ILECs and competitors embroiled in process dispute over new CRTC interrogatories

The CRTC process over price floor safeguards for retail tariffed services is threatening to become bogged down in a "procedural morass" as the incumbent telcos object to supplemental questions recently sent to various parties by the commission. On April 30, ILECs including Bell Canada and TELUS Communications Inc. sent a letter to the CRTC responding to the regulator’s request for further information in the Telecom Public Notice 2003-10 proceeding. In it, they allege that the commission’s questions are outside the scope of the process, and ask that the proceeding be extended to give them time to answer the commission’s questions. Cable companies and others have objected to putting off a decision on price floors, and are calling on the commission to immediately ban ILECs from bundling regulated and unregulated services together if the process threatens to drag on. The dispute arises in the context of PN 2003-10, which arose from Telecom Public Notice 2003-8. In the original proceeding, the CRTC found that ILECs marketing bundles of services including local telephony had too much flexibility in pricing, and that they could use bundles as anti-competitive tools in new markets. According to cable industry sources, the decision was recognition by the CRTC that the current regulatory framework is leading to weak competition in telecommunications markets in Canada, and that a speedy resolution was called for. To redress the competitive challenges, the commission had proposed temporarily modifying the imputation test to prove that revenues associated with tariffed services are equal to or more than the cost of providing them, and that ILECs be allowed to offer no more than a 10% discount over the standalone costs of bundled items, among other measures. Objections to those measures by the ILECs led to the current process, in which no safeguards have yet been implemented but all parties have been expecting an accelerated process, as outlined in last December’s PN 2003-10. On April 23, the commission sent out a lengthy list of interrogatories, with May 14 as a deadline for responding to them. The commission also set out a schedule with May 28 as a deadline for filing final arguments, and reply comments due on June 11. The interrogatories, however, seem to have spooked the ILECs, and they have fired back with a letter to the commission asking it to rescind several questions they say are outside the scope of the proceeding. Mirko Bibic, Bell Canada’s chief of regulatory affairs, tells Network Letter that the current process should be focused entirely on the imputation test and bundling rules in question, and that the commission’s supplemental questions fall outside that debate. Bibic says it is legally unfair of the CRTC to change the focus in mid-process, and that ILECs need time to properly respond to the interrogatories with well-researched responses. The ILECs claim that the CRTC questioning indicates to them that the regulator is considering micro-managing imputation tests to ensure that the incumbents aren’t cross-subsidizing their regulated services with their non-regulated services in bundles. In PN 2003-10, the commission noted that it would be studying "submissions on any other aspect of the current regulatory framework regarding the imputation test and bundling rules, and any other related retail tariffed service pricing safeguards." While cable companies and others say the ILECs shouldn’t be surprised that the commission is now asking for additional information that expands on previous filings, those queries are well within the commission’s scope. Bibic doesn’t agree, saying that filings made by parties for January 30 didn’t raise the issues now being brought up by the regulator, and so the incumbents don’t have time to properly respond to them within the current framework. The cable companies don’t see it that way. In a May 4 letter to the commission by the Canadian Cable Television Association (CCTA), cablecos write that: "The Commission should not contemplate rewarding the ILECs with any further delay in the resolution of the very serious issue raised in this proceeding. To do so would be to the detriment of the development of sustainable competition, something that would surely not be in the public interest." CCTA acting president Michael Hennessy tells Network Letter that the ILECs should be compelled to respond to the interrogatories within the prescribed time limits. If the commission decides to extend the reply dates, he says, then the regulator should act immediately to protect consumer interests by forbidding the bundling of tariffed and non-tariffed items. If the ILECs’ request is granted, the process could be extended for months. If compelled to answer the disputed interrogatories, Bell and the other incumbents have asked that: "The amended Public Notice should further establish procedures to give parties a meaningful opportunity to test these new proposals." The ILECs say the additional time is critical, since the interrogatories suggest the commission is contemplating a complex new regime."The substance of the new proposals could cause TELUS and the Companies serious harm and also have a material adverse effect on other parties, such as consumers of telecommunications services. Generally, the new proposals contemplated by the supplemental interrogatories, if implemented would further limit the ability of TELUS and the Companies to price their services at competitive levels and offer services that consumers expect in a competitive market. The new proposed rules would further limit customer choice. The new proposed rules would place upward pressure on prices for telecommunications services. Procedurally, the new proposals are also unfair to parties who have had no opportunity to comment on them….Taken as a whole, the new proposals are complex, and especially so since TELUS and the Companies can only speculate on the full breadth of the proposals as they are gleaned from the interrogatories," TELUS and the others write.

ILECs and competitors embroiled in process dispute over new CRTC interrogatories

News | May 11, 2004

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