ARCHIVED -  Telecom Order CRTC 97-1406

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Telecom Order

Ottawa, 1 October 1997
Telecom Order CRTC 97-1406
The dispute resulted from the activities of one or more individuals who accessed and programmed two of Cantel's voice mailboxes, each assigned to a cellular number, to respond with the simulated "1" tone and word "yes" in timed sequence in order to authorize payment of third party charges when queried by Bell's automated operator services. The individuals were identified and were later charged with the offence of theft of telephone services under the Criminal Code of Canada.
File No.: 94-0636
1. In its application, Cantel stated that, on 3 October 1991, it advised Bell of its concerns about wireline telephone customers fraudulently charging calls originating and terminating on Bell's network to Cantel's cellular numbers. Cantel advised Bell that it could no longer accept third party charges to cellular numbers and requested that Bell change its service to bar third party charges being placed against cellular numbers.
2. Cantel submitted that Bell's ability to bill Cantel for telephone calls is set out in, and restricted by, the Bell/Cantel Interconnection Agreement (the Interconnection Agreement). Cantel noted that the Interconnection Agreement governs Cantel's responsibility for long distance charges originating or terminating on Cantel's network, but routed on Bell's network. Cantel noted the terms of the Interconnection Agreement which provide for Bell's billing to Cantel of toll charges for use of Bell's network of wireless-to-wireline and wireline-to-wireless but not of wireline-to-wireline calls. Cantel said that, as these calls were all wireline-to-wireline on Bell's network which were billed third party to a Cantel assigned number, the interconnect agreement did not permit Bell to bill for the calls.
3. Cantel stated that, in response to Cantel's request to block third party billing from Cantel numbers, Bell said that it could put numbers, contained in dedicated NXXs and 1,000 number blocks into its billed number screening (BNS) database; numbers not contained in dedicated NXXs or 1,000 blocks, which included the Cantel numbers that were subjected to the fraudulent billing could not be included in the BNS database, due to space and other BNS database limitations. Cantel also stated that Bell had indicated that it would assume liability for third-party billed calls where the subscriber had no knowledge of the call, for example, where calls from non-Cantel subscribers are charged to inactive Cantel numbers.
4. Cantel stated that it had accepted Bell's proposed solution by letter dated 30 January 1992. Cantel noted that, by letter dated 17 February 1992, Bell confirmed that it had blocked the ability to bill third number charges to Cantel numbers in identified 1,000 number blocks. Cantel stated that Bell also noted that it would not accept liability for all third party charges in all instances where Cantel's subscriber denied knowledge of the call, for example, for third party charges from coin telephones and hotels which were validated by Bell's operator before the call was connected. Bell also stated that it would not accept liability when the call was originated by a Cantel subscriber.
5. Cantel noted that it had almost 8,000 numbers associated with the Oshawa interconnect, but only one block of 1,000 numbers. Cantel stated that Bell, not Cantel, is responsible for assigning cellular numbers outside 1,000 blocks or dedicated NXXs, and that it was open to Bell to place Cantel's numbers in larger blocks by reserving 1,000 block numbers for cellular usage.
6. Cantel stated that, in the period 1 June to 31 July 1993, it was billed approximately $581,638, plus applicable taxes and associated late payment charges, for calls placed on Bell's network, but charged to the two Cantel numbers, using Bell's automated operator service for charging calls to third party numbers. Cantel stated that all of the calls originated and terminated on the wireline network, and that neither Cantel nor any of its customers agreed to accept the charges for any of the calls or had knowledge of the calls being placed. Cantel therefore disputed the charges in accordance with the procedures in place between the two companies. Cantel stated that it and Bell had been unable to reach an agreement on responsibility for the charges.
7. Cantel stated that fraud was perpetrated on Bell's automated operator service, and noted that Bell subsequently apprehended and prosecuted the culprits. Cantel expressed the view that Bell's automated operator service was "the other culprit in this instance", since it was incapable of distinguishing mechanized responses from real human beings and is apparently incapable of monitoring extraordinary volumes of charges to single third party numbers.
8. Cantel submitted that it was neither fair nor consistent with Bell's stated policy (in its letter of 10 January 1992) for Cantel to be charged for the calls in question, particularly in light of the following: (1) the calls originated and terminated on Bell's network; (2) Bell's own number assignment practices; (3) the caller was fraudulently attempting to charge the call to a third party's number; (4) Bell's automated operator system could not distinguish between a mechanized response and a human being; (5) Bell's system was unable to monitor the large volume of calls being charged or Bell was negligent in not reporting the large volume to Cantel; (6) the interconnection agreement only requires Cantel to pay for calls that either originate or terminate on its network, which was not the case in this instance; and (7) Bell's policy was to assume all liability when Cantel or its subscribers denied all knowledge of a call.
9. Bell filed its response on 6 April 1994. Bell stated that the amount in dispute was currently $724,630, including GST, but excluding late payment charges.
10. Bell stated that Cantel lodged its first complaint with regard to third party charges in late 1991. Bell noted that, at that time, it did not offer a validation service that would have permitted it to deny third party charges to Cantel's numbers but that it offered to include numbers in 1,000 blocks dedicated to Cantel in the BNS database. Bell submitted that Cantel had been clearly informed that, because of limitations due to the size of the database, only numbers included in dedicated 1,000 number blocks could be included in the database. Bell submitted that it was in Cantel's power to request and pay for dedicated 1,000 number blocks, but that Cantel chose not to do this. Therefore, according to Bell, thousands of numbers had been assigned outside blocks of a thousand numbers.
11. Bell stated that it was not aware of the fraudulent activity of the individuals who used Cantel's voice mail system to place calls billed to third number calls, and that Cantel was aware that Bell's systems did not permit the detection of such fraudulent activities. Bell stated that its policy was to assume liability for fraudulent calls once advised of them, and that it cannot be responsible for calls placed while it is unaware of fraudulent activities.
12. Bell stated that the monies claimed by it were not based on the Interconnection Agreement, but on Special Facilities Tariff (SFT) Item G-250(a)(1)c which states that:
"In accordance with Article 9 of General Tariff Item No. 10, the Cellular Service Operator is responsible for all charges levied in respect to all calls associated with any of the seven-digit telephone numbers so assigned and placed in service."
13. Bell submitted that Cantel is responsible for the charges billed to its telephone numbers under Article 9 of the Terms of service (the Terms), which states:
"9.1 Customers are responsible for paying for all calls originating from, and charged calls accepted at, their telephones, regardless of who made or accepted them."
14. Bell stated that the calls in question were accepted at Cantel's telephone numbers, through the use of Cantel's voice mail system.
15. Bell disagreed that the fraud was perpetrated on Bell and not on Cantel. Bell stated that the calls were charged to Cantel's telephone numbers because Cantel had configured its network so that calls to the numbers assigned to it could be routed to an electronic voice mail system, and the voice mail system was configured to accept/authorize charges for third party billed calls. Bell stated that therefore, Cantel was involved in the routing of the verification requests placed by Bell, and that clearly, Cantel was in control of the voice mail system that was used to authorize billing to the Cantel account.
16. Bell submitted that the charges are properly claimed and requested that the Commission order Cantel to pay the monies claimed, along with all appropriate taxes and late payment charges.
17. In its reply dated 18 April 1994, Cantel stated that its only involvement was that the caller sought to charge the calls to cellular numbers by manipulating voice mailboxes associated with these numbers. Cantel stated that, for its part, it did not operate a third party billing service, and that it sought to have Bell block this type of call from being charged to cellular numbers. Cantel submitted that a cellular customer cannot be said to have "accepted" charges which this customer has no knowledge of, especially when the "acceptance" is through fraud and deceit from a wireline customer. Cantel submitted that, in these circumstances, it appeared clear that the fraud had been perpetrated by a Bell customer, using Bell's services, to defraud Bell's toll business.
18. With regard to Bell's submission that it was in Cantel's power to order blocks of a thousand numbers, Cantel stated that it had asked Bell to implement a complete solution to the third party billing problem, and Bell had provided only a partial solution. Cantel reiterated that its agreement with Bell does not cover the provision of third party billing. Rather, third party billing is a Bell service that is outside the scope of Bell's interconnection arrangement with Cantel.
19. Cantel disputed Bell's assertions that it was not aware of the fraudulent activity and that Cantel was aware that Bell's systems did not permit the detection of such fraudulent activities.
20. On 27 May 1994, Bell submitted information that responded to information that, it said, Cantel had raised for the first time in its reply. Among other things, Bell provided more information on number assignments to Cantel, and stated that there is no systematic monitoring of the network for toll fraud.
21. Cantel responded on 14 June 1994, submitting that Bell ultimately assigns numbers and reiterated that it had taken corrective action as soon as it had learned of the fraud.
22. The Commission notes that the Interconnection Agreement states clearly the types of calls for which charges to Bell are payable. These calls must all originate or terminate on Cantel's network, consistent with Radio Common Carrier Interconnection With Federally Regulated Telephone Companies, Telecom Decision CRTC 84-10, 22 March 1984 (Decision 84-10) in which the Commission stated that:
"In all cases, mobile systems that choose to offer alternate intercity routing will not be permitted to carry fixed land line station to fixed land line station traffic. Only mobile to mobile calls, or calls initiated or terminated on a mobile terminal will be permitted to be carried on interexchange facilities between mobile systems."
23. While Bell argued that the monies it claims were based not on the Interconnection Agreement but on SFT Item G-250(a)(1)c, which, as quoted above, requires the cellular operator to pay charges associated with the assigned number, the Commission notes that G-250(a) of that same SFT states that:
"The provision of cellular service is also subject to the terms and conditions detailed in a cellular interconnection agreement between the Company and a Cellular Service Operator."
24. Further, the telephone numbers that Cantel leases from Bell, including those at issue, are not for the purpose of making conventional wireline telephone calls but rather are integral to, and for the purpose of, the interconnection of Bell's and Cantel's networks. Thus they should be looked at in the context of interconnection and the Interconnection Agreement which governs. As the Interconnection Agreement states in section 3:
"Bell will provide to Cantel ... those facilities and arrangements described in Bell's Cellular Access Service tariff which are necessary to establish the physical interconnection of Cantel's system with Bell's system."
25. The foregoing sets out calls that cellular operators may or may not carry. It also points out, specifically, call types to which Bell tariff rates are applicable, pursuant to the agreement. Wireline to wireline calls are not included.
26. In the Commission's view, SFT Item G-250(a)(1)c, which refers to Cantel's obligations under Article 9.1 of the Terms, does not override the Interconnection Agreement. Rather, the cellular operator is responsible for charges associated with the cellular number for calls that the Commission has permitted the cellular operator to carry, pursuant to Decision 84-10 and the Interconnection Agreement. When it approved the SFT, the Commission was not approving charges associated with calls that it would not permit cellular operators to carry.
27. Bell argued that, pursuant to Article 9.1 of the Terms, Cantel is liable because the person perpetrating the fraud was able to fix Cantel's voice mail system to interface with Bell's automated operator system to permit the third party billing at issue. Article 9.1 of the Terms states that:
"Customers are responsible for paying for all calls originating from, and charged calls accepted at, their telephones, regardless of who made or accepted them."
28. In the Commission's view, the use of the word "who" indicates clearly that Article 9.1 of the Terms contemplates that a person must accept such charges. This is consistent with the proposition that only a person is able to decide whether the charge should be accepted or whether fraud is occurring. In the Commission's view, this is borne out by Bell's statement in its letter covering Tariff Notice 4432, dated 16 July 1992. The proposed tariff was to provide for third-party billing from pay telephones. The letter states that:
"In order to curtail fraudulent use of this option, every call made under such conditions will be verified and a person at the service to be billed will have to agree to accept the charges."
29. The Commission notes, further, that this problem would not have arisen before Bell's decision to implement automated operator services. Previously, when there were live operators, this type of fraudulent billing would have been virtually impossible. The Commission is of the view that where the telephone company makes such changes to its operating systems, it should make every effort to ensure that the changes do not increase the opportunities for fraud. The Commission notes that Bell recognized the risk of third party fraud when it sought to protect itself regarding pay telephone calls that are billed third-party by using live operators and live persons in all such cases.
30. In the Commission's view, it would be inappropriate for Bell to protect itself from fraud by restricting third party billing to a live person for pay telephone calls while applying a different, less stringent standard - i.e. acceptance by a machine - such as to permit, as in Cantel's case, fraud to take place.
31. In light of the above considerations, the Commission is of the view that, Article 9.1 of the Terms means that a live person must decide, in real time whether the third party billing of a call will be accepted at a telephone. "Acceptance" by means of what is, in fact, an exchange of data between an automated operator system and a voice mail system that has been programmed by someone with the necessary delays and the answer "yes" to cause the automated operator system to conclude that the third party charge has been accepted is not what the Commission intended to be legitimate acceptance when it approved Article 9.1 of the Terms.
32. Regarding Bell's position that it made every reasonable effort to protect Cantel once it learned of the fraud being conducted, the Commission's view is otherwise. Bell's position suggests that, in view of the Bell offer to put dedicated NXXs and dedicated 1,000 blocks into the BNS database, but not other Cantel assigned seven-digit numbers, it behooved Cantel to refrain from using any numbers other than those within dedicated NXXs or 1,000 blocks and that, if Cantel did use such numbers, it would be given no fraud protection. However, it is to be noted that the SFT provides for the lease to Cantel of seven digit numbers that are not part of dedicated NXXs or 1,000 blocks. It is to be inferred, therefore, that Bell was taking the position that it would protect Cantel with respect to some tariff services, but not others that, for Cantel's purposes, serve exactly the same function.
33. Bell maintained that Cantel's voice mail system is configured to accept third-party billing. However, the Commission notes Bell's letter of 1 September 1993, filed as Attachment 6 to Cantel's application, which states that:
"It is apparent that the security of your [Cantel's] system has been breached. It is Bell Canada's position [that] the security of a customer's system is their responsibility as is any toll charges accepted by their system."
34. In the Commission's view, this comment is not consistent with Bell's position that Cantel's voice mail system has been configured, at least by Cantel, to accept third party billing. If Cantel's security was breached, the voice mail system was not originally configured to accept these calls, as Bell suggests; rather, those committing the fraud found ways of doing what was not intended to be permitted. Further, Cantel alerted Bell when it first learned of the fraud. This was not a case in which the customer was implicated in the fraud or let charges accumulate before objecting to them.
35. For all of the above reasons, the Commission is of the view that Bell should bear responsibility for the charges.
36. In light of the foregoing, the Commission orders that:
Bell credit Cantel's account for any and all monies charged in respect of calls billed third party to Cantel telephones via voice mail.
Laura M. Talbot-Allan
Secretary General
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