Consumer advocacy group has some apprehensions about price cap decision

Consumers have been touted as the big winners in the CRTC’s recent price cap ruling, but the primary campaigner for them at the proceedings last fall still has reservations about the final outcome. The Public Interest Advocacy Centre (PIAC) is concerned over the decision to stop monitoring utility side returns and intercorporate transactions by the ILECs. "So while one can get company profits at the overall company level, in four years’ time when we come to assess how well this regime has worked, we can’t see whether there has in fact been a fair balance between the three stakeholders, whether the formula was correct," PIAC counsel Philippa Lawson tells Network Letter. "We will not be able to see how well the ILECs have done on the utility side." In the past, the utility segment financial data has been one of the best indications of the fairness of the price cap regime, Lawson maintains. The only reason such information is released is for regulatory purposes. Problems with reporting"The problem with not reporting it is that there can be no doubt that the phone companies will come to the regulator for relief if they find they are unable to make adequate profits under this regime," she notes. "On the other hand, if the regime turns out to be overly generous to them, as the last one was, and they’re all making across the board returns in the 20 per cent range or something, well above market averages, we’re not going to know." The CRTC abandoned intercorporate transaction reporting in Telecom Decision 2002-34. The original rules were implemented when the ILECs were under rate of return regulation. The submissions lessened the likelihood the incumbents would exaggerate the amount of utility segment intercorporate transactions, thereby reducing utility segment earnings. That incentive is unlikely under the new price cap regime, the commission believes, and thus struck the reporting requirement from the new four-year plan. "I’m concerned that companies will be able to perhaps use that to their advantage and to the disadvantage of other players," Lawson states. "There are all sorts of ways they can exploit their corporate affiliates to the advantage of their shareholders." The PIAC lawyer isn’t sure why the CRTC opted for the new rules. The commission was determined to dump the previous costing method and to start using Phase II costing for everything."I don’t think anyone has confidence in Phase II costs, even after going through a couple of proceedings on it," she says. "I think what the commission has done is just lost a really important tool." Consumer bill of rights During the price cap hearings last fall, PIAC had suggested implementing a consumer bill of rights. The current system, whereby consumer information is listed at the front of telephone directories, is confusing and not well presented. The incumbents argued that the information more than fulfilled the requirements. Bell Canada and its affiliates maintained the directory listing constituted a de facto consumer bill of rights.The commission sided with PIAC, setting the stage to develop a separate bill of rights. Sometime in the future, it will issue a public notice to set up a proceeding on the terms of such a bill. Lawson is reluctant to speculate on what issues will arise out of those hearings. But she expects all parties involved will look at the communication of existing consumer rights, clarification of those rights and obligations, and closing any gaps that may exist.

Consumer advocacy group has some apprehensions about price cap decision

News | July 15, 2002

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