Three CRTC rulings undercut actual costs of competitor services: Telus

Saying that "we don’t want to be a savings bank for the competitors," Telus Corp. is asking the CRTC to review three of its decisions regarding the rates Telus charges to competitors for certain wholesale services. In three separate decisions (Telecom Decisions 2006-22, 2006-23 and 2006-42), the commission ruled that rates for the Telus competitor services of access tandem and direct connect services would be reduced and made retroactive by four years, while rates for its collocation power rates would be reduced and made retroactive by six years. "During the period 2000 to 2002, there were a lot of files before the commission that just piled up without resolution," says Willie Grieve, VP of telecom policy and regulatory affairs for Telus. "This was before the time the commission started on its program to speed up its decision-making processes. It seems now that the commission is cleaning out its drawer of past files. Our concern is that if you wait six years to clean up, can that be justified?" Telus wants the CRTC to review the three decisions on the grounds that the regulator failed to take into account costs specific to Telus and misused the vehicle of interim rates accompanied by a retroactive rate adjustment. Telus also argues that, if they are required to refund any money that such funds come out of the company’s deferral account, as the circumstances surrounding decisions were completely out of Telus’ control. With regard to costs, Telus argues that the commission used a blend of other incumbent costs in deriving what the competitor services retail rates should be. This, says Telus, means the CRTC underestimated its actual costs by as much as 11%. "We just need the commission to recognize that they should be using our costs rather than using the general costs of other companies," Grieve tells Network Letter. "We can never be sure what costs are going to be imposed on us if we file cost studies for competitor services. That’s why we are looking for a Phase II review to get this sorted out. There is some delay in getting that proceeding going, but the commission has indicated to us that it is coming." With respect to using interim rates, Telus argues that they shouldn’t have been used for such a long period of time. "As the market actually developed over the years from the time rates were made interim, the CLEC model proved to be infeasible," states Telus in its application. "Entities that were to benefit from the interim rates exited the market. Data originally requested by the CRTC became worthless and, perhaps due to the changing market realities, the entire administrative process to set final rates ground to a halt. The purpose of interim rates ceased to exist and the CRTC ceased all activities to set final rates during this period of hiatus. Interim rates are not intended to allow any regulator to ‘wait and see’ what will happen over the course of a half-decade and then make retroactive changes." As a result of the three decisions, Telus says it’s now required to pay competitors more than $20 million – an amount the company characterizes as material. "By waiting so long and then being required to refund the money is a cash windfall for the competitors and does not reflect the competitive situation as it was then or even now," says Grieve. Telus maintains that the retroactive rate changes are actually a form of ‘double compensation’ for competitors: first through the higher retail rates they charged during the interim period, and again through a rebate going back four and six years. Should the company be required to refund competitors, Telus says that the money should come from its deferral account because the situation was clearly out of the company’s control. "The financial impact of the rate reductions should be recovered by the ILEC from the deferral account because of the extremely long time frame between the setting of interim competitor service rates and final rates, and because the commission-ordered changes to the Telus costs (upon which the new rates were set) bear no relationship to Telus’ actual Phase II costs," states the application. While Telus uses phrases in its application referring to the commission’s duty to utilize regulations that are ‘efficient and effective’, Grieve denies that this particular application is intended to put pressure on the commission to change its current regulatory practices. "No, this is a very specific application," he says. "We’re only trying to draw the commission’s attention to the question of interim rates and the length of time such rates remain interim." The success of Telus’ application may be in doubt, however, as the commission embarks on a lengthy and detailed examination of wholesale services (Telecom Public Notice 2006-14) where questions of what constitutes a wholesale service and how they should be priced are core considerations. "The commission has a very detailed proceeding in place for essential services, so I don’t know what their appetite is for looking at our application," says Grieve. "However, we think they should rule in our favour because we think we’re using some fresh arguments."

Three CRTC rulings undercut actual costs of competitor services: Telus

News | 11/24/2006 5:00 am EST

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