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Order CRTC 2000-60

Ottawa, 31 January 2000

First Canadian Telecom alleges anti-competitive behavior by Bell Canada in payphone marketplace

File No.: 8622-F8-01/99
The Commission has determined there is insufficient evidence to conclude that Bell Canada has engaged in anti-competitive behaviour for basic pay telephone service.
First Canadian Telecom alleged that Bell Canada was trying to win back payphone location service providers in violation with the rules. The alternative payphone service provider was seeking compensation from Bell Canada, as well as an order declaring that the telephone company breached the Telecommunications Act.
While the Commission did not find Bell Canada at fault, clearer national winback guidelines have been written into this order to help equitable competition unfold in the emergent pay telephone industry.
The Commission will launch a future proceeding to examine issues arising from payphone competition. In the meantime, payphone service providers are encouraged to ensure all location providers are aware of any special charges that may arise from premature termination of contracts.
1. On 15 February 1999, First Canadian Telecom Inc. (FCT), a competitive pay telephone service provider (CPTSP), filed a Part VII application alleging that Bell Canada impedes or obstructs the installation and rollout of FCT's pay telephone equipment.
2. FCT requested that Bell be ordered to cease and desist from:

a) cutting and tampering with the inside wiring of FCT's location providers;

b) wrongfully removing concrete pad fixtures on which Bell's telephone booths were affixed; and

c) contacting location providers who have signed valid letters of authorization and agency with FCT.

3. In addition, FCTrequested that:

d) the Commission order compensation by Bell totalling $1,218.80 for 22 instances where Bell failed to deliver pay telephone basic access line service (PAL) on time.

e) Bell be directed to provide at least 48 hours notice where it is unable to meet the date specified in the service work order; and

f) the Commission issue a declaratory order stating that Bell has subjected FCT to unjust discrimination and unreasonable disadvantage in the provision of PAL service and Bell has conferred an undue preference on its own pay telephone service operations in contravention of subsection 27(2) of the Telecommunications Act.

Payphone competitors receive local access via incumbent or alternative carriers

4. CPTSPs may acquire access lines from an incumbent local exchange carrier (ILEC) using PAL tariffs, which were given interim approval effective 13 November 1998. Alternatively, a CPTSP can obtain access from a competitive local exchange carrier (CLEC).
5. When a CPTSP orders a PAL from an ILEC, current practices include verification of the order to ensure it contains consent from the location provider for the CPTSP to act on its behalf with the ILEC. CPTSPs generally use a Letter of Authorization (LOA) for this purpose. Since pay telephones are usually installed on private property, ILECs and CPTSPs enter into compensation arrangements with location providers by signing contracts for a specified period of time. These contracts often include termination clauses and associated charges. When a location provider terminates an existing ILEC contract, the telephone company proceeds to remove its payphones and install a PAL.

Tampering with the inside wiring at FCT location provider premises

6. FCT noted 13 separate instances over a one-month period where it encountered problems with Bell's existing inside wiring. FCT submitted that when the technicians remove Bell's pay telephone equipment, they also remove the location providers' telephone inside wiring, the hydroelectric wiring and/or jacks that provide power to the pay telephones at the site. FCT noted occasions where technicians leave wiring in place, but cut it at various places between the Bell demarcation point and the installation site. Thus the wiring is rendered inoperative and forces FCT to re-install the customer's inside wiring. In other instances, Bell technicians have cut back the telephone and/or hydroelectric inside wiring at the pay telephone site to such a degree that the wiring is recessed into the wall (or floor) behind (or beneath) the pay telephone site.
7. Bell noted that it has no obligation to provide FCT any electrical equipment or wiring as it is not part of the PAL service.
8. FCT replied that the typical practice in other jurisdictions where pay telephone competition exists is to disconnect the electrical wire at its source and to cap both the source and terminating ends of the wire. FCT submitted that this practice should apply to Bell.
9. The Commission notes that it has not received any recent complaints with respect to the concern expressed by FCT and is of the view that the incidents alleged by FCT do not constitute an ongoing problem. Accordingly, the Commission need not take any specific action.
10. However, the Commission also considers that in order to facilitate the orderly rollout of pay telephone competition, when Bell chooses to leave existing wiring in place, it should leave it in such a manner that another service provider may easily reconnect it, while still ensuring that the disconnected wiring presents no safety concerns.

Wrongful contact with location providers

11. FCT submitted that Bell's Carrier Services Group (CSG) should not be allowed to disclose FCT's PAL service order information to Bell's pay telephone business office as this permits Bell to promote its own competitive pay telephone operations and winback location providers. By doing so, FCT argues that Bell's practices are contrary to section 27(2) of the Telecommunications Act and to Bell's CSG procedures and employee code of conduct.
12. In response, Bell noted that it described in detail the manner in which it deals with orders for PAL service from CPTSPs in its response to interrogatory The Companies(CPC)29Jan99-6 PAL. Bell specifically identified that for PAL "in" orders requiring the removal of a Bell pay telephone in service, the CSG will issue an "out" order to the pay telephone business office to remove the existing pay telephone, lines and, where applicable, other fixtures e.g., booth and concrete pads. If the location provider has executed a term agreement with Bell that is still in effect, the business office will contact the location provider to advise that termination charges apply. Upon confirmation by the location provider that it wishes to proceed, Bell will process the CPTSP order and, upon payment of all appropriate charges by the location provider, the "out" order will be processed and Bell would proceed with the "in" order of PAL.
13. Bell indicated that it continues to adhere to this process and that the procedures are neither anti-competitive nor do they result in unjust discrimination contrary to section 27(2) of the act. In addition, Bell submitted that these procedures are not contrary to Bell Canada's CSG procedures and employee code of conduct.
14. In Bell's view, FCT is experiencing problems due to the fact that it fails to notify location providers, when it induces them to terminate their existing contracts with Bell, that termination charges may apply. Once location providers are advised that charges will apply, they may decide to allow their existing contracts to expire at the end of the term.
15. By letter dated 5 March 1999, the Commission directed Bell to comment on whether the competitive winback guidelines for ILECs and CLECs set out in the Commission's letter of 16 April 1998 should apply in this situation. These guidelines prohibit the ILECs from attempting to win back a customer for a period of three months after the customer's service has been completely transferred to another local service provider, with one exception: ILECs are allowed to win back customers who call to advise them that they intend to change local service providers.
16. The winback guidelines were implemented in order to facilitate CLEC entry into the local market. The Commission considered that, without such guidelines, ILECs would potentially be able to win back customers even before local service was effectively transferred to a CLEC because ILECs control and have access to customer specific information, such as leased loops, directory listings, and 911 information.
17. Bell submitted that the situation alleged by FCT is materially different from the situations subject to the Commission's existing winback guidelines in a number of ways. First, the business relationship between Bell and the location provider is not one of supplier and customer as is the case between an ILEC and its customer. The location provider is not Bell's customer but provides the company with space and associated cleaning and upkeep for its pay telephone locations. Users of the pay telephone are Bell's customers. Secondly, there is no change in service provider for access service. Thirdly, should a location provider choose to terminate the contract, for whatever reason, Bell is entitled to recover its termination charges.
18. According to Bell, it is reasonable to expect that it will advise the location provider upon termination of an unexpired contract that termination charges will apply. In addition, the company is of the view that it is entitled to determine the reasons for termination and to attempt to address the location provider's concerns. In Bell's view, it would be inappropriate to attempt to draw an analogy between winback activities and notification of termination charges or between winback activities in the local exchange market and contact with location providers in the pay telephone marketplace. Bell submitted that it does not provide a service to the location provider nor is the location provider a customer.
19. FCT noted that an LOA represents the location provider's consent for Bell to deal directly with FCT regarding the provision of pay telephone services at the location provider's premises. When there is a valid LOA in place, FCT stated that there is no need for Bell to initiate contact with the location provider in question. FCT submitted that Bell should direct all inquiries to FCT, even if it is determined that there is an existing contract between the respondent and a location provider that has also entered into an LOA with FCT.
20. In FCT's view, Bell's disrespect of the LOAs and subsequent use of customer confidential information has been used to:

(a) discourage location providers from entering into contracts with FCT;

(b) win back location providers; and

(c) threaten the location provider in question with the withdrawal of other services directly provided by Bell.

21. Accordingly, FCT supports application of the Commission's competitive winback guidelines to Bell's activities in the pay telephone market regardless of the fact that location providers are not "customers" of Bell.
22. FCT argued that the principle of the Commission's winback decision was to prevent Bell and other ILECs from using their control over and access to customer specific confidential information to win back customers even before service is transferred from one service provider to another. In addition, FCT noted that another objective of the winback guidelines, cited by the Commission, was to facilitate CLEC entry into the local market. In FCT's view, these same principles apply equally to the pay telephone market.
23. The Commission notes that Bell's business office contacts location providers in order to notify them that termination charges may apply upon disconnection of service and to verify the authenticity of an LOA.
24. The Commission further notes Bell's assertion that the location provider is not its customer but does not agree that this should be a substantive reason to not apply the winback guidelines to Bell's pay telephone service. Bell would not be providing pay telephone service at commercial premises without entering into contracts with location providers. Without the location provider, Bell would not have customers for its pay telephone service.
25. In its comments with respect to a Part VII application by Goldiphones Inc. dated 23 March 1999, Bell stated that in virtually all cases, location providers are business people who are familiar with the practice of executing contracts with suppliers, customers, landlords, tenants, etc. It is typical that these types of contracts contain termination charges for early termination. The binding nature and term of the agreement are part of the contract that the location provider signs. As such, they are very clearly informed of these conditions.
26. With this in mind, the Commission considers that location providers as business people should be aware of termination charges and that Bell should be satisfied with that assumption. Accordingly, Bell's contention that it needs to remind location providers of these conditions is unfounded.
27. In Bell's Primary Interexchange Carrier/Customer Account Record Exchange (PIC/CARE) Access Customer Handbook, consumer safeguards were established to protect the end-user from unauthorized changes to its primary interexchange carrier. Section 8.3 states that end-user order confirmation is required prior to submitting a PIC subscription order to the Bell Canada CSG and that one method to show such confirmation is to obtain the end-user's written order confirmation.
28. The Commission considers that the LOA presented by a CPTSP to Bell represents an equivalent confirmation of a location provider's request to discontinue its Bell pay telephone service as the end-user confirmation called for in the PIC procedure. In the Commission's view, the LOA is sufficient authority to cause Bell to institute procedures to take out its pay telephone and provision a payphone access line to the CPTSP. In addition, the Commission considers that it is inappropriate for Bell to call the location provider to verify the authenticity of the LOA. As noted above, location providers are generally business people who can be assumed to be aware of the terms and conditions of any agreements they enter, including the LOA with a CPTSP. Accordingly, there should be no need for such verification which provides Bell with the opportunity to dissuade location providers from migrating service by negating the consent already provided by the LOA and causing unnecessary delays in the processing of primary access line orders. These procedures could place FCT, as well as other CPTSPs, at a significant disadvantage that may result in lost contracts with location providers.
29. The Commission notes that, following a dispute raised at the CRTC Interconnection Steering Committee (CISC - recently renamed CRTC Industry Steering Committee), winback guidelines were imposed on local exchange carriers a year after competition had been in place. To prevent anti-competitive behaviour from occurring, similar winback guidelines modified for the pay telephone market should be imposed on all ILECs to facilitate competitive entry. These modified winback guidelines will balance the public interest concerns of customers and location providers, as well as the competitive concerns of FCT, other CPTSPs and the ILECs.

Failed payphone access line installation

30. FCT identified three types of delays for delivery of PAL service to certain payphone locations on the date specified in the work order:
a) failure to remove Bell payphone equipment,
b) failure to establish a demarcation point; and
c) failure to establish a payphone access line.
31. FCT stated that it has encountered one or more of the foregoing delays in approximately 30% of its service provider locations. FCT submitted that this unacceptably high level of service delays suggests that Bell is engaged in a pattern of conduct designed to impede FCT's entry into the market.
32. FCT noted that Bell's failure to remove pay telephone equipment and install PAL service on the agreed installation date has caused numerous consequences for FCT. For one, FCT has had to deal with irate landlords and building owners who have been forced to attend and then re-attend at premises scheduled for removal and/or installation of pay telephones. Of more significance is the resulting termination of FCT contracts by location providers.
33. Bell noted that in the month of January, where it appears that many of FCT's due dates were missed, a record-setting winter storm played havoc with the company's ability to meet due dates for all services in the Greater Toronto Area.
34. Bell submitted that timely provision of service will rely, to a considerable extent, upon the CPTSP's work with the location provider to ensure that access is available and that the location provider is fully informed of, and fully consents to, the arrangements offered by the CPTSP.
35. Bell identified four reasons for missed payphone access line due dates:

a) the location provider was not available or did not have access to the telephone terminal room;

b) the location provider changed its mind and decided not to take a pay telephone from a CPTSP;

c) the location provider was not aware that work activity was required and requested Bell technicians to leave the premises; and

d) the location provider requested time to confirm with the partners, associates, principals, or employees before proceeding with a change in service provider.

36. Further Bell admitted that in the case of a new service offering, the company's own processes and systems typically require fine-tuning. Bell added that FCT could improve its processes and that such improvement will assist the company in meeting FCT's service expectations.
37. FCT stated that it is extremely unlikely that the reasons cited by Bell apply in the case of service delays described in the supporting evidence provided as Exhibit A to FCT's application. FCT noted that its senior officers dealt directly with each of these location providers and it was clear that each understood exactly what would occur when Bell's pay telephone service was migrated to FCT.
38. In addition, FCT submitted that Bell's arguments regarding the impacts of the January snowstorm are equally lacking in substance. FCT noted that while it supplied Bell with its forecast of its service requirements at the time it placed its first order for PAL service with Bell, FCT has now been advised by Bell that it can only process six payphone access line installations a day.
39. The Commission notes that FCT's application was received only three months after Stentor's payphone access line tariff was given interim approval. The Commission also considers that the record winter snowstorm that hit Toronto in January 1999 made it extremely difficult for Bell to meet any installation dates, let alone installation dates at FCT location sites. Based on the record of this proceeding, the Commission is of the view that requiring the credits that FCT requested, during the initial months of a new service is not warranted. The Commission notes, in any event, that there was little evidence presented to justify the amount sought.
40. The Commission notes Bell's admission that its processes could be improved as is the case with many new service offerings. The Commission also notes that FCT did not concede any misunderstanding by its location providers. While this may be the case, the Commission considers that such misunderstandings are a possible reason for some missed installations.
41. With respect to FCT's second request that Bell provide at least two days notice if it is unable to meet a specific work order, the Commission finds this to be an effective way to prevent needless visits and time wasted by location providers.
42. In addition, the Commission notes that the recommendations regarding application of the winback guidelines to Bell's pay telephone division will prevent Bell from rejecting work orders on the basis that an existing contract is in effect. Thus, many of the delays that FCT has experienced to date should be prevented from occurring in the future.
43. With respect to FCT's request for an explicit declaratory order that would reprimand Bell for subjecting FCT to unjust discrimination and unreasonable disadvantage in the provision of PAL service, the Commission does not consider it appropriate to take such action at this time. The Commission did not direct Bell or other ILECs to follow specific procedures when confronted with an incoming payphone access line order from a competitor. Furthermore, the application of the winback guidelines should ensure an equitable competitive environment for CPTSPs.
44. Considering the above, the Commission:

a) imposes the following winback guidelines on all ILECs for the provisioning of PAL service:

  • the Carrier Services Group is to consider a Letter of Authorization from a CPTSP to be sufficient confirmation of a location provider's authorization;
  • upon receipt of an LOA, the CSG is to proceed with an order to remove any applicable pay telephones and an order to install a payphone access line;
  • the CSG shall refrain from notifying the business office until a payphone access line has been provisioned;
  • the business office may, at that time, bill the location provider for outstanding charges;
  • except in response to a call from a location provider (see below), the business office may not contact or attempt to win back the location provider for a period of three months after a PAL has been provisioned;
  • when service is to be provided by a CLEC, the winback timeframe commences once the "out" order (removal of pay telephones) has been completed; and
  • the ILEC may win back location providers who call to advise that they intend to change pay telephone service providers.
The Commission also:

b) directs Bell, when the company chooses to leave existing wiring in place, to leave the wiring in such a manner that another service provider may easily reconnect it, while still ensuring that the disconnected wiring presents no safety concerns;

c) directs Bell to provide at least two days notice if it is unable to meet a specific work order;

d) directs FCT to notify its location providers of the proposed installation date and approximate time to ensure that Bell technicians have access to the premises;

e) denies FCT's request for compensation; and

f) denies FCT's request for an explicit declaratory order.

Secretary General
This document is available in alternative format upon request and may also be viewed at the following Internet site: http://www.crtc.gc.ca
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