Call-Net wants CRTC to speed up process of setting DNA tariff rates

Even as Call-Net Enterprises Inc. blames the price cap decision for its current economic woes, it has filed a request with the CRTC to change the determination of Digital Network Access tariffs. The telco hopes it can speed up the process to set the new rates. In a June 12 letter to the commission, Don Bowles, VP regulatory affairs for the CLEC, wrote, "While Decision 2002-34 contains some important new initiatives designed to foster increased competition in the Canadian telecommunications market and to reduce the competitors’ costs of interconnection with incumbent local exchange carriers (ILECs), the benefits of some of these initiatives will only be realized at the conclusion of what may predictably be protracted follow-up proceedings. This timing works against the commission’s policy objective of hastening the development of a competitive telecommunications market in Canada for the benefit of consumers and especially against the roll out of competitive local residential services." Bowles tells Network Letter the filing has four essential components. The first seeks to have the discussion of what elements are actually included in the DNA tariff to begin now. Otherwise, the CRTC would decide what is to be included and wait until cost studies are submitted. "So we said, let’s just do the first part of it," he explains. "We’ll split the proceeding in two, figure out what should be in it and once the commission decides that, then the telephone company goes off and does its cost studies." Secondly, the firm wants consideration of digital interexchange channels and the channelization feature of DNA for the tariffs. In a similar vein, Call-Net wants all DNA components and digital interexchange channels to be placed in the competitor DNA tariff. Lastly, the company is seeking an additional discount on the customer access component of the interim tariff. Call-Net served copies of the application on all parties to the price cap ruling. It asked that the process be expedited. The commission agreed, saying the parties had to file comments by the end of June. Call-Net will make its response known by July 3. While some have suggested the CLEC is using this procedure as a method of challenging the price cap decision itself, Bowles vehemently denies this. "Absolutely not. This is not a review and vary of anything," he tells Network Letter. He made the same point in his letters to the CRTC. The five major ILECs filed their tariff pages on June 14. Three days later, Bowles sent another letter to the commission, reiterating many of his earlier concerns and repeating his request for a quick process. The CRTC agreed, saying interested parties (aside from the ILECs) must have their comments submitted by July 5. The incumbents’ replies must be returned by July 17. That is the same date for anyone who wishes to become a party to future DNA tariff proceedings to register with the commission. Reduction in interim rate sought In its second letter, Call-Net asks for a reduction in the interim rate for the access component of the competitor DNA service. The company wants to leave the levies to the CRTC’s discretion or select the lowest tariff already in place. "There’s two rates in the tariff now, one is for the first bunch of channels and the second rate for the further channels," Bowles explains. "So we said either use the commission’s judgement or in the absence of the commission’s judgement use that lower rate for all channels." In its filing, Call-Net notes that Bell Canada has set a five-year contract rate for four DS-1s in Band 0 at $220 a month, with each additional DS-1 priced at $150 per month. For DS-3s in the same band, the five-year rate for the initial access is $1,650 per month, dropping to $960 a month for each additional DS-3. (The CLEC uses these figures only as an example. The numbers change from ILEC to ILEC and by the band used.) In Decision 2002-34, the CRTC said the access rates are to be set at the rates currently approved under a five-year contract. Call-Net speculates this move was intended to give carriers lower interim rates based on the difference between the non-contracted rate and the five-year rate. Since Call-Net and other CLECs already subscribe to the longer term, they realize no cost benefit. Bowles believes competitors would have to pay a termination penalty if they switch from the five-year plan to a monthly contract. "I’m pretty sure there would be under the existing arrangement. We sort of thought that was kind of silly," he states. "That’s one of the reasons I wanted it all rolled in. Then instead of changing tariffs, you’re just getting a different rate out of the same tariff." Similarly, he believes CLECs will have to subscribe to the new tariff issued on June 14 in order to receive retroactive benefits. Call-Net maintains that ILECs will not be hurt by shifting to the lower tariff rates. The fees for additional DS-1s and DS-3s, which have already been approved by the CRTC, are presumably above cost. "It is therefore unlikely that the final cost-based rates for this service will exceed the interim rate," the telco writes in its application. "There would be a similar result if the commission could determine a reasonable estimate of the underlying costs. Even if it ultimately transpired that the final rates were higher than the interim rates, the ILECs could make up any shortfall through the deferral account." So far, Call-Net has received two letters of support for its filing. Ted Woodhead, Rogers Wireless Inc. director of government relations, wrote the commission on June 14, endorsing the call for an expedited process and for the discussion of digital interexchange and other services. Also in Call-Net’s corner is the Competition Bureau. On June 21, André Lafond the deputy commissioner of competition for civil matters, wrote that, "By advancing the time table for these comments, the commission could minimize the time required for competitors to take advantage of DNA service. DNA is an important access service for competitors. By making this service available to competitors, the CRTC will help to lower entry barriers into local residential telephone markets." The Bureau endorses the view expressed by the CRTC in Decision 2002-34 that facilities-based competition is preferable in Canada. "Given the fragile state of competition in local telephone markets, the Bureau is in favour of any procedural changes the commission can make to ensure competitors have access to essential network elements at the earliest opportunity," Lafond wrote. "This will enhance the opportunity for effective competition in local markets and, thereby, assist the government’s policy of creating a viable and sustainable telecommunications marketplace."

Call-Net wants CRTC to speed up process of setting DNA tariff rates

News | July 3, 2002

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