CRTC to review wholesale rate setting approach

The CRTC has launched a public consultation into whether the approach it uses to set wholesale rates should be changed, stating it’s seeking to establish a “more transparent and efficient process” while ensuring rates remain just and reasonable. In its call for comment issued Friday, the regulator put forward five rate-setting approaches, including the Phase II approach that has been in place since 1979. The CRTC launched a review of wholesale wireline services in 2013, but declared in its July 2015 determination that “no party provided compelling evidence to justify a deviation from the current incremental costing approach or to demonstrate that the retail-minus or efficient competitor model approaches would be better alternatives.” Since that determination however, the CRTC said in its consultation notice, “interventions have been received on the record of various wholesale service rate-setting proceedings in which the Phase II methodology has been challenged or companies have proposed adjustments to its principles.” The regulator said it had again decided to review the methodology because of the importance of ensuring “rates are just and reasonable and established in an efficient manner.” The CRTC’s August decision to lower the rates wholesale-based ISPs pay for wholesale access under the aggregated regime, retroactive to 2016, is currently frozen, after the Federal Court granted an application for a stay until an appeal is heard by the Federal Court of Appeal. The judge in the appeal said this month in a note that the hearing could still go ahead in June if the parties involved “foresee no logistical difficulties in meeting” the original May and June deadlines for documents to be filed, As well as continuing with the Phase II approach to set rates, the CRTC proposes a retail-minus approach where rates are determined based on the current retail rates for similar services, minus a predetermined percentage, and a most efficient operator model, where a single model based on the most efficient network design is used to develop costs for companies deploying similar technology while also taking into account company-specific input assumptions. Accounting-based costing being used to create service rates, which are updated on an annual basis is another model proposed by the CRTC, as is one where rates are commercially negotiated between wholesale customers and service providers. The regulator also asks intervenors to put forward any other approaches they consider appropriate and to consider whether the same methodology should be used for all wholesale services and all companies providing them. The CRTC also asked for submissions about how a transition to a new methodology should be made, if one is to occur, whether it should help companies to understand the rate-setting process and any other ways to create a more efficient process. Interventions close on July 23.

CRTC to review wholesale rate setting approach

Brief | April 24, 2020

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CRTC to review wholesale rate setting approach

Brief | April 24, 2020

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