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Telecom Decision CRTC 2006-79
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Ottawa, 21 December 2006
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Follow-up to Decision 2005-17 - Final revenue base to determine total maximum adjustment value for the calculation of customer credits in the case of sub-standard retail quality of service performance by the ILECs
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Reference: 8638-C12-200505018
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In this Decision, the Commission finalizes the list of retail business and residential services to be included in the incumbent local exchange carriers' local retail services revenue base used to calculate customer credits in the event of sub-standard retail quality of service results, in accordance with Retail quality of service rate adjustment plan and related issues, Telecom Decision CRTC 2005-17, 24 March 2005 (Decision 2005-17).
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The Commission also determines that adjustments to customer credits already made under the retail rate adjustment plan (RAP), as determined in Decision 2005-17, as well as future customer credits required to be paid under the retail RAP, are to include the additional local retail services revenues resulting from this Decision. Where credits have already been provided to customers under the retail RAP, customer credit adjustments are to be implemented no later than 60 days from the date of this Decision.
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Background
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1.
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In Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002, as amended by Telecom Decision CRTC 2002-34-1, 15 July 2002 (Decision 2002-34), and Implementation of price regulation for Télébec and TELUS Québec, Telecom Decision CRTC 2002-43, 31 July 2002 (Decision 2002-43) (collectively, the price cap decisions), the Commission set out the price regulation frameworks that apply to the following incumbent local exchange carriers (ILECs): Aliant Telecom Inc.1 Bell Aliant Regional Communications, Limited Partnership (Bell Aliant)), Bell Canada, MTS Allstream Inc. (MTS Allstream),2 Saskatchewan Telecommunications (SaskTel), Société en commandite Télébec (Télébec), TELUS Communications Inc.3 (TCC), and TELUS Communications (Québec) Inc. (TELUS Québec)4 (collectively, the ILECs).
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2.
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In the price cap decisions, the Commission implemented a retail quality of service (Q of S) rate adjustment plan (RAP) on an interim basis (the interim plan), effective 1 July 2002, for Bell Aliant, Bell Canada, MTS Allstream, and TCC, and effective 1 October 2002, for Télébec and TELUS Québec.
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3.
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In Saskatchewan Telecommunications - Transitions to federal regulation - Reporting quality of service, Telecom Decision CRTC 2002-53, 30 August 2002 (Decision 2002-53), SaskTel became subject to the same Q of S standards and reporting as the other major ILECs. In Saskatchewan Telecommunications - Applicability of interim quality of service rate adjustment mechanisms and related matters, Telecom Decision CRTC 2003-36, 5 June 2003 (Decision 2003-36), the Commission determined that, effective 1 July 2003, SaskTel was subject to the same interim plan as the other ILECs.
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4.
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In the price cap decisions, the Commission determined that the retail RAP was to be based on a maximum annual adjustment of five percent of total annual business and residential local service revenues. The revenue base was not to be restricted to local exchange services; it was to also include revenues from all other local retail business and residential services that were not forborne from regulation.
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5.
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In Retail quality of service rate adjustment plan and related issues, Telecom Decision CRTC 2005-17, 24 March 2005 (Decision 2005-17), the Commission finalized the retail Q of S RAP for the ILECs. For the purpose of the interim and final retail Q of S plans, the Commission determined, in paragraph 77, that the total maximum adjustment value (TMAV) represented five percent of the total revenue base calculated in accordance with the Commission's determinations in Decision 2005-17, and any relevant subsequent decisions. In particular, these revenues included:
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a) all revenues from the Residential Local Exchange Services in non-high-cost serving areas (non-HCSAs) basket, Residential Optional Local Services in non-HCSAs basket, Residential Local Exchange Services in high-cost serving areas (HCSAs) basket, Residential Optional Local Services in HCSAs basket, and Single and Multi-line Business Local Exchange Services basket;
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b) all Centrex revenues from the Uncapped Services basket; and
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c) all other revenues derived from services to be identified by the Commission in a follow-up proceeding.
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6.
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In Decision 2005-17, the Commission initiated this proceeding to identify the revenues to be included in the TMAV under the final RAP from the Other Capped Services basket, the Uncapped Services basket (excluding Centrex), the Pay telephone services basket and the Services with Frozen Rate Treatment basket. The ILECs were directed to file a list of tariff items in each of these service baskets, along with supporting arguments as to why the tariff items should be included or not in the revenue base from which to calculate the TMAV.
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7.
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The Commission also determined that it would establish the procedure for making any adjustments to the interim customer credits resulting from Decision 2005-17 in its decision regarding the services to be included in the retail RAP in order to calculate the final revenue amount of the TMAV for the interim period.
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Process
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8.
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On 25 April 2005, Bell Aliant, Bell Canada, SaskTel, TCC, Télébec, and TELUS Québec filed their lists of tariff items to be used to identify the revenues to be included in the TMAV. On 16 May 2005, the Commission received MTS Allstream's list, and on 30 May 2005, TCC submitted a minor revision to its list.
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9.
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On 24 May 2005, the Public Interest Advocacy Centre, on behalf of the Consumers' Association of Canada, the National Anti-poverty Organization, and l'Union des consommateurs (collectively, the Consumer Groups) provided comments.
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10.
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On 2 June 2005, Bell Aliant, Bell Canada, and SaskTel submitted reply comments.
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11.
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The issues considered in this proceeding are discussed below in the following sections:
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Section A - Local services within the scope of this proceeding
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Section B - Relevance of services within the Public Notice 2005-2 proceeding to this
proceeding
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Section C - Tariff items to be included in the revenue base to calculate the TMAV
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Section D - Other matters
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A - Local services within the scope of this proceeding
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Positions of parties
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12.
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Bell Canada, SaskTel, and Télébec submitted that the Commission had set out two broad criteria in Decision 2005-17 regarding which revenues from a particular service should be included in the calculation of the TMAV: (1) the service should be a local retail service; and (2) the service should not be forborne from regulation. The companies indicated that they had applied these criteria in assessing whether a service should be included or excluded for the calculation of the TMAV.
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13.
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Bell Aliant indicated that in its assessment of what revenues to exclude from the revenue base to calculate the TMAV, it used the following definition of local exchange services provided by the Commission in Regulatory framework for voice communication services using Internet Protocol, Telecom Public Notice CRTC 2004-2, 7 April 2004 (Public Notice 2004-2):
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To the extent that VoIP services provide subscribers with access to and/or from the public switched telephone network (PSTN) along with the ability to make and/or receive calls that originate and terminate within an exchange or local calling area as defined in the ILECs' tariffs, in the Commission's preliminary view, these services should be treated as local exchange services and are referred to as local VoIP services.
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14.
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Bell Aliant submitted that many access services are used to transport data services only; there is no access to the PSTN and no ability to make and/or receive voice calls. According to Bell Aliant, these access services did not meet the Commission's definition of local exchange services and were therefore excluded for the calculation of the TMAV. Bell Aliant also excluded any derived services from these non-local exchange services.
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15.
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Bell Aliant further submitted that services such as interexchange voice circuits that do not have local calling capability did not meet the definition of a local exchange service and were therefore excluded.
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16.
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In their lists of tariff items, MTS Allstream, TCC, and TELUS Québec identified which items they included in or excluded from the revenue base to calculate the TMAV, and provided reasons for proposed tariff item exclusions.
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17.
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The Consumer Groups indicated that they were in general agreement with the two broad criteria identified by Bell Canada.
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Commission's analysis and determination
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18.
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In the price cap decisions, the Commission determined that the maximum amount of revenue available for the retail RAP would be five percentof total annual business and residential local revenues, including revenues from local exchange services and all other local retail business and residential services that were not forborne from regulation.
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19.
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The Commission notes that the first sentence of paragraph 77 of Decision 2005-17 states that the revenues to be used to calculate the TMAV shall comprise all business and residential revenues derived from local exchange services and from all other retail business and residential local exchange services that are not forborne from regulation.
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20.
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The Commission acknowledges that, if read on its own, that sentence might have led the ILECs to conclude that only residential and business local exchange services were to be included in the TMAV calculation. However, items a), b) and c) of that same paragraph specified that the ILECs were to include both local exchange services and all other optional local services that were not forborne from regulation.
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21.
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The Commission notes that all parties, except Bell Aliant, agreed that revenues derived from business and residential local exchange services and all other business and residential local services which are not forborne from regulation were to be included in the revenue base to calculate the TMAV.
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22.
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Based on the above, the Commission determines that for purposes of the retail RAP, the revenues to be used to calculate the TMAV shall comprise the revenues originally included in the interim revenue base pursuant to Decision 2005-17, paragraph 77, in addition to revenues derived from all other local business and residential retail services (collectively, local retail services) that
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(i) are not forborne from regulation; and
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(ii) are not otherwise expressly excluded by the Commission for other reasons.
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23.
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The Commission also determines below which local retail services should be excluded for other reasons such as:
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(a) the inability to directly attribute the use of the local retail service to a particular residential or business retail customer; and/or
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(b) the impracticality of isolating the local retail services portion from the non-local retail services portion due to the blended nature of the service.
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24.
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With respect to access services used only to transport data services, the Commission considers that such services are local retail services, and therefore determines that if they are not forborne from regulation, their revenues are to be included in the revenue base used to calculate the TMAV. The Commission further determines that interexchange services, which by their nature are not local retail services or are forborne from regulation, are to be excluded from the revenue base used to calculate the TMAV, unless otherwise noted in this Decision.
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25.
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Finally, the Commission noted in Appendix C to Decision 2005-17, that the TMAV represented five percent of the total revenue base calculated in accordance with the Commission's determination in that Decision and any relevant subsequent decisions.
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B - Relevance of services within the Public Notice 2005-2 proceeding to this proceeding
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Positions of parties
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26.
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The Consumer Groups submitted that there was disagreement among the ILECs regarding the appropriate inclusion or exclusion of services, as well as which services should be classified as local retail services, for the purpose of determining the revenue base for the TMAV and the ILECs' identification of tariff services within the scope of the proceeding initiated in Forbearance from regulation of local exchanges services, Telecom Public Notice CRTC 2005-2, 28 April 2005 (Public Notice 2005-2).
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27.
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The Consumer Groups provided a table listing the tariff items that, in their view, were inconsistently classified by the ILECs in this proceeding and in the proceeding initiated by Public Notice 2005-2. The Consumer Groups indicated that their table set out the rationale submitted by Bell Aliant, Bell Canada, MTS Allstream, and SaskTel for excluding certain tariff items in this proceeding, as well as the justification for including certain tariff items in the Public Notice 2005-2 proceeding.
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28.
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The Consumer Groups noted that in this proceeding, Bell Canada submitted the following:
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Where a service consists of both interexchange and local access components, the Company is of the view that, due to the nature of such services, the majority of the revenues associated with the service are associated with the interexchange components. In such situations, the Company does not consider these services to be local in nature.
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29.
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The Consumer Groups submitted that while this was the approach taken by Bell Canada in this proceeding, it had claimed that the service was a local exchange service within the scope of the Public Notice 2005-2 proceeding. In the Consumer Groups' view, a service could not be considered a local exchange service for the purposes of a local forbearance proceeding but not a local exchange service for the purposes of the retail RAP.
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30.
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The Consumer Groups submitted that local exchange services represent a sub-set of tariff retail local services used as the revenue base to calculate the TMAV. In their view, any items identified as local exchange services by the ILECs for the Public Notice 2005-2 proceeding would also form part of the revenue base for the TMAV.
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Reply comments
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31.
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Bell Aliant indicated that a service could be excluded from the scope of one proceeding but included in the scope of another. Bell Aliant proposed, for example, to exclude its latepayment charges, non-sufficient funds (NSF) chargesandforeign exchange services from the revenue base to calculate the TMAV as the charges applied to a broader range of services than just local exchange services. In regard to late payment charges, as the company only tracked the aggregate revenues received from these charges, it indicated that it was unable to identify the portion of those revenues that related to local retail services. According to Bell Aliant, even if it was feasible to identify the amount of such charges, the inclusion of those amounts in the revenue base to calculate the TMAV would have no significant effect on the value of the TMAV. Bell Aliant submitted that in contrast, however, late payment charges, NSF chargesandforeign exchange services pertained to local exchange and related services that were within the scope of the Public Notice 2005-2 proceeding.
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32.
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In regard to the Consumer Groups' view that the tariff items to be included in the revenue base to calculate the TMAV should be those considered by the company to be local exchange services within the scope of the proceeding initiated by Public Notice 2005-2, Bell Canada indicated that it had already addressed this issue in its submission in the Public Notice 2005-2 proceeding,5 as follows:
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In the Decision 2005-17 follow-up proceeding, the Companies indicated that local retail services and services that are not forborne should be included in the revenue base used for the calculation of the TMAV. They also indicated that charges that apply to a broader set of services than just local retail should be excluded, as the TMAV applies to local retail service only. In contrast, in the PN 2005-2 proceeding, the Companies indicated that all local exchange and associated services, and other charges to the extent they apply to such services, are within the scope of that proceeding. The relationship between these services and charges must necessarily be taken into account in establishing the framework for forbearance for local exchange services. The Companies agree with the Consumer Groups that any local exchange service and associated retail local service that is in scope in the PN 2005-2 proceeding should be included in the calculation of the TMAV. (emphasis added by Bell Canada)
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Commission's analysis and determination
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33.
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The Commission notes that some parties argued that certain services should either be included in or excluded from the revenue base to calculate the TMAV, based on whether they were considered to be a local exchange service subject to the forbearance framework established in the Public Notice 2005-2 proceeding.
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34.
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In List of services within the scope of the proceeding on forbearance from the regulation of local exchange services, Telecom Decision CRTC 2005-35-1, 14 July 2005 (Decision 2005-35-1), the Commission considered that the framework for local forbearance that resulted from the Public Notice 2005-2 proceeding would apply to all local exchange services that fell within the definition of local exchange services set out in Public Notice 2005-2, including those local exchange services that were/are tariffed subsequent to the issuance of List of services within the scope of the proceeding on forbearance from the regulation of local exchange services, Telecom Decision CRTC 2005-35, 15 June 2005 (Decision 2005-35). The definition of local exchange services was encompassed in paragraphs 22 and 23 of Public Notice 2005-2.
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35.
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At paragraph 22, the Commission considered that local exchange services used by residential and business customers to access the PSTN were within the scope of that proceeding, as were the service charges and any features related to the provision of those services. The Commission noted that the scope of the Public Notice 2005-2 proceeding did not include pay telephone services, customer-specific arrangements (CSAs) and bundles that did not include local exchange services, point-to-point services, operator services, mobile and exchange radio services, and competitor services.
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36.
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At paragraph 23, the Commission noted that some local exchange services that were within the scope of the proceeding used underlying access and transport services, for example, Megalink service (sometimes referred to as ISDN-PRI), a local exchange service that requires components of Digital Network Access (DNA) service. The Commission considered that the dependencies between these underlying access and transport services and local exchange services were relevant to that proceeding.
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37.
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The Commission is of the view that while there are similarities between the Public Notice 2005-2 proceeding and this proceeding, the two proceedings are entirely different. The Commission considers that the Public Notice 2005-2 proceeding related to relevant markets and the forbearance of local exchange services within those markets while this proceeding is to finalize the local services revenue base used to calculate the TMAV for the retail RAP. Consequently, determinations as to what constitutes a local retail service in this proceeding should not be based on the Public Notice 2005-2 proceeding. For example, the Commission notes that while public telephone services were excluded from the Public Notice 2005-2 proceeding, they represent local retail revenues which may or may not be included in the local services revenue base used to calculate the TMAV. Additionally, the Commission considers that while Operator Services revenues were also excluded from the Public Notice 2005-2 proceeding, there are Q of S indicators included in the RAP to which Operator Services revenues are directly applicable and which, therefore, may warrant inclusion in the calculation of the TMAV. Accordingly, the Commission determines that the final list of services to be included in the retail RAP is to be based on the criteria for inclusion confirmed in this Decision such that the revenue from local retail services that are not forborne from regulation, or otherwise excluded, is to be included in the revenue base to calculate the TMAV.
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C - Tariff items to be included in the revenue base to calculate the TMAV
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38.
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As noted above, the ILECs filed lists of tariff items that they considered should be included or not in the revenue base to calculate the TMAV.
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39.
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The Commission is of the view that the ILECs' and the Consumer Groups' submissions were generally consistent in terms of inclusions or exclusions. The Commission will only individually review those items for which there were differences of opinion among the parties in relation to the inclusions or exclusions, or where the Commission disagrees with an ILEC's proposal.6 The tariff items determined by the Commission below, to be excluded, are listed in the Attachment and are to be excluded from the revenue base to calculate the TMAV in total, or as otherwise noted in the Attachment or elsewhere in this Decision.
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(a) DNA and DNA services
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Positions of parties
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40.
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Bell Aliant submitted that it excluded its DNA and DNA service tariff items on the basis that the services were not local exchange services. Bell Aliant argued that the Commission determined in Decision 2005-17 that the local revenue base should be derived solely from business and residential local exchange services. The company indicated that it considered its DNA service to be a blended service, meaning it included a combination of revenues from local exchange and non-tariffed services (and/or non-local exchange services).
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41.
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SaskTel submitted that DNA service could be used to provide digital transmission of information between a customer's premises and another point through SaskTel's intra-exchange and interexchange services. According to SaskTel, in the proceeding leading to Competitor Digital Network Services, Telecom Decision CRTC 2005-6, 3 February 2005, as amended by Telecom Decision CRTC 2005-6-1 dated 28 April 2006 (Decision 2005-6), it was identified that competitors could use SaskTel's DNA service in a variety of applications that were not consistent with the TMAV local exchange service criteria established by the Commission.
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42.
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SaskTel noted that at paragraph 567 of Decision 2005-6 the Commission stated,
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Consequently, the Commission determines that SaskTel's CDNA [Competitor Digital Network Access] rates are to be replaced, retroactive to 1 June 2002, by rates equal to SaskTel's retail DNA service rates at 1 June 2002. Further, the Commission determines that SaskTel's competitor digital network (CDN) service rates approved in this Decision are to apply to new demand only and that competitors may not migrate existing demand for SaskTel's retail DNA and IX [interexchange] service tariffs to the CDN services. Accordingly, SaskTel's retail rates are to apply to existing competitor demand for CDN services.
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43.
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According to SaskTel, this meant that the proportion of its DNA revenues derived from competitors would remain at or near the levels it reported in the proceeding that led to Decision 2005-6, unless and until competitors or their customers terminated their current applications of the service. Revenues acquired from the competitors' subscription to DNA were subject to potential penalty under the new CDN services' Q of S indicators created in Finalization of quality of service rate rebate plan for competitors, Telecom Decision CRTC 2005-20, 31 March 2005 (Decision 2005-20). SaskTel submitted that DNA could be associated with the provision of SaskTel's intra-exchange as well as interexchange services, and it was unable to expressly identify the DNA revenues associated with the provision of local, intra-exchange services without searching each customer's detailed records. In SaskTel's view, the contribution that the local portions of DNA would likely make to the TMAV was not commensurate with the efforts required to acquire the necessary information. SaskTel argued that for all of the above reasons, revenues from DNA should be excluded from the revenue base for the TMAV.
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44.
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The Consumer Groups submitted that Bell Aliant's claim that DNA service was not a local exchange service was not relevant since, as noted above, the Commission has previously determined that the total amount available for rate adjustments would be based on local revenues and not restricted to local exchange services.
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45.
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According to the Consumer Groups, SaskTel's claim that DNA service was a mix of competitor and retail services was not a sufficient reason to exclude the DNA revenues from the revenue base. The Consumer Groups submitted that the Commission had established a CDN service in Decision 2005-6 that incorporated competitor use of DNA-type services, thus removing the competitor use of the DNA service.
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46.
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The Consumer Groups indicated that Bell Canada, MTS Allstream and TCC included DNA services in the revenue base to calculate the TMAV. Télébec and TELUS Québec also identified DNA for inclusion in the local services revenue base. The Consumer Groups submitted that Bell Canada's explanatory note indicated that it considered DNA service to be a tariffed local retail service and therefore, the revenues should be included. The Consumer Groups further submitted that, based on the criteria that a service should be a local retail service and should not be forborne from regulation, DNA should also be included.
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Reply comments
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47.
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Bell Aliant noted that the Consumer Groups identified DNA and DNA services as two items that it was excluding from the revenue base to calculate the TMAV, but that it was including, for purposes of forbearance, in the Public Notice 2005-2 proceeding. Bell Aliant submitted that its Digital Switched, Megalink and Microlink services were all PSTN-connected services. According to Bell Aliant, these tariff items reference DNA as their access facility and, as such, DNA fell within the scope of Public Notice 2005-2 when provided in conjunction with these services. Bell Aliant submitted that it identified DNA as a blended service and did not intend to exclude the revenues associated with any DNA used as an access facility for PSTN-connected services. Bell Aliant argued that it only proposed to exclude these revenues when the service was provided for data purposes. In Bell Aliant's view, DNA was a point-to-point service that did not connect to the PSTN. Therefore, it should be excluded from the revenue base for the TMAV, and it was not a service within the scope of Public Notice 2005-2.
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48.
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SaskTel submitted that it was identified in the proceeding leading to Decision 2005-6 that competitors can employ SaskTel's DNA service in a variety of applications that are not consistent with the TMAV local exchange service criteria established by the Commission.
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49.
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SaskTel noted that as a result of the shortfall in its deferral account, in Decision 2005-6, the Commission directed SaskTel to use retail DNA rates for all CDN services in place prior to 3 February 2005. SaskTel submitted that because of the unique situation created by this direction, the DNA revenues derived from its competitors would remain at or near the levels it reported in the proceeding that led to Decision 2005-6 until such time as competitors or their customers terminated or changed their current applications of the service.
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50.
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SaskTel reiterated that revenues earned from the competitors' subscription to DNA were subject to potential penalty under the new CDN services' Q of S indicators created in Decision 2005-20. SaskTel submitted that it should not be penalized twice in the event that it had to provide rebates to both residential and competitor customers for the same services.
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Commission's analysis and determination
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51.
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The Commission considers DNA to be a local retail service and therefore determines that for all of the ILECs, this service is to be included in the revenue base used to calculate the TMAV.
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52.
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The Commission notes, however, its finding in Decision 2005-6 that SaskTel's retail DNA rates were to apply to competitor demand existing at the date of that Decision and notes further that, notwithstanding the introduction of its CDN service, SaskTel continues to receive DNA service revenues from competitors that use the retail DNA service tariff. Further, with respect to the position of the Consumer Groups regarding competitor use of retail DNA service, the Commission notes that in Decision 2005-6, at paragraph 567, it determined that SaskTel's CDN service rates approved in that Decision were to apply to new demand only and that competitors may not migrate existing demand for SaskTel's retail DNA and interexchange service tariffs to CDN service.
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53.
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The Commission also notes that, as SaskTel has submitted, its revenues earned from competitor use of DNA service are subject to potential rebates related to CDN services under the rate rebate plan for competitors established in Decision 2005-20. In the Commission's view, it would not be appropriate to require SaskTel to include revenues generated by competitors in the revenue base used to calculate the TMAV. The Commission therefore determines that SaskTel is to exclude DNA service revenues received from competitors eligible to use its CDN service from the revenue base used to calculate the TMAV.
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b) Foreign exchange (FX) services
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Positions of parties
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54.
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MTS Allstream submitted that its FX services primarily generated interexchange revenues and therefore should not be included in the revenue base for the purpose of retail Q of S adjustments and penalties. Bell Aliant, Bell Canada, Télébec and TELUS Québec also excluded this item.
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55.
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TCC included FX services in the revenue base to calculate the TMAV and noted that the voice portion of FX services included an interexchange component.
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56.
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The Consumer Groups noted that in their table showing the differences between the ILECs' classification of services in this proceeding and the Public Notice 2005-2 proceeding, the ILECs generally excluded FX services in this proceeding but included them in the Public Notice 2005-2 proceeding.
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Commission's analysis and determination
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57.
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The Commission notes that FX services provide individual line service from an exchange which does not normally serve the area in which the customer is located. In the Commission's view, although FX services consist of a local exchange access component and an interexchange distance component, the interexchange distance component is comparable to tariffed analogue private line services. In the Commission's further view, FX services are more closely aligned with interexchange services than with local services. The Commission therefore determines that all of the ILECs are to exclude FX services from the revenue base to calculate the TMAV.
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c) Analogue private line services
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Positions of parties
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58.
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TCC stated that it included the local portion of its analogue private line servicesin the revenue base to calculate the TMAV and excluded the interexchange portion. Other ILECs generally submitted that their analogue private line services should be excluded because the services were interexchange or primarily interexchange in nature or included an interexchange component.
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Commission's analysis and determination
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59.
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The Commission considers that the local retail services portion of analogue private line services is a local retail service. Accordingly, the Commission determines that the local retail services portion of analogue private line services revenues for all of the ILECs is to be included in the revenue base to calculate the TMAV.
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d) Bundles
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Positions of parties
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60.
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Bell Canada, MTS and TCC submitted that revenue from business bundles should be included in the revenue base to calculate the TMAV. Bell Aliant also submitted that business bundles should be included in the revenue base but that toll revenues should be excluded. TELUS Québec submitted that business bundles should be excluded from the revenue base because they included an interexchange component.
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Commission's analysis and determination
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61.
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The Commission notes that both ILECs and competitors are increasingly bundling local telephone service, optional features, long distance, Internet access, video, and wireless services to satisfy the converging communication needs of consumers. Bundles are simply combinations of individual services under a single rate structure.
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62.
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The Commission determines that where non-tariffed or non-local retail services revenues can be separated from the revenues of local retail services in a bundled service offering, those revenues are to be excluded from the revenue base to calculate the TMAV by all of the ILECs and the remaining local retail services revenues are to be included. If a bundle contains local retail services, the revenues of which cannot be separated from the revenues of non-tariffed or non-local services, the revenues of the entire bundled service offering are to be included.
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e) Customer volume pricing plans (CVPPs)
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Positions of parties
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63.
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MTS Allstream submitted that revenues associated with CVPPs should be included in the revenue base to calculate the TMAV, whereas all of the other ILECs proposed that those revenues be excluded.
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Commission's analysis and determination
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64.
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The Commission notes that services eligible for discounts under a CVPP are the monthly recurring charges associated with services such as digital private line services, managed digital private line services, digital private line solutions service extension features, and interoffice digital channels. The Commission considers these services to be largely interexchange in nature and/or are services which are forborne from regulation. The Commission therefore determines that all of the ILECs are to exclude CVPPs from the revenue base to calculate the TMAV.
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f) Late payment charges and NSF charges
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Positions of parties
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65.
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Bell Aliant, MTS Allstream, SaskTel, and Télébec submitted similar arguments that revenues associated with NSF charges and those associated with surcharges on overdue accounts should not be included in the revenue base to calculate the TMAV because these services were not specific to local service. Bell Aliant noted that it offered these services to recover standard business operating expenses, and not on a retail or wholesale basis. According to SaskTel, the contribution that the local portions of these tariff items would likely make to the TMAV was not commensurate with the efforts to determine the appropriate portions, and should therefore be excluded.
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66.
|
Bell Canada and TCC submitted that NSF charges and late payment charges applied to local and/or non-local, tariffed and/or non-tariffed, and retail and/or wholesale services, and therefore excluded these tariff items.
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67.
|
TELUS Québec submitted that late payment charges applied to local and/or non-local and tariffed and/or non-tariffed services, and should be excluded from local revenues, while NSF charges should be included.
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68.
|
The Consumer Groups noted in their table showing the differences between the ILECs' classification of services, that the ILECs generally excluded late payment charges and NSF charges in this proceeding, but included them in the Public Notice 2005-2 proceeding, indicating that, in the ILECs' view, they applied to local exchange services.
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Commission's analysis and determination
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69.
|
The Commission considers that late payment charges and NSF charges are of a non-specific nature. They are established to recover general business expenses, and can be applied to local and/or non-local, tariffed and/or non-tariffed, and retail and/or wholesale services. The Commission considers that revenues from such services are generally too broad in scope to be called local retail services revenues, and therefore determines that all of the ILECs are to exclude late payment charges and NSF charges from the revenue base to calculate the TMAV.
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g) Construction charges
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Positions of parties
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70.
|
Bell Canada, SaskTel, TCC, Télébec and TELUS Québec submitted that construction charges for work on public property, trench provisioning, winter construction charges, inside wiring, etc., should be included in the revenue base to calculate the TMAV. MTS Allstream submitted that its service charges tariff itemshould be included.
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Commission's analysis and determination
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71.
|
The Commission considers that tariffs for construction charges and tariffs including items related to construction costs only apply to local retail services. The Commission therefore determines that the construction charges revenue for all of the ILECs is to be included in the revenue base to calculate the TMAV.
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h) Special assemblies/special facilities tariffs/special facilities services
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Positions of parties
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72.
|
Bell Aliant and Bell Canada indicated that revenues from special assemblies/special facilities tariffs/special facilities services should be excluded from the TMAV revenue base. Bell Aliant submitted that special assemblies were not a local exchange service, and Bell Canada indicated that special facilities tariffs/special facilities services were considered to be non-tariffed local retail services. The remaining ILECs indicated that these items should be included.
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Commission's analysis and determination
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73.
|
The Commission considers that special assemblies represent combinations of individual services which may or may not be related to local retail services or non-tariffed services. The Commission is of the view that the probable effort required to separate special assembly tariffs by individual service component is unlikely to result in any appreciable change to the TMAV. The Commission therefore determines that the special assemblies/special facilities tariffs/special facilities services revenue for all of the ILECs is to be excluded from the revenue base to calculate the TMAV.
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i) Pay telephone services
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Positions of parties
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74.
|
All of the ILECs submitted that pay telephone services revenues were of a local retail nature and should be included in the revenue base to calculate the TMAV. TCC and SaskTel submitted that wireless pay telephone services in the Other Capped Services basket should also be included. TCC further submitted that its public radiotelephone service tariff item should also be included.
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Commission's analysis and determination
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75.
|
In Decision 2005-17, the Commission determined that eligible network access services (NAS) under the retail RAP should only include services or NAS-types that are subscribed to by retail end-customers and should not include pay telephones.
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76.
|
The Commission notes that all ILECs indicated that tariff items within the Pay telephone services basket were considered to be tariffed local retail items. The Commission is of the view that, to the extent possible, revenues included in the retail RAP should be related to the NAS eligible for customer credits. The Commission notes that while pay telephone services revenues meet the basic criteria that the service should be a local retail service and that the service should not be forborne from regulation, there is no revenue link to pay telephone NAS since they are not included in the retail RAP.
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77.
|
Accordingly, the Commission determines that all tariff items within the ILECs' Pay telephone services basket, wireless pay telephone services in the Other Capped Services basket and public radiotelephone services for all of the ILECs are to be excluded from the revenue base to calculate the TMAV.
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j) Blended services (interexchange and local components)
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Positions of parties
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78.
|
Bell Aliant indicated that it offers blended services, meaning a combination of local exchange services and non-tariffed and/or non-local exchange services. Bell Aliant submitted that where it could determine that the revenues from its blended services were from non-tariffed and/or non-local exchange services, these revenues should be excluded from the revenue base to calculate the TMAV.
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79.
|
Bell Aliant indicated that for other tariff items where it was virtually impossible to determine how much of the revenue was derived from local exchange services and where, in its estimation, the majority of the revenues were not derived from local exchange services, it excluded the tariff item. Bell Aliant argued that the revenues to be excluded were immaterial in the overall TMAV calculation.
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80.
|
Bell Canada noted that several tariff items identified in its list consisted of interexchange and local access components. Where a service consisted of both components, Bell Canada was of the view that, due to the nature of such services, the majority of the revenues associated with the service came from the interexchange component. Bell Canada submitted that it did not consider these services to be local in nature and therefore the revenues from such services should be excluded from the revenue base to calculate the TMAV.
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81.
|
Bell Canada argued that, while in some cases the revenues associated with the local access component could potentially be isolated for inclusion in the revenue base to calculate the TMAV, the effort to do so would not be commensurate with the potential change in the magnitude of the TMAV. Bell Canada submitted that the revenues associated with the services that had both interexchange and local access components, in total, represented less than one percent of the revenue base that it proposed to use for the calculation of the TMAV.
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82.
|
SaskTel noted that it had several tariffed interexchange services which might or might not have an associated local component, and should therefore be excluded from the revenue base to calculate the TMAV, as they did not meet the Commission's criteria.
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83.
|
TCC noted that, in keeping with the Commission's goal of implementing a plan that is simple and efficient to administer, it had analyzed its revenues for tariff items that contained both local and interexchange components. TCC indicated that where the majority of revenues for a tariff item were local in nature, it had included the tariff item in the revenue base to calculate the TMAV, and where the majority of revenues were interexchange in nature, it had excluded the tariff item. In TCC's view, the additional effort that would be required to subdivide the revenues for these tariff items between local and interexchange components for the purpose of the TMAV calculation was not warranted.
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84.
|
TCC and TELUS Québec noted that it had made an exception to this approach for its analogue private line services in the Other Capped Services basket, which had much higher revenues. TCC submitted that it had included only the local portion of the revenues for this service in the revenue base to calculate the TMAV.
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85.
|
Télébec noted that several tariff items included both interexchange and local access components. It submitted that the revenues from such services should be excluded from the revenue base to calculate the TMAV.
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Commission's analysis and determination
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86.
|
The Commission notes that the TMAV was set at five percent of local retail services revenues in order to establish a threshold sufficient to provide the ILECs with the incentive to deliver service at or above established standards. The Commission considers that while some amount of local retail services revenues may not be included because of blended services exclusions, this may be offset by other tariff items which include some element of non-local retail services. The Commission further considers that to the extent revenue reporting can be simplified without compromising the overall revenue amounts subject to the retail RAP, the purpose of establishing an appropriate level of revenue will be met.
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87.
|
In the price cap decisions, the Commission expressed the view that the basis for calculating the rate adjustment payment under the retail RAP would be objective and transparent, since the rate adjustment formula would be based on clearly measured results reported by the ILECs. The Commission is of the view that while it may be possible in some cases to split the interexchange revenue from the local retail services revenue of blended services, on balance, the administrative effort to do so offsets the potential revenue that would be included in the revenue base to calculate the TMAV.
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88.
|
The Commission determines that in the case of tariff items containing blended services, meaning those that include a combination of revenues from local retail services and non-tariffed or non-local retail services, which are not otherwise expressly dealt with in this Decision, where less than one half of the revenues for a tariff item are considered to be tariffed local retail services, all of the ILECs are to exclude all of the revenues for such items from the revenue base to calculate the TMAV. In the case of blended services where one half or more of the revenues are considered to be tariffed local retail services, all of the ILECs are to include all of the revenues for such blended services in the revenue base to calculate the TMAV.
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k) Digital private line services
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Positions of parties
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|
89.
|
While MTS Allstream submitted that digital private line services should be included in the revenue base to calculate the TMAV, the remaining ILECs excluded similar services on the basis that these services were either entirely interexchange services or they were blended services which included interexchange services as well as a local exchange component.
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Commission's analysis and determination
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90.
|
The Commission considers that digital private line services are generally point-to-point services which are more closely aligned with interexchange-type services than with local retail services. Accordingly, the Commission determines that the digital private line services of all of the ILECs are to be excluded from the revenue base to calculate the TMAV.
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l) Tie trunks/tie line services
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Positions of parties
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|
91.
|
Bell Aliant and Bell Canada submitted that their tie trunk services should be included in the revenue base to calculate the TMAV. SaskTel and TELUS Québec indicated that tie line services should be excluded as they were either interexchange services or included an interexchange component.
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Commission's analysis and determination
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92.
|
The Commission considers that tie trunks/tie line services are used primarily to provide circuits between private branch exchange (PBX) and private automatic branch exchange (PABX) systems, switchboards and certain types of key systems and/or Centrex systems. Based on the preceding, in the Commission's view, tie trunks/tie line services are local retail services. Accordingly, the Commission determines that the tie trunks/tie line services of all of the ILECs are to be included in the revenue base to calculate the TMAV.
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m) Toll telephones/toll station services
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Positions of parties
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|
93.
|
Bell Canada and TCC submitted that toll telephones and toll station services in the Other Capped Services basket should be included in the revenue base to calculate the TMAV. TELUS Québec submitted that toll telephones in the Pay telephone services basket should be included.
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Commission's analysis and determination
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|
94.
|
The Commission is of the view that toll telephones and toll station services are related to the provisioning of interexchange service. Accordingly, the Commission determines that all of the ILECs are to exclude these services from the revenue base to calculate the TMAV.
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n) Access special routing services
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Positions of parties
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95.
|
Bell Aliant, MTS Allstream, and TCC indicated that their access special routing services should be included in the revenue base to calculate the TMAV. Bell Canada and SaskTel submitted that these services were interexchange services and should be excluded.
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Commission's analysis and determination
|
|
96.
|
The Commission notes that access special routing services provide for the routing of DS-1 and DS-3 access via an alternative path to the customer's serving wire centre or to an alternative wire centre. The Commission agrees that these services are interexchange in nature. Accordingly, the Commission determines that the access special routing services of all of the ILECs are to be excluded from the revenue base to calculate the TMAV.
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o) Toll access/toll terminal services
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|
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Positions of parties
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|
97.
|
Bell Aliant submitted that its toll access services should be excluded from the revenue base to calculate the TMAV because they were not local exchange services. TCC submitted, on the other hand, that its toll access/toll terminal services should be included.
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Commission's analysis and determination
|
|
98.
|
The Commission notes that toll access/toll terminal services are only available from the premises of a customer in the hotel/motel industry, the serving central office, or a competitive service provider's point of presence. These services are used solely for the purpose of allowing billing or call completion for guest-originated long distance calling which requires operator interception. Accordingly, the Commission determines that toll access/toll terminal services are not local retail services and therefore all of the ILECs are to exclude these services from the revenue base to calculate the TMAV.
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p) Province-wide 9-1-1 services - access by competitive local exchange carrier (CLEC) end-customers, per NAS or working telephone number (WTN)
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Positions of parties
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|
99.
|
MTS Allstream submitted that its province-wide 9-1-1 services - access by CLEC end-customers, per NAS or WTN, should be included in the revenue base to calculate the TMAV. Bell Canada, SaskTel, and TCC submitted that their similar services should be excluded as they were competitor services and/or there were no retail customers associated with these services.
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Commission's analysis and determination
|
|
100.
|
The Commission agrees that province-wide 9-1-1 services - access by CLEC end-customers, per NAS or WTN, should be excluded from the revenue base to calculate the TMAV as these services are competitor services and/or no retail customers are associated with these services. Accordingly, the Commission determines that province-wide 9-1-1 services - access by CLEC end-customers, per NAS or WTN, for all of the ILECs are to be excluded from the revenue base to calculate the TMAV.
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q) Sale of tariffs/tariff subscription services
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Positions of parties
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|
101.
|
Bell Aliant submitted that its sale of tariffs and tariff subscription services were not local exchange services and should therefore be excluded from the revenue base to calculate the TMAV. Bell Canada excluded its sale of tariff and subscription services because they were not entirely associated with local retail services, while at the same time included a second sale of tariff item in the revenue base to calculate the TMAV. SaskTel excluded its tariff subscription services on the basis that these tariffs were not associated specifically to retail local services. MTS Allstream included these services.
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Commission's analysis and determination
|
|
102.
|
The Commission considers that the sale of tariffs and/or tariff subscription services are not specific to local retail services. Rather, these services are related to general tariffs, special facilities tariffs, national services tariffs, exchange services tariffs, access services tariffs, and CLEC tariffs. Accordingly, the Commission determines that the sale of tariffs and/or tariff subscription services of all of the ILECs are to be excluded from the revenue base to calculate the TMAV.
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r) Conference access/Conference 300 services
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|
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Positions of parties
|
|
103.
|
Bell Aliant and MTS Allstream submitted that conference access and Conference 300 services should be included in the revenue base to calculate the TMAV. Bell Canada submitted that its Conference 300 service should be excluded because it included interexchange service and message toll service components.
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Commission's analysis and determination
|
|
104.
|
The Commission considers that conferencing services are primarily interexchange services in nature as they are typically used for conference call meetings on a cross-country basis and include message toll components. The Commission notes that rates and regulations for long distance services apply for each caller located outside the local calling area in which the conference bridging equipment is located. Accordingly, the Commission determines that conference access, Conference 300 services and other conferencing services offered by all of the ILECs, other than those specific to local conferencing services, are to be excluded from the revenue base to calculate the TMAV.
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s) Remote call forwarding services
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|
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Positions of parties
|
|
105.
|
Bell Canada, Bell Aliant, and TCC submitted that remote call forwarding services were not local exchange services, but were interexchange services, and should not be included in the revenue base to calculate the TMAV. MTS Allstream submitted that its remote call forwarding service should be included.
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Commission's analysis and determination
|
|
106.
|
The Commission notes that remote call forwarding service enables a customer to have a telephone number in an exchange which would not normally serve the area in which the customer is located. All local exchange calls placed to this telephone number are automatically redialed, and forwarded, via the long distance network, to the customer's locations. The Commission considers that the remote call forwarding services of all of the ILECs are interexchange in nature, and therefore determines that these services are to be excluded from the revenue base to calculate the TMAV.
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t) Single number reach services
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|
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Positions of parties
|
|
107.
|
Bell Canada submitted that its single number reach services should not be included in the revenue base to calculate the TMAV since they include an interexchange service component, but its SimplyOne and Primeline Executive services should be included. SaskTel and TCC submitted that their equivalent services should be included.
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Commission's analysis and determination
|
|
108.
|
The Commission notes that Bell Canada's single number reach service is similar in nature to its SimplyOne and Primeline Executive services which the company submitted should be included in the revenue base to calculate the TMAV. The Commission further notes that single number reach services are a find me/follow me service that provides customers with a virtual telephone number that can be programmed by customers to forward calls regardless of where they are located, as well as notification that they have a call waiting while they are on the Internet. The Commission does not agree that because single number reach services include an interexchange component they should be excluded from the revenue base to calculate the TMAV. The Commission is of the view that all of the ILECs' single number reach services or equivalent services are primarily local in nature, and therefore determines that these services are to be included in the revenue base to calculate the TMAV.
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u) Service charges
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|
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Positions of parties
|
|
109.
|
Bell Aliant submitted that its service charges - Data and Other tariff item for multiple tariffs should be excluded from the revenue base to calculate the TMAV because it is not a local exchange service or a blended service. Télébec submitted that its service charges in the Other Capped and Uncapped Services baskets should be excluded since they were either not uniquely a local retail service or the charges applied to local and non-local, and tariffed and non-tariffed services. The remaining ILECs submitted that service charges should be included.
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|
|
Commission's analysis and determination
|
|
110.
|
The Commission notes that the service charges in Télébec's tariff are equivalent to general service charges such as connection charges found in the Residential Local Services and Business Services baskets of the large ILECs already included in the revenue base to calculate the TMAV, as determined in Decision 2005-17. The Commission considers that the majority of Télébec's service charges would apply to local retail services, and therefore determines that its service charges are to be included in the revenue base to calculate the TMAV.
|
|
111.
|
The Commission is of the view that, although Bell Aliant submitted that its service charges for Data and Otherwere not related to a local exchange service, such service charges would be related to local retail services. Accordingly, the Commission determines that this item in Bell Aliant's Other Capped Services basket is to be included in the revenue base to calculate the TMAV. The Commission considers that the majority of the service charges of all of the ILECs apply to local retail services, and therefore determines that these services are to be included in the revenue base to calculate the TMAV.
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|
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v) Remaining tariff items
|
|
112.
|
As determined above, the revenues associated with the tariff items listed in the Attachment are to be excluded in total, unless otherwise noted in the Attachment, from the revenue base to calculate the TMAV. The Commission further determines that all remaining tariff items not listed in the Attachment, with the exception of blended services noted further in this paragraph, will be included in the revenue base to calculate the TMAV and will be in addition to those revenues originally included in the interim revenue base pursuant to Decision 2005-17, paragraph 77. As noted above, the Commission also determines that in the case of blended services, and which the Commission notes are not expressly included in the Attachment, where one half or more of the revenues for a tariff item originate from tariffed local retail services, all of the ILECs are to include such blended services in the revenue base to calculate the TMAV; blended services to be excluded will only be those where more than one half of the revenues originate from non-tariffed or non-local retail services.
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D - Other matters
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|
|
Adjustments to interim and final retail RAP payments
|
|
113.
|
In Decision 2005-17, the Commission determined the reporting periods for each of the ILECs under the interim plan as follows:
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|
|
- 18 months for Bell Aliant, Bell Canada, MTS Allstream, and TCC, from 1 July 2002 to 31 December 2003, and 12 months from 1 January 2004 to 31 December 2004;
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|
|
- 15 months for Télébec and TELUS Québec, from 1 October 2002 to 31 December 2003, and 12 months from 1 January 2004 to 31 December 2004; and
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|
|
- 18 months for SaskTel, from 1 July 2003 to 31 December 2004.
|
|
114.
|
The Commission further determined that it would establish the procedure for making any adjustments to the interim customer credits resulting from Decision 2005-17 in its decision regarding this proceeding.
|
|
115.
|
The Commission determines that adjustments to customer credits already made under the interim or final plan, future customer credits required under the interim or final plan, as well as any subsequent determinations resulting from the disposition of pending or future exclusion applications and/or annual Q of S retail RAP reports, are to include the additional revenues from the Other Capped Services basket, the Uncapped Services basket and the Services with Frozen Rate Treatment basket, in accordance with this Decision, in the calculation of the TMAV.
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|
116.
|
The Commission determines that where retail RAP payments have already been made to customers under the interim and final plans, customer credit adjustments are to be implemented no later than 60 days from the date of this Decision, except where there is a pending exclusion application. The Commission further determines that the customer credit adjustments are to be made payable to customers of record as of the ILEC billing cycle immediately preceding distribution of the customer credit. In the case of pending exclusion applications, the Commission will address the payment of customer credits in the determinations resulting from those applications.
|
|
117.
|
The Commission further determines that where a customer credit adjustment is made, the ILECs are required to submit a report to the Commission setting out the total local retail services revenues per service basket used to calculate the TMAV, the total customer credit adjustment amount, the number of NAS to which the adjustment has been applied, and the actual amount of per NAS payment made. The report is to be submitted to the Commission within 30 days of the date that the customer credits have been processed.
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|
|
Changes resulting from future determinations
|
|
118.
|
The Commission considers that in order for regulation to be efficient and effective, any method of determining revenue amounts must be straightforward and easy for parties to understand, and for the Commission to implement and administer. The Commission is also of the view that the retail local services revenue amount should be determined as objectively as possible in order to minimize disputes or controversy over its accuracy.
|
|
119.
|
The Commission notes that the tariff items listed in the Attachment to this Decision reflect the tariff items in place at the time of the ILEC submissions and are subject to change as new services evolve and, potentially, as forbearance is granted within specific markets.
|
|
120.
|
The Commission determines that, in the event a customer credit is payable in a given reporting year under the final RAP, the ILECs are required to file with the Commission an updated list of local retail services proposed to be used to calculate the TMAV as part of the annual retail plan report as set out in Decision 2005-17, serving copies on parties who actively participated in this proceeding. Further, the updated list of local retail services is to be based on the general determinations and criteria for inclusion and/or exclusion as determined in this Decision, and it is to be based on the end of the reporting period for which a customer credit is applicable and will apply to that year. In addition, the Commission determines that in the event an ILEC is granted forbearance from the regulation of local retail services for a particular market, the ILEC is to include an accounting as part of the annual retail plan report noted above, of the amount of any forborne revenues it would propose be deducted from the local retail services revenue base used in the calculation of the TMAV. The Commission notes that in Forbearance from the regulation of retail local exchange services, Telecom Decision CRTC 2006-15, 6 April 2006, paragraph 448, the ILECs are expected to develop protocols to provide for pro-rated retail Q of S rebates based on the period of time during the reporting cycle that local exchange rates were regulated in the relevant market. The Commission further determines that interested parties will have 15 days to file comments with the Commission, serving copies on parties who actively participated in this proceeding, and the ILECs will have 15 days to file reply comments with the Commission, serving copies on any interested party who filed comments.
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Secretary General
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This document is available in alternative format upon request, and may also be examined in PDF format or in HTML at the following Internet site: www.crtc.gc.ca
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__________
Footnotes
1 On 7 July 2006, Bell Canada's regional wireline telecommunications operations in Ontario and Quebec were combined with, among other things, the wireline telecommunications operations of Aliant Telecom Inc., Société en commandite Télébec, and NorthernTel, Limited Partnership to form Bell Aliant Regional Communications, Limited Partnership.
2 MTS Communications Inc. became known as MTS Allstream Inc. during the course of the proceeding leading to Retail quality of service rate adjustment plan and related issues, Telecom Decision CRTC 2005‑17, 24 March 2005, and will be referred to as MTS Allstream throughout this Decision.
3 Effective 1 March 2006, TELUS Communications Inc. (TCI) assigned and transferred all of its network assets and substantially all of its other assets and liabilities, including substantially all of its service contracts, to TELUS Communications Company (TCC) and will be referred to as TCC throughout this Decision.
4 Effective 1 July 2004, TCI assumed all rights, entitlements, liabilities, and obligations relating to the provision of telecommunications services in the territory previously served by TELUS Communications (Québec) Inc. All references to TELUS Québec in this Decision refer to TCI's operations in Quebec.
5 Bell Canada's 27 May 2005 submission in the Public Notice 2005‑2 proceeding leading to List of services within the scope of the proceeding on forbearance from the regulation of local exchange services, Telecom Decision CRTC 2005‑35, 15 June 2005.
6 The Commission notes that within the positions of parties in the following sections, not all parties are referenced for all tariff items because the ILEC may not have provided a position with respect to the same or similar tariff item or the ILEC may simply not have a tariff item applicable to the section being discussed.
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Attachment
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