CRTC decides to review price cap decision with new emphasis on competitor DNA

The CRTC's pronouncement that it will review its own ruling on price caps just weeks after originally releasing the decision has taken many telecom insiders by surprise. The move gives ILECs and CLECs an opportunity to raise specific complaints that they didn't get a chance to mention during the first set of hearings last year. At the beginning of the month, the commission issued Telecom Public Notice 2002-4 (NL, Aug. 13/02), saying it was taking a second look at the provisions of Telecom Decision 2002-34, the price cap ruling. The new proceeding will focus on competitor Digital Network Access (CDNA) service. "The commission considers that there is substantial doubt as to the correctness of its decision to exclude the channelizing feature," the regulator wrote. "Accordingly, as suggested by Call-Net, the commission considers it appropriate to review and vary this aspect of Decision 2002-34 of its own motion, pursuant to section 62 of the Act." It is unusual for the CRTC to initiate a review and vary, especially when the original decision was released only 10 weeks ago (NL, June 3/02). The company that nudged the process along is cautiously hopeful about the public notice. "I've got to be careful and not get too excited here," Don Bowles, VP regulatory affairs at Call-Net Enterprises Inc., tells Network Letter. "They've just expanded the scope of a proceeding. At the end of the day, they might deny everything." Call-Net had asked for clarification on several points of Decision 2002-34 (NL, July 3/02). The CLEC was adamant that the filing was not a review and vary. It did, however, leave open the option that the commission could change the Call-Net application to an R&V. The fact that the CRTC agreed is unexpected, according to one ILEC. "Normally you get the parties to comment on whether, if it is a review and vary, the commission should review it," Bernard Courtois, executive counsel for BCE and Bell Canada, states. "And it looks like, on the procedural aspect, decided to go ahead and review it without asking for comments from the parties on that issue. So that was a bit of a surprise." Because the new hearings have been initiated, the CRTC has decided not to require the ILECs to file final tariffs for competitor DNA. The original ruling had directed the telcos to submit the tariffs by September 13. The proceedings will go well into next year. Documents are to be filed at various times over the next few months, with final comments scheduled for late winter. That worries at least one competitor. "We're going to go through that process until February," Teresa Griffin-Muir, VP regulatory affairs at AT&T Canada Corp., asserts. "The incumbents file their cost studies at the beginning of September. But then if there's changes we'd have to have a subsequent look at what they say their costs are. According to what's written in the public notice, that might not be entirely necessary. But if you just take the time of the process plus the time, even on an optimistic basis, that it takes the commission to make a decision, that's a long time." Bowles is not as concerned as his AT&T Canada counterpart. "Hopefully some of this stuff's going to be retroactive so we're not too upset with the timelines," he says. The Call-Net executive believes the essential argument of DNA service provision is quite basic. The company intends to revive calls it made during the previous hearings. "Our point is that the services, the facilities that are provided in the DNA tariff, are effectively near-essential services. We have very little, if any, competitive choices and they should be treated as other near-essential services." The incumbents feel they're also being affected by the provisions of the ruling. " the commission reduces the price of DNA at the wholesale level, and particularly with a reduction of say 40 per cent like it's prescribed for the links portion, well, that's bound to have a depressing effect on the price of retail," Courtois tells Network Letter. "It also concerns the wholesale market and you can see, for example, out west we like to go for alternative sources of supply, not just Telus. But of course we're not prepared to pay the same price anymore. So you've depressed the wholesale market overnight. And that's why when you do things like that it's very much a double-edged sword." All sides of the dispute hope that the CRTC will take the time to delve further into aspects of the price cap regime that were overlooked in the hearings last fall. In its June 12 letter to the commission, Call-Net had asked that digital interexchange channels and the channelization feature of DNA be considered for the tariffs. The CRTC agreed to this. "This wasn't really on the table per se," Bowles notes. "So the commission in the decision said, 'the theory is right, the principle's right, we need a competitive tariff, we need cost-based rates for certain components, not all of them, but certain components'. And then for some bizarre reason they made it very restrictive in the decision." One of the other areas being explored is resale. Microcell Telecommunications Inc. asked for clarification on the prohibition of simple resale of the CDNA. The CRTC accepted the idea and has added it to its list of submissions. Other topics added to the proceeding are clarification of the term "competitor", network configurations and the use of CDNA by wireless companies. Bell had suggested, back in October 2001, including an item called optical links arrangement to its access services tariff. It would make optical CO connecting link arrangements available to co-locating carriers and DSL providers. Futureway Communications Inc. objected, saying the links would lead only to Bell's network. The Richmond Hill ON CLEC suggested the tariff should allow co-located carriers to have access to other carriers' networks in the same CO. "In the commission's view, Futureway's request to permit competitors to use Bell Canada's proposed service to connect to non-ILEC facilities in the same central office could involve matters addressed by the commission's co-locations framework and, as such, is beyond the scope of the CDNA proceeding," the public notice states. "However, given the relevance of Bell Canada's proposed tariff to the definition of the final CDNA service, the commission finds that it is appropriate to provide parties with the opportunity to comment on Bell Canada's proposal in the context of the CDNA proceeding." Courtois agrees that the new proceeding should provide more detail than last year's presentations. "I think the reason why the commission decided to carry out this review is that it wants more information on the types of usage that carriers make of the various components of the service. In that sense, it looks like there's going to be new information brought into the record, maybe more focused, more pointed, on that single service than there was during the broader hearing on price caps." Muir concurs, saying the proceeding is on a different level than the earlier one. Still, she believes there is room to discuss the policy implications of the price cap mechanism as well as the nuts and bolts of the implementation.

CRTC decides to review price cap decision with new emphasis on competitor DNA

News | August 27, 2002

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