ARCHIVED - Order CRTC 2001-696

Order CRTC 2001-696

Ottawa, 13 September 2001

The Commission approves a TCI proposal for rate increases and restructured tariffs for local radio program channel service

Reference: Tariff notice 320

On 8 December 2000, TELUS Communications Inc. (TCI) filed tariff notice 320 proposing to consolidate the former TELUS Communications (Edmonton) Inc. (TCEI) tariff for radio program service and the former TCI tariff for local exchange radio program channel service into the new TCI tariff item 670 Local radio program channel service (LRPCS). The company also proposed significant rate increases for the service to bring the rates in line with the rates for local channels, a similar service.

The company also proposed to replace the existing service design charge which is based on an hourly rate, multiplied by the actual time spent to design a circuit, with a flat rate per circuit. The proposed rates are the same as those approved for the company in British Columbia.

Interventions were received from the Canadian Association of Broadcasters (CAB) and the Alberta Broadcasters Association (ABA).

The CAB submitted that the proposal to restructure rates for certain broadcast services across Alberta would result in a rate increase of 300% for some radio stations. In addition, the proposal to increase service charges by as much as 700% will be particularly hard on those small-market radio broadcasters who have yet to make the required capital investment in alternate digital technology.

The ABA submitted that the proposed rates would make it uneconomic for many radio broadcasters to continue the local programming practice of "remote broadcasting". Remote broadcasts, which require LRPCS at affordable rates, allow local radio stations to deliver live, local-event coverage, as well as live, extended-form local advertising. The ABA argued that both of these types of programs are critical to the delivery of diverse, high quality local broadcasting to Albertans.

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The ABA noted that TCI stated that it was proposing to change the price cap designation of these circuits by TCEI from Other capped services to Uncapped services in order to be consistent with classification of this service in the rest of Alberta (as well as the price cap classification for similar services in Bell Canada and TELUS Communications (B.C.) Inc. (TCBC) territories). The ABA submitted that the price cap classification of this service is not clear in TCI or TCBC territory and in fact is designated as Other capped services in Bell Canada territory. The ABA noted that it disagreed with the proposal by TCI to treat LRPCS as an uncapped service and submitted that the company should have demonstrated that the proposed changes in TN 320 comply with the price cap constraints.

The ABA also objected to TCI's proposed "bundling" of an equalization payment with the per quarter-mile rate for these circuits. The ABA stated that TN 320 would make equalization a mandatory service feature, even for customers who do not need it.

In its reply, TCI submitted that the CAB case includes incorrect percentage increases and worst-case scenarios rather than averages. TCI noted that the CAB does not disagree with the stated objective of bringing the rates in line with existing local channel tariffs.

TCI also submitted that, apart from supporting the CAB assertions in general and qualitative terms, the ABA comments have not provided any quantifiable example to substantiate the various claims of adverse effects of the proposed rates on ABA members.

TCI noted that in Telecom Decision CRTC 98-2, Implementation of price cap regulation and related issues, dated5 March 1998, Attachment D (page 2) specifically identified TCBC item 406 under Uncapped services. The TCI LRPCS base-rate reference set-up for Edmonton and Alberta is similar to the TCBC base-rate reference set-up for an equivalent service. Therefore, TCI denied the ABA allegation that TCI "may have mischaracterized the treatment of these services for price cap purposes by the CRTC in Telecom Decision CRTC 98-2."

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The Commission notes that there was disagreement about the correct price cap classification of the proposed amalgamated tariff. However, since the revenue impact of the proposed rate changes is small compared to the total revenues of the price cap baskets, the Commission considers that the price cap classification of this service has no material impact on the ruling in this proceeding.

The Commission considers it appropriate to replace the existing extra work charge with the proposed flat rate service design charges.

The Commission notes that the proposed rate structure has different rates for the different levels of equalization, and therefore disagrees with ABA's submission that this proposal constitutes inappropriate bundling.

The Commission notes that the proposed rates for LRPCS bear a reasonable relationship to the rates for voice grade local channels that use similar facilities, and considers that the resultant rate increases are not excessive.

Accordingly, the Commission approves TN 320.

Secretary General

This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca