Telecom Decision CRTC 2003-11

Ottawa, 18 March 2003

See also: 2003-11-1

Follow-up to Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34 - Service basket assignment

Reference: 8638-C12-64/02

In this decision, the Commission finalizes the assignment of tariffed services to the service baskets established in Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002.

Introduction

1.

In Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34), the Commission established the price regulation regime that is now applicable to the following incumbent local exchange carriers (ILECs): Aliant Telecom Inc.(Aliant Telecom), Bell Canada, MTS Communications Inc. (MTS), Saskatchewan Telecommunications (SaskTel) and TELUS Communications Inc. (TCI) (collectively, the ILECs).

2.

Appendices 1 and 2 to Decision 2002-34 contained the Commission's assignment of competitor services, and its preliminary view regarding the assignment of other tariffed services, respectively. The Commission initiated, in Decision 2002-34, a procedure to allow the parties to the proceeding to comment on the service assignments set out in Appendices 1 and 2 of that decision.

3.

The Commission received comments dated 17 July 2002 from Aliant Telecom, Bell Canada, and MTS (collectively, the Companies), AT&T Canada Corp. on behalf of itself and AT&T Canada Telecom Services Company (collectively, AT&T Canada), Call-Net Enterprises Inc. (Call-Net), SaskTel and TCI.

4.

Call-Net filed reply comments on 1 August 2002. AT&T Canada, the Canadian Cable Television Association (CCTA), the Companies, Microcell Telecommunications Inc. (Microcell), the Public Interest Advocacy Centre (PIAC), Rogers Wireless Inc. (RWI), and TCI filed reply comments on 2 August 2002. The Companies and TCI filed further reply comments on 15 August 2002 and 16 August 2002, respectively.

5.

In part I of this decision, the Commission addresses Call-Net's argument that many of the ILECs' proposals were requests to review and vary Decision 2002-34. In part II of this decision, the Commission addresses parties' submissions related to the assignment of competitor services. Lastly, in part III of this decision, the Commission addresses parties' submissions related to the classification of other tariffed services.

Part I - Call-Net's argument that many ILEC proposals are requests to review and vary Decision 2002-34

6.

In its reply comments, Call-Net argued that many of the ILECs' proposals were requests to review and vary Decision 2002-34 on the basis that these proposals dealt with mark-up and productivity issues resolved by Decision 2002-34. Call-Net submitted that such proposals should be dismissed.

7.

The Commission notes that Call-Net did not specifically identify the ILEC proposals that, in its view, constituted requests to review and vary Decision 2002-34. The Commission further notes that the scope of the follow-up proceeding leading to this decision specifically requested parties' views with respect to the assignment of services set out in Appendices 1 and 2 of Decision 2002-34. Accordingly, the Commission considers that parties' requests to reclassify a service, insofar as they do not propose a change to the specific criteria set out in Decision 2002-34 to assign services to a particular category, basket, or service grouping, are not requests to review and vary Decision 2002-34.

Part II - Competitor services

Background

8.

In Decision 2002-34, the Commission established two categories of services within the competitor services group. The first category comprised those services that are in the nature of an essential service (Category I competitor services). The second category comprised other services developed for use by telecommunications service providers (Category II competitor services).

9.

The Commission noted in Decision 2002-34 that Category I competitor services would include interconnection and ancillary services required by Canadian carriers and resellers interconnecting to the ILECs' networks, essential services as defined in Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8) and near-essential services, such as those that were the subject of Local Competition sunset clause for near-essential facilities, Order CRTC 2001-184, 1 March 2001 (Order 2001-184). The Commission stated in Decision 2002-34 that Category I services were critical inputs required by competitors in light of the very limited supply of these services.

10.

The Commission determined in Decision 2002-34 that Category I competitor services would generally be priced on the basis of Phase II costs plus a mandated mark-up of 15%. Further, Category I competitor services would be subject to a constraint at the rate element level requiring that, on an annual basis, the price reflect the impact of the rate of inflation less the productivity offset (the I-X constraint). For Category II competitor services, the Commission found it appropriate to cap the rates for these services at existing levels.

Unbundled Loop Service Charge per order, Unbundled Loop Service Charge per loop and Loop Selection Service Charge

11.

The Companies and TCI argued that the Unbundled Loop Service Charge per order, the Unbundled Loop Service Charge per loop, and the Loop Selection Service Charge should be exempted from the application of the I-X constraint. The Companies and TCI noted that in Decision 2002-34 these services were classified as Category I competitor services subject to the mark-up reduction and the I-X constraint. They submitted that in the original economic studies used to establish the cost-based rates for these services they had applied a productivity factor to the Phase II costs of these services. The Companies and TCI submitted that it would therefore be inappropriate to apply the I-X constraint to these services.

12.

AT&T Canada and Call-Net submitted that the ILECs' request should be denied and that the I-X constraint should apply.

13.

AT&T Canada submitted that it was not clear how the productivity factors were determined, what level of productivity improvements were applied, and over what period of time these improvements had been forecast. AT&T Canada argued that improvements applied directly within the ILECs' cost studies lacked transparency and were open to potential gaming. AT&T Canada submitted that the Commission should ensure that productivity improvements are applied in a consistent and transparent manner to ensure that competitors will be charged true cost-based rates.

14.

Call-Net submitted that, if productivity was included in the Phase II costs of these services, they should be subject to annual cost updates to ensure the most current forward-looking view of the Phase II costs.

15.

The Commission notes that the original cost studies filed by the ILECs in support of the current Unbundled Loop Service Charge per order and Unbundled Loop Service Charge per loop did not explicitly include a productivity factor. Further, the Commission's revised cost estimates on which the current rates are based did not include a productivity factor. Accordingly, the Commission concludes that the Unbundled loop service charge per order and the Unbundled loop service charge per loop should be subject to the I-X constraint.

16.

The Commission notes that while the cost study filed by the Companies in support of the Loop Selection Service Charge referred explicitly to the inclusion of a productivity factor, the cost study filed by TCI did not. Accordingly, the Commission concludes that the Loop Selection Service Charge of Bell Canada, MTS and Aliant Telecom will be exempt from the application of the I-X constraint, whereas the I-X constraint will apply to the Loop Selection Service Charge of TCI.

Loop Modification service

17.

The Companies and TCI submitted that the charges associated with Loop Modification service should be exempt from the application of the mark-up reduction and the I-X constraint. The Companies and TCI noted that this service was classified as a Category I competitor service subject to the mark-up reduction and the I-X constraint. They noted that their respective tariffs specified that these charges were determined based on the amount of work and time required to modify an existing loop in order to remove bridge taps or loading coils. The Companies and TCI argued that when a rate was based solely on labour rates subject to ongoing adjustments, it was not appropriate to apply an I-X constraint.

18.

Call-Net argued that Loop Modification service should not be exempt from the mark-up reduction and the I-X constraint. Call-Net submitted that Loop Modification service is in the nature of an essential service since only the ILEC field technician is capable of providing the service. Call-Net argued that the ILECs will experience productivity gains on these services and that the rates charged to competitors for this service should reflect those gains.

19.

AT&T Canada stated that, in its experience, the ILECs have generally used a flat-rate approach in determining the rates for services of this nature. AT&T Canada submitted that competitors and customers have generally not been provided details of the work and time spent in completing a task. AT&T Canada argued that, as a result, there was no incentive for the ILECs to improve productivity in relation to services provided at hourly rates.

20.

The Commission notes that all the ILECs' tariffs specify that Loop Modification service is rated on the basis of the work and time required by a technician to modify a loop. The Commission notes, however, that none of these tariffs identifies or references the specific labour rates that apply when loop modifications are requested by a competitor. The Commission considers that the ILECs' tariffs with respect to Loop Modification service are not sufficiently precise and require amendments to incorporate a reference to the specific tariffed labour rates and conditions that would apply for this service. The Commission therefore directs the ILECs to file, within 30 days of the date of this decision, proposed amendments to their tariffs to either specify or incorporate a reference to the specific labour rates and conditions that would apply for Loop Modification service.

21.

As the ILECs' tariffs for this service do not include any rates, the Commission considers that the pricing constraints applicable to Category I competitor services should not apply to Loop Modification service at this time. The Commission concludes that this service should remain classified as a Category I competitor service, but be exempt from both the mark-up reduction and the I-X constraint. The Commission notes that, consistent with its determinations set out later in this decision, the labour rate applied by each ILEC for loop modification service will be subject to the mark-up reduction if it is classified as a Category I competitor service, or to an I-X constraint at the basket level if it is classified as a retail service.

Wireless Service Provider Enhanced 9-1-1 service

22.

Bell Canada and TCI proposed that Wireless Service Provider Enhanced 9-1-1 service (WSP E-911) be assigned to the basket of services with frozen rates, rather than as a Category I competitor service subject to the mark-up reduction and the I-X constraint. Bell Canada argued that WSP E-911 was the end-user charge applicable to wireless subscribers for 9-1-1 service. Bell Canada and TCI submitted that WSP E-911 should be assigned to the basket of services with frozen rates in accordance with the treatment of other 9-1-1 services.

23.

RWI and Microcell argued that this service should remain classified as a Category I service subject to the mark-up reduction and the application of the I-X constraint. RWI and Microcell stated that, although the WSP E-911 charge is calculated each month on the basis of the number of wireless working telephone numbers, the charge is paid by wireless service providers (WSPs) rather than end-users. Microcell submitted that there is no obligation on wireless carriers to pass this charge through to their end-users. Mircrocell submitted that wireless carriers set end-user 9-1-1 charges based on an overall assessment of internal and external cost elements and competitive market realities and did not mechanically pass through charges from the ILECs.

24.

The Commission notes that 9-1-1 service is addressed to end-users, while WSP E-911 is a service addressed to WSPs. The Commission further notes that while the ILECs' retail rates for 9-1-1 service were set based on Phase II costs plus a mark-up lower than 15%, the rates for WSP E-911 service were set based on Phase II costs plus a mark-up of 25%. The Commission considers that WSP E-911 is in the nature of an essential service since, in the absence of this service, WSPs would be unable to provide the public safety answering point with the call back number and location identification information for a wireless end-user that dialled 9-1-1.

25.

The Commission concludes that WSP E-911 service should remain classified as a Category I competitor service subject to the mark-up reduction and the I-X constraint.

Network Recorded Announcements for Customers of Disconnected IXCs with Feature Group D service

26.

The Companies and TCI submitted that Network Recorded Announcements for Customers of Disconnected IXCs with Feature Group D service should be exempt from the I-X constraint. The Companies and TCI noted that this service was classified as a Category I competitor service subject to the mark-up reduction and the I-X constraint. They submitted that as there is no mark-up in the current rate for this service it would not be appropriate to apply the mark-up reduction.

27.

The Commission notes that in Telecom Order CRTC 95-1145, 25 October 1995, it directed the ILECs, excluding SaskTel, to file final rates for this service with no mark-up. The Commission concludes that for the ILECs other than SaskTel, the rates for Network Recorded Announcements for Customers of Disconnected IXCs with Feature Group D service should be exempt from the mark-up reduction.

28.

The Commission notes that SaskTel's tariff for Network Recorded Announcements for Customers of Disconnected IXCs with Feature Group D service states that the service will be provided at cost. As no specific rates are set out in SaskTel's tariff for this service, the Commission considers that the pricing constraints applicable to Category I competitor services should not apply to this service for SaskTel. The Commission notes that, consistent with its determinations set out later in this decision, the labour rate applied by SaskTel for Network Recorded Announcement for Customers of Disconnected IXCs with Feature Group D service will be subject to the mark-up reduction if it is classified as a Category I competitor service, or to an I-X constraint at the basket level if it is classified as a retail service.

800/888 Carrier Access Multi-Carrier Selection Capability service

29.

The Companies and TCI submitted that 800/888 Carrier Access Multi-Carrier Selection Capability service should be assigned as a Category II competitor service. They noted that this service was classified as a Category I competitor service subject to the mark-up reduction and the I-X constraint.

30.

The Companies submitted that, as there were few subscribers for this service, it could not be considered essential or near-essential. The Companies stated that the current rate was established without any mark-up over Phase II costs and argued that it would be inappropriate to mandate price reductions for 800/888 Carrier Access Multi-Carrier Selection Capability service by applying an I-X constraint.

31.

TCI submitted that, while this service may provide additional functionality to competitors' 800 access service, it is not essential to competitors offering 800 access service. TCI stated that this service was not found to be essential in Decision 97-8 or near-essential in Order 2001-184. TCI further submitted that, should the Commission decide to leave this service as a Category I competitor service, there should not be a mark-up reduction as there is no mark-up in the current rate for this tariff item.

32.

AT&T Canada and Call-Net submitted that the ILECs' requests to reclassify 800/888 Carrier Access Multi-Carrier Selection Capability service as a Category II competitor service should be denied. AT&T Canada stated that, in Telecom Order CRTC 94-302, 29 March 1994 (Order 94-302), the Commission determined that 800/888 Carrier Access Multi-Carrier Selection Capability service was a bottleneck feature that would offer greater customer choice and flexibility. AT&T Canada argued that this demonstrates that this is an essential service. AT&T Canada submitted that the rates for the service had not been revisited since at least 1996 and that interexchange carriers continue to compensate the ILECs for the development of the service. Call-Net submitted that, rather than omitting this service from Category I, a new Phase II cost study should be undertaken which includes a 15% mark-up to reset the cost at its proper level.

33.

The Commission notes that in Order 94-302, it determined that 800/888 Carrier Access Multi-Carrier Selection Capability service was a bottleneck service. The Commission therefore considers that the service meets the criterion for a Category I competitor service. The Commission further notes that the original cost study for 800/888 Carrier Access Multi-Carrier Selection Capability service did not include a productivity factor and that, pursuant to Order 94-302, the rates for this service did not include a mark-up. The Commission concludes that 800/888 Carrier Access Multi-Carrier Selection Capability service is a Category I competitor service that should be subject to the I-X constraint but exempt from the application of the mark-up reduction.

34.

The Commission notes that the ILECs have filed tariff revisions to discontinue the application of charges for the development of this service. The Commission considers that, in view of the limited use of this service, there would be little benefit to reviewing the costs for this service at this time. Accordingly, the Commission considers that it would not be appropriate to require the ILECs to file revised cost studies, as proposed by Call-Net.

Payphone Compensation per Call

35.

SaskTel and TCI argued that Payphone Compensation per Call, which was assigned as a Category I service subject to the mark-up reduction and the I-X constraint, should be moved to the payphone basket.

36.

SaskTel submitted that this service is a "pass through" of compensation to pay telephone service providers from interexchange carriers providing toll-free services. SaskTel stated that the recipients of the compensation included the ILECs and competitive pay telephone service providers (CPTSPs). SaskTel stated that the assignment proposed by the Commission would reduce the compensation to all pay telephone service providers. SaskTel stated that the CPTSPs were not provided with an opportunity to comment on these immediate rate reductions. SaskTel submitted that the Payphone Compensation per Call service, at least in the interim, should be assigned to the payphone basket and that issues regarding compensation per call should be addressed within the future proceeding regarding access to pay telephone services contemplated in Decision 2002-34.

37.

TCI submitted that the service represents an alternative way for the company to be compensated for the use of its payphone service.

38.

The Companies stated that they would not object to SaskTel's and TCI's proposed reassignment, but submitted that, if the Commission were to retain this service as a Category I competitor service, the mark-up reduction and the I-X pricing constraint should not apply. The Companies stated that the Commission approved the rates for payphone compensation per call in Pay Telephone Compensation per Call for Toll-free Calls, Telecom Order CRTC 99-1017, 22 October 1999 (Order 99-1017). The Companies argued that in Order 99-1017 the Commission had not identified all of the factors that it had considered in determining the rate for this service. The Companies submitted that the rate for this service was set below the level required to result in a 25% mark-up, based on the costs filed in support of the associated tariff notice. The Companies noted, in addition, that in the original economic study they had applied a productivity factor to develop their estimates of the Phase II costs of this service.

39.

Call-Net argued that this service was correctly categorized as a Category I competitor service. Call-Net submitted that it was essential that its retail toll-free service work at payphones in order to compete with the ILECs. Call-Net submitted that this service was not similar to other retail pay telephone services, but rather that it was similar to toll-free carrier identification charges since it was based on querying a database to identify the terminating telephone number.

40.

The Commission notes Payphone Compensation per Call service enables the ILECs to collect compensation from interexchange carriers (IXCs) for callers making toll-free calls at payphones that are connected to the toll networks of these IXCs. In the Commission's view, the functionality provided for Payphone Compensation per Call is similar to that provided for 800 Carrier Identification charges, in that both services provide for querying a database to identify the terminating telephone number. The Commission thus considers that Payphone Compensation per Call service should not be assigned to the payphone services basket, which contains retail pay telephone services.

41.

In Decision 2002-34, the Commission concluded that the public and semi-public pay telephone services would be assigned to a separate category in the price cap regime and that the rates for these services would remain at current levels until the Commission considered policy issues related to pay telephone service in a forthcoming proceeding. In Access to pay telephone service, Telecom Public Notice CRTC 2002-6, 5 December 2002 (Public Notice 2002-6), the Commission sought comments on the extent to which consumers rely on pay telephone service; the availability of pay telephone service; and the rate at which pay telephones have been or will be removed from service, the need for public interest payphones, and access to payphones by deaf consumers. With respect to SaskTel's argument, the Commission considers that the proceeding initiated by Public Notice 2002-6 is not the appropriate forum to consider issues regarding the rate for Payphone Compensation per Call service.

42.

The Commission notes that in Order 99-1017 it determined that Bell Canada's proposed rate of $0.25 for compensation for toll-free calls was based on the incremental costs and the fixed common costs per call submitted by Bell Canada. Further, in Compensation for toll-free payphone calls and tracking report service approved, Order CRTC 2000-735, 3 August 2000, the Commission noted that this was a cost-based rate with a reasonable mark-up.

43.

Accordingly, the Commission concludes that Payphone Compensation Per Call should remain classified as a Category I competitor service subject to the mark-up reduction and the I-X constraint.

Support structure services

44.

In its reply comments, the CCTA submitted that support structure services, which are currently assigned as Category II competitor services, should be treated as an essential/near-essential type service and assigned to Category I competitor services.

45.

The CCTA submitted that, in past decisions, including Part VII Application - Access to Supporting Structures of Municipal Power Utilities - CCTA vs. MEA et al. - Final Decision, Telecom Decision CRTC 99-13, 28 September 1999 and Access to Telephone Company Support Structures, Telecom Decision CRTC 95-13, 22 June 1995, the Commission found that it was in the public interest to avoid duplication of support structures and to ensure access on a joint use basis. The CCTA stated that the Federal Government also had recognized the critical importance of support structures and the need to secure access to physical locations and existing support structures at a reasonable cost rather than unnecessarily duplicating these facilities. The CCTA argued that the Commission established the rates for access at levels below those that would be market-based in consideration of the public interest.

46.

The CCTA submitted that support structure services shared many characteristics with other services that have been assigned as Category I competitor services. The CCTA noted specifically that elements of the ILECs' co-location services provided almost identical functionality as elements in the support structure services.

47.

The Companies argued that the CCTA's submission was not a response to other parties' comments, but constituted a classification proposal raised out of process that should be struck from the record. The Companies submitted that, should the Commission choose to consider the CCTA's proposal, it should be denied. TCI supported the Companies' position.

48.

The Companies acknowledged that the Commission had expressed the view that the joint use of support structures by multiple service providers was in the public interest. The Companies noted, however, that in Decision 97-8 the Commission determined that support structures were not essential services. The Companies submitted that the CCTA had provided no evidence which casts doubt on the correctness of the Commission's determination in Decision 97-8.

49.

The Companies submitted that there were a number of competitive supply alternatives that were available as a result of the extensive infrastructure investments of the power utilities and cable companies and those arising with the advent of facilities-based competition. The Companies also submitted that CCTA members and others made their support structure facilities available to third parties, often in direct competition to the Companies' own support structure service offerings, on an unregulated basis. The Companies argued that the CCTA provided no evidence that its members were unable to obtain their own rights-of-way or to establish their own support facilities or that additional pricing constraints in this segment of the competitive marketplace were warranted.

50.

The Commission notes that in Decision 97-8 it stated the following:

The Commission notes that the Act provides a comprehensive framework for the provision of access to public and private property, including support structures. While, as CCTA noted, access to existing private rights-of-way will be subject to the terms of the original licence granting such rights-of-way, all LECs will have the ability to negotiate new public and private rights-of-way and other arrangements. Where negotiations fail to achieve access by a LEC to private or public property on suitable terms and conditions, the Commission notes that the Act provides a framework by which such access might be obtained. In light of these considerations, the Commission considers that access to rights-of-way and similar arrangements should not be treated as essential facilities, and that no specific access to such arrangements should be mandated at this time.

51.

The Commission agrees that the CCTA's proposal for reassignment should have been put forward in the first round of comments. However, the Commission finds that it is appropriate to give further consideration to the CCTA's proposal. In the interim, the Commission concludes that Support Structure services should remain classified as Category II competitor services. Parties to this proceeding may comment on the CCTA's proposal by 7 April 2003, copying the other parties to the proceeding. Parties who filed comments on the CCTA's proposal may file reply comments, copying other parties who filed comments, by 17 April 2003.

Call Routing Location Number Absent service and Local Number Portability - Access to Service Control Point service

52.

TCI argued that Call Routing Location Number Absent service, which was assigned as a Category I service subject to the mark-up reduction and the I-X constraint, should be reassigned as a Category II competitor service. TCI stated that Local Number Portability (LNP) - Access to Service Control Point service, which provides the same functionality as Call Routing Location Number Absent service, had been assigned as a Category II competitor service for the other ILECs.

53.

In its reply comments, Call-Net submitted that Local Number Portability (LNP) - Access to Service Control Point service should be assigned as a Category I competitor service for all ILECs. Call-Net argued that this service should be subject to the mark-up reduction and the I-X constraint. Call-Net noted that with the exception of TCI's Call Routing Location Number Absent service, the ILECs' LNP - Access to Service Control Point service had been assigned as a Category II competitor service. Call-Net submitted that this service was essential for offering toll service. Call-Net argued that the ILECs could be expected to experience productivity improvements in providing this service over the second price cap period.

54.

The Commission notes that Call-Net's request was filed during the reply comment phase of this proceeding. The Commission notes that no party objected to or commented on this aspect of Call-Net's reply.

55.

The Commission notes that it assigned the ILECs' LNP - Access to Service Control Point service as a Category II competitor service on the basis that the rates for this service were not based on Phase II costs plus a mark-up of 25%. The Commission considers that TCI's Call Routing Location Number Absent service should also have been assigned as a Category II competitor service since the rates for this service were also not based on Phase II costs plus a mark-up of 25%. The Commission notes that as copies of the database are also available from a third party service provider, competitors could provide this service themselves. The Commission further notes that Bell Canada and TCI compete in the provision of this service in Canada.

56.

Accordingly, the Commission concludes that LNP - Access to Service Control Point service was appropriately classified as a Category II competitor service and that TCI's Call Routing Location Number Absent service should be reclassified as a Category II competitor service.

Asynchronous Digital Subscriber Line service

57.

AT&T Canada argued that Asynchronous Digital Subscriber Line (ADSL) service should be assigned as a Category I competitor service, rather than a Category II competitor service. AT&T Canada submitted that Bell Canada's ADSL service should be defined as an essential service given the difficulty in obtaining unbundled loops through the ILECs' remotes.

58.

TCI stated that ADSL service was not found to be an essential facility in Decision 97-8 or a near-essential facility in Order 2001-184, or elsewhere. TCI argued that the service should not be reassigned as a Category I competitor service. TCI submitted that AT&T Canada has not argued that ADSL service was essential, but rather, was simply seeking better terms for access and usage.

59.

The Companies and TCI argued that AT&T Canada had failed to provide any evidence that ADSL service was in the nature of an essential service.

60.

The Commission notes that in Decision 2002-34, it assigned Bell Canada's ADSL Loop Administration and Support service to Category I on the basis that the rate for this service was based on Phase II costs plus a 25% mark-up. The Commission notes that it classified other components of Bell Canada's ADSL service and the ADSL service provided by the other ILECs to Category II.

61.

The Commission notes that the issue as to whether the remaining ADSL service components are in the nature of an essential service is currently being examined in the context of the proceeding initiated by Bell Canada Tariff Notice 6622. The Commission considers that, until a final decision in respect of Bell Canada Tariff Notice 6622 is issued, ADSL service should remain assigned as a Category II competitor service, with the exception of Bell Canada's ADSL Loop Administration and Support service, which will remain assigned as a Category I competitor service, subject to the mark-up reduction and the I-X constraint. The Commission intends to address the assignment of ADSL service for all other ILECs upon the conclusion of the proceeding initiated by Tariff Notice 6622.

Remote Switching and DSLAM Information service and ADSL Coverage Information service

62.

In its reply comments, AT&T Canada proposed that Remote Switching and DSLAM Information service and ADSL Coverage Information service be assigned as Category I competitor services as their rates are based on cost plus a 25% mark-up.

63.

The Commission notes that AT&T Canada's request was filed during the reply comment phase of this proceeding. The Commission further notes that no party objected to or commented on this aspect of AT&T Canada's reply.

64.

The Commission notes that Remote Switching and DSLAM Information and ADSL Coverage Information provide reports to the requesting party relating to the remote switching and the DSLAM equipment in each wire centre and ADSL coverage information by NPA, respectively. The Commission notes that such information is only available from an ILEC. The Commission further notes that rates for these services are based on Phase II costs plus a 25% mark-up. Accordingly, the Commission concludes that the Remote Switching and DSLAM Information and ADSL Coverage Information services should be classified as Category I competitor services subject to the mark-up reduction and the I-X constraint.

Network Portability Access service

65.

TCI submitted that this service should be assigned as a Category II competitor service since the service had been superseded by local number portability services and was therefore no longer essential. TCI noted that Network Portability Access service was assigned both as a Category I competitor service and as an uncapped service for Alberta and was omitted from the appendices for British Columbia.

66.

The Commission notes that Network Portability Access Service provides for the interconnection of a service provider's network portability service system to an ILEC's public switched telephone network while local number portability services allow telephone numbers to be ported between local exchange carriers. The Commission further notes that network portability service is a network based service offered by service providers that allows a user to program the service provider's system from any Touch-Tone equipped telephone for the purpose of specifying where calls to the user's personal number are to be delivered. The Commission thus considers that local number portability services are not a substitute for Network Portability Access service. The Commission notes that Bell Canada did not oppose the classification of its Network Portability Access service as a Category I competitor service. The Commission concludes that Network Portability Access service was appropriately assigned as a Category I competitor service subject to the mark-up reduction and the I-X constraint.

Directory Publisher Billing and Collection service

67.

TCI proposed that Directory Publisher Billing and Collection service be assigned as an uncapped service. TCI noted that the service provides for the collection and remittance of money owed by TCI's customers to a directory publisher.

68.

The Commission notes that it has allowed competition in the provision of telephone directories. As Directory Publisher Billing and Collection service would be provided to a customer providing directory publishing service, the Commission considers it is a service developed for the use of competitors. However, since directory publishers have the information necessary to bill and collect their customers, which are also TCI's customers, the Commission considers that Directory Publisher Billing and Collection service is not in the nature of an essential service. The Commission concludes that Directory Publisher Billing and Collection service is a Category II competitor service.

Floor Space Physical and Virtual Co-location Arrangement

69.

SaskTel submitted that Floor Space Physical and Virtual Co-location Arrangement services, which were assigned as Category I competitor services subject to the I-X constraint, should be exempt from the I-X constraint at the current time in view of the ongoing follow-up process initiated by Decision 2002-34 regarding this service.

70.

AT&T Canada noted that none of the ILECs, with the exception of SaskTel, took issue with the assignment of Floor Space Physical and Virtual Co-location Arrangement services. AT&T Canada contended that the proceeding in question had nothing to do with the assignment of the service.

71.

The Commission, in Decision 2002-34, expressed the preliminary view that it would be appropriate to use the floor space rate of $14.90 per square metre, based on MTS' Phase II costs plus a 15% mark-up, for each ILEC. In Decision 2002-34, the Commission also established a process to provide parties with the opportunity to comment on its preliminary view. The Commission notes that this process is not pertinent to the assignment of Floor Space Physical and Virtual Co-location Arrangement services as Category I competitor service subject to the I-X constraint. The Commission concludes that Floor Space Physical and Virtual Co-location Arrangement services were appropriately assigned as Category I competitor services subject to the I-X constraint.

Customer Information Reports service

72.

Bell Canada submitted that Customer Information Reports service, which was assigned as a Category I competitor service subject to the mark-up reduction and the I-X constraint, should be assigned as a Category II competitor service. Bell Canada noted that the demand for this service was virtually zero. Bell Canada argued that this service was not essential or near-essential. Bell Canada submitted that the current rate was established without any mark-up over Phase II costs and that it would, therefore, be inappropriate to mandate a mark-up reduction to the rate for this service.

73.

The Commission notes that customers of Customer Information Reports service receive weekly listings of names, addresses and other information related to requests from Bell Canada's subscribers to install, remove or change the location of a service which will result in access line movement. The Commission notes that this service could be used by competitors to identify potential customers. As the demand for this is very small, it is evidently not the only way to identify potential customers. Accordingly, the Commission is of the view that this service is not in the nature of an essential service. The Commission concludes that the Customer Information Reports service is a Category II competitor service.

Exchange Maps service

74.

Aliant Telecom proposed that Exchange Maps service be assigned as a Category II competitor service since the rating of this service was based on the recovery of costs incurred.

75.

AT&T Canada argued that there is no other practical source for this information. AT&T Canada submitted that Exchange Maps service should be assigned as a Category I competitor service.

76.

The Commission notes that Aliant Telecom is the only practical source for the information provided by Exchange Maps service. The Commission notes that the tariff states that Aliant Telecom will provide to a customer one paper copy of any one of its exchange maps to a customer free of charge, but that requests for additional copies and/or exchanges will be provided based on the expense incurred. In light of the fact that no rate is charged for the first copy of any exchange map, the Commission finds that the service should be exempted from the pricing constraints on Category I competitor services. The Commission concludes that Exchange Maps service should be assigned as a Category I competitor service exempt from the mark-up reduction and the I-X constraint.

Competitor services provided on the basis of hourly labour rates and flow-through charges

77.

TCI argued that Local Network Interconnection and Component Unbundling - 9-1-1 Maps service (9-1-1 Maps service) should be exempt from the I-X constraint as it is provided at tariffed hourly labour rates. TCI submitted that any productivity gains it achieved were automatically flowed through to customers at the time the service was provided. TCI further argued that the labour rates for this service were market-determined retail rates that were competitive and should not be subject to a productivity offset.

78.

SaskTel argued that the Application Charge, the Project Management Fee, the Site Preparation Fee, the Installation/Maintenance service, the Power Delivery service and the Cable Pulling/Splicing service should be exempt from the mark-up reduction and the I-X constraint. SaskTel stated that the tariffs for these services referenced SaskTel's labour rate and the recovery of other costs, such as charges from other suppliers, incurred in provisioning these services. SaskTel submitted that where charges were applied based on labour rates subject to ongoing adjustment, it was not appropriate to apply an I-X constraint.

79.

SaskTel further argued that Modification service, Additional Charges, Diagnostic Maintenance service, and WSP - Network Access Service: Trouble Investigation service should be exempt from the mark-up reduction. SaskTel stated that these services were rated based on SaskTel's labour rate and the amount of work and time required to complete the task. SaskTel submitted that these charges should similarly be exempt from the I-X constraint as they were applied based on labour rates subject to ongoing adjustment.

80.

The Commission considers that it is generally not appropriate to subject labour rates to the I-X constraint as labour rates usually increase over time. The Commission notes that productivity improvements would be achieved through reductions in the time required to perform the tasks associated with a particular work function. The Commission concludes that labour rates associated with the provision of Category I competitor services should be subject to the mark-up reduction but not to the I-X constraint.

81.

The Commission further considers that it is generally not appropriate to subject flow-through charges from other suppliers to either the mark-up reduction or the I-X constraint.

Wireless Access Service Repair Visit service

82.

Aliant Telecom proposed that Wireless Access Service Repair Visit (WAS Repair Visit) service, a service which is rated on an hourly basis, be assigned as a Category II competitor service.

83.

The Commission notes that Aliant Telecom's WAS Repair Visit service provides the same functionality as SaskTel's Wireless Service Provider - Network Access Service: Trouble Investigation service, which the Commission assigned as a Category I competitor service since it was in the nature of an essential service. The Commission concludes that Aliant Telecom's WAS Repair Visit service should be similarly assigned as a Category I competitor service.

84.

The Commission notes that as a Category I competitor service, WAS Repair Visit service would normally be subject to the mark-up reduction and the I-X constraint. However, as it is rated on an hourly basis, the Commission considers that WAS Repair Visit service should be exempted from the I-X constraint.

Mobile Radio Network Access service - 7-Digit Telephone Numbers service

85.

Aliant Telecom proposed that Mobile Radio Network Access service - 7-Digit Telephone Numbers service be assigned as a Category II competitor service since it is no longer the sole provider of telephone numbers.

86.

The Commission notes that Mobile Radio Network Access service provides analogue access to and from Aliant Telecom's public switched telephone network for the mobile radio systems of operators of conventional and private mobile radio systems and private mobile radio systems. The Commission further notes that each analogue mobile radio network access is necessarily tied to a telephone number that must be provided by the service provider. The Commission thus considers that competitors would not be a viable source of telephone numbers to the customers of Aliant Telecom's Mobile Radio Network Access service. The Commission considers that the 7-Digit Telephone Numbers service component of this service should be treated in the same manner as Mobile Radio Network Access service. The Commission therefore concludes that Mobile Radio Network Access service - 7-Digit Telephone Numbers service is a Category I competitor service that should be subject to the mark-up reduction and the I-X constraint.

Emergency Services - Operator Access Co-ordination service and Zero-Dialled Emergency Call Routing service

87.

Bell Canada and SaskTel argued that Zero-Dialled Emergency Call Routing service, which was assigned as a Category I competitor service subject to the mark-up reduction and the I-X constraint, should be assigned to the basket of services with frozen rates.

88.

TCI proposed that Emergency Services - Operator Access Co-ordination service should be assigned as a Category II competitor service. TCI argued that this service is similar to other operator services which were classified as Category II competitor services.

89.

The Commission notes that, unlike services with frozen rates that are provided to end-users, Zero-Dialled Emergency Call Routing service is provided to competitors.

90.

The Commission notes that TCI's Emergency Services - Operator Access Co-ordination service provides the same functionality as the other ILECs' Zero-Dialled Emergency Call Routing service. These services are necessary for competitive pay telephone service providers to provide a connection to emergency services to their customers in areas where 9-1-1 service is not available. For this reason, the Commission considers that these services are in the nature of an essential service. The Commission concludes that the ILECs' Zero-Dialled Emergency Call Routing service was appropriately assigned as a Category I competitor service subject to the mark-up reduction and the I-X constraint and that TCI's Emergency Services - Operator Access Co-ordination service should be similarly assigned and subject to the mark-up reduction and the I-X constraint.

Relay service

91.

The Companies and TCI argued that Relay service should be assigned to the basket of services with frozen rates pursuant to Decision 2002-34. The Companies and TCI stated that Relay service was assigned both as a Category I competitor service subject to the mark-up reduction and the I-X constraint. MTS submitted that charges for Relay service are not payable by a competitor but are collected from end-users to support the service.

92.

The Commission notes that the rates for Relay service include both a set-up charge per competitive local exchange carrier (CLEC) and an access charge per network access service (NAS) or working telephone number (WTN). The Commission notes that while the rate for the set-up charge was based on Phase II costs plus a mark-up of 25%, the access charge corresponds to the retail rate for this service. The Commission concludes that the set-up charge is appropriately assigned as a Category I competitor service subject to the mark-up reduction and the I-X constraint, while the access charge is appropriately assigned to the basket of services with frozen rates.

Other capped services used by competitors

93.

AT&T Canada submitted that services used by competitors, which were assigned to the other capped services basket, should be reassigned as Category I competitor services. AT&T Canada stated that in Decision 2002-34 the Commission had recognised that, during the first price cap regime, the downward trend in ILEC business rates had squeezed the margins available to competitors and impeded competitive entry. AT&T Canada argued that the basket constraint on other capped services could similarly result in a significant adverse effect on the development of local competition.

94.

AT&T Canada stated that the ILECs' rate reductions resulting from the application of the I-X pricing constraint on other capped services could be focused on services such as Digital network access (DNA), Megalink and Digital exchange access services. AT&T Canada stated that it was especially concerned that the ILECs would be able to reduce the rates for DNA service by more than the I-X rate element constraint applicable to competitor-DNA service. AT&T Canada argued that such rate reductions would squeeze the margins available to competitors and impede competitive entry. AT&T Canada urged the Commission to ensure that the productivity offset associated with competitor-DNA service be at least equal to that applied to the retail DNA service.

95.

AT&T Canada argued that some of the same issues would apply to Centrex service, which has been classified as an uncapped service.

96.

The Companies and TCI submitted that the Commission should reject AT&T Canada's request to reassign services in the other capped services basket that were used by competitors to Category I competitor services. The Companies and TCI argued that AT&T Canada had not provided any evidence that services in the other capped services basket that were used by competitors met the Commission's definition of a Category I competitor service.

97.

The Companies and TCI argued that AT&T Canada's request was an attempt to place services that were not in the nature of an essential service, and that were subject to varying degrees of competition, under Category I competitor service constraints. The Companies and TCI submitted that, moreover, AT&T Canada's request was a request to review and vary the determinations made by the Commission in Decision 2002-34 regarding the criteria used by the Commission to assign services to different baskets.

98.

In Decision 2002-34, the Commission established the criterion used to assign a service as a Category I competitor service. The Commission notes that AT&T Canada has not provided any evidence to demonstrate why the other capped services and Centrex services used by competitors would each satisfy the criterion established in Decision 2002-34 to assign services as Category I competitor services. The Commission notes that AT&T Canada has argued that the other capped services and Centrex services used by competitors should be assigned as Category I competitor services on a different basis, namely that the pricing constraints on these services could have a significant adverse effect on the development of local competition.

99.

The Commission considers that AT&T Canada's proposal is a request to review and vary the Commission's determinations in Decision 2002-34 with respect to the criteria used to define the service baskets. The Commission notes that, pursuant to Guidelines for review and vary applications, Telecom Public Notice CRTC 98-6, 20 March 1998 (Public Notice 98-6), applicants must demonstrate that there is substantial doubt as to the correctness of the original decision in order for the Commission to exercise its discretion pursuant to Section 62 of the Telecommunications Act to review and vary a decision. The Commission considers that AT&T Canada has not demonstrated in its request that there is substantial doubt as to the correctness of Decision 2002-34.

100.

In light of the above, the Commission concludes that it is not appropriate to reclassify other capped services and Centrex services used by competitors as Category I competitor services.

Part III - Retail Services

Background

101.

In Decision 2002-34, the Commission assigned the ILECs' retail services to each basket or sub-basket as follows:

102.

In Decision 2002-34, the Commission assigned specific retail services to uncapped services where it considered that market forces were sufficient to provide price protection to customers. In particular, the Commission determined that Centrex customers would be protected given that Centrex service was a substitute for business local exchange service, the rates of which were capped. The Commission also determined that business optional local services and service bundles that include a business local exchange service or a business optional local service would be protected in view of the substitutes available for these services. The Commission also assigned most special facilities and special assembly tariffs to uncapped services since the services in question were offered to a limited number of customers and the associated rates were often developed having regard to factors such as long-term commitment. In addition, the Commission determined that it was not necessary to apply pricing constraints to the Late Payment Charge since it was based on a Commission-approved formula.

Maintenance service - Network Diagnostic Maintenance service and Customer-Provided Telephone Set and Inside Wiring service

103.

The Companies and TCI argued that Maintenance service and Network Diagnostic Maintenance service should be assigned to uncapped services, rather than to the other capped services basket. The Companies stated that Maintenance service and Network Diagnostic Maintenance service were related to maintenance activities for forborne services such as inside wire and terminal equipment and argued that they should therefore be uncapped. TCI stated that charges for Network Diagnostic Maintenance service were based on time and labour rates as well as charges that are flowed through to customers. TCI further argued that the labour rates for this service were competitive market-determined retail rates that should not be subject to an additional productivity offset.

104.

MTS stated that in cases where trouble is found with MTS' equipment or facilities no charge applies for Customer-Provided Telephone Set and Inside Wiring service. MTS stated that customers were responsible for providing their customer-provided telephone sets and inside wiring and were free to evaluate their own service issues, or to complete testing on their own, where demarcation devices were present. MTS submitted that competitive alternatives to Customer-Provided Telephone Set and Inside Wiring service were widely available.

105.

AT&T Canada submitted that the service charge associated with the ILECs' Maintenance service and Network Diagnostic Maintenance service was related to the maintenance of regulated services and should remain in the other capped services basket. AT&T Canada argued that while conceptually, this service charge was only applied if the fault lied outside of an ILEC's facility, the service provided was clearly the result of maintenance activities performed in isolating a fault on a regulated service. AT&T Canada further stated that the service charge for Maintenance service and Network Diagnostic Maintenance service, which was applied to competitors as well as to the ILECs' end-customers, was often applied in cases where it was not clear that the fault lied outside of the ILECs' responsibility. AT&T Canada submitted that leaving the service in the other capped services basket could encourage productivity improvements resulting from a better level of co-operative testing between the ILECs, competitors and end-customers.

106.

PIAC submitted that although inside wiring and terminal equipment markets have been forborne, diagnostic services were required both when the problem was due to company facilities as well as when the problem was with customer inside wiring or terminal equipment, because the customer could not determine with certainty where the problem resided. PIAC argued that the service charge should be subject to a price cap because it was related to a service that was considered to be the company's responsibility under conditions that could not always be determined in advance by the customer.

107.

PIAC stated that, while diagnostic services might be competitively available, consumers were not expected to pay for such services when the problem was with company facilities. PIAC stated that the only way to determine the source of the problem was by conducting diagnostic tests and argued that, if there was any chance that the problem was with an ILEC's facilities, customers would rightly request that the ILEC perform the diagnosis.

108.

The Commission notes that the services assigned to uncapped services in Decision 2002-34, with the exception of the Late Payment charge, are targeted at business customers. The Commission notes that Network Diagnostic Maintenance service and Customer-Provided Telephone Set and Inside Wiring service are targeted at a broader range of customers.

109.

In Decision 2002-34, the Commission assigned Centrex services, business optional local services and service bundles that include a business local exchange service or a business optional service on the basis that substitutes were available that would discipline prices for these services. The Commission notes that while retail customers with a demarcation point could perform a diagnostic test by attaching a working terminal to the jack in the demarcation point, competitors will require the co-operation of an ILEC's technician to test and isolate the source of the problem when an unbundled loop is involved.

110.

In light of the above, the Commission is not persuaded that Maintenance service, Network Diagnostic Maintenance service, and Customer-Provided Telephone Set and Inside Wiring service should be reassigned to uncapped services. Moreover, the Commission agrees that productivity improvements from co-operative testing could result from having these services assigned to the other capped services basket.

111.

The Commission concludes that Maintenance service, Network Diagnostic Maintenance service and Customer-Provided Telephone Set and Inside Wiring service should remain in the other capped services basket.

Retail services provided on the basis of hourly labour rates

112.

Aliant Telecom submitted that an upward pricing constraint of I-X should not apply to hourly labour rates. Aliant Telecom argued that these rates should be reassigned to the single and multi-line business local exchange services basket from the other capped services basket. Aliant Telecom stated that these labour rates were an alternative to standard service charges applicable for business primary exchange services, which have been assigned to the single and multi-line business local exchange services basket.

113.

Aliant Telecom and TCI noted that Construction Charges, which have been placed in the other capped services basket, were uncapped under the last price cap regime. Aliant Telecom and TCI stated that rates for these services were based upon hourly labour rates and time as well as charges that are flowed through to customers. Aliant Telecom and TCI submitted that Construction Charges should be uncapped in the current regime given the competitive nature of the market for these services. TCI submitted that any productivity gains achieved by TCI with respect of these services would be automatically flowed through to customers at the time they were provided. TCI argued that inclusion of Construction Charges in a price cap basket would be punitive. TCI stated that this would be consistent with Appendix 1 of Decision 2002-34, whereby the Commission exempted construction charges from the application of the I-X constraint.

114.

Bell Canada submitted that its Interior Construction service relates to the provision of inside wire or other apparatus that were no longer subject to regulation and were offered on a competitive basis by alternate providers of these services and therefore should be uncapped. This service is rated based upon hourly labour rates and time as well as unusual expense that is flowed through to customers.

115.

SaskTel submitted that Extra Provisioning charges, Winter Construction charges and Distribution and Entry Construction charges, which were assigned to the other capped services basket, should be assigned to the residential local exchange services sub-baskets in HCSAs and non-HCSAs and the single and multi-line business local exchange services basket. SaskTel stated that these services provided for the facilities necessary to provision network access, including the costs of material, engineering and labour. SaskTel further stated that it regarded the rates associated with these services as installation charges. SaskTel argued that the revenues associated with these services should be assigned to the residential local exchange services sub-baskets for HCSAs and non-HCSAs and to the single and multi-line business local exchange services basket consistent with the nature of the network access service provisioned.

116.

The Commission considers that moving hourly labour rates to the single and multi-line business local exchange services basket, as Aliant Telecom suggested, would not be appropriate as these rates are applicable to other services, like Centrex services, which have not been assigned to that basket.

117.

The Commission assigned construction charges to other capped services since that they applied across customer types, and to a limited number of customers. The Commission notes that none of the ILECs, other than SaskTel, objected to the assignment of construction charges to the other capped services basket. The Commission considers that it would not be appropriate to reassign construction charges to the residential local exchange services sub-baskets in HCSAs and non-HCSAs and the single and multi-line business local exchange services basket, as suggested by SaskTel.

118.

The Commission considers that it is generally not appropriate to subject services rated on the basis of hourly rates, or services that flow through charges from other suppliers to customers to an I-X constraint. The Commission notes that productivity improvements would be reflected in the time required to perform the associated tasks. However, the Commission considers that moving these services to uncapped services is not an acceptable solution as customers often have no alternative but to go to the ILEC to obtain such services.

119.

The Commission also notes that the I-X constraint on other capped services applies at the basket level, rather than at the rate element level, the I-X constraint on Other capped services applies at the basket level. Accordingly, the ILECs could choose whether to adjust the rates for services rated on the basis of an hourly labour rate basis. In light of the above, the Commission concludes that these services should remain in the other capped services basket.

Direct-in-Dial service, Optional Hunting Arrangements service, Equivalent Line service and Tie Trunks service

120.

The ILECs argued that Direct-in-Dial (DID) service, Optional Hunting Arrangements service and Equivalent Line service should be reassigned from the other capped services basket to the single-line and multi-line business local exchange services basket on the basis that they were related to the provision of business exchange services and were subject to the same competitive circumstances.

121.

Aliant Telecom argued that Tie Trunks service should be assigned to the single-line and multi-line business local exchange services basket since the service was used only in conjunction with private branch exchange (PBX) and multi-line local exchange services. Aliant Telecom noted that Tie Trunks are speciality channels used in conjunction with multi-line exchange services to provide connectivity between PBXs.

122.

The Commission notes that DID service, Optional Hunting Arrangements service, Equivalent Line service and Tie Trunks service are supplementary to business primary exchange services. The Commission concludes that DID service, Optional Hunting Arrangements service, Equivalent Line service and Tie Trunks service should remain in the other capped services basket, as they are discretionary.

Remote Call Forwarding service

123.

TCI argued that Remote Call Forwarding service, which was assigned to the other capped services basket, should be assigned as an uncapped service since it was similar to Call Forwarding service, which was a optional feature for business customers that was assigned as an uncapped service.

124.

The Commission notes that Remote Call Forwarding service enables a customer to receive long distance calls, at no charge to the calling party. The service is provided by assigning a local telephone number in a distant exchange. In Decision 2002-34, the Commission assigned Centrex services, business optional local services and service bundles that include a business local exchange service or a business optional service to uncapped services on the basis that substitutes were available that would discipline prices for these services. The Commission recognizes that both Remote Call Forwarding service and Call Forwarding service provide for calls to be routed to a different number than that which was dialled. The Commission, however, considers that the functionality provided by Remote Call Forwarding service, with respect to the called party being billed for long distance calls made by the calling party, makes this service significantly different from that provided by Call Forwarding service. The Commission therefore considers that these two services are not substitutes for one another. The Commission notes that no other ILEC requested that Remote Call Forwarding service be reassigned as an uncapped service. The Commission concludes that Remote Call Forwarding service should remain in the other capped services basket.

MessageManager - Call Forward Busy/Call Forward No Answer service

125.

SaskTel argued that MessageManager - Call Forward Busy/Call Forward No Answer service, which was assigned as a Category I competitor service subject to the 8% mark-up reduction and the I-X constraint, was targeted to retail customers.

126.

SaskTel noted that it filed an application, coincident with its submission in this proceeding, to introduce call-forwarding services to competitors. SaskTel noted that the rates for this new service were established at an 8% reduction to the current retail rates and submitted that this service should be assigned as a Category I competitor service subject only to the I-X constraint.

127.

The Commission agrees that, to be consistent with the assignment of retail call forwarding services provided by the other ILECs, the retail component of MessageManager - Call Forward Busy/Call Forward No Answer service should be assigned to the residential optional local services sub-baskets in HCSAs and non-HCSAs for the service provided to residential customers, and to uncapped services for the service provided to business customers. The Commission further notes it has assigned the component of MessageManager - Call Forward Busy/Call Forward No Answer service provided to competitors as a Category I competitor service subject only to the I-X constraint.

Corporate LAN Extension service

128.

Aliant Telecom argued that Corporate LAN Extension service, which was assigned to the other capped services basket, should be assigned as an uncapped service. Aliant Telecom noted that the service was a switched packet service, which is eligible for forbearance pursuant to Telecom Order CRTC 96-130, 19 February 1996 (Order 96-130). Aliant Telecom proposed that it should be treated as uncapped until such time as the company applies to withdraw the tariff.

129.

In Decision 2002-34, the Commission assigned Centrex services, business optional local services and service bundles that include a business local exchange service or a business optional service on the basis that substitutes were available that would discipline prices for these services. The Commission notes that in Order 96-130, it determined that any significant rate increases in the rates for X.25 packet services would invite new entrants or encourage customers to use the self supply option. Accordingly, the Commission concludes that Corporate LAN Extension service should be assigned to uncapped services.

Wire Watch service

130.

SaskTel and MTS argued that Wire Watch service should be reassigned as an uncapped service, rather than to the other capped services basket, SaskTel and MTS submitted that this service was entirely discretionary. They stated that Wire Watch service provided a prepaid repair warranty type service for inside wire and jacks over which they no longer have control. SaskTel and MTS stated further that they offer Wire Watch service in competition with numerous other service providers throughout their operating territories.

131.

The Commission notes that the services assigned to uncapped services in Decision 2002-34, with the exception of the Late Payment charge, are targeted at business customers. The Commission notes that Wire Watch service is targeted at residential customers.

132.

In Decision 2002-34, the Commission assigned Centrex services, business optional local services and service bundles that include a business local exchange service or a business optional service on the basis that substitutes were available that would discipline prices for these services. The Commission considers, based on the record of this proceeding, that there is insufficient evidence to conclude that pricing constraints are not required to discipline the price of Wire Watch service.

133.

The Commission considers that Wire Watch service is an optional local service. As the service is only available to residential customers, the Commission concludes that Wire Watch service should be assigned to the residential optional local services sub-baskets in HCSAs and non-HCSAs.

Operator services

134.

TCI argued that Operator services should be assigned to uncapped services as there were competitive alternatives available.

135.

The Commission notes that the services assigned to uncapped services in Decision 2002-34, with the exception of the Late Payment charge, are targeted at business customers. The Commission notes that Operator services are targeted at a broader range of customers.

136.

In Decision 2002-34, the Commission assigned Centrex services, business optional local services and service bundles that include a business local exchange service or a business optional service on the basis that substitutes were available that would discipline prices for these services. The Commission notes that customers of TCI cannot generally avail themselves of the operator services provided by another local exchange carrier, unless they are also customers of that local exchange carrier. The Commission notes that, in Decision 2002-34, it determined that the extent of local competition was insufficient to protect residential and business local exchange service customers and consequently capped these services. Accordingly, the Commission considers that it would not be appropriate to assign Operator services, for which there is insufficient competition to discipline prices, to the uncapped services basket.

137.

The Commission notes that the Operator services provided by the other ILECs were assigned to the other capped services basket for other ILECs. The Commission concludes that TCI's Operator services should be assigned to the other capped services basket.

Dataroute service

138.

TCI argued that Dataroute service, which was assigned to the other capped services basket, should be removed from the appendices since the service was discontinued effective 1 September 1999.

139.

The Commission notes that, although Dataroute service is no longer offered by TCI, the tariff provisions still remain in the National Services Tariff and data filed by TCI in the proceeding that led to Decision 2002-34 showed that there were revenues associated with this service. The Commission concludes that, until there are no customers for Dataroute service for a specific ILEC, the service should remain in the other capped services basket for that ILEC.

Jack and Plug Arrangements service, Jack service and Jack and Plug Equipment service

140.

Bell Canada argued that Jack and Plug Arrangements service, which was assigned to the other capped services basket, should be reassigned to uncapped services. Similarly, Aliant Telecom argued that Jack service and Jack and Plug equipment service should be reassigned to uncapped services. Aliant Telecom and Bell Canada submitted that these services were related to the provision of inside wire or other inside apparatus that were no longer subject to regulation and were offered on a competitive basis by alternate providers of these services.

141.

The Commission notes that the services assigned to uncapped services in Decision 2002-34, with the exception of the Late Payment charge, are targeted at business customers. The Commission notes that Jack and Plug Arrangements service, Jack service and Jack and Plug Equipment service are targeted at a broader range of customers.

142.

In Decision 2002-34, the Commission assigned Centrex services, business optional local services and service bundles that include a business local exchange service or a business optional service to uncapped services on the basis that substitutes were available that would discipline prices for these services. The Commission notes that while competition is permitted in the inside wire market, it is not persuaded, based on the record of this proceeding, that there is insufficient evidence to conclude that pricing constraints are not required to discipline the prices for Jack and Plug Arrangements service, Jack service and Jack and Plug Equipment service. Accordingly, the Commission considers that these services should not be assigned to uncapped services.

143.

In light of the above, the Commission concludes that Jack and Plug Arrangements, Jack service and Jack and Plug Equipment service should remain in the other capped services basket.

Telephone Instruments - Telephone Set Loss Charge

144.

TCI submitted that the Telephone Instruments - Telephone Set Loss Charge should be assigned to uncapped services given that the Commission has forborne from the regulation of terminal equipment. TCI submitted that this charge was similar to the Late Payment charge, which was assigned to uncapped services, and stated that it could be avoided by returning the set.

145.

The Commission notes that, in Decision 2002-34, it assigned the Late Payment charge to uncapped services because it was based on a Commission-approved formula and chartered bank interest rates and thus was, in effect, subject to a cap based on the prevailing interest rates. The Commission notes that the Telephone Instruments - Telephone Set Loss charge is not similar to the Late Payment charge in that respect. The Commission concludes that the Telephone Instruments - Telephone Set Loss Charge should remain in the other capped services basket.

Duplicate service

146.

Aliant Telecom argued that Duplicate service should be assigned to uncapped services since it was a premium substitute for regular exchange access service.

147.

The Commission notes that Duplicate service is a primary exchange service that provides a customer with one-party local exchange service in two locations in the same central office district. The Commission considers that although this service is available to both residential and business customers, it is primarily addressed to business customers. Accordingly, the Commission concludes that Duplicate service should be assigned to the single-line and multi-line business local exchange services basket.

Internet Call Director

148.

TCI argued that Internet Call Director service, which was assigned to the other capped services basket, was an optional service. TCI proposed that the revenues from business customers be included with uncapped services.

149.

The Commission agrees that Internet Call Director service is an optional service. The Commission notes, however, that this service is available to both residential and business customers. The Commission concludes that the revenues from business customers should be assigned to uncapped services and that the revenues from residential customers should be assigned to the residential optional services sub-baskets in HCSAs and non-HCSAs.

Reserved Telephone Number service

150.

TCI submitted that Reserved Telephone Number service, which was assigned to the other capped services basket, should be assigned to uncapped services since it was a discretionary service that customers can purchase either from TCI or other local service providers where there were competitors.

151.

The Commission notes that the tariff for Reserved Telephone Number service states that the service is offered to retail customers who subscribe to TCI's business services that use telephone number blocks for services such as Centrex service, DID service, and Digital Exchange Access service. The tariff further states that customers can reserve any remaining non-working numbers in a block of ten, plus additional numbers in blocks of 10, or in blocks of 100.

152.

In Decision 2002-34, the Commission assigned Centrex services, business optional local services and service bundles that include a business local exchange service or a business optional service to uncapped services on the basis that substitutes were available that would discipline prices for these services. The Commission considers that while TCI's customers may reserve telephone numbers with competitors, they are unlikely to do so unless they are also customers of those competitors' local exchange services. The Commission notes that in Decision 2002-34 it determined that the extent of local competition was insufficient to protect residential and business local exchange service customers and accordingly capped these services. Accordingly, the Commission considers that it would not be appropriate to assign TCI's Reserved Telephone Number service, for which there is insufficient competition to discipline prices, to the uncapped services basket. The Commission considers that this service should not be assigned to uncapped services.

153.

The Commission concludes that TCI's Reserved Telephone Number service should remain in the other capped services basket.

Telephone Number services

154.

Bell Canada submitted that the tariff item for Telephone Number services, which appears in both the other capped services basket and as an uncapped service, should be assigned to uncapped services since the company was no longer the sole provider of telephone numbers and the demand for these numbers was discretionary. Bell Canada noted that the service provides reserved numbers or prestige numbers to customers.

155.

The Commission notes that Telephone Number services permit customers to reserve one or more telephone numbers for up to one year while prestige number service permits customers to select the telephone numbers, subject to availability. The Commission considers that while Bell Canada's customers may reserve telephone numbers with competitors, they are unlikely to do so unless they are also customers of those competitors' local exchange services. The Commission notes that in Decision 2002-34 it determined that the extent of local competition was insufficient to protect residential and business local exchange service customers and accordingly capped these services. Accordingly, the Commission considers that it would not be appropriate to assign Bell Canada's Telephone Number services, for which there is insufficient competition to discipline prices, to the uncapped services basket. Accordingly, the Commission considers that this service should not be assigned to uncapped services.

156.

In light of the above, the Commission concludes that Bell Canada's Telephone Number services should be assigned to other capped services.

Denial service

157.

TCI noted that Denial service has been assigned to the other capped services basket. TCI stated that Denial service, in Alberta, was the same service as Call Guardian service, in British Columbia. TCI submitted that residential portion of Denial services in Alberta should be assigned as a service with frozen rates consistent with the treatment of the British Columbia service.

158.

In Decision 2002-34, the Commission assigned certain services to the basket of services with frozen rate treatment in view of their importance to subscribers and the manner in which the associated rates were set. The Commission notes that Denial service provides customers with the option to restrict incoming calls or outgoing calls. Further, the Commission notes that this functionality is very different from that provided by Call Guardian service, which provides for Toll Restrict service, Third Number Deny service, Collect Call Deny, all services geared at helping residence customers manage their long distance service expenditures. Accordingly, the Commission considers that Denial service should not be assigned to the basket of services with frozen rates. The Commission concludes that Denial service should remain in the other capped services basket.

Interconnection with Private Mobile Telephone Service - Network access service

159.

TCI noted that Interconnection with Private Mobile Telephone Service - Network Access service was assigned both as a Category I competitor service and as an other capped service. TCI submitted that the service should be assigned to the single-line and multi-line business local exchange services basket as this service allows a private mobile radio subscriber to interconnect with the PSTN using a business line charged at business rates.

160.

The Commission notes that Interconnection with Private Mobile Telephone Service - Network Access service provides switched network access for radio systems operators and private mobile system operators at local exchange service rates for business customers. The Commission thus considers that this service is business primary exchange service. Accordingly, the Commission concludes that Interconnection with Private Mobile Telephone Service - Network Access service should be assigned to the single-line and multi-line business local exchange services basket.

Other requests for classification or reclassification made by the ILECs

161.

The Commission notes that it has no concerns in regard to a number of other proposals made by the ILECs to classify or reclassify a number of services to which parties to this proceeding raised no objections. The Commission finds that these proposals are either consistent with the criterion for the assignment of competitor services or the basket structure established in Decision 2002-34.

Request for clarification

162.

SaskTel stated that there are elements within tariff items that have been assigned to the competitor services basket that cross-reference the rates of other competitor services, services in the other capped services basket or uncapped services. SaskTel argued that the revenues from the cross-referenced services should be attributed to and subject to the pricing constraints applicable to the cross-referenced services.

163.

TCI argued that cross-referenced retail tariff items should not be subject to the mark-up reduction for the service specific I-X pricing constraint. TCI submitted that it is clear in Decision 2002-34 that the mark-up reduction of 8% and the service-specific I-X pricing constraint is limited only to Category I competitor services listed in Appendix 1. TCI argued that, accordingly, the Commission did not intend that the ILECs would be required to reduce the prices of retail tariffs cross-referenced in Category I competitor service tariffs through a mark-up reduction of 8% or the application of a service-specific I-X pricing constraint. TCI stated that these cross-referenced retail tariff items are already subject to pricing constraints in their respective baskets.

164.

The Commission confirms that, where a tariff specifically references another tariff item, the pricing constraints that are identified in Appendix 1 or Appendix 2 for the cross-referenced item are applicable to that item.

Conclusion

165.

The Commission approves the requests for classification or reclassification of services made in the context of this proceeding, per the amendments specified above, and as set out in Appendices 1 and 2 of this decision.

166.

The Commission's determinations with respect to the assignment of competitor services to Category I or II and whether particular Category I competitor services are exempt from the mark-up reduction or the I-X constraint are set out in Appendix 1 to this decision. The Commission's final classification of other tariffed services to the various baskets established in Decision 2002-34 is set out in Appendix 2.

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 

Appendix 1