GATINEAU – The small incumbent local telephone companies (SILECs) are urging the CRTC to reject proposals calling for changes to the local subsidy regime for lost telephony customers (lost NAS). They also say a regime that will force them to raise local rates to make up for a shortfall in toll interconnection revenue won’t work.
The large incumbents, as well as Rogers Communications and Shaw Communications, want the Commission to only allow the 50% subsidy rule to apply to lost customers who port their number to a competing carrier. The SILECs counter that this is not what the CRTC had intended when it issued the Obligation to Serve decision (Telecom Regulatory Policy 2011-291)
Bragg Communications (EastLink) argues the Commission explicitly granted SILECs the ability to get that 50% subsidy on all lost NAS customers in TRP 2011-291. The company cites the decision as evidence. “During that period, the small ILECs will also receive 50% of the subsidy for each of the residential NAS they no longer serve in their territory (i.e., lost NAS),” states the Obligation to Serve decision.
According to EastLink, “this means that any NAS a SILEC had served in May but no longer served in June would be subject to a 50% subsidy in June, regardless of why the SILEC no longer served the subscriber.” Besides, the company adds, this provision isn’t permanent and will only be available to SILECs for the first three years following the introduction of local competition or wireless number portability.
With respect to local competition and forbearance, the Ontario Telecommunications Association and the Association des Compagnies de Téléphone du Québec, jointly filing as the Canadian Independent Telephone Company Joint Task Force (JTF), urged the Commission to reject EastLink’s proposal for automatic forbearance once a SILEC faces competition from at least one wireline competitor that has reached the 75% competitor presence test.
The JTF points to comments from Bell Canada and Telus for supporting its proposal that forbearance should “be left in the hands of the SILECs.”
“Automatic forbearance based merely on competitor presence is not justified because all of the local forbearance criteria must be fulfilled,” said Telus highlighting quality of service and communications plan requirements as two such elements.
Toll interconnection rates remain a divisive issue in this proceeding. The JTF suggests its proposal that calls for a lowering of the rates but then having that money shifted to the contribution fund and then redistributed to SILECs, will promote toll competition in all SILEC territories. The amount transferred would be $7.4 million.
The JTF tells the Commission that it should reject proposals that would see the shortfall in revenue be recouped through local rate increases (an exogenous adjustment) “not only because it was not part of its original proposal, but also in light of the fact that SILECs have already been incented to increase their local rates multiple times by TRP 2011-291.”
MTS Allstream is among the many parties to the proceeding opposed to the JTF’s proposal on toll interconnection. “There is no public policy rationale to force all carriers to provide SILECs with additional subsidies and as such the JTF’s proposal should be rejected. If the Commission wishes to grant the SILECs some ability to recoup the loss on their own, an exogenous adjustment is a fair and reasonable proposition,” the company writes in its final argument.
The Manitoba-based incumbent (and national competitor via its Allstream arm) argues there are two basic elements required in a SILEC regulatory framework: competition and reasonable prices, and cost-based rates. This, says MTS, involves a number of elements including a framework that allows primary exchange service (PES) rates to move towards costs where those rates are below cost.
In addition, it includes “an explicit subsidy that provides the appropriate level of compensation to the SILEC to recover PES costs not recovered through the allowable PES rate; and the removal of any implicit subsidies from the rates charged to competitors for interconnection and competitor services.”
