Consider financial impact of Bell’s Type 2 CSA rule changes application: Justice

The Department of Justice is telling the CRTC that it must consider carefully the financial impact on customers of moving to ex post regulation of customer specific arrangements (CSAs) as suggested by Bell Canada in a recent application to the commission. The following is an edited excerpt of its submission regarding the impact on the Government of Canada (GoC). Bell Canada has proposed that, instead of requiring that CSAs be approved prior to an ILEC commencing work under a contract with an enterprise customer, the "commission could deal on an ex post basis with any complaints" regarding a particular CSA and that, if "the commission were, in a particular case, to find that a bundle had been designed to circumvent a tariff, the commission would have the authority under sections 24 and 25 of the Act to take remedial action. If the commission does not review a proposed CSA prior to the services being delivered by an ILEC under a GoC contract, the GoC will have no way of knowing, as the customer, whether the revenues from the CSA exceed the sum of the tariffed components of the CSA or whether the CSA is part of a practice designed by the ILEC to circumvent tariffs. By way of example, Public Works and Government Services Canada (PWGSC) awarded a contract to Bell Nexxia (then a subsidiary of Bell Canada) following a competitive process in June of 2000. This contract was subject to an ex post review following the release of Telecom Decision CRTC 2002-76. At the time PWGSC entered into its contract with Bell Nexxia in 2000, PWGSC was unaware that Bell Nexxia, as a Bell Canada affiliate, was breaching its regulatory obligations. Given the commission’s direction to Bell Canada in Telecom Decision 2003-63, two courses of action were available to PWGSC: accept the substantial, unexpected increase in the monthly amount payable to Bell Canada; or terminate the contract with Bell Canada and arrange for services to be provided by another telecommunications carrier within 90 days. As a result, notwithstanding that Bell Canada had breached its regulatory obligations by failing to provide its services in accordance with applicable tariffs, the GoC had no option other than to re-allocate scarce tax dollars that could have been used for other programs in order to begin paying the increased rates to Bell Canada. In these circumstances, the result was that, by breaching its regulatory obligations, Bell was effectively rewarded by being directed to charge higher prices – and thus increase its profits by approximately $6 million each year for the rest of the contract term. The Intervener submits that, if only ex post reviews of CSAs are conducted and such a review reveals that an ILEC incorrectly represented that its proposed service complied with all of its regulatory obligations, the integrity of the competitive process would be undermined, because: the GoC would only learn after the contract has been awarded that the ILEC’s proposal was non-compliant; by this time, the transition will likely have been completed and it may not be in the public interest to re-tender the requirement; and the proposal submitted by one of the ILEC’s competitors may have actually represented the best value to Canada. For example, the higher prices that the ILEC is required to charge to comply with its tariff may be higher than the prices proposed by one of its competitors.

Consider financial impact of Bell’s Type 2 CSA rule changes application: Justice

News | 11/08/2005 5:00 am EST

To keep reading, get a free trial.

Already a Subscriber?

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us