|
Telecom Public Notice
|
|
Ottawa, 11 January 1984
|
|
Telecom Public Notice CRTC 1984-6
|
|
INTEREXCHANGE COMPETITION AND RELATED ISSUES
|
|
Background
|
|
At present, telephone companies are the sole providers in Canada of long distance (interexchange) public telephone service. Other interexchange telecommunications services, such as private line voice services and data transmission services, are in general provided by both CNCP Telecommunications (CNCP) and the telephone companies. Telesat Canada (Telesat) provides satellite telecommunications services to regulated Canadian common carriers and broadcasting undertakings. In addition to the telecommunications systems of the telephone companies, CNCP and Telesat, a number of private interexchange telecommunications systems exist.
|
|
Under the terms of CNCP Telecommunications, Interconnection with Bell Canada, Telecom Decision CRTC 79-11, 17 May 1979, and CNCP Telecommunications: Interconnection with the British Columbia Telephone Company, Telecom Decision CRTC 81-24, 24 November 1981 (Decisions 79-11 and 81-24), Bell Canada (Bell) and British Columbia Telephone Company (B.C. Tel) are required to permit CNCP to interconnect with their facilities for the purpose of providing certain interconnected private line voice services and interconnected data services.
|
|
As indicated in Agenda of Major Telecommunications Issue Proceedings, CRTC Telecom Public Notice 1983-73 (Public Notice 1983-73), 15 November 1983, two applications recently filed with the Commission raise the question as to whether further competitive entry into interexchange markets should be permitted.
|
|
On 25 October 1983, CNCP filed an application with the Commission for orders permitting interconnection of its system with the public switched telephone networks of Bell and B.C. Tel for the purpose of enabling CNCP to compete with the telephone companies in the provision of interexchange public telephone service.
|
|
On 4 November 1983, the Commission received an application from British Columbia Railway (B.C. Rail) for an order permitting interconnection of its telecommunications system with the public switched telephone network of B.C. Tel. In this application, B.C. Rail seeks approval for the more limited type of interconnection approved for CNCP in Decisions 79-11 and 81-24.
|
|
In Bell Canada, British Columbia Telephone Company and Telesat Canada: Increases and Decreases in Rates for Services and Facilities Furnished on a Canada-Wide Basis by Members of the TransCanada Telephone System, and Related Matters, Telecom Decision CRTC 81-13, 7 July 1981, and Attachment of Subscriber-Provided Terminal Equipment, Telecom Decision CRTC 82-14, 23 November 1982 (Decision 82-14), the Commission indicated its intention to conduct an overall review of the current restrictions against resale and sharing of telecommunications services.
|
|
A major concern raised by all of the above-noted matters relates to the potential loss of contribution from interexchange services to the overall revenue requirement of regulated telecommunications carriers. Whether such a loss of contribution will occur, and if so, to what extent, as well as its impact on rates for other services, are issues of regulatory concern common to these matters. At the same time, these matters also raise the question of the potential benefits that might accrue from increased competition of various types, in terms of factors such as efficiency, innovation and increased user choice.
|
|
In view of the similarity of the issues raised by the CNCP and B.C. Rail applications, and by the potential removal of restrictions against resale and sharing, the Commission has decided to consider all of these matters together in the context of a general issue proceeding to be conducted in the manner described in this public notice.
|
|
Scope of the Proceeding
|
|
In this proceeding, the Commission intends not only to dispose of the specific applications of CNCP and B.C. Rail but also to consider: (1) the general principles that should guide the Commission in considering any possible future applications for interconnection that would enable the applicants to compete in the provision of telecommunications services and (2) whether any of the existing restrictions on the resale and sharing of the services and facilities of federally-regulated telecommunications common carriers should be removed. In considering these applications in the context of a general issue proceeding, it is the Commission's intention to reduce uncertainty regarding the federal regulatory response to competitive initiatives and to minimize regulatory costs and delays associated with the processing of individual applications for competitive entry.
|
|
The Commission intends, in this proceeding, to consider the outstanding issues relating to resale and sharing for the purpose of providing both intraexchange and interexchange services. In this context, the Commission notes that it has previously relaxed certain restrictions on the resale and sharing of PBX's in Decision 82-14. Further, the issue of resale and sharing for the purpose of providing enhanced services is currently before the Commission in the proceeding initiated by Enhanced Services, CRTC Telecom Public Notice 1983-72, 15 November 1983. Finally, resale and sharing of Telesat's satellite services is being considered by the Commission in the proceeding initiated by Telesat Canada - Final Rates for 14/12 GHz Satellite Service and General Review of Revenue Requirements CRTC Telecom Public Notice 1983-42, 23 June 1983, in the limited context of the subletting of excess capacity by licensed broadcasting undertakings to other such undertakings for broadcast programming purposes.
|
|
To assist the Commission in its consideration of all of these matters, a number of issues are identified in this notice on which interested parties are asked to comment. In order to establish the context in which their comments are made, interested parties are requested, in addressing these issues, as well as any others they may wish to raise, to distinguish among the following means of permitting increased market entry:
|
|
I resale and sharing of telecommunications services and facilities for the purpose of providing
interexchange services other than Message Toll Service (MTS) and Wide Area Telephone Service
(WATS) equivalents;
|
|
II resale and sharing of telecommunications services and facilities for the purpose of providing
interexchange services including MTS/WATS equivalents;
|
|
III interconnection of telecommunications systems for the purpose of providing interexchange
services other than MTS/WATS equivalents;
|
|
IV interconnection of telecommunications systems for the purpose of providing interexchange
services including MTS/WATS equivalents;
|
|
V interconnection of telecommunications systems and resale and sharing of telecommunications
services and facilities for the purpose of providing intraexchange services.
|
|
Interested parties are requested to indicate their view as to the appropriate type and degree of entry, including number of entrants, that should be permitted. Further, in addressing each of the issues set out in the next section, they are asked to identify the specific entry scenario to which their comments relate.
|
|
Issues
|
|
1. Introduction
|
|
Permitting increased competitive entry may be expected to have different effects on various user groups and competitors. The nature and extent of such impact will depend on the degree of competition permitted and the user group or competitor in question.
|
|
Increased competition may have a significant impact not only upon the level of rates paid for long distance services but also upon relative rates paid for different long distance services and upon the rates paid for other services offered by competitors.
|
|
These rate impacts may result not only from pressures to restructure rates to reflect costs more closely but also from the downward pressure on costs in a competitive environment. In addition, competition may affect the ability of firms to support certain services from the revenues generated by other services or to charge different prices for essentially similar services.
|
|
Indeed, a major concern raised by the introduction of competition is the impact on the existing pricing and accessibility of local telephone service. To the extent that competition results in an erosion of interexchange revenues, there may be an impact on existing local service rates and accessibility.
|
|
Competition may also be expected to affect the level of efficiency in the telecommunications services market. These impacts include the effect of entry on service quality and choice, network planning, design and provisioning, and research and innovation both in terms of new services and the introduction of more cost effective technologies.
|
|
2. Impact of Competition
|
|
Interested parties are requested to indicate the advantages and disadvantages associated with various types of competitive entry, including specifically the entry options listed above, in terms of their impact on the following:
|
|
(i) the revenues of the regulated common carriers;
|
|
(ii) rates for MTS and WATS, including the practice of rate averaging;
|
|
(iii) rates for other interexchange telecommunications services;
|
|
(iv) the relationship among rates for different interexchange services;
|
|
(v) rates for local telephone service and the resultant implications for local service accessibility;
|
|
(vi) service quality and choice, supplier responsiveness, innovation, research and development and
supplier efficiency;
|
|
(vii) the efficiency of telecommunications network planning and design; and
|
|
(viii) the long run costs of supplying telecommunications services.
|
|
3. Regulation
|
|
Interested parties are requested to indicate what regulatory terms and conditions they consider might be adopted in order to maximize advantages and reduce disadvantages identified in their comments on the above issues, including:
|
|
(i) alternative types of interconnection that could be furnished to competitors and the implications
of each upon network costs and the ability of competitors to compete on an equal footing with
existing suppliers;
|
|
(ii) the basis upon which rates paid by competitors for interconnection should be established
including their relationship to (a) costs, (b) existing tariffs and (c) the quality of interconnection;
|
|
(iii) the extent, if any, to which competitors or others should contribute to the support of local
service and the manner in which any such contribution should be determined;
|
|
(iv) the extent, if any, to which distinctions should be made among the types of services and
facilities for which resale and sharing should be permitted; and
|
|
(v) the nature of the regulatory treatment to be accorded to existing suppliers of
telecommunications services and to new entrants, excluding a consideration of service costing
issues currently being deliberated upon in Inquiry into Telecommunications Carriers'
Costing and Accounting Procedures: Phase III - Costing of Existing Services and a
consideration of the use of a structural separation approach. The reasons for these exclusions
are set out in Public Notice 1983-73.
|
|
Participation and Procedure
|
|
1. In this proceeding the Commission will consider significant questions of public policy relating to
the structure of markets for telecommunications services. The decisions to be taken could have
significant implications for all carriers regulated by the Commission. In addition, these decisions
could have implications for provincial regulators as well as the carriers regulated by them. In
light of this, the Commission invites the participation in this proceeding of the federal
Department of Communications, provincial departments and agencies concerned with
telecommunications regulatory policy and provincially-regulated telecommunications common
carriers.
|
|
2. The applicants, CNCP and B.C. Rail, and the respondents, Bell and B.C. Tel in respect of the
CNCP application, and B.C. Tel in respect of the B.C. Rail application, will be considered parties
to this proceeding.
|
|
3. Since the issues to be addressed in this proceeding are relevant to all the federally-regulated
carriers, the Commission directs that, in addition to Bell, B.C. Tel and CNCP, all other federally-
regulated carriers be joined as parties to this proceeding.
|
|
4. Others desiring to participate in this proceeding may do so in accordance with the procedure set
out below.
|
|
5. On 14 December 1983, the Commission indicated to Bell and B.C. Tel that they could request
from CNCP particulars of its application. Such requests were made by 21 December 1983.
CNCP's responses to the requests were filed by 9 January 1984.
|
|
6. The answers of Bell and B.C. Tel to the CNCP application and the answer of B.C. Tel to the
B.C. Rail application must be filed with the Commission and served on the respective applicants
by 20 January 1984.
|
|
7. The replies of CNCP and B.C. Rail must be filed with the Commission and served on the
respective respondents by 30 January 1984.
|
|
8. Interrogatories may be addressed by the respective applicants and respondents to each other,
with a copy to the Commission, by 20 February 1984.
|
|
9. Interested persons wishing to receive copies of all material required to be submitted to the
Commission pursuant to paragraphs 5, 6, 7, 10, 11, 12 and 13 of this section should so notify
the Commission by writing to Mr. J.G. Patenaude, Secretary General, CRTC, Ottawa, Ontario
K1A 0N2, by 1 March 1984. The Commission will then distribute a list of interested persons,
along with their mailing addresses, to the parties, as defined in paragraphs 2 and 3 above.
|
|
10. Responses by the applicants and respondents to interrogatories addressed to them must be
filed with the Commission and served on the parties and interested persons by 19 March 1984.
The applications, the responses of CNCP to the requests for particulars, the answers and the
replies are to be served by the originators on the parties and interested persons by the same
date.
|
|
11. Evidence to be submitted by each applicant in support of its application must be filed with the
Commission and served on the parties and interested persons by 9 April 1984.
|
|
12. Evidence to be submitted by each respondent in support of its answer must be filed with the
Commission and served on the parties and interested persons by 30 April 1984.
|
|
13. Evidence to be submitted by the parties, as defined in paragraphs 2 and 3 above, respecting
the issues set out in this public notice must also be filed with the Commission and served on
the parties and interested persons by 30 April 1984.
|
|
14. Any person wishing to comment on the evidence submitted by the parties, or otherwise to
comment on the issues in this proceeding, may do so by writing to the Commission by 22 May
1984.
|
|
15. Any person wishing to participate in the public hearing in connection with this proceeding must
file a notice of intention to do so with the Commission by 22 May 1984. These persons will be
designated interveners and will be considered parties to the proceeding. The Commission will
then distribute a list of all such parties along with their mailing addresses.
|
|
16. Parties may address interrogatories respecting the evidence filed pursuant to paragraphs 11,
12 and 13, with a copy to the Commission, by 22 May 1984.
|
|
17. Responses to such interrogatories must be filed with the Commission and served on the
parties by 18 June 1984.
|
|
18. Interveners intending to submit evidence at the public hearing must file such evidence with the
Commission, with copies to the parties, by 16 July 1984.
|
|
19. Parties may address interrogatories respecting evidence filed pursuant to paragraph 18, with a
copy to the Commission, by 7 August 1984.
|
|
20. Responses by interveners to interrogatories addressed to them must be filed with the
Commission and served on the parties by 27 August 1984.
|
|
21. Requests by parties for further responses to their interrogatories filed pursuant to paragraphs
10, 17 and 20, specifying in each case why a further response is both relevant and necessary,
must be filed with the Commission and served on the party from whom the further response is
requested by 4 September 1984.
|
|
22. The Commission will conduct a pre-hearing conference, tentatively scheduled for 12
September 1984, to settle all outstanding preliminary matters and issues in connection with
this proceeding. The Commission will distribute an agenda for the conference to the parties
prior to 12 September 1984.
|
|
23. It is anticipated that a decision on matters arising out of the pre-hearing conference, including
the order in which evidence will be presented and the order of questioning, will be made orally
the day following the conference.
|
|
24. The public hearing is tentatively scheduled to commence 2 October 1984 in the Outaouais
Room of the Conference Centre, Phase IV, Place du Portage, Hull, Quebec.
|
|
25. Opportunity will be provided for rebuttal evidence, final argument and reply argument in a
manner to be determined by the Commission in the course of the hearing.
|
|
26. All documents referred to in this public notice are to be actually filed and served by the dates
mentioned, not merely mailed by those dates.
|
|
J.G. Patenaude
Secretary General
|
|
|