12 intra-exchange channel service is lower than the competitor-DNA rate for that service. Accordingly, the Commission has applied Bell Canada's proposed mark-up on the rate for the OC-3 intra-exchange channel service to the costs for OC-12 intra-exchange channel service, to arrive at a revised rate for that service. The Commission notes that as a result of this determination, Bell Canada's monthly rate for OC-12 intra-exchange channel service will change to $4,400, from the proposed rate of $3,500.
 

Compliance with pricing constraints set out in Decision 2002-34

11.

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

12.

The pricing constraints which apply to services in the other capped services basket include:
 
  • a basket constraint, operating through the service basket limit (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 incumbent local exchange carrier from decreasing rates in more competitive areas and increasing rates in less competitive areas of the same band, that rates for other capped services should not generally be permitted to be further de-averaged within a band.

13.

The Commission finds that the proposed tariff revisions comply with the basket constraint requirement that the service band index not exceed the SBL for the other capped services basket. As Bell Canada proposed no rate increases, the rate element constraint limiting rate increases to 10% per year is not pertinent.

14.

The Commission also finds that the proposed tariff revisions would not further de-average rates for other capped services within a band.

15.

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

Other issue: Allstream Corp.'s intervention

16.

The Commission notes that an intervention received from Allstream Corp. (Allstream), dated 30 April 2004, in relation to Bell Canada Tariff Notice 6802, provided comments on Tariff Notice 808, among others. In Bell Canada's reply, dated 7 May 2004, the company noted that Allstream's comments on this tariff notice were due by 18 March 2004, and accordingly argued that they were out of process.

17.

The Commission notes that Allstream's comments were filed approximately one and a half months late. Accordingly, the Commission considers Allstream's intervention to be out of process for Tariff Notice 808 and is therefore not part of the record of this proceeding.
 

Conclusion

18.

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

19.

The Commission approves on an interim basis Bell Canada's application with the exception of the OC-12 intra-exchange channel service rate, which is to be set at a monthly rate of $4,400 as outlined in paragraph 10 above. The revisions take effect as of the date of this order.
  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: 2004-07-19

Date modified: