ARCHIVED -  Telecom Order CRTC 97-1055

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Telecom Order

Ottawa, 5 August 1997
Telecom Order CRTC 97-1055
On 9 May 1996, Stentor Resource Centre Inc. (Stentor), on behalf of the Respondents, answered Mitel's application. Mitel provided its reply on 17 May 1996. Stentor filed further comments on 29 May 1996. Mitel provided a further reply on 3 June 1996. In a letter dated 25 June 1996, Stentor stated that the Respondents' disclosure of the interface specification was not complete. On 28 June 1996, Mitel responded, stating that Stentor's letter, including its intention to submit a revised disclosure document confirmed Mitel's allegations and emphasized the need for the Commission to grant the relief that Mitel sought in its application.
File No.: 96-2065
1. In its application, Mitel stated that the Respondents introduced the CNI feature to their respective Megalink services without providing proper advance notice to equipment manufacturers of the terminal-to-network interface specifications. Mitel stated that Notification of Network Changes, Terminal-to-Network Interface Disclosure Requirements and Procedures for the Negotiation and Filing of Service Arrangements, Telecom Letter Decision 94-11, 4 November 1994 (Letter Decision 94-11), requires that a carrier disclose the network interface at least six months before the new service is offered commercially as does CP-01. Mitel submitted that Northern Telecom Canada Limited (now Nortel), a Bell affiliate and its competitor, is the only equipment manufacturer aware of the interface specifications for the CNI feature because it supplies DMS 100 switches to the Respondents.
2. Mitel stated that Bell's application for the CNI feature as a Megalink option was approved by the Commission on 31 October 1995, while TCI's application was approved on 22 February 1996. Mitel stated that under the CP-01 disclosure process, it was entitled to disclosure of the interface specifications six months prior to commercial implementation of the service. In the case of Bell, the disclosure should have occurred at the end of April 1995. Mitel submitted that Bell did not provide any disclosure of the terminal-to-network interface specifications related to CNI. Mitel added that if it were to receive this information today, it would take at least six months before Mitel could begin manufacturing PBXs which would support CNI. Consequently, Mitel stated that its competitor, Nortel, was given at least a year's head start in respect of developing, testing and marketing products which support CNI. Mitel further stated that the combined effect of the Respondents' failure to follow the CP-01 disclosure process, together with Nortel's knowledge of the terminal-to-network interface resulted in loss of sales for Mitel and damage to Mitel's reputation as an equipment manufacturer.
3. Mitel submitted that the Commission, in Letter Decision 94-11, imposed an obligation on the Respondents to disclose modifications to terminal-to-network interface specifications for bottleneck services such as Megalink. Mitel stated its understanding that the Commission views CP-01 disclosure as the minimum requirement for bottleneck services since, in that Letter Decision, the Commission expressly contemplates the imposition of an even higher standard in respect of competitive services in which the telephone companies have a dominant position.
4. Mitel submitted that the Respondents: (1) failed to comply with the disclosure requirement set out in Letter Decision 94-11 and, hence, breached section 24 of the Telecommunications Act (the Act); and (2) conferred on Nortel an undue preference contrary to subsection 27(2) of the Act. Mitel added that, to the extent that the Respondents market Nortel's PBXs, they conferred an undue preference on themselves, contrary to subsection 27(2) of the Act.
5. Mitel sought orders from the Commission: (1) requiring the Respondents to disclose the terminal-to-network interface for the CNI feature; (2) directing the Respondents to comply with the CP-01 disclosure process in respect to all bottleneck services; (3) prohibiting the Respondents from marketing Nortel PBX equipment for a period of six months from the date of disclosure of the terminal-to-network interface; and (4) suspending for a period of six months that part of the Respondents' Megalink Service tariffs which permits the Respondents to provide the CNI feature.
6. In addition, Mitel requested that the Commission's Order requiring compliance with the CP-01 disclosure process be filed with the Federal Court and made an order of the Court pursuant to section 63 of the Act. In this respect, Mitel submitted that the Respondents have shown on a number of occasions that they are willing to disregard Commission orders. To support its claim, Mitel provided two examples of Bell's failure to properly disclose terminal-to-network interface specifications. The first example relates to Bell's Megalink service, which was approved by the Commission in 1992. Bell provided CP-01 Notice of Disclosure prior to the Commission's approval of the Megalink tariff. Mitel submitted that when it attempted to connect one of its PBXs (built to the specifications provided by Bell in its CP-01 disclosure) to the Bell network, it did not succeed because Bell failed to fully disclose all details of the terminal-to-network interface. Mitel stated that it was forced to spend an additional six months of design work on this particular PBX. Mitel's second example related to Bell's Microlink Service. As a result of a test of the "Ring Again" feature on the Mitel Radicall Set Handler, Mitel stated that it discovered that Bell's interface did not accord with the specifications disclosed by Bell in 1991. Mitel stated that Stentor subsequently informed Mitel that Nortel had issued an update of the specifications, but both Bell and Stentor failed to notify the industry of this update. Mitel indicated that Stentor subsequently filed a new disclosure notice to correct the situation.
7. Mitel submitted that although the Commission does not have jurisdiction to award damages, it has the power to file its orders with the Federal Court to help ensure compliance with those orders. Mitel stated that it considers this step necessary given the Respondents' demonstrated willingness to ignore Commission orders. Mitel submitted that if the Commission's Order were made an order of the Federal Court, Mitel could invoke that Court's processes to obtain swift, effective relief in the event the Respondents failed to provide proper disclosure in the future.
8. In its 9 May 1996 answer, Stentor submitted that the terminal-to-network interface specifications for the Megalink Service were disclosed by Bell in December 1990 in Interface Document ID-0005 (ID-0005), which indicates that the Megalink interface requirements are defined in the relevant portions of certain Nortel publications, including NIS A211-1, Version 3, "ISDN Primary Rate User-Network Interface Specification" (NIS A211-1) and, thus, the appropriate terminal-to-network interface specifications for CNI have been available to all terminal equipment manufacturers since 1990.
9. With respect to Mitel's first requested remedy that the Commission require the Respondents to disclose the terminal-to-network interface specifications for CNI, Stentor submitted that there was no need for the Commission to order any further disclosure, because the specifications are already available in the 1990 Nortel publication NIS A211-1 and Stentor has issued the disclosure notice TAPAC Bulletin No. 96-02 to formally update the list of supplementary services offered by the Respondents.
10. With respect to Mitel's second requested remedy that the Commission direct the Respondents to comply with the existing disclosure process, Stentor submitted that the Respondents are aware of their responsibilities and made every attempt to meet those responsibilities. Stentor added that the Respondents took the appropriate steps to remedy the fact that an update to the list of services supplementary to Megalink was not issued due to an administrative oversight and undertook a review of their procedures to prevent recurrence.
11. Stentor objected to Mitel's request that the order requiring compliance with the existing disclosure process be made an order of the Federal Court. Stentor submitted that it would be unnecessary and inappropriate to do this, in light of Mitel's failure to demonstrate that the Respondents deliberately avoided their disclosure responsibilities and in the absence of any evidence of repeated or deliberate non-compliance with Commission rulings.
12. Stentor opposed Mitel's third request that the Commission prohibit the Respondents from marketing Nortel PBX equipment for a period of six months from the date of disclosure of the terminal-to-network interface arguing that neither Nortel nor the Respondents enjoyed an undue preference. Stentor added that Mitel's proposal would unfairly prejudice Nortel customers and would severely damage Nortel's competitive position.
13. With respect to Mitel's fourth request, that the Commission suspend the tariff associated with the provision of the CNI feature for six months, Stentor submitted that this would unfairly harm customers who have subscribed in good faith, and have become accustomed to or dependent on, this functionality.
14. Stentor submitted that should the Commission determine that Mitel has been unduly disadvantaged, the Commission could, as a possible remedy, direct the Respondents to waive the service charge associated with subscribing to the CNI feature in connection with a Mitel PBX for a period of six months after the Commission issues its determination.
15. Mitel submitted in its 17 May 1996 reply that since 1990, Nortel released a supplement to Version 3, as well as Versions 4, 5 and 6 of NIS A211-1. In addition, Mitel identified at least 10 technical changes to the Network Name specifications between Versions 3 and 4. Mitel stated that there was considerable doubt as to whether proper disclosure of the network interface for CNI had been made by the Respondents and that it would be appropriate for the Commission to order the Respondents to provide full disclosure of the network interface for this feature.
16. Mitel submitted that a 6 month suspension of the tariff was necessary to prevent Nortel from continuing to enjoy the undue preference granted to it by the Respondents. Mitel submitted that if the tariff were not suspended, Nortel would continue to enjoy a competitive advantage over Mitel in light of the fact that Nortel's PBXs would support the CNI feature while Mitel's equipment would still be in the redesigning stage. Mitel added that if the CNI feature were to be suspended, the inconvenience to customers would be minimal.
17. Mitel stated that Stentor's suggested waiver of the service charge associated with the subscription to the CNI feature in connection with a Mitel PBX might be appropriate, but should be characterized as an additional remedy and not as a substitute for Mitel's requested remedies. Mitel submitted that by the time the CNI feature was implemented within Mitel's PBXs, the six-month waiver period would have expired and would be of little or no value to Mitel. Hence, Mitel argued, the waiver should be extended to 24 months in order to provide a meaningful remedy.
18. Mitel reiterated that it was necessary for the Commission to file its Order with the Federal Court in order to impress upon the Respondents the importance of the disclosure obligations. In addition, Mitel could invoke that Court's processes to obtain swift, effective relief in the event the Respondents failed to provide proper disclosure in the future.
19. Mitel submitted that in light of the fact that, since 1990, when Version 3 of NIS A211-1 was released, Nortel has released four BCS software loads and given that it is typical for software suppliers to support only the two most recent versions of software, Mitel found it difficult to believe that the Respondents were relying on an outdated software version to support the CNI feature. Mitel submitted that it would be appropriate for the Commission to direct the Respondents to disclose the network interface for CNI along with the identification of the BCS software version which is installed on their switches.
20. In its letter dated 25 June 1996 (the June Letter), Stentor indicated that, further to Mitel's comments concerning both the correctness of the disclosure of Version 3, and Nortel's release of further versions of the specification, Stentor had conducted a further investigation of the interface specification and had determined that Version 3 of the specification, as disclosed in TAPAC Bulletin No. 96-02, was incomplete.
21. Stentor admitted that later versions of the specification contained additional information that PBX manufacturers should take into account when developing equipment with CNI functionality.
22. Stentor stated that it was working with Nortel to identify the correct interface specification for disclosure and was expecting to submit a revised disclosure document to Industry Canada by 28 June 1996.
23. On 28 June 1996, Mitel stated that the contents of the June Letter, including Stentor's intention to submit a revised disclosure document, confirmed Mitel's allegations and emphasized the need for the Commission to grant the relief that Mitel sought in its application.
24. In the Commission's view, the June Letter indicates clearly that, contrary to Stentor's position throughout the proceeding, the Respondents had not provided full disclosure of the terminal-to-network interface specification needed to offer CNI. The Commission notes that, in Letter decision 94-11, it stated that:
"...the Commission has in the past required disclosure of terminal interface specifications as a precondition to approving certain tariff filings, based on a finding that disclosure is required to ensure that telephone companies do not confer an undue preference on themselves."
25. The Commission went on to state that its concerns regarding such undue preference continue to apply where bottleneck services are involved.
26. This case involves bottleneck services, namely, Megalink. As the record shows, tariffs for CNI were approved for Bell and TELUS in late 1995 and early 1996, respectively. However, as Stentor said in its June Letter, full disclosure such as to permit the competitive offering of CNI was not complete.
27. In the Commission's view, however, undue preference was not necessarily conferred upon a telephone company. TELUS has not offered terminal equipment since 1995. Bell offers Mitel PBXs along with Nortel PBXs in its line of terminal equipment.
28. The Commission is nonetheless of the view that the respondents did contravene subsection 27(2) of the Act in failing to conform with the requirements of Letter Decision 94-11. The Respondents' failure to disclose the Nortel-developed network-to-terminal interface specification for CNI on Megalink, meant that Nortel PBXs were able to accomodate CNI while Mitel PBXs were not, thus giving Nortel a competitive advantage. Therefore, it is the Commission's view that the Respondents conferred an undue preference on Nortel which developed the specification and which competes actively in the PBX market with Mitel. Moreover, they subjected Mitel to unjust disadvantage, as against Nortel, in PBX markets in both the TELUS and Bell territories.
29. The record of this proceeding shows clearly that the Respondents failed to provide sufficient information to allow Mitel to offer CNI. The Commission's view is that the Respondents did not, and perhaps still do not, take the disclosure and notice of disclosure rules sufficiently seriously, particularly given the importance of issues related to subsection 27(2) of the Act with respect to which the Commission expressed concern in Letter Decision 94-11. In the Commission's view, therefore, it would be appropriate to issue, and file with the Federal Court, an order directing Stentor member companies to adhere strictly to the requirements set out in Letter Decision 94-11, and to the procedures set out in CP-01.
30. With regard to the specific disclosure of the specification for CNI, the Commission notes that the June Letter indicated that Stentor expected to complete disclosure by 28 June 1996. Nevertheless, the Commission is of the view that it would be appropriate to direct Stentor to provide, within 20 days of this Order, evidence that full disclosure has been completed by all Stentor members regarding CNI. It would also be appropriate to require Stentor to provide assurances that full disclosure of all other Megalink-related network-to-terminal interface specifications by all Stentor members has taken place, and where this is not the case, to provide reasons.
31. With regard to the proposed six-month prohibition against the respondents' marketing Nortel PBX equipment, as stated above, TELUS no longer offers terminal equipment, so that the issue would apply only to Bell. Further, the Commission notes Stentor's contention that such a measure would unfairly prejudice customers using Nortel equipment; customers would suffer inconvenience or worse, through no fault of their own.
32. Regarding the proposal that the Commission suspend for six months the Respondents' Megalink tariffs for the provision of CNI, the Commission is of the view that this would be unduly onerous for those customers who have subscribed to the service and depend on it. As stated above, customers would find themselves caught between the two participants in this dispute, suffering the consequences of acts or omissions that they had no part in causing.
33. Nevertheless, the Commission is of the view that a remedy is called for in view of the unjust disadvantage that Mitel suffered in a market that is highly competitive. The Commission's view is that the waiver of service charges associated with CNI when used with Mitel PBXs would help redress the imbalance caused by the Respondents' failure to disclose sufficiently the CNI specification. Further, it is a remedy that would not, in any way, cause inconvenience or dislocation to customers.
34. The Commission notes Mitel's position that Stentor's proposed six month waiver from the point at which Mitel starts to offer CNI would not be sufficient. The Commission also notes Mitel's position that any such waiver should be in addition to the other remedies that it proposed and that it should last 24 months from the date of the Commission's Order. As noted above, the Commission is of the view that the Mitel-proposed remedies of suspending Bell sales of Nortel equipment and suspending elements of the Respondents' Megalink tariffs would not be appropriate. To redress the balance, however, the Commission is of the view that the Stentor proposed waiver of service charges should be applied for a period of 36 months from the date of the Commission's Order.
35. In light of the foregoing, the Commission:
(1) orders the Respondents to provide, within 20 days of the date of this Order, evidence that full disclosure by all Stentor members has been completed regarding CNI;
(2) orders the Respondents to provide assurances that full disclosure of all other Megalink-related network-to-terminal interface specifications has taken place for all Stentor members, and where this is not the case, to provide reasons;
(3) directs all Stentor member companies to adhere strictly to the requirements set out in Letter Decision 94-11, and to the procedures set out in CP-01; and
(4) orders the Respondents to waive for 36 months from the date of this Order, the Megalink CNI service charge, as applicable, when associated with Mitel terminal equipment.
The Commission will file this Order with the Federal Court.
Laura M. Talbot-Allan
Secretary General
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