TELUS spearheads opposition to CRTC plan to extend price regulation regime

TELUS Corp. is spearheading opposition to the CRTC’s plan to extend the current price regulation regime for a period of two years with a comprehensive and sometimes acerbic submission to the commission released last week. Already a vocal opponent of the extension, TELUS set out its objections to the decision in four documents, which totaled 95 pages. While its main document "respectfully" suggested courses of action, one legal brief included in the package slammed the process, saying the CRTC’s "failure to develop a proper evidentiary record appears to be symptomatic of a deeper problem." While not as scathing, other submissions from carriers MTS Allstream, Aliant, Bell Canada, and SaskTel also voiced disapproval of the process and disagreed with the CRTC’s contention that the landscape has remained static since 2001. Earlier this year, the CRTC found the telecommunications services market hasn’t changed enough and that a review the current price cap regime was unnecessary. It asked for comments to be submitted by June 13 on its proposal to extend the current regime an additional two years. "The commission considers that the current regime is achieving the objectives set out in Decision 2002-34 and, as such, current circumstances within the industry do not warrant a review at this time," the commission concluded in Telecom Public Notice 2005-3. In a tersely-worded opinion, TELUS’ legal counsel contended that the CRTC’s proposal violates the statutory requirement that rates must be just and reasonable from the standpoint of shareholders and customers, and that rates must allow the carrier a reasonable opportunity to earn a fair return. "The commission’s third price cap proposal would, if acted upon, result in a decision that violates these principles and would, therefore, be subject to being set aside on appeal for want of jurisdiction," wrote Michael Ryan of the U.K.-based law firm Arnold and Porter. TELUS also insisted that decisions relating to rates must be based on evidence and the commission simply did not have the information available to it that would make it possible for it to make the judgment that circumstances have not changed significantly. Nevertheless, TELUS said it is prepared to support a two-year extension to the existing price cap regime provided that the CRTC eliminates the price constraint in non-high cost serving areas and allows incumbent local exchange carriers to offer competitive choices to customers by reducing prices within rate bands for residential services in non-HCSAs and for business services. In stark contrast to TELUS’ submission, Aliant’s succinct two-page brief agreed with an extension but did not concur with the CRTC’s reasons, saying that it believes market conditions have changed significantly in the past four years. It suggested that "a one-year extension of the regime would be appropriate as this would allow industry resources to focus on the resolution of key regulatory issues being addressed in various proceedings, such as the local exchange forbearance proceeding, and in the upcoming telecom policy review." Allstream joined Aliant in asking for a one-year extension when the current cap expires in May 2006, but suggested that there should be flexibility to propose and implement modifications to the regime during the extension period. Bell Canada also insisted that a one-year extension was the prudent course of action although it would agree to a two-year plan should the CRTC cap residential local service rates in non-high cost serving areas at current levels and continue to permit rate decreases for these services. SaskTel generally supports the commission recommendation to extend the current price cap regime for an additional two years but states that its conclusion is based upon detailed knowledge of the Saskatchewan market and may not properly reflect the dynamics of all of Canada’s telecommunications markets. It suggests that the CRTC extend the price cap regime for two years on the condition that it review the industry in early 2006 to determine whether the extension is warranted. The Public Interest Advocacy Centre also calls for a review of the current price cap regime aimed at finding a way to set just and reasonable rates while at the same time assembling a reasonable evidentiary record. PIAC said it would be in favour of allowing "the option of setting interim rates, if there are time constraints, until the proceeding is complete."

TELUS spearheads opposition to CRTC plan to extend price regulation regime

News | 07/09/2005 4:00 am EDT

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