Glossary of Telecommunications Terms

Basic Service Objective (BSO)
The basic level of telephone service that the Commission attempts to ensure is available to the public throughout Canada, consisting of:
  • individual line local service with Touch-Tone dialling, provided by a digital switch with capability to connect via low-speed data transmission to the Internet at local rates;
  • enhanced calling features, including access to emergency services, Voice Message Relay service, and privacy protection features;
  • access to operator and directory assistance services;
  • access to the long distance network; and
  • a copy of a current local telephone directory.
Call Management Services (CMS)
Optional enhanced calling features that provide the privacy protection incorporated in the BSO.
Common Channel Signalling System 7 - the digital signalling system used by the telephone companies to route telephone calls and to provide other services.
Centrex service
A combination of exchange service and intercommunicating service offered by suppliers through switching equipment located in their central offices.
Code Division Multiple Access (CDMA)
A spread spectrum method of allowing multiple users to share the radio frequency spectrum by assigning each active user an individual code.
An arrangement which provides access to the ILEC's central office space for the purpose of interconnecting Canadian carriers.
Competitive Local Exchange Carrier (CLEC)
Providers of local telecommunications service in competition with incumbent service providers.
Consumer Bill of Rights (CBOR)
A comprehensive, concise and clear written document containing an inventory of consumer rights.
Consumer Productivity Dividend
(see Stretch Factor)
Economy-wide TFP
A measure of national productivity growth for the business sector of the economy as a whole, produced by Statistics Canada.
Essential Facility
A facility, function, process or service that meets three criteria: it is monopoly controlled; a CLEC requires it as an input to provide services; and a CLEC cannot duplicate it economically or technically. Facilities that meet this definition are subject to mandatory unbundling and mandated pricing. ILECs must also treat the tariffed rates for these facilities as costs in applying the imputation test.
The basic unit for the administration and provision of telephone service by an ILEC, which normally encompasses a city, town or village and adjacent areas. Within an exchange and to other exchanges that have extended area service (EAS) or similar services with that exchange, all subscribers may place an unlimited number of calls of any duration to all other subscribers without incurring long distance toll charges. Exchanges for which EAS or similar services have been established continue, nevertheless to be separate and distinct exchanges.
Exogenous Factor (Z-Factor)
A component of the price cap formula incorporating a change, specific to the telecommunications industry, having a material impact on the company, resulting from legislative, judicial or administrative actions which are beyond the control of the company. A time limited exogenous factor is one that expires after either full recovery of the costs, or realisation of the savings, allowed for.
The Commission refrains, in respect of specified telecommunications services, from exercising some or all its powers under sections 24, 25, 27, 29 and 31 of the Telecommunications Act. The Commission may forbear when forbearance is consistent with Canadian telecommunications policy objectives, and the Commission must forbear, to the extent it considers it appropriate, when there is sufficient competition to protect the interests of telecommunications users.
Gross Domestic Product Price Index (GDP-PI)
An index which measures the cost of a fixed basket of goods and services that make up the GDP in a particular base year. This is the inflation factor (I) used in the Price Cap Index.
High Cost Serving Area (HCSA)
Narrowly defined bands that clearly identify those areas where the cost of providing service is substantially higher than the average cost in other parts of the ILEC territory.
Imputation Test
A test adopted by the Commission to detect anti-competitive targeted pricing strategies. This test is to ensure that all telephone company services are priced to recover all causal costs including contribution and network access charges.
Incumbent Local Exchange Carrier (ILEC)
The existing telephone companies, prior to the introduction of local competition.
Input Price Differential (IPD)
The difference between the telecommunications industry and economy-wide input price growth rates.
Industry TFP
The measure of efficiency of the telephone companies taking into consideration all the inputs (labour, material and capital) and output (revenues).
Internet Service Provider (ISP)
A company that provides access to the Internet to the general public.
Local Exchange Carrier; either an ILEC or a CLEC.
Marginal Costs Basic Productivity Offset
The offset is based on long-term average annual unit cost changes combined with average annual economy-wide inflation (based on Statistic Canada's chain weighted GDP-PI)

Marginal Cost methodology (see Phase II Costing methodology)
National Contribution Fund
A fund established to support continuing access by Canadians to basic telecommunications services.
Network Access Service (NAS)
A connection or line that provides customers with access to the public-switched telephone network.
Network Enhancement Program (NEP)
A program initiated by the Commission in Newfoundland and Labrador in order to relieve toll traffic congestion on certain routes to allow carriage of emergency service calls during busy periods.
Phase II Costing Methodology (Phase II)
A long-run incremental costing methodology which estimates the cost of serving an additional increment of demand for a particular service.
Phase III Costing Methodology (Phase III)
The methodology established by the Commission to segregate the costs and revenues of various categories of telephone company services by assigning the investment, expense and revenue accounts of the telephone company's regulated operations to the appropriate service category.
Price Cap Index (PCI)
The constraint that specifies the maximum level of aggregate price change. The PCI consists of an inflation factor (I) a productivity offset (X) and an exogenous factor (Z).
Productivity Offset (X-factor)
A target productivity to offset the inflation rate in the price cap formula. It represents the telecommunications industry productivity gains in excess of those experienced in the general economy.
Rate Rationalization
Moving telecommunications service rates closer to their associated costs.
Return on Equity (ROE)
The rate of return on the average shareholder's investment, also known as average common equity. The ROE is calculated by dividing the net income after taxes by the average common equity.
Revenue Percent Charge
The charge established to collect contribution from all telecommunications service providers based on a percentage of their annual contribution-eligible revenues.
Service Band Index (SBI)
An index that specifies the aggregate price level of a basket or sub-basket of services charged by the regulated firm.
Service Band Limits (SBLs)
A constraint which limits the increase or decrease in the price of a basket or sub-basket of services.
Service Baskets
A group of services subject to pricing constraints under price regulation.
Service Improvement Plans (SIPs)
Proposals made by ILECs to upgrade their networks in order to achieve the BSO.
Stretch Factor (Consumer Productivity Dividend)
An adjustment factor of the additional efficiency the companies are expected to achieve, as a result of the streamlining of regulation through price caps and the incentives incorporated with pricing flexibility, in the form of savings for ratepayers.
The payment provided to local residential service providers equal to the difference in average costs and average revenues of providing service in high cost serving areas.
Take Rate
The ratio of the number of premises that elect to take a service divided by the total number of premises in a market area.
Terms of Service
The rules setting out the basic rights and responsibilities of the carriers and of their customers regarding tariffed services. The Terms of Service are generally printed in the introductory pages of a telephone book.
Total Factor Productivity (TFP)
A measure of the economic efficiency of a firm's operations. TFP is defined as the ratio of outputs to inputs.
Total Subsidy Requirement (TSR)
The sum of the subsidy requirements of the high cost bands in an ILEC territory.
Tracking Plan
A monitoring program to track service improvement plans as they are implemented.
Wireless Service Provider (WSP)
A provider of cellular and personal communications services.

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