ARCHIVED - Telecom Order CRTC 2004-57

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Telecom Order CRTC 2004-57

  Ottawa, 20 February 2004

Northwestel Inc.

  Reference: Tariff Notices 802 and 802A

Occupancy rates for radio sites - Power rates


The Commission received an application by Northwestel Inc. (Northwestel), dated 21 November 2003 and amended on 19 December 2003, to revise Special Services Tariff item 702, Occupancy Rates for Radio Sites, specifically in relation to its power rates.


Northwestel proposed a slight modification in the structure of its power products to reduce the number of rate options it offers arguing that it was not cost-effective to bill customers for power based on "demand load consumption". Northwestel also proposed to increase its power rates to bring them closer to the costs of provisioning the service to its customers.


Northwestel indicated that while the proposed increases to its power rates range between 25% and 497%, these rates have not been revised in 16 years. Northwestel submitted that this had resulted in a significant disparity between rates and costs. In support of the proposed rates, Northwestel provided a cost study to demonstrate that the proposed rates, which include a 25% mark-up, would recover incremental costs and would provide a contribution towards the recovery of fixed and common costs.


Northwestel indicated that it had notified the 12 customers that would be affected by its proposals.


The Commission received comments from Microcell Solutions Inc. (Microcell) dated 22 December 2003, noting that the proposed rate increases were considerable. Microcell argued that access to Northwestel radio sites on reasonable terms would be a vital factor in permitting competitive telecommunications service providers to establish themselves in Northwestel's territory. Microcell submitted that it was crucial for the Commission to submit Northwestel's proposed rate increases to the fullest scrutiny, keeping in mind their impact not only on existing customers, but on new entrants as well.


Northwestel did not file a reply to the comments.

Commission analysis and determination


Since the company is unable to bill its customers on the basis of "demand load consumption", the Commission finds that Northwestel's proposal to remove the two "demand load consumption" rate options is reasonable.


The Commission notes that, based on Northwestel's cost study, the current rates do not recover the per unit costs for provisioning power at radio sites. The Commission has reviewed Northwestel's cost study, its methodology and assumptions and considers that they are appropriate. The Commission finds that Northwestel's cost estimates appropriately reflect its causal costs for provisioning power at these radio sites. Accordingly, the Commission finds that Northwestel's power rates, which include a 25% mark-up over its Phase II costs, are reasonable.


In light of the foregoing, the Commission approves Northwestel's application, with an effective date one month from the date of issuance of this order. This will allow for sufficient time for Northwestel to implement the required billing changes.
  Secretary General
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Date Modified: 2004-02-20

Date modified: