OTTAWA – VOIP provider Primus Telecommunications has told the CRTC that it could lose market share if a Commission decision granting retroactive rate increases for Bell Canada’s and Bell Aliant’s unbundled local loops (ULL) is allowed to stand.
The competitive telecom and broadband provider says it will have to raise local telephony prices to pay for the higher ULL rates which could result in the loss of customers.
“This type of an increase would significantly harm Primus’ competitive position in the market and, indeed, would simply not be feasible or practical, because the current pricing in the market (and in particular, Bell’s retail pricing) does not allow Primus to increase its own prices without experiencing a substantial loss in market share as its subscribers flee to the only provider that can apparently sustain lower rates, namely Bell,” Primus writes in a review and vary application filed with the Commission on May 5.
Primus is the second telephony provider to launch an appeal of the January 12, 2011 retroactive ULL rate decision (Decision 2011-24). MTS Allstream filed an appeal in March. Bell has also filed an appeal contesting certain elements of the decision. Primus says because of the ongoing appeals of the decision, a stay in its implementation of the decision would be appropriate.
Earlier this year, and after an 18-month proceeding on Tariff Notices 269 and 7205, the CRTC approved rate increases for and Bell’s and Bell Aliant’s ULLs and made them retroactive to December 14, 2009. The rates were lower than what had been proposed but were still an increase over existing rates.
Primus contends that while the rates aren’t as high as Bell would have preferred, they will still have a significant impact on competitors because they can’t control their costs as easily because of their reliance on incumbent facilities, including ULLs. Some competitors to the tariff proceeding warned the Regulator that they could see a 10% to 20% increase in operating costs as a result of its rate approval.
“While Primus acknowledges that the Commission did not grant approval to the ULL rates that were proposed by Bell in TNs 269/7205, it did approve overall rate increases for Bell’s ULLs which, if applied retroactively, will still require Primus and other competitors to make significant retroactive payments to Bell,” the company writes in its appeal. Primus added that the longer the retroactive period, the greater financial harm that would be suffered by it and other competitors.
Primus says the Commission breached its duty to fairness by allowing Bell to game the regulatory process through delays, including one that lasted 75 days. The company argues that the CRTC should have returned Bell’s tariff applications and asked it to re-file them when it was read.
“Instead, the Commission allowed Bell to unilaterally suspend a tariff proceeding that Bell itself had initiated and furthermore acceded to every other delay created by Bell without ever once remonstrating Bell for failing to submit formal extension requests.
What it believes to be “just and reasonable” rates were also raised by Primus in its appeal. It says that the Commission failed to take into account the impact of the administrative delays and their effect on the retroactive ULL rates. The result is rates that aren’t just and reasonable in Primus’ view.
“Indeed, it would violate the statutory requirement set out in subsection 27(1) of the [Telecommunications] Act that every rate charged by a Canadian carrier – including rates that are established during any interim period of time – be just and reasonable. In addition, if not corrected, this error would confer an undue preference on Bell contrary to subsection 27(2) of the Act because it would allow Bell to benefit from its own misconduct,” contends Primus.
In its appeal, Primus says the new ULL rates should only apply on a going forward basis. The commencement of the new rates would be the date on which the commission renders its final decision with respect to its R&V and those of MTS and Bell.
