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Ottawa, 23 December 1998
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Telecom Order CRTC 98-1343
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On 2 December 1998, TELUS Communications Inc. (TCI) filed an application under Part VII of the CRTC Telecommunications Rules of Procedure, in contemplation of a legal amalgamation of TCI, TELUS Communications (Edmonton) Inc., TELUS Edmonton Holdings Inc., TELUS Mobility Inc. (TMI), Canadian Mobility Products and TELUS Cable Holdings Inc. (the amalgamated entity), effective 1 January 1999. In its application, TCI sought a declaration, pursuant to section 48 of the Telecommunications Act (the Act), that the forbearance order which currently applies to TMI's mobile wireless operations in Alberta will continue to apply to the amalgamated entity. Alternatively, the application sought an order, pursuant to section 34 of the Act, forbearing from regulating the amalgamated entity's mobile wireless services.
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File No.: 8640-T10-01/98
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1.In a letter dated 4 December 1998, the Commission expressed the preliminary view that it would be appropriate to forbear from the amalgamated entity's provision of mobile wireless services. Interested parties were invited to comment on the Commission's preliminary view and TCI's application.
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2.Comments were received from Call-Net Enterprises Inc. (Call-Net) and Microcell Telecommunications Inc. (Microcell).
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3.Call-Net and Microcell opposed TCI's application for a declaration, pursuant to section 48 of the Act, that the forbearance order that currently applies to TMI's wireless operations in Alberta will continue to apply to the amalgamated company.
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4.Call-Net did not, however, oppose TCI's application for a section 34 forbearance order, given the Commission's ruling in NBTel Inc. - Forbearance from Regulating Cellular and Personal Communications Services, Telecom Decision CRTC 98-18, 2 October 1998 (Decision 98-18).
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5.Microcell did not oppose granting TCI forbearance on an interim basis, but urged the Commission to satisfy itself that the public interest is protected prior to issuing any forbearance order to the amalgamated entity.
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6.In its reply comments, dated 17 December 1998, TCI indicated that it would be willing to accept relief under the section 34 forbearance order application, and submitted that the Commission need not deal with the section 48 application in the context of this public process.
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7.In Regulation of Wireless Services, Telecom Decision CRTC 94-15, 12 August 1994 (Decision 94-15), the Commission found that the cellular market was sufficiently competitive to warrant forbearance pursuant to subsection 34(2) of the Act. Accordingly, the Commission forbore from regulating cellular services that were being offered through a structurally separate affiliate of a telephone company. In the case of cellular services offered in-house by a telephone company, the Commission stated that "conditional upon the development and implementation of the appropriate costing and marketing safeguards, it would be appropriate to forbear with respect to the provision of wireless services by the telephone companies".
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8.In Regulation of Mobile Wireless Telecommunications Services, Telecom Decision CRTC 96-14, 23 December 1996 (Decision 96-14), the Commission extended the forbearance regime in Decision 94-15 to include all mobile voice wireless telecommunications services that are connected to the public switched telephone network. In that Decision, the Commission restated its conclusion in Decision 94-15 not to extend forbearance in respect of such services provided in-house by a dominant telephone company providing primary exchange service.
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9.In Decision 98-18, the Commission found it appropriate to forbear from the provision of cellular/PCS services by NBTel Inc. (NBTel), which are not offered through a structurally separate affiliate. In that Decision, the Commission noted that it had already found the cellular/PCS market to be sufficiently competitive to protect the interests of users. The fundamental question in that case, then, was whether there were sufficient safeguards in place to warrant forbearance.
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10.In this regard, the Commission noted, among other things, that since Decision 94-15, it had imposed measures, such as the split rate base and the price cap regime, to limit the likelihood and incentive of cross-subsidization from utility to competitive segments and thus reduced NBTel's ability to pursue an anti-competitive cross-subsidy strategy.
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11.In Forbearance from Regulation of Mobile Wireless Services Provided by Municipally Owned Telephone Companies, Telecom Decision CRTC 98-19, 9 October 1998, the Commission further determined that, in light of the costing safeguards that were in place, it was not necessary to require structural separation prior to forbearance.
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12.As noted in Decision 98-18, the Commission has already found the mobile wireless market to be sufficiently competitive to protect the interests of users.
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13.With respect to the question of whether there are sufficient costing safeguards in place to warrant forbearance, the Commission notes that all of the amalgamated entity's utility wireline operations will be placed under price cap regulation effective 1 January 1999. In the circumstances, the Commission considers that there is no reasonable likelihood or incentive of cross-subsidization from the utility operations of the amalgamated entity to the competitive operations, including wireless services.
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14.The Commission further notes that TCI intends to maintain its wireless operations as a separate operating division within the amalgamated entity, the effect of which is that it will have accounting separations that isolate and identify TMI's revenues, expenses and investments from all other operations of the amalgamated entity. TCI also confirmed that the amalgamated entity will report transactions involving the wireless division and the utility segment in the same way that inter-corporate transactions are currently reported. TCI further confirmed that, for the purposes of reporting Split Rate Base results for the amalgamated entity, the wireless division's revenues, expenses and investments will be wholly assigned to the Competitive segment of the amalgamated entity.
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15.In light of the above, and based on the record of this proceeding, the Commission finds that it would be appropriate to forbear from the provision of mobile wireless services by the amalgamated entity, consistent with the degree of forbearance granted to the provision of public switched mobile voice services in Decision 96-14. In particular, the Commission will refrain from exercising its powers and duties under sections 24 (in part), 25, 29, 31 and subsections 27(1), 27(5) and 27(6) of the Act.
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16.The Commission considers that, consistent with Decisions 96-14 and 98-18, it is necessary to retain certain of its powers with respect to section 24 of the Act in order to maintain conditions to safeguard the confidentiality of customer information, and to impose conditions that may be necessary in the future. Accordingly, on a going-forward basis, the existing conditions concerning customer confidentiality must continue to be included, where appropriate, in all contracts or other arrangements with customers for the provision of the services forborne in this Decision.
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17.The Commission is of the view that, consistent with Decision 96-14, it is important to retain subsections 27(2), 27(3) and 27(4) in order to ensure that the amalgamated entity, among other things, does not unjustly discriminate against other service providers or customers, or confer an undue preference with respect to access to its network. The Commission considers it necessary to retain subsection 27(3) to the extent that it does not refer to compliance with any of the powers and duties forborne in this Decision.
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18.Based on the above, pursuant to subsection 34(1) of the Act, the Commission finds as a matter of fact that to refrain from exercising powers and performing duties under sections 25, 29, and 31 and subsections 27(1), 27(5) and 27(6) of the Act to the extent set out in this Decision with respect to the amalgamated entity's mobile wireless services is consistent with the Canadian telecommunications policy objectives. Pursuant to subsection 34(2) of the Act, the Commission finds as a question of fact that the provision of these services is subject to sufficient competition to protect the interests of users. Pursuant to subsection 34(3) of the Act, the Commission finds that to refrain from exercising the powers and performing the duties to the extent set out in this Decision would not likely impair unduly the continuance of a competitive market for these services.
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19.In light of the foregoing, the Commission directs that pursuant to subsection 34(4) of the Act, effective 1 January 1999, sections 24 (in part), 25, 29 and 31 as well as subsections 27(1), 27(3) (in part), 27(5) and 27(6) of the Act do not apply to the amalgamated entity's mobile wireless services, to the extent that they are inconsistent with the Commission's determinations herein.
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Secretary General
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This document is available in alternative format upon request.
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