Microcell wins right to opt out of new subsidy regime for expanded LCAs

Microcell Telecommunications Inc. is cheering a CRTC decision allowing it to opt out of the controversial plan to compensate long distance service providers for lost revenue from expanded local calling areas (LCAs). In Telecom Decision 2003-28, the CRTC ruled that it had made incorrect assumptions about the ability of a wireless CLEC to effectively participate in the new LCA framework as set out in Telecom Decision 2002-56. Accordingly, the commission has adopted a new three-point LCA strategy for which Microcell vigorously lobbied that would give CLECs the option of choosing one time only whether or not to participate in the 2002 compensation plan. The commission recognized that it would be difficult for a wireless CLEC such as Microcell to impose an increased charge to subscribers due to its national pricing strategy as opposed to that of ILECs, which are geographically based. "This would result in a CLEC/WSP being required to fund a plan without the benefit of collecting a temporary surcharge from its subscribers. Accordingly, the commission considers that the assumption made in Decision 2002-56 that all CLECs could collect a temporary surcharge if they chose to is not necessarily correct, at least not in the case of a CLEC/WSP," states the commission's May 7 ruling. Last year, Microcell filed a review and vary application with the commission appealing certain provisions of Telecom Decision 2002-56 (RoW, Oct. 28/02). In its October 2002 petition, Microcell argued that the commission was incorrect to assume that CLECs would automatically match ILEC rate increases in an expanded local calling area. The wireless operator also suggested that giving CLECs the ability to opt in and opt out of the cross-subsidy regime could be a possible solution. As can be expected, Microcell is happy with the outcome of its petition. "The commission acknowledged all of our areas of fact that we had submitted and they also adopted the approach for solving the problem that we had submitted, which was the opt into both/opt out of both approach. We're pretty satisfied," Microcell's director of regulatory affairs Dennis Béland tells Report on Wireless. Initial ruling out of the blue The fact that Microcell had to file the R&V in the first place came as a bit of a surprise to the company. Béland explains that the company had been following the expanded LCA process, but was under the impression it was more of an issue between ILECs and their subscribers. "It hit us out of the blue when the decision came down and the commission said here's the framework and by the way, not just ILECs, but CLECs as well are basically going to be taxed to compensate the parties that allegedly would incur financial losses as a result of the LCA expansion. We looked at the facts, or the assumptions that they had made, and we found a series of those assumptions we felt were factually incorrect," Béland explains. "We laid out those three factually incorrect assumptions pretty clearly and the commission basically agreed with us in the end." In its ruling, the commission set out the following three fundamental principles for opting out of the compensation plan: the CLEC's decision to opt out of the plan is to be made once, prior to the CLEC participating in any compensation plan for any expanded LCA within the CLEC's operating territory; where a CLEC accepts compensation for foregone toll revenue in one geographic area, it is not permitted to opt out at a later date for a different area; and a CLEC that opts out is not permitted to opt in at a later date.

Microcell wins right to opt out of new subsidy regime for expanded LCAs

News | May 27, 2003

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