O.N. Telcom files review and vary over contribution levies for independent ILECs

The concern over CRTC decisions affecting small independent telcos continues as an Ontario company seeks to have the commission take another look at two decisions and rescind a subsequent order. O.N. Tel Inc., the parent company of O.N. Telcom, has filed a review and vary application asking the CRTC to re-examine Decision 2001-583, relating to toll competition for O.N. Tel, and Decision 2001-756, the regulatory framework for small incumbent telephone companies. It also seeks to have Order 2001-876, on interim charges for the contribution regime, rescinded. The provisions of 2001-756 were cited by Persona Communications Inc. as one of the factors contributing to its failed takeover of Amtelecom Group Inc.’s telecom and cable businesses (NL, March 12/02). The basis for the appeal is that O.N. Tel believes the commission erred by using another company’s contribution rate as the basis for setting its levy. The independent ILEC is upset that Northern Telephone Ltd. (NTL) was used as the standard. "The commission established a 1998 interim contribution rate for O.N. Telcom of $0.0519 and a 1999 interim contribution rate of $0.0408," the firm writes in its filing. "These proxies were based on using another carrier’s (that is, NTL’s) 1997 contribution rate as a proxy for 1998 and the same carriers’ 1998 contribution rate as a proxy for 1999." At the time, the CRTC noted that O.N. Tel would file its own contribution rate once its Phase III processes were completed. The company submitted its 1998 contribution requirement information on March 9, 2000 (see table), even though it had not finalized the Phase III calculations. The telco points out that this filing came three weeks before the CRTC issued its letter using the NTL rates as a proxy. It believes the commission should have used those figures in place of the NTL numbers. "In O.N. Telcom’s view, the commission’s complete disregard of O.N. Telcom’s evidence relating to its contribution requirements for the years 1998 to 2001 breaches the regulatory bargain," the telco states. "Briefly speaking, incumbent telephone companies are under a legal and regulatory obligation to provide service and, as a result, must undertake substantial investments to satisfy that obligation. In return, incumbent telephone companies must be allowed the opportunity by the regulator to recover their investment, including an appropriate rate of return. This is the regulatory bargain." O.N. Tel is asking the CRTC to reconfigure its contribution rates to the amounts requested in March 2000. The company believes the transition subsidy available to it is too low and is seeking amendments. The CRTC set the rate using a contribution base of $770,000 for this year. The telco, using a 2002 contribution requirement of $1,008,040 as a base, requests subsidies of $913,880 for this year; $806,835 next year; $714,675 for 2004; and $631,400 for 2005. It wants the commission to view this as an error and issue an immediate correction, rather than waiting for the outcome of the entire R&V proceeding. The company wants the regulator to reinstate the direct connect and equal access rates that were approved for O.N. Tel, NTL, and the Cochrane PUC on a final basis. It would like the costs and revenues associated with host remote links used for toll purposes and assigned to the utility segment of the company.

O.N. Telcom files review and vary over contribution levies for independent ILECs

News | 03/25/2002 5:00 am EST

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