ARCHIVED - Telecom Commission Letter - 8638-C12-200515002

Letter

Our file: 8638-C12-200515002

Ottawa, 23 February 2007

By Electronic mail

To:   regulatory.affairs@telus.com ; document.control@sasktel.sk.ca ; regulatory.matters@aliant.ca ; bell.regulatory@bell.ca ; iworkstation@allstream.com ; duchesne@consommateur.qc.ca ; jlawford@piac.ca ; napo@napo-onap.ca

Dear Sir/Madam:

Re: 8638-C12-200515002 - Follow-up to Bill management tools - Debt repayment plans, Telecom Decision CRTC 2005-38, 29 June 2005

In Bill management tools - Debt repayment plans, Telecom Decision CRTC 2005-38, 29 June 2005 (Decision 2005-38), the Commission directed Aliant Telecom Inc. (now Bell Aliant Regional Communications, Limited Partnership), Bell Canada, MTS Allstream Inc. (MTS Allstream), and TELUS Communications Company (TCC) (collectively, the Companies) to conduct a pilot bad debt repayment plan (BDRP) for a period of 18 months commencing no later than 29 August 2005, with a representative sample of 600 former subscribers who had been disconnected because of outstanding debt.

The Commission directed the Companies to file a report reflecting 12 months of pilot BDRP results, and to show cause why the BDRP, as set out by the Commission in Decision 2005-38, should not be permanently instituted.   The Commission also directed Saskatchewan Telecommunications (SaskTel) to file comparable results for the same 12-month period, and to show cause why its existing BDRP should not be modified to conform with the terms of the BDRP as set out by the Commission in Decision 2005-38.

This letter sets out the follow-up process to the above-noted proceeding and addresses the issue of subscribers who are currently enrolled in the Companies' pilot BDRPs.

Further Process

Commission staff notes that pursuant to Decision 2005-38 Bell Aliant, Bell Canada and MTS Allstream filed 12 months of results for their respective pilot BDRPs on 2 October 2006 .   TCC filed 7 months of results for its pilot BDRP on 28 September 2006 . [1]   SaskTel filed 12 months of results for its BDRP on 2 October 2006 . [2]  

The attached interrogatories are addressed to the Companies (Appendix 1), SaskTel (Appendix 2), and the Public Interest Advocacy Centre (PIAC), the National Anti-Poverty Organization (NAPO) and l'Union des consommateurs (collectively, the Consumer Groups) (Appendix 3).   Responses are to be filed and served on all parties by 16 March 2007 .

Parties may address interrogatories to other parties. Any such interrogatories must be filed with the Commission and served on the relevant party or parties by 9 March 2007 .   Responses to such interrogatories are to be filed with the Commission and served on all parties by 23 March 2007 .

All parties may file written comments with the Commission on the BDRP results filed by the Companies and SaskTel and any other matter associated with the permanent institution of BDRPs, as set out by the Commission in Decision 2005-38, serving a copy on all other parties by 6 April 2006 .

All parties may file their reply comments with the Commission, serving a copy on all other parties by 20 April 2006 .

Where a document is to be filed or served by a specific date, the document must be actually received, not merely sent, by that date.   Parties can file their submissions electronically or on paper. Submissions longer than five pages should include a summary.

Bad debt repayment plan pilot projects

Commissions staff notes that in Decision 2005-38, the Commission directed the Companies to conduct pilot BDRPs for a period of 18 months.

Commission staff notes that at the time the Companies filed pilot BDRP results in September and October 2006, they all had subscribers still enrolled in their pilot BDRPs. [3]

Commission staff notes that, in light of the follow-up process set-out above, the Companies' 18-month pilot BDRPs will terminate prior to the issuance of a decision with respect to the possible implementation of a permanent BDRP.   Commission staff considers that terminating BDRPs for subscribers still enrolled in the pilot projects, prior to the Commission issuing a decision in this matter, would be contrary to the interest of those subscribers and the Commission's intent with respect to the BDRP proceeding.

Commission staff notes that the Companies' initial pilot BDRP results indicated that the majority of subscriber defaults occurred within the first few months of the program, and that the number of defaults steadily declined in the later months. Commission staff also notes that, in its 2 October 2006 filling, SaskTel indicated that the longer a customer is on a BDRP, the greater the likelihood that the customer's debt will be repaid. Accordingly, Commission staff considers that extending the pilot BDRPs pending a Commission decision in this matter, for those subscribers still enrolled in the programs, would not materially increase the Companies' bad debt.

Commission staff notes that in Decision 2005-38, the Commission considered that the costs for pilot BDRPs would not be material to the Companies, and concluded that the costs to conduct the pilot BDRPs would not warrant a draw-down from the deferral account.   Commission staff considers that a significant portion of the costs incurred by the Companies with respect to the pilot BDRPs occurred during the start-up of the program, and that, based on pilot BDRP results filed by the Companies to date, the on-going operational costs are not material.   Accordingly, Commission staff considers that extending the pilot BDRPs for those subscribers still enrolled in the programs, until such time as the Commission renders a decision in this matter, would not materially raise the Companies' costs.

Having regard to the above considerations, Commission staff therefore requests that the Companies maintain their pilot BDRPs, for those subscribers still enrolled in the programs, until a Commission decision is issued in regards to this follow-up process .

Yours sincerely,

Gerry Lylyk
Director, Consumer Affairs
Telecommunications

c.c.: Philippe Kent , CRTC

Attachments

[1] Due to a labour disruption that took place from 21 July 2005 to 19 November 2005 , TCC did not launch its pilot BDRP until 1 February 2006 .

[2] Pilot BDRP results can be found on the Commission's website at http://www.crtc.gc.ca/PartVII/eng/2005/8638/c12_ 200515002. htm.

[3] Bell Aliant, Bell Canada , MTS Allstream and TCC indicated that they respectively had 13 (out of 121), 221 (out of 600), 99 (out of 694) and 109 (out of 140) subscribers still enrolled in the pilot BDRPs.

Attachment 1

Interrogatories addressed to Bell Aliant, Bell Canada , MTS Allstream and TCC (the Companies)

The_Companies(CRTC) 23 February-101-102

101

Provide an update on your company's pilot bad debt repayment plan (BDRP) by submitting the following results for the entire pilot period, which is to cover the period from the starting date of your pilot BDRP to February 28, 2007 (Pilot Period):

a) total amount of bad debt repaid during the Pilot Period;

b) total number of subscribers who defaulted during the Pilot Period, broken down by month of participation in the pilot BDRP;

c) total amount of bad debt repaid by those who defaulted during the Pilot Period;

d) total number of subscribers enrolled in the Pilot BDRP who fully repaid their bad debt; and

e) total number of subscribers enrolled in the Pilot BDRP still repaying their debt.

102

Provide the total amount of revenues generated for the entire pilot period by subscribers enrolled in your company's pilot BDPR.   Revenues should include basic phone service charges, reconnection charges and any other optional service charges, but should not include the BDRP payments themselves (i.e. bad debt repaid).

The_Companies(CRTC) 23 February-103-104-105

103

In its 6 June 2003 response to CRTC information request of 7 May 2003 , SaskTel indicated that there was a greater than expected interest in the company's BDRP.   In their 2006 pilot BDRP result submissions , the Companies generally indicated that the take-rate for their pilot BDRPs was low (e.g.: Bell Aliant 20%, Bell Canada 21% and TCC 2%) .

a)   Provide your views as to why a low percentage of subscribers elected to enrol in your company's pilot BDRP.

b)   Identify any measures that you consider appropriate, and who should undertake them, in order to improve the take-rate of subscribers to a BDRP.

104

Provide samples of all printed material provided to subscribers that communicates and explains your company's pilot BDRP. Provide a copy of any telephone scripts used by your company to communicate and explain the BDRP program to potential subscribers.

105

In its 6 June 2003 response to CRTC information request of 7 May 2003 , SaskTel generally indicated that its BDRP was a successful program since, among other things, a greater percentage of bad debt was recovered relative to the amount traditionally recovered through collection agencies.

a)   Provide your views, with supporting rationale, as to whether a permanent BDRP would result in a greater percentage of bad debt being recovered as compared to that traditionally recovered through collection agencies.

b)   If you do not consider that a larger percentage of bad debt could be collected by a permanent BDRP relative to that traditionally recovered through collection agencies, provide your views as to why your results would differ from SaskTel's.

The_Companies(CRTC) 23 February-106

106

In its 6 June 2003 response to CRTC information request of 7 May 2003, SaskTel generally indicated that, despite the greater percentage of bad debt recovered by its BDRP as compared to that traditionally recovered through collection agencies, the overall financial success of its BDRP was uncertain, due to the administrative costs of the program and the impact of subscribers defaulting while enrolled in the BDRP.

a)   Provide the total net increase in new bad debt incurred by subscribers who defaulted during the Pilot Period.

b)   Provide the average amount of new bad debt incurred by a subscriber who defaulted during the Pilot Period.

c)   Provide a break-down of the elements that make up a subscriber's average new bad debt calculation (i.e. disconnection charges and other fees).

d)   Identify, on average, how long your company continues to provide basic service to subscribers who default from the pilot BDRP, and explain the rationale for this length of time.

e)   Provide your views as to whether a permanent BDRP should permit the disconnection of a BDRP subscriber immediately upon defaulting from the program, and whether such a modification would serve to reduce the new bad debt accrued by incumbent local exchange carriers (ILECs) offering a permanent BDRP.

f)   Provide any other measures, with supporting rationale, that could help reduce the new bad debt accrued by ILECs offering a permanent BDRP.

g)   Provide your views as to how start-up costs or on-going administrative costs could be minimized by ILECs offering a permanent BDRP.

The_Companies(CRTC) 23 February-107-108

107

If the Commission were to consider it appropriate to impose permanent BDRPs on all ILECs, i dentify any measures or modifications to the BDRP, as set out by the Commission in Bill management tools - Debt repayment plans, Telecom Decision CRTC 2005-38, 29 June 2005 (Decision 2005-38), that you would consider appropriate in order to improve the overall effectiveness, efficiency or financial impact of the plan.

108

In Decision 2005-38, the Commission indicated that, due to their discretionary nature, the ILECs' existing repayment terms and conditions could be inconsistently applied. The Commission considered that a permanent BDRP would ensure that all subscribers were treated consistently, and would also facilitate reconnection by easing the financial burden for consumers on low incomes. In their 2006 pilot BDRP result submissions , some parties suggested that, in lieu of their BDRPs, competitive LECs or wireless providers could meet the needs of consumers on low incomes who had been disconnected by ILECs.

a)   In light of the fact that competitive LECs and wireless providers have no obligation to serve and have the ability to require a deposit in any amount before providing service to new subscribers, provide your views, with supporting rationale, as to whether competitive LECs or wireless providers could meet the needs of consumers on low incomes who have incurred bad debt with an ILEC and have been or are in the process of being disconnected.

b)   Provide any other measures that you would consider appropriate for the Companies to adopt, in lieu of a permanent BDRP, which would facilitate access to basic phone service for consumers on low incomes, particularly if they have incurred bad debt with an ILEC.

Attachment 2

Interrogatories addressed to SaskTel

SaskTel(CRTC) 23 February-201-202

201

Pursuant to Bill management tools - Debt repayment plans, Telecom Decision CRTC 2005-38, 29 June 2005 (Decision 2005-38), on 2 October 2006 SaskTel filed results for 12 months of its bad debt repayment plan (BDRP).   These results covered the period from May 29, 2005 to August 31, 2006 .  

Provide an update on your company's BDRP by filing the following results for the period May 29, 2005 to February 28, 2007 (BDRP Period):

a) total amount of bad debt repaid during the BDRP Period;

b) total number of subscribers who defaulted, broken down by month of participation in the BDRP;

c) total amount of bad debt repaid by those who defaulted during the BDRP Period;

d) total number of subscribers enrolled in the BDRP who fully repaid their bad debt; and

e) total number of subscribers enrolled in the BDRP still repaying their debt.

202

Provide the total amount of revenues generated by subscribers to your company's BDPR during the BDRP Period.   Revenues should include basic phone service charges, reconnection charges and any other optional service charges, but should not include the BDRP payments themselves (i.e. bad debt repaid).

SaskTel(CRTC) 23 February-203-204-205

203

In its 6 June 2003 response to CRTC information request of 7 May 2003 , SaskTel indicated that there was a greater than expected interest in the company's BDRP.   In their pilot 2006 BDRP result submissions , the Companies generally indicated that the take-rate for their pilot BDRPs was low (e.g.: Bell Aliant 20%, Bell Canada 21% and TCC 2%) .

a)   Provide your views as to why a low percentage of subscribers elected to enrol in the Companies' pilot BDRPs.

b)   Identify any measures that you consider appropriate, and who should undertake them, in order to improve the take-rate of subscribers to a BDRP.

c)   Provide an estimate as to the take-rate of subscribers eligible and aware of SaskTel's BDRP who elect to enrol in the program.

d)   If SaskTel's take-rate differs from that of the Companies, provide your views as to why these take-rates may differ.

204

Provide samples of all printed material provided to subscribers that communicates and explains your company's BDRP. Provide a copy of any telephone scripts used by your company to communicate and explain the BDRP program to potential subscribers.

205

In its 6 June 2003 response to CRTC information request of 7 May 2003 , SaskTel generally indicated that its BDRP was a successful program since, among other things, a greater percentage of bad debt was recovered relative to that traditionally recovered through collection agencies.

a)  Provide your views, with supporting rationale, as to whether SaskTel's BDRP still recovers a greater percentage of bad debt compared to that traditionally recovered through collection agencies.

SaskTel(CRTC) 23 February-206

206

In its 6 June 2003 response to CRTC information request of 7 May 2003, SaskTel generally indicated that, despite the greater percentage of bad debt recovered by its BDRP as compared to that traditionally recovered through collection agencies, the overall financial success of its BDRP was uncertain, due to the administrative costs of the program and the impact of subscribers defaulting while enrolled in the BDRP.

a)   Provide the total net increase in new bad debt incurred by subscribers who defaulted during the BDRP Period.

b)   Provide the average amount of new bad debt incurred by a subscriber who defaults while enrolled in the BDRP.   To calculate the average, use the BDRP Period.

c)   Provide a break-down of the elements that make up a subscriber's average new bad debt calculation (i.e. disconnection charges and other fees).

d)   Identify, on average, how long your company continues to provide basic service to subscribers who default from the BDRP, and explain the rationale for this length of time.

e)   Provide your views as to whether a permanent BDRP should permit the disconnection of a BDRP subscriber immediately upon defaulting from the program, and whether such a modification would serve to reduce the new bad debt accrued by incumbent local exchange carriers (ILECs) offering a permanent BDRP.

f)   Provide any other measures, with supporting rationale, that could help reduce the new bad debt accrued by ILECs offering a permanent BDRP.

g)   Provide your views as to how start-up costs or on-going administrative costs could be minimized by ILECs offering a permanent BDRP.

h)   Provide an estimate as to the start-up costs for SaskTel's BDRP, and for the annual on-going administration of the program.

SaskTel(CRTC) 23 February-207-208

207

If the Commission were to impose permanent BDRPs on all ILECs, i dentify any measures or modifications to the BDRP as set out by the Commission in Decision 2005-38 that you would consider appropriate in order to improve the overall effectiveness, efficiency or financial impact of the plan.

208

In Decision 2005-38, the Commission indicated that, due to their discretionary nature, the ILECs' existing repayment terms and conditions could be inconsistently applied. The Commission considered that a permanent BDRP would ensure that all subscribers were treated consistently, and would also facilitate reconnection by easing the financial burden for consumers on low incomes. In their 2006 pilot BDRP result submissions , some parties suggested that, in lieu of their BDRPs, competitive LECs or wireless providers could meet the needs of consumers on low incomes who had been disconnected by ILECs.

a)   In light of the fact that competitive LECs and wireless providers have no obligation to serve and have the ability to require a deposit in any amount before providing service to new subscribers, provide your views, with supporting rationale, as to whether competitive LECs or wireless providers could meet the needs of consumers on low incomes who have incurred bad debt with an ILEC and have been or are in the process of being disconnected.

b)   Provide any other measures that you would consider appropriate for the Companies to adopt, in lieu of a permanent BDRP, which would facilitate access to basic phone service for consumers on low incomes, particularly if they have incurred bad debt with an ILEC.

SaskTel(CRTC) 23 February--209

209

In light of the percentage of bad debt recovered from and the additional revenues generated by subscribers with bad debt who are reconnected, relative to the additional bad debt accrued and the administrative costs of the program, describe the financial impact that SaskTel's BDRP has had on the company.   If the financial impact is negative, provide rationale as to why your company has elected to offer a BDRP.   Identify whether your company plans to continue to offer its BDRP, should the Commission determine that it would not be appropriate to impose a permanent BDRP on all ILECs.

Attachment 3

Interrogatories addressed to PIAC, NAPO and l'Union des consommateurs (Consumer Groups)

Consumer_Groups(CRTC) 23 February-301-302

301

In its 6 June 2003 response to CRTC information request of 7 May 2003 , SaskTel indicated that there was a greater than expected interest in the company's bad debt repayment plan (BDRP).   In their 2006 pilot BDRP result submissions , the Companies generally indicated that the take-rate for their pilot BDRPs was low (e.g.: Bell Aliant 20%, Bell Canada 21% and TCC 2%) .

a)   Provide your views as to why a low percentage of subscribers elected to enrol in the Companies' pilot BDRPs.

b)   Identify any measures that you consider appropriate, and who should undertake, them in order to improve the take rate of subscribers to a BDRP.

302

In its 6 June 2003 response to CRTC information request of 7 May 2003 , SaskTel generally indicated that, despite the greater percentage of bad debt recovered, the overall financial success of its BDRP was uncertain, due to the administrative costs of the program and the impact of subscribers default while under the BDRP.

a)   Provide your views as to whether a permanent BDRP should permit the disconnection of a BDRP subscriber immediately upon defaulting from the program, and whether such a modification would serve to reduce the new bad debt accrued by incumbent local exchange carriers (ILECs) offering a permanent BDRP.

b)   Provide any other measures, with supporting rationale, that would help reduce the new bad debt accrued by ILECs offering a permanent BDRP.

Consumer_Groups(CRTC) 23 February-303-304

303

If the Commission were to impose permanent BDRPs on all ILECs, i dentify any measures or modifications to the BDRP, as set out by the Commission in Bill management tools - Debt repayment plans , Telecom Decision CRTC 2005-38, 29 June 2005 (Decision 2005-38), that you would consider appropriate in order to improve the overall effectiveness, efficiency or financial impact of the plan.

304

In Decision 2005-38, the Commission indicated that, due to their discretionary nature, the ILECs' existing repayment terms and conditions could be inconsistently applied. The Commission considered that a permanent BDRP would ensure that all subscribers were treated consistently, and would also facilitate reconnection by easing the financial burden for consumers on low incomes. In their 2006 pilot BDRP result submissions , some parties suggested that, in lieu of their BDRPs, competitive LECs or wireless providers could meet the needs of consumers on low incomes who had been disconnected by ILECs.

a)   In light of the fact that competitive LECs and wireless providers have no obligation to serve and have the ability to require a deposit in any amount before providing service to new subscribers, provide your views, with supporting rationale, as to whether competitive LECs or wireless providers could meet the needs of consumers on low incomes who have incurred bad debt with an ILEC and have been or are in the process of being disconnected.

b)   Provide any other measures that you would consider appropriate for the Companies to adopt, in lieu of a permanent BDRP, which would facilitate access to basic phone service for consumers on low incomes, particularly if they have incurred bad debt with an ILEC.