Competitors: rate ranges should only be allowed under certain guidelines

Consumers will be the main beneficiaries of the increased influences of market forces on pricing due to the use of rate ranges for telecommunications services according to a joint submission to the CRTC from Bell Canada, NorthernTel LP and Télébec. Of course, the ability to respond to competitive pricing quicker will benefit the ILECs as well, something that was not lost on some of the other parties which filed comments to Public Notice 2006-8. After recently approving ranges of rates for a number of VoIP services including Bell’s Digital Voice Lite and SaskTel’s Centrex IP, the commission felt a need to set guidelines regarding the use of rate ranges on other services. In their initial comments, most parties supported rate ranges in some form, but the replies were more partisan. It shouldn’t come as a surprise that MTS Allstream objected to Bell’s plan. The company "submits that Bell’s proposal must be rejected and that confidential rate ranges should only be permitted on a case-by-case basis where there is demonstrated need for such ranges in the public interest." Without sufficient competition, added MTS, ILECs would not have to reduce prices within a range, and could also target any competitive entry. "The existence of competition in a market is not a pre-condition for rate ranges to be appropriate," submitted Bell. "The approval of rate ranges for less competitive markets and services will assist in ensuring that, as competition develops, regulated pricing better reflects true competition." Bell proposed that rate ranges should be available in all markets except where a compelling public policy reason for restricting ranges existed. It also suggested allowing a fixed public rate within a confidential rate range to provide pricing freedom without extensive regulatory measures. MTS, however, urged the commission to reject Bell’s range-within-a-range proposal. "Bell’s proposed model would make a mockery of the tariff filing obligations and permit Bell to charge practically any rate at any time without notice to the commission or to customers." The Public Interest Advocacy Centre (PIAC) also opposed the Bell proposal, arguing that it would allow ILECs to engage in discriminatory behaviour. With such a model, submitted PIAC, ILECs would have the flexibility to charge one group of customers the maximum permitted within a range, while offering lower prices to other customers who may have switched to a competitor. While PIAC dissented somewhat with Bell’s proposal, it didn’t reject the use of rate ranges outright. It submitted that ranges could be used with the exception of four provisions: residential services offered on a stand-alone basis should not be eligible; customers must receive 30 days notice in advance of any price increase; new rates must be published on or before the date they become effective; and flexibility afforded by rate ranges should not allow ILECs to engage in price discrimination. Not surprisingly, the ILECs refuted the need for some of PIAC’s recommendations. Specifically, Telus Corp. noted that giving 30 days advanced notice for a price increase goes beyond its general terms of service, which reads that following a rate change "customers must pay the new rate whether or not they were notified of the change." Telus added that if rate ranges are approved, which it feels they should be, the ranges should be confidential and price changes within the range should be subject only to a requirement to notify the commission within 24 hours of making the rate change. Bell also acknowledged the filings of PIAC and MTS in its reply – submitted jointly with Bell Aliant Regional Communications and SaskTel as well as Télébec and NorthernTel – saying the two appear to have mistaken rate ranges for forbearance, particularly in that the Telecommunications Act does not require a level of competitiveness in a marketplace to be achieved before the commission can consider approving ranges. "Calls for additional constraints or limits on rate ranges lack a sound basis in law and regulatory policy," submitted Bell. "Further, the constraints and limitations suggested are out of step with the recommendations of the Telecom Policy Review and Policy Direction which call for greater reliance on market forces and minimally intrusive regulation." But Bell took this rationale further, asking that some existing constraints and limitations under the rate range approach granted its Digital Voice Lite be changed. The Competitors – Cogeco Cable Inc., Quebecor Media Inc., Rogers Communications Inc., Shaw Communications Inc. – see no such basis for any change to the current rate ranges approach. "To the contrary, given that the rates for Bell Digital Voice have not changed in the four months since the release of Decision 2006-11, the facts clearly demonstrate that Bell et. al’s current position is totally without merit," wrote the Competitors, adding that disclosing price changes with the commission two days in advance is hardly intrusive. And while the Competitors were in favour of rate ranges, they stipulated three situations where ranges should not be permitted, namely: for any service that is already offered below cost; in respect of competitor services since they are priced to foster the development of competition; and for services that fulfil a social policy objective like public safety services, the protection of privacy or accessibility for persons with disabilities. The ILECs all agreed on the last condition, which should be of some help to the CRTC. Aside from that, the commission has a lot to consider when making its determination.

Competitors: rate ranges should only be allowed under certain guidelines

News | August 17, 2006

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