Report
to/Rapport au :
Corporate
Services and Economic Development Committee
Comité des services organisationnels et du
développement économique
and / et
Agriculture & Rural Affairs Committee
Comité de l'agriculture et des questions
rurales
and Council / et au Conseil
18 April 2006 / le 18 avril 2006
Submitted by/Soumis par : Ned Lathrop,
Deputy City Manager/Directeur municipal
adjoint,
Planning and Growth Management/Urbanisme et Gestion de la croissance
Contact Person/Personne
ressource : Rob Mackay, Manager/Gestionnaire,
Strategic
Projects/Initiatives stratégiques
Economic Development and Strategic Projects/
Développement économique et Projets stratégiques
(613) 580-2424 x 22632, Rob.Mackay@ottawa.ca
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SUBJECT: |
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OBJET : |
AGRANDISSEMENT
DE LA ZONE D’APPEL LOCAL – APPELS SANS FRAIS D’INTERURBAIN |
REPORT RECOMMENDATIONS
That the Corporate Services and
Economic Development Committee and the Agriculture and Rural Affairs Committee
recommend Council:
1.
Endorse the proposed request to Bell to proceed with an
application to CRTC to expand Ottawa's local calling area based on Staff’s
recommended surcharge scenario No. 1: "One City - One Rate" with a
uniform monthly surcharge applied to all telephone lines in the City, but with
residential and business surcharges calculated separately;
2.
Direct staff to consult with the affected neighbouring
municipalities; and
3.
Delegate to the City Manager the authority to request
Bell to proceed with CRTC tariff application subject to consultation and the
results of the updated Financial Impact Study.
RECOMMANDATIONS DU
RAPPORT
Que le Comité des services organisationnels et du
développement économique et le Comité de l’agriculture et des questions rurales
recommandent que le Conseil :
1.
Appuie la demande à Bell de déposer une
demande auprès du CRTC pour agrandir la zone d’appel local d’Ottawa sur la base
du scénario de frais supplémentaires no 1 « Une ville - Un taux » recommandé
par le personnel, en appliquant des frais supplémentaires mensuels uniformes à
toutes les lignes téléphoniques de la ville, ces derniers étant cependant
calculés séparément pour les résidences et les entreprises;
2.
Avise les employés de consulter les
municipalités avoisinantes touchées;
3.
Délègue au directeur des services
municipaux le pouvoir de demander à Bell d’appliquer les tarifs du CRTC en
fonction de consultations et des résultats de l’étude sur les répercussions
financières mises à jour.
EXECUTIVE SUMMARY
Assumptions and Analysis:
Expanding the toll-free telephone calling area to include all of Ottawa was first proposed in 1996 by the Regional Government and has been identified as a key priority in the City Corporate Plan, the Ottawa 20/20 process and most recently during the Rural Summit.
Through a lengthy process, which included considerable input from stakeholders and the public, the CRTC provided, in Telecom Decisions CRTC 2003-27, 07 May 2003 and CRTC 2004-56, 26 August 2004, a revised framework under which Canadian municipalities could apply for changes to their local calling areas. The revised regulation entitled incumbent and certain other long distance carriers to collect toll revenues foregone as a result of toll-free calling through a monthly surcharge to be borne by the customer and set the compensation period at three years.
In the spring of 2005, Bell Canada conducted the required economic evaluation study to calculate the amount of foregone toll revenue and in May 2005 representatives from Bell met with Ottawa officials to present the results of the study.
Decima Research completed a study to measure public reaction to an initiative that would bring toll-free calling to all areas of Ottawa and to establish price sensitivities. A statistically accurate survey of 808 residential and 202 business interviews were carried out by telephone between 26 January and 12 February 2006.
The study indicated that support is very strong, with 94% of all businesses and 96% of all residents considering this initiative to be either a good or an excellent idea. Support decreases however, once a surcharge concept is introduced, and at $1.00 per month, the highest price tested, support dropped to 46% among non-core residential subscribers and 37% among core subscribers. The maximum charge that could be added to residential telephone bill while maintaining at least 50% support is $0.70 ($0.56 core and $0.87 non-core).
Results reported for business subscribers were fairly consistent between core and non-core with a surcharge of $3.00 per month, the highest price tested, support was 39% among non-core subscribers and 40% for core subscribers. Incremental support rose quickly however, as the level of surcharge dropped and at a monthly surcharge of $1.50 per month, two thirds (65%) of businesses polled, supported the monthly surcharge. The maximum charge that could be added to a business telephone bill, while maintaining at least 50% support is $2.40 according to the findings of the Decima survey.
Bell Canada developed
the following two scenarios to recover this amount through a surcharge on
monthly telephone bills:
1. Uniform Monthly Surcharge - $0.63 per month for all residential subscribers and $0.59 per month for all business subscribers, and
2. Monthly Surcharge For Non-Core Subscribers - no surcharge for core subscribers, $1.45 per month for non-core residential subscribers and $2.36 per month for non-core business subscribers. Core subscribers would pay no surcharge.
Staff developed the following alternative scenario for consideration:
3. Double Weighted Surcharge For Non-core Subscribers - $0.87 per month for non-core residential subscribers, $0.95 per month for non-core business subscribers, $0.44 surcharge for core residential subscribers and $0.47 per month for core businesses, and
Bell Canada is
currently updating their 2005 Economic Study but since long distance rates have
generally dropped since the completion of the original study it is expected
that the required surcharge amount will be lower.
Based on the completed economic evaluation study, and in consideration of the Decima Research study, staff considers the proposed scenario number 1 "Uniform Monthly Surcharge" wherein all residential subscribers would pay a uniform monthly surcharge of $0.63 per line and all business subscribers would pay a uniform monthly surcharge of $0.59 per line and consistent with the principle "One City - One Rate” to be fair and equitable, and is requesting that Council select Scenario 1.
The monthly surcharge would be in place only for a period of 3 years and then be removed from the monthly phone bills. If the CRTC approves Bell's application on behalf of the City of Ottawa, toll free calling throughout Ottawa will be instituted. Staff anticipates that this will occur during the 2nd or 3rd quarter of 2007.
Financial Implications:
All preparation leading up to the filing of the final CRTC application will be funded by existing budgets in the Economic Development and Legal Services Branch.
There will be a future cost to the City of approximately $2,000 per month ($24,000 per annum) beginning partway through 2007 and extending for three years. This represents the City's cost for payment of the surcharge on its own telephone lines. The tax increase forecast for 2007 as presented in the 2006 Draft Budget Summary document was projected to be 8.1%. The impact of this additional requirement in 2007 will result in a .002% tax increase. All additional requirements approved by Council that have a 2007 budget implication will be summarized and presented in the City’s quarterly status reports.
The City will incur the cost of a plebiscite should Bell be required to undertake it because the monthly surcharge proposed exceeds one dollar per month, per residential subscriber, as would be the case if Council selects scenario 2. This cost has not been precisely determined but has been estimated by Bell to be in the range of $500,000 to $1,000,000. Currently there is no approved funding to conduct the Plebiscite.
Public Consultation/Input:
The Legal Services Branch and outside legal Counsel conversant in CRTC matters were consulted. Staff have initiated discussions with Bell Canada on surcharge scenarios, the timing and requirements of an application for expanded local calling in Ottawa and impacts of the economic study revision, which is now underway.
On adoption of the recommendations of this report, staff will carry out a consultation process with all affected neighbouring municipalities and agencies representing the business community.
RÉSUMÉ
Hypothèses et analyse :
L’agrandissement de la zone d’appels sans frais
d’interurbain pour y ajouter la Ville d’Ottawa en entier a d’abord été proposé
en 1996 par l’administration régionale et fait partie des priorités importantes
du plan directeur municipal, du processus Ottawa 20/20 et du récent Sommet
rural.
Au cours d’un long processus, qui
comprenait une participation considérable de la part des intervenants ainsi que
du public, le CRTC a fourni, dans les documents Décision de Télécom CRTC 2003
27, le 7 mai 2003, et CRTC 2004 56, le 26 août 2004, un cadre révisé en vertu
duquel les municipalités du Canada peuvent demander des changements à leur zone
d’appel local. Les règlements révisés déclaraient les titulaires et certains
autres fournisseurs de services interurbains admissibles à encaisser les
redevances des recettes perdues à cause de l’abolition des frais d’interurbain
en facturant des frais supplémentaires mensuels aux clients et établissaient la
période de compensation à trois ans.
Au printemps de 2005, Bell Canada a
effectué l’évaluation économique nécessaire pour calculer le montant des
redevances de recettes perdues et, au mois de mai 2005, des représentants de
Bell ont rencontré les représentants de la Ville d’Ottawa pour présenter les
résultats de l’étude.
La société Decima Research a réalisé une
étude pour évaluer la réaction du public face à une initiative qui rendrait
gratuits les appels dans l’ensemble de la Ville d’Ottawa et pour déterminer le
niveau de sensibilité en ce qui concerne la tarification. Un sondage précis sur
le plan statistique a été mené auprès de 808 résidents et de 202 entreprises
par téléphone entre le 26 janvier et le 12 février 2006.
L’étude a démontré que le soutien est très
élevé, car 94 % des entreprises et 96 % des résidents considèrent cette
initiative comme une bonne ou une excellente idée. Par contre, le soutien
diminue lorsque le concept de frais supplémentaires est présenté, et à 1 $ par
mois, le tarif le plus élevé qu’on a proposé, le soutien diminue à 46 % parmi
les abonnés résidentiels des zones excentriques et à 37 % pour les abonnés du
noyau urbain. Le maximum que l’on pourrait ajouter à la facture de services
téléphoniques résidentiels tout en conservant au moins 50 % du soutien est 0,70
$ (0,56 $ pour le noyau urbain et 0,87 $ pour la zone excentrique).
Les résultats rapportés pour les abonnés
du service affaires étaient plutôt semblables entre ceux du noyau urbain et
ceux de la zone excentrique pour des frais supplémentaires de 3 $ par mois, le
prix le plus élevé proposé, le niveau de soutien était de 39 % pour les abonnés
de la zone excentrique et de 40 % pour les abonnés du noyau urbain. Par contre,
le soutien différentiel montait rapidement si le niveau de frais
supplémentaires diminuait et pour des frais supplémentaires de 1,50 $ par mois,
les deux tiers (65 %) des entreprises consultées soutenaient les frais mensuels
supplémentaires. Les frais supplémentaires qui peuvent être ajoutés à la
facture de services téléphoniques affaires, pour conserver au moins 50 % du
soutien, ne peuvent dépasser 2,40 $ selon les résultats du sondage Decima.
Bell Canada a créé les deux scénarios
suivants pour récupérer ce montant en ajoutant des frais aux factures
mensuelles de services téléphoniques :
1. Frais supplémentaires mensuels uniformes : 0,63 $ par mois pour tous les abonnés du service résidentiel et 0,59 $ par mois pour tous les abonnés du service affaires;
2. Frais supplémentaires mensuels pour les abonnés des zones excentriques : aucuns frais supplémentaires pour les abonnés du noyau urbain, 1,45 $ par mois pour les abonnés du service résidentiel qui habitent la zone excentrique et 2,36 $ par mois pour les abonnés du service affaires qui habitent la zone excentrique. Les abonnés du noyau urbain ne paieraient aucuns frais supplémentaires.
Les employés ont créé le scénario de rechange
suivant qui fera l’objet d’une étude :
3. Frais supplémentaires doublement pondérés pour les abonnés de la zone excentrique : 0,87 $ par mois pour les abonnés du service résidentiel de la zone excentrique, 0,95 $ par mois pour les abonnés du service affaires de la zone excentrique, 0,44 $ de frais supplémentaires pour les abonnés du service résidentiel du noyau urbain et 0,47 $ par mois pour les abonnés du service affaires du noyau urbain.
Bell Canada procède actuellement à une
mise à jour de son étude économique 2005, mais comme les frais d’appel
interurbain ont généralement diminué depuis la fin de la première étude, et il
est attendu que le montant des frais supplémentaires nécessaires soit moins
élevé.
Selon les résultats de l’étude économique et
l’étude de la société Decima Research, les employés considèrent que le scénario
proposé numéro 1 « Frais supplémentaires mensuels uniformes » où tous les
résidents abonnés paieraient des frais supplémentaires mensuels uniformes de
0,63 $ par ligne et tous les abonnés du service affaires paieraient des frais
supplémentaires mensuels uniformes de 0,59 $ par ligne et conformes au principe
« Une ville – Un tarif » est juste et équitable et demandent que le Conseil
choisisse le scénario numéro 1.
Les frais supplémentaires mensuels
seraient mis en place seulement pour une période de trois ans pour ensuite être
supprimés de la facture téléphonique mensuelle. Si le CRTC approuve la demande
de Bell au nom de la Ville d’Ottawa, les appels sans frais d’interurbain dans
toute la ville d’Ottawa seront mis en œuvre. Les employés prévoient que cette
demande aura lieu pendant le deuxième ou le troisième trimestre de 2007.
Répercussions
financières :
Tous les
préparatifs menant au dépôt de la dernière demande au CRTC seront financés par
les budgets actuels du développement économique et de la direction des services
juridiques.
Il en coûtera plus tard à la Ville environ
2 000 $ par mois (24 000 $ par année) à compter de la mi année 2007 et pendant
trois ans. Il s’agit du coût qu’assumera la Ville pour payer les frais
supplémentaires de ses lignes téléphoniques. Dans l'ébauche du sommaire
budgétaire de 2006, la hausse de taxes prévue pour 2007 s'établit à 8,1 %. Ces
frais supplémentaires se traduiront en 2007 par une hausse de taxes de 0,002 %.
Tous les besoins de financement supplémentaires, une fois approuvés par le
Conseil, qui ont une incidence sur le budget de 2007 seront résumés dans les
rapports trimestriels de la Ville.
La Ville assumera le coût d’un référendum
si Bell doit en faire un parce que les frais supplémentaires mensuels proposés
surpassent 1 $ par mois, par abonné du service résidentiel, tel qu’il serait le
cas si le Conseil choisissait le scénario numéro 2. Ce coût n’a toujours pas
été déterminé avec précision mais Bell estime qu’il se situera entre 500 000 $
et 1 000 000 $. Pour le moment, aucun financement n'a été approuvé pour la
tenue d'un tel référendum.
Consultation publique / commentaires :
La Direction des services juridiques et un avocat de
l’extérieur au courant des dossiers du CRTC ont été consultés. Les employés ont
entrepris des discussions avec Bell Canada sur les scénarios de frais
supplémentaires, l’opportunité et les exigences d’une demande d’agrandissement
de la zone d’appel local de la Ville d’Ottawa et les effets de la révision de
l’étude économique actuellement en cours.
Lors de l’adoption des recommandations du
présent rapport, les employés effectueront un processus de consultation auprès
de toutes les municipalités avoisinantes concernées et des agences qui
représentent le milieu des affaires.
BACKGROUND
On 2 October 2001 the Corporate Services and Economic Development Committee received a report on staff’s efforts to expand toll free calling capabilities to all residents within the new City of Ottawa. The report indicated that this effort was started by the Regional Government in 1996 and that the Canadian Radio-television and Telecommunication Commission (CRTC) had recently initiated a process to review the framework for the expansion of local calling areas. In the report staff requested that the Committee recommend Council pass a resolution supporting toll free calling throughout Ottawa.
The resolution (Document No. 1 attached) which was subsequently adopted by Council and submitted to the CRTC with the City’s formal submission on 15 November, 2001 indicated that the City of Ottawa officially endorsed the concept of the City being reorganized as one community of interest and that toll-free calling be expanded as soon as possible to all residents and businesses located in the new City of Ottawa. This position and the City’s submission to the CRTC were also supported by the business community which filed separate letters with the commission supporting the City’s rationale for toll free calling throughout Ottawa.
After reviewing Ottawa’s submission as well as others, the CRTC released Decision 2002-56 which established a new framework to evaluate applications for the expansion of local calling areas throughout Canada. The first step in this process requires a city to pass a motion to create an expanded local calling area and present it to the incumbent carrier, which in Ottawa’s case is Bell Canada.
On
15 October 2002 the Corporate Services and Economic Development Committee
received a subsequent progress report on the toll free initiative. The report
recommended that Council approve a resolution (copy attached as DOCUMENT 2) to
support the establishment of an expanded calling area and formally request Bell
Canada to prepare the economic study and estimated cost of any plebiscite that
may be required, as contemplated under Telecom Decision CRTC 2002-56. The
recommendation also suggested that the Business Development Branch report back
to Council upon receipt of the Economic Study from Bell Canada, in order for
Council to determine whether or not to authorize Bell Canada to proceed with a
formal application to the CRTC for expanded local calling.
At that time, there remained two related matters outstanding before the Commission. The first was the period of compensation for foregone toll revenues that would apply to subscribers in exchanges that moved to expanded local calling areas under the new regime. The second was the potential eligibility of telecommunications service providers, other than the incumbent local exchange carrier, to share in the recovery of such revenues. These matters were subsequently addressed by the commission in Telecom Decision CRTC 2003-27, 07 May 2003. The CRTC set the compensation period for the collection of foregone toll revenue at three years and allowed competitive local exchange carriers to opt in or out on a one-time basis, from both collecting and contributing funds associated with the foregone toll revenue compensation plan.
Finally, responding to an appeal raised by two other long distance carriers, in Telecom Decision CRTC 2004-56, 26 August 2004, the Commission extended the scope of Decision 2003-27 to provide that single-hop resellers would also be eligible for compensation for foregone toll revenues when a local calling area was created or expanded.
In the spring of 2005, Bell Canada conducted the economic evaluation study required in order to calculate the amount of foregone toll revenue that would have to be recovered under the new regulatory regime. On 06 May 2005 representatives from Bell met with Ottawa officials to present the results of the study.
DISCUSSION
Expanding the toll-free calling area to include all Ottawa addresses has been identified as a key priority in the City Corporate Plan, the Ottawa 20/20 process and most recently during the Rural Summit.
Under the revised
CRTC regulation, carriers, including incumbent local exchange carriers,
competitive local exchange carriers and certain long distance resellers may
recover foregone long distance toll revenue through a surcharge on monthly
telephone bills. The surcharge will only be in force for a period of three
years and then will be removed from monthly bills. The regulations require that
the incumbent carrier complete an economic impact study, collecting data from
all affected long distance service providers, including resellers in order to ascertain the foregone monthly toll revenue. If the proposed
surcharge is more than $1 per month for residential customers, a plebiscite is
required.
Decima Research, engaged by the City of Ottawa, completed a study to measure public reaction to an initiative that would bring toll-free calling to all areas of Ottawa and to ascertain price sensitivities. A total of 1,010 telephone interviews were carried out between 26 January and 12 February 2006. Of these, 808 were residential telephone subscribers and 202 were business subscribers, with interviews conducted with the individual in the organization responsible for telephone service.
The survey produced the following results:
§ Support is very strong, with 94% of all businesses and 96% of all residents considering this initiative to be either an excellent or a good idea. Support decreases however, once the concept of a surcharge is introduced.
§ At the lowest price tested - $0.25 per month per line, residential support remained strong at 63%. Similarly, at the lowest price tested - $0.50 per month per line, business support was even stronger at 77%.
§ The results indicate that the maximum charge that could be added to residential telephone bill, while maintaining at least 50% support would be an average of $0.70 per month per line comprised of $0.56 for core subscribers and $0.87 for non-core subscribers.
§ The results indicate that the maximum charge that could be added to business telephone bill, while maintaining at least 50% support would be $2.40 (both core and non-core).
Toll Recovery Scenarios
Based on information gathered through the economic evaluation study completed in the spring of 2005, Bell reported the total amount of foregone toll revenue to be recovered through a monthly surcharge on telephone bills. The scenarios below, illustrate monthly surcharge scenarios, required to recover this amount, spread over 3 years, on behalf of all affected long distance service providers, including resellers.
Scenario No. 1
Bell Canada proposed two scenarios to recover the estimated foregone toll revenue over three years. Bell's first scenario shown in the table below is based on a "One City - One Rate" philosophy with a uniform monthly surcharge applied to all telephone lines in the City, with foregone residential and business tolls calculated separately, thus avoiding any subsidy between business and residential subscribers. The rate for business subscribers is slightly lower than that for residential subscribers but is calculated on the basis of the total foregone business toll divided by the number of business lines. Similarly, the monthly surcharge for residential subscribers is calculated by dividing the total foregone residential toll by the number of residential lines. As the amount proposed for all residential subscribers is less than one dollar per month, this scenario will not trigger a plebiscite.
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Bell Scenario No. 1 Expanded Local Calling Area Uniform Monthly
Surcharge / Line |
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No. Of lines |
% |
Monthly Surcharge |
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Residential: |
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Core |
214,382 |
57% |
$ 0.63 |
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Non-Core |
163,601 |
43% |
$ 0.63 |
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377,983 |
100% |
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Business: |
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Core |
98,840 |
75% |
$ 0.59 |
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Non-Core |
33,248 |
25% |
$ 0.59 |
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132,088 |
100% |
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Scenario No. 2
Bell’s second scenario shown in the table below is based on the principle that "those who directly benefit should pay.” Foregone toll revenue would be recovered only from non-core subscribers and no surcharge would be added to telephone bills for customers in core areas. As the monthly surcharge for Non-core residential subscribers would exceed one dollar per month, Bell Canada would be required to conduct the plebiscite that is to be paid for by the City. A simple majority of the votes cast in the plebiscite would determine whether it passes or not.
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Bell Scenario No. 2 Expanded Local Calling Area Non-Core Only Monthly
Surcharge/Line |
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No. Of lines |
% |
Monthly Surcharge |
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Residential: |
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Core |
N/A |
0% |
$ 0.00 |
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Non-Core |
163,601 |
100% |
$ 1.45 |
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377,983 |
100% |
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Business: |
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Core |
N/A |
0% |
$ 0.00 |
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Non-Core |
33,248 |
100% |
$ 2.36 |
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132,088 |
100% |
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Scenario No. 3
Staff has developed an alternative scenario for consideration. Alternative Scenario No. 3 shown below illustrates the monthly surcharges that would be charged, calculated by double-weighting the number of non-core lines. This alternative is consistent with the principle that "those who directly benefit should pay most.” As with Scenario 1, the amount proposed for residential subscribers is less than one dollar per month, whether core or non-core and accordingly this scenario would not trigger a plebiscite.
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Alternative Scenario No. 3 Expanded Local Calling Area Apportion Costs on the basis of double weighting
for non-CORE |
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Adjusted No. Of
lines Core @ 2X |
% |
Monthly Surcharge |
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Residential: |
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Core |
214,382 |
40% |
$0.44 |
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Non-Core |
327,202 |
60% |
$0.87 |
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541,584 |
100% |
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Business: |
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Core |
98,840 |
60% |
$0.47 |
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Non-Core |
66,496 |
40% |
$0.95 |
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165,336 |
100% |
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Bell Canada is currently updating their Economic Study and is gathering current data from its own records and from all other affected long distance service providers, including resellers. Long distance rates have generally dropped since completion of the original study and it is expected that the required surcharge amount will drop slightly.
When the updated Economic Study referenced above is completed, staff will review the revised cost estimates and adjust the scenario adopted by Council and request that Bell file the adjusted scenario with the CRTC. Interested parties including the City would be allowed to comment at this stage, should there be a concern with the total surcharge and/or the supporting data provided by Bell Canada and other participating service providers. If the CRTC approves the final application, toll free calling throughout Ottawa will be instituted. Staff anticipates that this will occur during the 2nd or 3rd quarter of 2007. Foregone toll revenue for a period of three years would be passed on as a surcharge to the subscribers identified in the City and in those exchanges in neighbouring municipalities straddling the Ottawa border.
Creating a single toll-free calling area throughout all of Ottawa will have the following benefits:
· Having toll-free long distance calling will help to reinforce the perception of Ottawa as one city rather than separate communities with different interests.
· Having toll-free long-distance calling would eliminate local calling area inequities where residents who live virtually across the street from each other incur toll when they call each other or their neighbours.
· There will be less confusion as to which communities within Ottawa are subjected to long distance fees.
· The expanded calling area would keep pace with the growth of the City.
· Toll-free calling throughout Ottawa will lower operating costs for many rural businesses. As well, this initiative will remove the disincentive some non-core residents have in calling these businesses and supporting them.
Based on the research and consultation that has been done to date, and the findings of the Decima research, staff considers the proposed surcharge scenario Number 1 to be fair and equitable, and requests that Council adopt the Recommendations of this report.
Expanding the toll-free calling area to include all of Ottawa was identified as a key priority during the recent Rural Summit.
Residents in rural Ottawa who currently pay long distance charges to call other exchanges in the City will benefit from a successful outcome of this process. Long distance charges can be onerous particularly for rural businesses that are communicating on a frequent basis with customers and other businesses outside core exchanges. As well, rural areas in communities such as Orleans and Kanata would not have to incur toll charges when their residents and businesses call each other.
An added benefit for rural businesses will be the elimination of a requirement for those of their customers who live in other non-core exchanges to pay long distance fees when calling these businesses, thus removing what many have described as a material impediment to sales growth.
Likewise, non-Ottawa residents who are within a telephone exchange that straddles Ottawa’s border will have the benefit of avoiding long distance telephone charges if they are calling other Ottawa exchanges. The costs for this expanded service will need to be borne by this group as well. Staff will be contacting each of these border municipalities once this report is adopted by Council
CONSULTATION
The Legal Services Branch and outside legal Counsel conversant in CRTC matters were consulted prior to finalizing this report.
As well, staff have initiated discussions with Bell Canada on surcharge scenarios, the timing and requirements of an application for expanded local calling in Ottawa and the possible impact of the economic study revision, now underway.
Business associations have also been consulted on this initiative and have generally been supportive of the City's efforts to expand the local calling area. Letters of support from the National Capital Business Alliance and the Greater Ottawa Chamber of Commerce formed part of the City's submission to the CRTC in November 2001.
On adoption of the recommendations of this report, staff will carry out a consultation process with all affected neighbouring municipalities and agencies representing the business community.
FINANCIAL IMPLICATIONS
All
preparation leading up to the filing of the final CRTC application will be
funded by existing budgets in the Economic Development and Legal Services
Branch.
There
will be a future cost to the City of approximately $2,000 per month ($24,000
per annum) beginning partway through 2007 and extending for three years. This
represents the City's cost for payment of the surcharge on its own telephone
lines. The tax increase forecast for 2007 as presented in the 2006 Draft Budget
Summary document was projected to be 8.1%.
The impact of this additional requirement in 2007 will result in an
.002% tax increase. All additional
requirements approved by Council that have a 2007 budget implication will be
summarized and presented in the City’s quarterly status reports.
The
City will incur the cost of a plebiscite should Bell be required to undertake
it because the monthly surcharge proposed exceeds one dollar per month, per
residential subscriber, as would be the case if Council selects scenario 2.
This cost has not been precisely determined but has been estimated by Bell to
be in the range of $500,000 to $1,000,000.
Currently there is no approved funding to conduct the Plebiscite.
SUPPORTING
DOCUMENTATION
Document
1 "Resolution Of The
Municipality Of The City Of Ottawa Regarding Toll Free Calling", adopted
by Council 14 November 2001
Document 2 "Council Resolution To Be Sent To Bell Canada", adopted by Council 23 October 2002
Document 3 Executive Summary of Decima Research Long Distance Study, completed between January 26 and February 12, 2006
DISPOSITION
Following Council's approval and selection of a surcharge scenario, the chosen surcharge scenario will be included as part of the City’s request to Bell Canada to proceed with an application to CRTC for expanded toll free calling throughout Ottawa.
Following Council approval of Recommendation 2, Planning and Growth Management staff will undertake to organize consultation sessions with all affected neighbouring municipalities and business associations.
Depending on and subject to Council approval of Recommendation 3, the City Manager will review the feedback arising from consultation with affected neighbouring municipalities and the results of the revised Financial Impact Study and will authorize Bell Canada to proceed with CRTC tariff application or alternatively, report back to the Agriculture and Rural Affairs and Corporate Services and Economic Development Committees.
RESOLUTION OF THE MUNICIPALITY OF THE
CITY OF OTTAWA REGARDING TOLL FREE
CALLING DOCUMENT 1
WHEREAS the Canadian Radio-television and
Telecommunications Commission (“CRTC”) has initiated a process in Public Notice
CRTC 2001-47, April 27, 2001 to establish a set of general principles and
criteria that should be used to consider applications for the expansion of
local calling areas;
AND WHEREAS the new City of Ottawa as
amalgamated by statute effective January 1, 2001 is participating in this
proceeding;
AND WHEREAS the City of Ottawa has made and
continues to make a concerted effort at many levels to create a
telecommunications friendly municipality within which local, national and
international business may operate, using highly skilled personnel;
AND WHEREAS the goal of the City of Ottawa in
participating in the CRTC proceeding is to ensure that a framework is developed
that will ultimately permit toll-free calling to be expanded to include all
residents and businesses located within the geographical boundaries of the City
of Ottawa;
THEREFORE IT BE RESOLVED THAT the City of
Ottawa officially endorses the concept of the City being reorganized as one
community of interest and that toll-free calling be expanded as soon as
possible to all residents and businesses located in the City of Ottawa.
Local Exchange Map
Toll Free Calling Capabilities by Exchange
COUNCIL RESOLUTION TO BE SENT TO BELL CANADA Document 2
RESOLUTION
WHEREAS the Canadian Radio-Television and Telecommunications Commission (CRTC) issued Telecom Decision 2002-56, September 12, 2002, in which decision the CRTC set out the framework for the expansion of local calling areas, together with the process under which such expanded local calling areas would be established;
AND WHEREAS prior to filing any application for expanded local calling with the CRTC, the incumbent local exchange carrier (ILEC) must first perform an economic study and must estimate the cost of any plebiscite that might be required, all as specified in Telecom Decision CRTC 2002-56;
AND WHEREAS the City of Ottawa wishes to establish an expanded local calling area as soon as possible that will include all of the exchanges that are wholly or partially located within the geographic boundaries of the City (which exchanges are attached as “Appendix A” to this motion);
THEREFORE BE IT RESOLVED THAT the City of Ottawa supports the establishment of an expanded local calling area to encompass all of the exchanges attached as “Appendix A”;
AND BE IT FURTHER RESOLVED THAT the City of Ottawa formally requests Bell Canada to prepare the economic study and estimated cost of any plebiscite that may be required, as contemplated under Telecom Decision CRTC 2002-56;
AND BE IT FURTHER RESOLVED THAT the Business Development Branch report back to Council upon receipt of the Economic Study from Bell Canada, in order for Council to determine whether or not to authorize Bell Canada to proceed with a formal application to the CRTC for expanded local calling.
EXECUTIVE
SUMMARY OF DECIMA RESEARCH LONG DISTANCE
STUDY,
COMPLETED BETWEEN JANUARY 26 AND
FEBRUARY 12, 2006 DOCUMENT 3
Decima Research
City of Ottawa Long Distance Study
Executive Summary
1.
Executive Summary for Residential Segment
1.1
Background and Methodology
The City of Ottawa and Bell Canada have undertaken an initiative to enable toll-free telephone calls throughout the new City of Ottawa area. The objectives of this initiative include bolstering community cohesiveness, supporting local businesses, and increasing the appeal of Ottawa as a location for business. The City of Ottawa commissioned Decima Research to conduct a survey with residents and businesses within the new City of Ottawa boundaries, to ascertain price sensitivities.
A total of 808 residential telephone interviews were completed between January 26 and February 12, 2006. The interviews lasted an average of 10.4 minutes and were conducted with the person in the household that was at least 18 years of age. The sponsorship of the study was revealed (i.e. “we are calling from Decima Research on behalf of the City of Ottawa”).
1.2
Results
Awareness of
and Reactions to Toll-Free Initiative
Residents are generally aware (71%) that some residents and businesses must pay long distance calling charges when making calls within the Ottawa area. Among those aware of these charges, one quarter (27%) are aware that the City of Ottawa and Bell Canada have embarked on an initiative to enable toll-free telephone calls throughout the entire new City of Ottawa.
Support for this initiative is very strong, with 96% of all residents considering this initiative to be either an excellent (56%) or a good (40%) idea. The vast majority (89%) also either strongly or somewhat agree that it is important for them to make toll-free calls anywhere within the new City of Ottawa area.
Reasons for endorsing the toll-free idea revolve mainly around the fact that the calling region is all within the same city, with some (also) anticipating cost savings from a lack of long distance charges. Among the few who do not support the initiative, the most common reasons revolve around expectations of price increases.
It should be noted that support for toll-free calling is high, despite large numbers of residents foreseeing no personal benefit at all (44%) or a minor one at best (31%). In fact, the further the group from their own reality, the greater the perceived benefit. As such, local businesses are seen as being the biggest beneficiaries of the initiative - with 73% of residents believing toll free calling will be a significant benefit for this group - followed by City of Ottawa residents in general (63%), and themselves a distant third (25%).
Communications
This likely
explains why the arguments ‘having toll-free long distance will benefit local
businesses since customers across the region will no longer incur long-distance
costs when contacting a particular business’ and ‘eliminating
long distance barriers will make it easier for friends and family to stay in
touch with one another’ are perceived to be among the strongest arguments
presented (considered strong arguments by 69% and 68% of residents
respectively), across both core and non-core communities.
‘The new City of Ottawa is much larger geographically than before amalgamation and therefore the local calling area should keep pace with the growth of the city’ garners a similar, if not slightly higher, level of support at 71%. In fact, this latter argument receives the highest ratings among core residents, and places second among non-core residents (the benefit to local businesses ranks highest for this latter audience).
The idea that
the local calling area needs to keep pace with the growth of the city is
(relatively) well received across all sub-groups, including those who do not support the toll-free initiative. This argument is
ranked at the top among non-supporters (46% consider it a strong argument),
along with the argument that the initiative will make it easier for individuals
to keep in touch with each other (46%) and will generate less confusion on which
communities are subjected to long distance fees (47%).
Price
Sensitivity
General support
for the toll-free initiative decreases once a monthly surcharge for a 3-year
period is introduced. At the lowest price point tested - $0.25 – support for the charge stands at 63%, and drops
with each price increment. It has been calculated that the maximum monthly
charge that could be added to a residential monthly telephone bill, while
maintaining at least 50% support for the surcharge across all residents, is $0.70
($0.56 among core residents and $0.87 among non-core residents). The main
reasons for opposing the surcharge, even if it were $0.25, are that current
local phone rates are high enough, along with the view that calls within the
city should be (completely) free. In sum, support for toll-free calling is
strong, though not surprisingly some are reluctant at having to pay for it.
2.
Executive Summary for Business Segment
2.1
Background and Methodology
The City of Ottawa and Bell Canada have undertaken an initiative to enable toll-free telephone calls throughout the new City of Ottawa area. The objectives of this initiative include bolstering community cohesiveness, supporting local businesses, and increasing the appeal of Ottawa as a location for business. The City of Ottawa commissioned Decima Research to conduct a survey with residents and businesses within the new City of Ottawa boundaries, to ascertain price sensitivities. A total of 202 business telephone interviews were completed between January 31 and February 10, 2006. The interviews lasted an average of 10.5 minutes and were conducted with the individual in the organization responsible for telephone services. The sponsorship of the study was revealed (i.e. “we are calling from Decima Research on behalf of the City of Ottawa”).
Results
Awareness of and Reactions to Toll-Free Initiative
Businesses are generally aware (73%) that some residents and businesses must pay long distance calling charges when making calls within the Ottawa area. Among those aware of these charges, 41% are aware that the City of Ottawa and Bell Canada have embarked on an initiative to enable toll-free telephone calls throughout the entire new City of Ottawa.
Support for this initiative is very strong, with 94% of all businesses considering this initiative to be either an excellent (58%) or a good (36%) idea. The vast majority (87%) also either strongly or somewhat agree that it is important for their business to make toll-free calls anywhere within the new City of Ottawa area and 88% agree that it is important that customers can call their business toll-free from within the City of Ottawa area.
Reasons for endorsing the toll-free idea revolve mainly around the fact that the calling region is all within the same city, with a number of businesses (also) anticipating cost savings from a lack of long distance charges.
It should be noted that support for toll-free calling is high, despite a number of businesses foreseeing no benefit at all for their own business (23%) or a minor one at best (46%). Interestingly, businesses have indicated that City of Ottawa residents would be the biggest beneficiaries of this initiative – with 69% of businesses believing toll free calling will be a significant benefit for this group - followed by local businesses in general (62%), and their own business a distant third (31%).
Communications
There will be less confusion on which communities within Ottawa are subjected to long distance fees’ (75%) and ‘the new City of Ottawa is much larger geographically than before amalgamation and therefore the local calling area should keep pace with growth of the city’ (74%) are considered to be the strongest arguments for having toll free calling.
These arguments are followed closely by ‘toll-free long distance will benefit local businesses since customers across the region will no longer incur long distance costs when contacting a particular business’ (71%), ‘having toll-free long distance will help to reinforce perceptions of Ottawa as one city rather than separate communities’ (68%) and ‘eliminating long distance barriers will make it easier for friends and family to stay in touch with one another’ (68%).
Price Sensitivity
General support for the toll-free initiative decreases once a monthly surcharge for a 3-year period is introduced. At the lowest price point tested - $0.50 per line – support for the charge stands at 77%, and drops with each price increment, most notably at a $3.00 price point (40%). It has been calculated that the maximum monthly charge that could be added to a business monthly telephone bill, while maintaining at least 50% support for the surcharge across all businesses, is $2.40 per line.
The main reasons for opposing the surcharge, even if it were $0.50 per line, are that calls within the city should be (completely) free and businesses currently pay enough for local phone bill charges and taxes.
In summary, support for toll-free calling remains strong even when a surcharge is introduced, particularly at the lowest price point tested ($0.50 per line).
