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ARCHIVED - Telecom Decision CRTC 2004-80

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Telecom Decision CRTC 2004-80

  Ottawa, 9 December 2004
 

Aliant Telecom, Bell Canada, MTS Allstream and SaskTel - Forbearance from section 29 of the Act for agreements related to forborne domestic toll services and forborne interexchange private line services

  Reference: 8640-B2-200400226
  In this Decision, the Commission approves an application received from Aliant Telecom Inc., Bell Canada, MTS Allstream Inc. and Saskatchewan Telecommunications (collectively, the Companies), for forbearance from section 29 of the Telecommunications Act in respect of agreements or arrangements that the Companies might enter into with any other telecommunications common carrier in relation to forborne domestic toll services and forborne interexchange private line services.

1.

On 14 January 2004, Aliant Telecom Inc., Bell Canada, MTS Communications Inc. (now known as MTS Allstream Inc.) and Saskatchewan Telecommunications (collectively, the Companies), filed a Part VII application for forbearance from section 29 of the Telecommunications Act (the Act) in respect of agreements or arrangements that the Companies might enter into with any other telecommunications common carrier in relation to forborne domestic toll services and forborne interexchange private line (IXPL) services.

2.

The Commission received no comments with respect to this application.
 

Background

3.

The Commission's power to forbear from regulating a telecommunications service or class of services provided by a Canadian carrier originates from section 34 of the Act which reads as follows:
 

34. (1) The Commission may make a determination to refrain, in whole or in part and conditionally or unconditionally, from the exercise of any power or the performance of any duty under sections 24, 25, 27, 29 and 31 in relation to a telecommunications service or class of services provided by a Canadian carrier, where the Commission finds as a question of fact that to refrain would be consistent with the Canadian telecommunications policy objectives.

 

(2) Where the Commission finds as a question of fact that a telecommunications service or class of services provided by a Canadian carrier is or will be subject to competition sufficient to protect the interests of users, the Commission shall make a determination to refrain, to the extent that it considers appropriate, conditionally or unconditionally, from the exercise of any power or the performance of any duty under sections 24, 25, 27, 29 and 31 in relation to the service or class of services.

 

(3) The Commission shall not make a determination to refrain under this section in relation to a telecommunications service or class of services if the Commission finds as a question of fact that to refrain would be likely to impair unduly the establishment or continuance of a competitive market for that service or class of services.

 

(4) The Commission shall declare that sections 24, 25, 27, 29 and 31 do not apply to a Canadian carrier to the extent that those sections are inconsistent with a determination of the Commission under this section.

4.

The Canadian telecommunications policy objectives referred to in subsection 34(1) are set out at section 7 of the Act and include the following:
 

.

 

(c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;

 

(f) to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective;

 

(h) to respond to the economic and social requirements of users of telecommunications services.

5.

Section 29 of the Act states that:
 

29. No Canadian carrier shall, without the prior approval of the Commission, give effect to any agreement or arrangement, whether oral or written, with another telecommunications common carrier respecting

 

a) the interchange of telecommunications by means of their telecommunications facilities;

 

b) the management or operation of either or both of their facilities or any other facilities with which either or both are connected; or

 

c) the apportionment of rates or revenues between the carriers.

6.

The Commission forbore in large part from the regulation of domestic toll and toll free services in Forbearance - Regulation of toll services provided by incumbent telephone companies, Telecom Decision CRTC 97-19, 18 December 1997 (Decision 97-19) and from IXPL services in Stentor Resource Centre Inc. - Forbearance from regulation of interexchange private line services, Telecom Decision CRTC 97-20, 18 December 1997 (Decision 97-20). The Commission did not forbear from the exercise of its powers and the performance of its duties pursuant to section 29 of the Act.

7.

In TELUS' application for forbearance from section 29 of the Telecommunications Act with respect to forborne interexchange private line and long distance services, Telecom Decision CRTC 2003-77, 19 November 2003 (Decision 2003-77), the Commission forbore from the exercise of its powers and duties pursuant to section 29 of the Act in respect of agreements or arrangements that TELUS Communications Inc. (TCI) might enter into relating to forborne domestic toll and forborne IXPL services.

8.

In Decision 2003-77, in response to a competitor's concern that forbearance would enable the incumbent local exchange carriers (ILECs) to enter into agreements with each other that would make it difficult for competitors to obtain non-discriminatory access to the ILECs' local networks, the Commission noted that with forbearance from section 29 of the Act, competitors would continue to have access to TCI's network at tariffed rates, terms and conditions. In addition, the Commission stated that despite forbearance from section 29 of the Act, TCI would still be required to comply with subsection 27(2) of the Act in providing competitors with access to its networks, a power that the Commission had retained in Decision 97-19. Subsection 27(2) of the Act prohibits a Canadian carrier, in relation to the provision of a telecommunications service or the charging of a rate for it, from unjustly discriminating or giving an undue or unreasonable preference toward any person, including itself, or subjecting any person to an undue or unreasonable disadvantage.
 

The application

9.

The Companies requested that the Commission refrain wholly and unconditionally from exercising its powers and performing its duties under section 29 of the Act with respect to agreements or arrangements relating to forborne domestic toll and forborne IXPL services entered into with other telecommunications common carriers.

10.

The Companies submitted that domestic toll services referred to the services for which forbearance was granted in Decision 97-19 and that forborne IXPL services referred to the services granted forbearance in Decision 97-20. The Companies stated that IXPL services referred particularly to high capacity services and digital data systems services on routes that had been granted forbearance, and on additional routes which might be granted forbearance in the future.

11.

The Companies submitted that, in prior decisions, the Commission had found it appropriate to continue to exercise its powers under section 29 of the Act in respect of the former Stentor Companies' agreements relating to forborne domestic long distance and IXPL services, due to concerns regarding the ability of the Companies to act in concert as a national entity and the settlement of jointly earned revenues.

12.

The Companies argued that the degree of competition for domestic long distance and IXPL services, while already sufficient to justify forbearance in 1997, had increased dramatically since that time. The Companies submitted that the degree of competition in the long distance and IXPL markets is such that all participants, including the Companies, must strive towards least cost commercial arrangements, with the end result being that the extra Commission scrutiny represented by the requirements pursuant to section 29 of the Act is no longer warranted.

13.

The Companies acknowledged that while the former Stentor alliance was no longer in existence, the Companies had entered into new arrangements, which the Commission had approved in Interconnection agreements between the former Stentor operating companies, Order CRTC 2001-291, 11 April 2001. The Companies submitted that, under price cap regulation, the rates for regulated services were not impacted by the manner in which the Companies settled revenues for forborne services.

14.

The Companies noted that in Decision 2003-77, the Commission stated that TCI would continue to be required to enter into agreements with competitive local exchange carriers, the other ILECs or interexchange carriers that conformed to the Commission approved Master Interconnection Agreements. The Companies submitted that these requirements would equally apply to the Companies if the Commission were to approve this application.

15.

The Companies were of the view that granting relief from the application of section 29 of the Act would simply put the Companies on an equal competitive footing with other competitors, including TCI, and that the burden imposed on the Companies by the section 29 requirements amounted to a competitive handicap that could no longer be justified. The Companies submitted that to continue to impose the section 29 regulatory requirement on the Companies would be counter to Decision 2003-77 to forbear with respect to such TCI agreements, as the Companies would still be required to file with the Commission any such agreements entered into with TCI.
 

Commission analysis and determination

16.

As noted above, the Commission, in Decision 97-19 and Decision 97-20, orbore in large part from the regulation of, respectively, domestic toll and toll-free services and certain IXPL services. The Commission notes that the Companies are requesting forbearance from the requirements of section 29 of the Act for agreements with respect to forborne domestic toll and forborne IXPL services.

17.

In Decision 97-19, the Commission retained its powers and duties under subsection 27(2) of the Act to ensure that competitors continue to obtain non-discriminatory access to the ILECs' networks. The Commission, furthermore, has established terms and conditions under which competitors in the domestic toll market obtain access to the ILECs' networks. The ILECs are required to provide competitors in the domestic toll market with access to their networks at tariffed rates, terms and conditions.

18.

The Commission notes, therefore, that if it was to forbear from the exercise of its powers under section 29 of the Act, competitors in the domestic toll market would continue to obtain access to the Companies' networks at tariffed rates, terms and conditions. In addition, the Companies would still be required to comply with subsection 27(2) of the Act in providing toll competitors with access to its network on a non-discriminatory basis.

19.

The Commission notes that the Companies would continue to be required to enter into agreements with competitive local exchange carriers and the other ILECs that conform to Commission approved Master Interconnection Agreements. Further, the Commission notes that interconnection between ILECs and interexchange carriers is governed by rules regarding carrier pre-selection and carrier access tariffs.

20.

In Follow-up Proceeding to Telecom Decision CRTC 97-20: Establishment of criterion and process for considering further forbearance for High Capacity/DDS interexchange private line services, Telecom Order CRTC 99-434, 12 May 1999, the Commission made it a criterion of forbearance on a particular IXPL route that one or more competitors of a Stentor company are offering or providing, on that route, the equivalent of DS-3 bandwidth (or greater) on a private line basis to at least one customer, using terrestrial facilities from other than the Stentor company in question or an affiliate of that company. The Commission is of the view that such competition on forborne IXPL routes is sufficient to protect the interests of users with regard to ILEC agreements respecting such routes.

21.

The Commission considers that approval of the Companies' application would be consistent with Decision 2003-77), and would remove the existing competitive imbalance between TCI and the Companies with respect to the requirements of section 29 of the Act.

22.

The Commission notes that with approval of the Companies' application, all agreements that include either forborne domestic toll or forborne IXPL services together with tariffed services would still be required to be filed with the Commission and would be subject to Commission approval.

23.

The Commission finds, pursuant to subsection 34(1) of the Act, as a question of fact, that refraining from the exercise of its powers and the performance of its duties pursuant to section 29 of the Act with respect to forborne domestic toll and forborne IXPL services provided by the Companies is consistent with the Canadian telecommunications policy objectives.

24.

The Commission finds, pursuant to subsection 34(2) of the Act, as a question of fact, that the market for forborne domestic toll and forborne IXPL services is sufficiently competitive to protect the interests of users so as to warrant forbearance from section 29 of the Act.

25.

Finally, the Commission finds, pursuant to subsection 34(3) of the Act, as a question of fact, that forbearance from the exercise of its powers and the performance of its duties pursuant to section 29 of the Act with respect to forborne domestic toll and forborne IXPL services would not impair the continuance of a competitive market for such services.

26.

Accordingly, the Commission approves the Companies' application for forbearance and declares, pursuant to subsection 34(4) of the Act, that section 29 of the Act does not apply with respect to forborne domestic toll and forborne IXPL services provided by the Companies.
  Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca

Date Modified: 2004-12-09

Date modified: