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Consumer Groups demand monthly bill detail by Bell and Aliant – Supplementary comments

Ms. Diane Rheaume

Secretary-General
Canadian Radio-Television and Telecommunications Commission
Ottawa, ON
K1A 0N2

BY FAX AND EMAIL

Dear Ms. Rheaume:

Re: Follow-up to Decision CRTC 2002-34:

Monthly Detailed Billing Statements

Comments of The Consumer Groups on Bell and Aliant Interrogatory Responses

1. We are in receipt of responses from Bell and Aliant to Commission interrogatories on the issue of monthly itemized billing statements. Pursuant to the Commission’s procedural order of October 25, 2002, the following are The Consumer Groups’ comments on those interrogatory responses.
2. The Consumer Groups filed initial comments on the issue of monthly itemized billing by Bell and Aliant on July 12, 2002, and a supplementary submission on September 9, 2002. We do not intend to repeat here the comments made in those submissions.
3. In its interrogatories, the Commission asked the Companies, among other things:

  • to estimate and compare their costs of implementing various approaches to monthly itemized billing (no option, opt-in, opt-out);
  • for estimates of additional space/pages required as a result of mandatory monthly itemized billing, and to what extent such requirements could be mitigated;
  • to list all services subject to itemization on the customer bill as of May 1985 and Oct 2002; and
  • (Bell only) for an estimate of its proposed “draw down” of the deferral account in the event of mandatory monthly bill detail.

Comparative Analysis of Options re: Monthly Bill Detail

1. It is clear from Bell’s comparison of the three approaches to monthly bill detail that the “no option” approach to monthly bill detail is the least costly: “no option”: 1.6¢/NAS/mo., “opt-in”: 2.7¢/NAS/mo., “opt-out”: 3.7¢/NAS/mo.). All three approaches are presumably compared to the base case of Bell’s current policy, which is to provide a detailed monthly bill annually, whenever there is a change to the customer’s service, and verbally upon request.
2. The Consumer Groups note that Bell’s proposed “opt-in” approach to monthly bill detail would, in fact, cost the company significantly more than the “no option” approach, even assuming that Bell’s figures are accurate. For cost reasons alone, mandatory monthly bill detail is thus a sensible approach.
3. However, Bell fails to account for the recurring cost savings that would be achieved under the “no option” approach, due to fewer billing-related inquiries. As noted in Bell’s 2 July submission, currently, “customers can request and receive detailed billing information verbally at any time, simply by contacting Bell Canada’s business office”. One of the obvious advantages of providing bill detail on a monthly basis is that customers need not call the company in order to obtain this information.
4. The Consumer Groups therefore submit that the costs of Bell’s “no option” scenario are even lower than estimated by Bell.
5. It is not so clear from Aliant’s responses what the relevant estimated costs are for each scenario, on a per NAS basis. Aliant states that, under the “no option” approach, it would incur ongoing costs of app.$1.24/res NAS, but does not specify the time period to which this cost applies, and does not include the estimated one-time cost of $334K in this figure. Nor does Aliant provide comparable per NAS cost figures for ongoing costs of the other two scenarios.
6. Aliant’s estimates are deeply flawed in a number of respects. First, they fail to account for any recurring call center-related costs. As Bell’s figures show, these costs constitute the bulk of the opt-in and opt-out scenario costs. Moreover, as noted above, the “no option” approach to monthly bill detail would result in fewer billing inquiries, hence reducing this ongoing expense. By completely ignoring these costs, Aliant is able to make the astonishing suggestion that it would actually save money by implementing an opt-in approach to detailed billing.
7. Second, Aliant’s estimate of the costs of an opt-out approach strangely include “the increased cost of print impressions to provide monthly billing detail to the Company’s entire residential customer base” (emphasis added), less only the assumed 10% who opt-out. Yet, Aliant already provides monthly detailed bills to its Nova Scotia and PEI customers, hence would not be incurring new costs in order to maintain this practice. This was recognized in Aliant’s cost estimate of the “no option” scenario, which only included printing costs for NB and NL customers. Aliant’s own evidence is thus internally contradictory.
8. Third, Aliant’s assumed extra printing costs of $1.24 per NAS are prima facie excessive in comparison with Bell’s $0.14 per NAS estimate for the same expense, even taking into account Bell’s higher economies of scale.
9. Aliant bases its estimate of printing costs on the assumption “it will be necessary to print additional pages for approximately 95% of Aliant Telecom’s residential subscribers”. Yet, nowhere does Aliant explain how this can be the case. Indeed, a review of the sample bills provided by Aliant in Aliant(CRTC)-107 suggests that:

  1. in most cases, the additional bill detail can easily be accommodated on the first page of the bill together with the total bill summary, hence requiring no extra page at all; and
  2. the additional bill detail consumes only a fraction of a page in any case, and therefore cannot, by any reasonable estimation, require the printing of an additional page in 95% of subscriber cases.

10. Clearly, Aliant has grossly underestimated the costs of its favoured approach (opt-in), and highly exaggerated the costs of the “no option” approach to monthly bill detail. The Consumer groups respectfully submit that Aliant’s cost estimates are fundamentally flawed for the reasons stated above, and should not therefore be relied upon.

Material Changes since 1985

11. Both Bell and Aliant offer many more optional services with recurring monthly charges in 2002 than they did in 1985 when the Commission last considered the issue of monthly itemized billing. As a result, the value of monthly bill itemization to consumers is greater in 2002 than it was in 1985.
12. While there may have been reason in 1985 to allow less detail on monthly customer bills, the increasing array of optional services and the increasing consumer uptake of these services over the past 17 years warrants a re-examination of this policy. Clearly, the need for monthly bill detail is much greater now than it was in 1985.

Cost Recovery

13. Bell argues that it should be permitted to recover the incremental costs of monthly itemized billing from its deferral account, and in Bell(CRTC)-104, proposes an annual draw-down of the deferral account in the amount of $1.4m for this purpose.
14. The Consumer Groups oppose any such cost recovery allowance, for the reasons stated in paras.32-36 of their 12 July 2002 submission.

Mitigation of Costs

15. Both companies maintain that they can do nothing in terms of bill design to offset the need for additional space, and hence paper costs.
16. The Consumer Groups challenge this position of the companies, and suggest that there are indeed ways in which detailed bills could be both shortened and made more easily understandable. For example, Bell Canada need not include a line item for “Touch-Tone service”, which was standardized almost a decade ago. In addition, it is questionable whether the mandatory 911 surcharge needs to be broken down into its constituent parts. Both of these line items provide little, if any, useful information to consumers, and simply serve to clutter the bill. Itemization is only desirable where it provides meaningful information to the consumer.
17. Moreover, the Consumer Groups note that the companies frequently use space on their monthly bills to advertise optional services – space which would be better used to inform consumers of what they are paying for in the way of optional services.

All of which is respectfully submitted,

original signed

Philippa Lawson

Counsel for the Consumer Groups

cc: Aliant

Bell Canada

END OF DOCUMENT

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