ARCHIVED - Telecom Decision CRTC 84-10

Telecom Decision

Ottawa, 22 March 1984

Telecom Decision CRTC 84-10

Radio Common Carrier Interconnection With Federally Regulated Telephone Companies

For related documents see: Telecom Decision CRTC 82-14, 23 November 1982, CRTC Telecom Public Notice 1983-14, 28 January 1983.

Table of Contents

I BACKGROUND

II SCOPE

III ADVANTAGES AND DISADVANTAGES OF INTERCONNECTION

A. Positions of the Parties
1. Introduction
2. Revenue Erosion
a) Toll Erosion and Revenue Stimulation - Conventional and Cellular
b) Cellular Radio as an Alternative to the Primary exchange Telephone Service
c) Impact of Conventional RCC Interconnection on the Provision of Service
3. Quality of Service - Conventional RCC Interconnection

B. Conclusions

1. The Public Interest
2. Provision of Basic Service in Sparsely Populated Areas
3. Exemption for Terra Nova
4. Regulatory Treatment

IV TERMS AND CONDITIONS OF INTERCONNECTION

1. Limitation with Regard to the Extent of Interexchange Competition
2. Framework for Negotiations - Introduction
3. Technical Standards - Cellular and Conventional Interconnection
4. Quality of Service - Conventional Interconnection
5. Point of Interconnection Digital Connection, Tone Signalling - Cellular Radio
6. Revenue Arrangements
a) Toll Revenue Sharing - Cellular
b) Billing and Collective Compensation - Cellular and Conventional
7. Rates for Cellular System Interconnection
a) Local and Interexchange Channel and Transmission Equipment
b) Four Wire Trunks
c) Telephone Numbers and Central Office Equipment
d) Other Rates
8. Rates for Conventional Interconnection

V IMPLEMENTATION

1. Technical Standards - Cellular and Conventional
2. Interconnection
3. Tariffs

I BACKGROUND

On 23 November 1982, the Commission released Attachment of Subscriber-Provided Terminal Equipment, Telecom Decision CRTC 82-14 (Decision 82-14). This decision set out the terms and conditions governing the attachment of subscriber-provided terminal equipment to the networks of the federally regulated telecommunications carriers.

During the proceedings leading up to Decision 82-14, the Canadian Radio Common Carriers Association (CRCCA) and certain other parties proposed that the scope of the definition of terminal equipment be extended to allow the connection of private communications systems, including two-way mobile radio systems, to the carriers' networks.

In Decision 82-14, the Commission expressed the view that the issue of the attachment of communications systems to the carriers' networks should be dealt with separately from the issue of the attachment of terminal equipment. As regards the connection of two-way mobile radio systems specifically, the Commission stated its intention to deal further with the matter in a forthcoming public notice.

On 23 October 1982, the federal Department of Communications (DOC) issued Cellular Mobile Radio Policy and Call for Licence Applications, Notice no. DGTN-006-82/DGTR-017-82. In this Notice, DOC invited applications to operate cellular mobile radio systems in twenty-three designated Metropolitan Areas (MA's) throughout Canada.

DOC had allocated frequencies for cellular radio, a new high capacity type of mobile radio-telephone system, expressly to alleviate the current shortage of frequencies for mobile telephone service and to provide for long term growth, including the introduction of the portable telephone.

In its Notice, DOC stated its intention to licence a maximum of two cellular radio systems in each MA, one of which would be operated by the telephone company within whose operating territory the MA is located. It invited applications from telephone companies and other applicants wishing to provide service within the designated MA's.

DOC further indicated that it was only prepared to consider applications to provide a public mobile telephone service with some form of interconnection with the public switched telephone network (PSTN).

In response to this Notice, Bell Canada (Bell) released an information document, dated 28 January 1983, entitled Cellular Mobile Telephone System (CMTS) Interconnection to Bell Canada's Local Public Switched Telephone Network ("CMTS Interconnection to Bell"). In that document, Bell outlined its position regarding the interconnection of cellular radio, the general technical conditions considered appropriate for interconnection, the proposed tariff structures and order of magnitude rates for interconnection and items it considered should be included in a special agreement with each cellular mobile provider.

Bell indicated that it would be submitting, for Commission approval, such tariffs and agreements as would be required for the interconnection of cellular mobile systems to its PSTN.

In CRTC Telecom Public Notice 1983-14, dated 28 January 1983, Radio Common Carrier Interconnection With Federally Regulated Telephone Companies (Public Notice 1983-14), the Commission indicated that it wished to determine, having regard to the provisions of the Railway Act and other statutes pursuant to which the Commission exercises its jurisdiction, whether it would be in the public interest to allow radio common carriers (RCC's) offering cellular or conventional mobile radio services to interconnect their systems with those of the federally regulated telephone companies (RCC interconnection). Should interconnection be found to be in the public interest, the Commission noted that it also wanted to consider the terms and conditions under which it should occur.

In Public Notice 1983-14, the Commission outlined those matters that it wished interested parties to comment on, indicating that it welcomed comment on any other matters regarding RCC interconnection. It also requested that interested parties state whether their comments were applicable to the interconnection of cellular systems, conventional systems or both.

Those matters upon which the Commission specifically invited comments were:

1. The impact of RCC interconnection on the quality and availability of radio-telephone service.

2. The impact of RCC interconnection on telephone and radio-telephone network development.

3. The impact of RCC interconnection on the creation of incentives for further technological
development and innovation.

4. The impact of RCC interconnection on carrier revenues, costs and rates, including the degree
to which interconnection would lead to the erosion of message toll service (MTS) revenues or
would stimulate such revenues.

5. Whether the potential advantages of interconnection would outweigh the disadvantages.

6. The technical standards that should apply to RCC interconnection and the procedure that
should be adopted to ensure compliance with them.

7. The terms and conditions upon which RCC interconnection should be permitted, having regard
particularly to subsection 321(2) of the Railway Act and the public interest
generally.

8. Noting that Bell and the British Columbia Telephone Company (B.C. Tel) currently offer
conventional radio-telephone service that is interconnected with the PSTN and generally do
not provide such interconnection to other radio-telephone systems, the Commission indicated
that it expected telephone companies which take the position that there should not be such
interconnection to give detailed reasons justifying such a position.

The Commission also invited comments on Bell's information document "CMTS Interconnection to Bell".

The parties who responded were: Bell, B.C. Tel, Canadian Industrial Communications Assembly (CICA), Canadian Manufacturers Association (CMA), Canadian Petroleum Association (CPA), CRCCA, Cantel Cellular Radio Group Inc. (Cantel), Celtel Corp. (Celtel), CNCP Cellular Corp. (CNCP Cellular), CNCP Telecommunications (CNCP), Director of Investigation and Research, Combines Investigation Act (the Director), DOC, Electrical and Electronic Manufacturers Association of Canada (EEMAC), Government of British Columbia, Ministry of Universities, Science and Communications (British Columbia), Government of Ontario, Ministry of Transportation and Communications (Ontario), Honeycomb Telephone Corporation (Honeycomb), KVA Communications and Electronics Co. (KVA), Lenbrook Industries Limited (Lenbrook), Manitoba Telephone System (Manitoba Tel), Motorola Canada Limited (Motorola), NorthwesTel Inc. (NorthwesTel), Pacific Western Communications Group Ltd. (Pacific Western), Roam Communications Limited (Roam), TAS Pagette (TAS), Telesat Canada (Telesat) and Terra Nova Telecommunications Inc. (Terra Nova).

The following parties responded to the initial set of comments submitted by the above parties: Bell, B.C. Tel, Cantel, CICA, CNCP Cellular, CRCCA, NorthwesTel, Pacific Western, Roam and Terra Nova.

On 14 December 1983, the Minister of Communications announced that Cantel had been chosen as the successful nontelco licensee to provide alternative cellular mobile radio telephone service in 23 MA's across Canada.

On 14 March 1984, the Minister of Communications announced his intention to issue a licence to a subsidiary of Bell Canada Entreprises Inc. (BCE) other than Bell to provide cellular radio service in Bell operating territory. It is not clear whether a similar requirement will also apply to the telco licence granted in B.C. Tel territory.

In this decision, the BCE subsidiary and, if applicable, a B.C. Tel affiliate, will be referred to as the "telco affiliate licensee."

II SCOPE

In its submission, B.C. Tel argued that it is inappropriate to distinguish between radio network systems, particularly cellular radio systems, and other network systems using more traditional means of carriage. According to B.C. Tel, the purpose of a communications network is to convey a voice or data message using some form of carrier, for example, copper wire or radio. B.C. Tel accordingly submitted that this proceeding necessarily raises the general issue of the interconnection of telecommunications networks with the PSTN, not merely RCC interconnection.

Therefore, in B.C. Tel's view, should the Commission choose to permit RCC interconnection, it should apply the same principles and restrictions here as it did with respect to the interconnection of switched voice networks in CNCP Telecommunications: Interconnection with Bell Canada, Telecom Decision CRTC 79-11, 17 May 1979 (Decision 79-11) and in CNCP Telecommunications: Interconnection with the British Columbia Telephone Company, Telecom Decision CRTC 81-24, 24 November 1981 (Decision 81-24).

The Commission considers that the issues related to RCC interconnection which are before it in this proceeding can be determined without disposing of the general issue of the interconnection of telecommunications networks to the PSTN. This general issue is more appropriately dealt with in the forthcoming Commission proceeding on Interexchange Competition and Other Related Issues which was announced in CRTC Telecom Public Notice 1984-6. Specifically excluded from the scope of this decision, therefore, is the interconnection of point-to-point microwave or satellite radio-based networks, which would be interconnected to provide alternative land fixed or non-mobile telephone service and which would have the ability to compete in the interexchange market.

III ADVANTAGES AND DISADVANTAGES OF INTERCONNECTION

A. Positions of the Parties

1. Introduction

Most of the parties commented favourably regarding the interconnection of both cellular and conventional mobile radio systems to the PSTN. In general, these parties felt that interconnection would enhance the value of mobile radio systems to end-users by allowing access to the general body of telephone subscribers in addition to paging and dispatch service users. In addition, they suggested that competition, especially arising from cellular system interconnection, would lead to technological developments and innovation, an increased choice of products and services, lower prices for users, new domestic markets, export opportunities and increased employment.

Bell indicated that it was not opposed to interconnection under appropriate terms and conditions, such as restrictions to protect against bypass of the message toll network of the telephone companies (toll bypass). B.C. Tel, NorthwesTel and Terra Nova were generally opposed to interconnection. However, these carriers also proposed restrictions that could be applied should the Commission determine RCC interconnection to be in the public interest.

Terra Nova indicated that, by agreement, it presently provides radio-telephone service throughout Newfoundland, covering its own territory and that of Newfoundland Telephone Company (NTC). In these circumstances, the company argued that interconnection should not be permitted in its territory until it was allowed throughout the Province.

2. Revenue Erosion

a) Toll Erosion and Revenue Stimulation Conventional and Cellular

A central premise of the arguments against interconnection put forward by B.C. Tel, NorthwesTel and Terra Nova was the contention that competition would result in an erosion of their revenues, with a consequent negative impact on the provision of basic telephone service. In their opinion, a major area of such revenue erosion would occur in the message toll service market.

Bell, although not discussing toll erosion and its potential impact directly, proposed restrictions on toll bypass under its proposed terms and conditions for interconnection.

It was B.C. Tel's position that, since radio services which incorporate toll bypass are not obliged to contribute financially to the provision of local service, and do not have an obligation to serve rural customers, these services could therefore be priced lower than those of the telephone companies. B.C. Tel indicated this would lead to toll erosion and diminish the subsidy from that service towards local rates. The result, it concluded, would be to threaten the principle of universally accessible telephone service.

Other parties commenting on the impact of interconnection contended that, rather than resulting in revenue erosion, RCC interconnection would provide a new source of long distance traffic for telephone companies, leading to an increase in revenues.

In this regard, CNCP Cellular suggested that cellular radio would lead to expansion of the long distance network and an increase in traffic and, as a result, produce a net financial benefit to the telephone companies. Honeycomb similarly argued that stimulation of new revenue would make any revenue reductions resulting from competition marginal.

Further, DOC anticipated that the interconnection of two cellular providers would increase revenues for the carriers generated from new services as well as through increased growth of current service offerings.

b) Cellular Radio as an Alternative to the Primary Exchange Telephone Service

In addition to the possibility of revenue erosion from toll bypass, B.C. Tel argued that the interconnection of cellular radio could, in the long run, decrease the revenues from its local exchange service.

The Company suggested that the market for cellular radio network mobile services will be significantly smaller than anticipated by many. As a result, it argued, there will be increased pressure for cellular providers to use their systems to provide fixed station service. B.C. Tel contended that, while cellular radio systems cannot meet the total service requirements of large urban centres at this time, they do have the capacity to serve, for instance, a substantial portion of the business sector.

B.C. Tel noted that CNCP Cellular and the Director considered that cellular radio could, in the long run, offer a viable alternative to the fixed telephone network for local distribution. The Director had pointed out that, when coupled with a microwave or satellite link, cellular radio could provide a long distance competitive alternative to the regulated common carriers, thereby eroding MTS revenues.

That being the case, B.C. Tel contended that competition in the local exchange market could, in the long run, result in a pricing cap being placed upon some urban local service rates if they were to remain competitive. This would necessitate price increases in rural areas due to decreasing subsidies from high to low density markets.

CNCP suggested that cellular radio does not have the capacity to meet the total telephone service requirement of a large urban population. Moreover, cellular users must pay rates which cover the entire costs of providing the service, whereas primary exchange customers' rates are subsidized.

c) Impact of Conventional RCC Interconnection on the Provision of Service

B.C. Tel, NorthwesTel and Terra Nova were concerned that the interconnection of conventional radio systems to the PSTN would lead to market fragmentation as well as toll bypass and therefore erode revenues otherwise available for the provision, improvement and extension of service.

Bell, B.C. Tel and NorthwesTel also pointed out that interconnection would affect the cost of providing basic service. Bell noted that the possible reassignment of frequencies used to provide service to some isolated areas could force it into alternate serving arrangements resulting in additional costs. B.C. Tel suggested that interconnection of conventional radio systems would significantly affect access to service in high risk and high cost areas, typically the mountainous regions served by it.

In addition, NorthwesTel and Terra Nova stressed that competitors would likely concentrate on the more lucrative routes, leading to a breakdown of internal subsidies based on route averaging.

Finally, NorthwesTel argued that competition would result in expensive duplication of facilities. Moreover, it suggested that, where an RCC system with network access was installed to serve some development activity, there would be limited incentive for the telephone system to overbuild that system to serve all subscribers due to the division of revenues in that area. As well, there would be little incentive to overbuild to provide basic service to any unserved pocket outside a development project.

In its submission, B.C. Tel stated that "while radio-telephone network service has been considered an extension of the local exchange telephone network, the company recognizes that for all but 1% of the subscribers the service is discretionary."

While DOC indicated that there might be problems of spectrum loading for conventional dispatch services as a result of interconnection, it argued that such interconnection would have very little impact on telephone network development.

Other parties also argued that there would be no negative impact on network development. CMA and the Director pointed out that spectrum limitations preclude significant revenue erosion. CRCCA and Motorola took the position that RCC interconnection would provide the carriers with revenues from a new class of users.

CPA contended that RCC interconnection could actually improve the provisioning of service to remote locations where required on short notice.

3. Quality of Service - Conventional RCC Interconnection

B.C. Tel argued that interconnection would result in low cost and low quality solutions to network service problems. NorthwesTel and Terra Nova argued that their lower revenue potential in a competitive market might impair the upgrading of existing telephone service and, as previously noted, the ability to extend service to isolated locations. As well, these carriers expressed concerns about network harm, expensive duplication of facilities, increased administrative costs and disputes over repair and maintenance.

With regard to conventional mobile radio systems, DOC was concerned that interconnection would result in only marginal improvement of service and this, in some cases, would be at the expense of current RCC subscribers. According to DOC, the primary purpose of the conventional RCC's has been, and should continue to be, to provide dispatch service. DOC was concerned that, as a consequence of interconnection, there would be greater congestion on already scarce frequencies.

Congestion could result because of the different average holding times for a dispatch call (estimated at 10 to 15 seconds) and a radio-telephone call (estimated at 180 seconds). Since DOC does not intend to allocate additional spectrum for conventional systems, it contended that increased holding times for radio-telephone calls could displace some dispatch users or cause them to wait for a longer period of time to make a connection.

DOC indicated that, in the case of private mobile radio systems, it intended to retain use of the frequencies allocated to these users for noninterconnected (primarily dispatch) traffic requirements. Moreover, from a spectrum utilization point of view, should the Commission allow interconnection for such systems, it should limit it to a very occasional use basis.

Bell agreed that, should interconnection be permitted, the degree of channel blocking could increase in the case of conventional mobile radio services. By the same token, it pointed out that interconnection could also result in the extension of radio-telephone service into areas not presently served by the federally regulated telephone companies. CPA argued that, by allowing access to meet the internal demands of users of private mobile radio services, the demand on point-to-point radio spectrum could be reduced.

CRCCA, Motorola and others submitted that conventional mobile radio service would be enhanced through interconnection to the PSTN on an occasional use or limited basis. KVA suggested that an occasional use restriction could be governed by a higher tariff to reduce air-time and a limitation to specific telephone numbers.

B. Conclusions

1. The Public Interest

Based on the record of this proceeding, the Commission has concluded that the interconnection of cellular and conventional public and private mobile radio systems to the PSTN is in the public interest. The Commission is of the view that such interconnection is likely to result in significant advantages, including increased consumer choice among mobile telephone services and equipment; increased access for paging and dispatch customers; technological developments, innovation and lower prices for users as competition develops; and increased opportunities for conventional system operators to offer more enhanced forms of mobile communications services.

The Commission has also taken into account the fact that cellular radio service is being licensed by DOC as a form of telephone service and that, without access to the general body of telephone subscribers through interconnection, a cellular radio system would be effectively precluded from providing service.

In coming to the conclusion that the interconnection of cellular and conventional mobile radio systems to the PSTN is in the public interest, the Commission has weighed the potential advantages of such interconnection against the disadvantages which have been suggested. The Commission is satisfied that the potential adverse effect of such disadvantages will be significantly minimized as a consequence of the imposition of appropriate terms, conditions and limitations both as set out in this decision and as will be further developed within the framework for negotiation established herein.

2. Provision of Basic Service in Sparsely Populated Areas

With regard to the concerns expressed in connection with the possible impact of interconnection on the provision of basic services to certain locations, the evidence in this proceeding indicates that mobile radio-telephone service is primarily a discretionary service. However, there may be specific instances where interconnection could have a detrimental impact upon the provision of basic service in sparsely populated areas. NorthwesTel, for example, may face problems in this regard due to the nature and size of its operating territory and its small subscriber base. While the evidence in this proceeding is insufficient to support a finding that interconnection in any specific geographic area is contrary to the public interest, the Commission would be willing to reconsider this matter on a case by case basis. However, the onus would be on the telephone company requesting such a reconsideration to demonstrate that, in a particular instance, interconnection would have a significant detrimental impact on the provision of basic service in a sparsely populated area.

3.Exemption for Terra Nova

With regard to Terra Nova's argument that interconnection should not be permitted in its territory until it is allowed throughout the Province of Newfoundland, the Commission has not been persuaded that RCC's in Terra Nova's territory should be denied the right of interconnection because Terra Nova has chosen to provide conventional mobile service in NTC territory as well.

4.Regulatory Treatment

One of the issues in this proceeding is the extent, if any, to which the various providers of conventional and cellular mobile radio services should be regulated and the appropriate nature of any such regulation. Consideration of these matters has been excluded from this decision. The Commission intends to deal with them separately.

IV TERMS AND CONDITIONS OF INTERCONNECTION

1. Limitation with Regard to the Extent of Interexchange Competition

With regard to cellular radio service, taking into account its projected limited market in the short run and the high cost of the terminals and air-time, the Commission does not foresee the potential for significant MTS erosion, at least in this decade.

Insofar as conventional mobile service is concerned, given the indications by Bell, DOC and others as to the limited growth potential and capacity of this service in relation to cellular, the Commission does not envisage significant toll erosion due to the interconnection of this service either now or in the future.

In arriving at these conclusions, the Commission notes that, despite the concern with toll erosion expressed in the submissions of some of the telephone companies, none presented evidence to indicate that toll bypass would significantly reduce toll revenues.

In these circumstances, the Commission considers that restrictions on the ability of competitive mobile systems to choose the most cost effective routing of intersystem traffic are inappropriate, at least at this time. The Commission does, however, consider it appropriate to impose a limitation in order to define the extent of interexchange competition that is permissible. 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. This may require revisions to be made to the tariffs of the federally regulated carriers regarding access to their interexchange services by cellular service providers.

2. Framework for Negotiations - Introduction

In the opinion of the Commission, cellular and conventional mobile radio providers and, where applicable, the telco affiliate licensees, together with the federally regulated telephone companies will themselves best be able to determine, subject to Commission review, the appropriate terms and conditions for interconnection within the broad framework established in this decision. They possess the technical expertise as well as other relevant information necessary to negotiate mutually acceptable interconnection arrangements.

All federally regulated telephone companies are directed to negotiate with conventional public and private mobile radio providers or their representatives to develop terms and conditions, to be included in their proposed tariffs, that will permit the interconnection of mobile radio systems to the PSTN. In addition,Bell and B.C. Tel are directed to negotiate with Cantel, and, where relevant, the telco affiliate licensee, to determine the terms and conditions for the interconnection of their cellular systems to the telco networks.

3. Technical Standards - Cellular and Conventional Interconnection

Positions of the Parties

Bell stated that public mobile services are an extension of the PSTN and that responsibility for quality of service must be shared by all service providers. Accordingly, appropriate standards should be developed through consultation among the federally regulated carriers and other service providers. According to Bell, standards for the interconnection of private mobile radio systems could be developed by a body such as the Terminal Attachment Program Advisory Committee (TAPAC).

Several parties agreed that TAPAC, or a similar body with representatives from interested parties, should develop the necessary standards. Others suggested that the current issues of Certification Standards CS-01 and CS-03, approved by TAPAC, are adequate. Some parties also stated that standards must be compatible with those in the U.S. Finally, DOC stated that it was prepared to establish technical standards and certification procedures for the interconnection of radio systems.

Although several parties argued that standards should be uniform throughout the country, some suggested they should contain only those parameters required to protect the network from harm. They indicated that signalling systems should not be included in these mandatory standards.

Conclusion

The Commission notes the statement by DOC that it would be prepared to establish technical standards and certification procedures for the interconnection of radio systems and is of the view that DOC would be the appropriate body to do so.The Commission notes that DOC has indicated that cellular systems must be technically and operationally compatible with each other and with systems operating in the United States.

4. Quality of Service - Conventional Interconnection

Positions of the Parties

As previously stated, the federally regulated telephone companies, particularly B.C. Tel, NorthwesTel and Terra Nova, argued that conventional RCC interconnection would have a detrimental impact on the quality of radio-telephone service provided.

While DOC contended that conventional RCC interconnection would have little impact on telephone network development, it expressed concerns about spectrum congestion.

Conclusion

Assuming that appropriate technical standards will be developed as set out in the preceeding section and taking into account that conventional mobile telephone service will be provided in a competitive environment, the Commission is of the view that no further requirements are necessary to protect against degradation of service.

As regards the question of maintenance, the Commission does not consider that a telephone company's responsibilities should extend beyond those it has for the services it provides.

Insofar as traffic congestion is concerned, the Commission is not convinced that it is necessary or that it would be practical to impose or monitor restrictions on peak hour use or impose higher charges for air time.

The Commission is also not convinced that interconnection will lead to an alteration in the nature of the service provided. Limited spectrum prevents conventional systems from becoming pure radio-telephone services, especially in markets where they would be competing directly with cellular radio service. Further, the submissions from conventional operators indicated that they desired interconnection to enhance, not replace, dispatch service.

The Commission considers that the system operator is in the best position to determine the mix of radio-telephone and dispatch traffic that most effectively serves the needs of his customers. The Commission, therefore, proposes that the system operator determine and apply whatever restrictions are considered appropriate, subject to any limitations that may be imposed by DOC.

5. Point of Interconnection, Digital Connection, Tone Signalling - Cellular Radio

Positions of the Parties

In their comments, Bell and B.C. Tel suggested that cellular mobile radio- telephone systems be connected to the Class 5 central office or local exchange switch rather than to the Class 4 toll switch. CRCCA and others stated that interconnection at the Class 4 level would offer a cellular licensee important advantages such as full control of operations, alternative routing capabilities, billing capabilities and remote switching capabilities. Celtel stated that the cellular switch should be permitted to be connected to toll connecting trunks from Class 4 serving offices and that the cellular switch should be designated as a Class 5 office rather than be treated as an advanced form of PBX. Moreover,the cellular switch should be provided with its own central office (NNX) code.

In response to arguments as to the advantages of Class 4 interconnection, Bell stated that it was not aware of cellular operations which would be adversely affected by use of the Class 5 central office switch. Moreover, Class 4 interconnection would not provide any additional alternate routing, billing or remote switching capabilities. The company pointed out that the majority of cellular calls are local and that, from a network perspective, it is inefficient to route local calls through the toll switch. Further, the assignment of a complete central office NNX code (comprising 10,000 numbers) to a cellular operation could result in a significant underutilization of telephone numbers. In Bell's opinion, the assignment of existing numbers in blocks of 100 is a much more efficient approach to number assignment and utilization. Bell indicated that its proposed method of interconnection would also apply to any cellular service provided by the company.

B. C. Tel agreed with Bell that the connection of cellular systems to a Class 4 office is contrary to proper network design principles. Moreover, Class 5 connection would enable the cellular operator to provide a full range of local services.

Cantel, in reply, stated that, where the adequate performance of end office functions can be assured through the interconnection of a cellular switch at a Class 5 exchange, such interconnection would be adequate; however, where such performance is only possible at a Class 4 switch, this should be the point of interconnection.

Another issue of concern was whether service would be provided from the cellular switch to the serving central office by analog or by digital trunks. Celtel maintained that digital connection to the switched network must be made available. Bell indicated it would consider such connection provided that service requirements are defined, appropriate tariffs and technical standards are developed and suitable facilities are negotiated. In addition, CNCP Cellular requested tone signalling on the central office trunks rather than the dial pulse signalling proposed by Bell. Bell replied that its document "CMTS Interconnection to Bell" provided for optional tone signalling.

Conclusion

The Commission considers that Bell and B. C. Tel should offer Cantel at least the same level of interconnection, under the same terms and conditions, as they provide to their own cellular operations or, where relevant, to telco affiliate licensees. Where this would result in Class 5 connection, and Cantel desires Class 4 connection, the parties should negotiate such interconnection, and tariffs should be filed therefor, reflecting any additional costs involved.

Since Bell has indicated a willingness to provide digital connection and tone signalling under appropriate conditions, the Commission considers that the telephone companies and Cantel, or where appropriate, the telco affiliate licensees, should negotiate the provision of these features taking into account the standards required to prevent harm to the network, the availability of facilities and any additional costs.

6. Revenue Arrangements

a) Toll Revenue Sharing - Cellular Positions of the Parties

Positions of the Parties

As previously noted, several parties, including Celtel, CNCP Cellular, CRCCA, EEMAC, Lenbrook, Motorola, TAS and the Director suggested that stimulation of MTS revenues will occur as a result of the interconnection of cellular mobile radio systems. In this context, CRCCA also noted that,in the United States, there is a division of toll revenue between telephone companies and the RCC operator who receives a commission of 33 per cent of the toll revenues generated by his customers. Other parties, including CMA, CPA and KVA, considered that there would be virtually no effect on MTS revenues.

Bell stated, in reply, that it believes that MTS calls made on mobile radio systems will largely be calls displaced from other business, residence or public telephones. Consequently, Bell saw no significant impact on MTS revenue, assuming no toll bypass. Based on its comments, Bell saw no justification for sharing toll revenues.

Conclusion

At this time, there is no evidence as to the extent to which, if at all, cellular radio will contribute to stimulation of toll revenues. In this regard, the Commission notes that the choice of intercity routing of cellular traffic by cellular licensees will have an impact on the manner in which revenues for cellular system toll calls will be distributed. Therefore, the Commission considers that it would be premature to make a regulatory determination with regard to the sharing of toll revenues. Should the parties determine that such revenue settlement arrangements are required, the Commission would expect them to negotiate suitable arrangements.

b) Billing and Collection Compensation Cellular and Conventional

Positions of the Parties

In its document "CMTS Interconnection to Bell", Bell stated that toll calls would be charged to a cellular system operator rather than directly to the subscribers of such a system. Celtel stated that, although its system design could meet this requirement, its preference would be for Bell to bill subscribers individually for toll calls. In reply, Bell pointed out that billing arrangements was one of the items it proposed for discussion.

Conclusion

The Commission considers that arrangements for the billing and collection of toll charges should be negotiated by the parties. If a cellular licensee, an RCC or their agent is to perform a billing and collection function on behalf of the telephone company, compensation for the performance of that function should be part of these negotiations.

7. Rates for Cellular System Interconnection

Positions of the Parties

In its document "CMTS Interconnection to Bell", Bell presented illustrative rates for interconnection between its facilities and those of a cellular radio system. Bell stated that, where applicable, tariffed rates for comparable components of other services currently approved, or filed for approval, had been used. The Company noted that other rates would be developed as required and would be filed for approval in due course.

Many parties were of the view that rates for interconnected facilities should be based on current tariffs for paging telephone numbers and standard business trunks. Moreover, these rates should be identical for the cellular operations of all cellular licensees.

Conclusion

As a general rule, the Commission considers that existing General Tariff rates should be used to the extent possible by Bell and B. C. Tel for the interconnection of Cantel's cellular service, or, where relevant, for the service provided by a telco affiliate licensee. Where this is not possible, the Commission considers that cost-based rates should be developed. The Commission anticipates that, if B. C. Tel provides cellular service in-house, the supporting information filed by it in respect of the proposed rates for that service would, for costing purposes, incorporate applicable tariffed rates for the use of underlying facilities.

a) Local and Interexchange Channels and Transmission Equipment

i) For local and interexchange channels, Bell and B. C. Tel the respective General Tariff rates
are to be applicable.

ii) For transmission equipment, Bell and B. C. Tel shall apply same tariff items used for
interconnection of like facilities by CNCP.

b) Four-Wire Trunks

Bell and B. C. Tel are to submit tariffs for four-wire trunks which are in accordance with their current practice for charging of four-wire facilities.

c) Telephone Numbers and Central Office Equipment

The Commission has considered both Bell's illustrative rates in "CMTS Interconnection to Bell" and the rates established in Colins Inc. et al v. Bell Canada: Final Rates, Telecom Decision CRTC 81-1, 12 January 1981 (Decision >81-1), for 100 telephone numbers and the associated outpulsing used by paging companies. In the latter case, the Commission approved a rate of $73.75, which has since been increased to $82.05 for B. C. Tel and $78.15 for Bell. The Commission considers that these rates are appropriate for cellular system interconnection. As regards trunk circuit equipment, the Commission is of the view that, in the negotiation process, further examination of the differences between the trunk terminations required for paging service in contrast with cellular service would be desirable.

With regard to rates for connection to a Class 4 office switch or rates for an entire NNX code, the Commission considers that Bell and B. C. Tel should enter into negotiations with Cantel and, where relevant, the telco affiliate licensees to develop cost-based rates. Rates should thereafter be submitted for interim approval, together with supporting cost information.

d) Other Rates

Certain other rates might be required for services provided by Bell and B.C. Tel to provide for cellular system interconnection, such as rates for maintenance and answer supervision. Where applicable, the companies will be required to file tariffs for approval of such rates based on costs.

8. Rates for Conventional Interconnection

The Commission expects that most of the rates discussed in the previous section will be applicable to the interconnection of conventional mobile systems to the networks of all federally regulated telephone companies. The Commission considers that, where different rates are required, they should be based on the same criteria, that is, General Tariff rates wherever possible and cost-based rates in all other cases.

V IMPLEMENTATION

1. Technical Standards - Cellular and Conventional

At such time as technical standards and certification procedures have been developed, it would be the Commission's intention to direct the federally regulated telephone companies to file tariffs for Commission approval which will specify that only equipment certified to these standards and so appropriately marked may be connected to their PSTN.

2. Interconnection

Conventional RCC's, or associations representing them, wishing to negotiate are to notify the appropriate federally regulated telephone company on or before 7 May 1984 and send a copy of this notice to the Commission by that date.

All federally regulated telephone companies must file a written report with the Commission, on or before 23 July 1984, describing the status of all negotiations for conventional RCC interconnection.

Bell and B. C. Tel must file a written report with the Commission, on or before 23 July 1984, describing the status of the negotiations with Cantel and, where applicable, with the telco affiliate licensees.

As for the terms and conditions for interconnection of private mobile radio systems, the Commission directs the federally regulated telephone companies to negotiate with each provider, representative or association on a case-by-case basis.

3. Tariffs

Upon completion of each of the aforementioned negotiation processes, individual federally regulated telephone companies are expected to file tariff pages for approval by the Commission reflecting agreements reached during such negotiations and the guidelines set out in this decision. Tariffs for the interconnection of cellular and conventional RCC's services shall, except with the prior approval of the Commission, be filed on or before 17 September 1984. Tariffs for the interconnection of private mobile radio systems shall be filed after the conclusion of negotiations with interested parties, or such other time as the Commission may determine is appropriate. All interested parties, including Cantel and, where relevant, telco affiliate licensees, conventional RCC's and operators of private mobile radio systems, will then be given an opportunity to comment on the proposed tariffs. Should it appear that there remains disagreement as to matters requiring resolution in order for the tariffs to take effect, the Commission may prescribe terms and conditions, give further directions regarding negotiations among interested parties or take whatever other action appears appropriate to resolve the outstanding issues.

J. G. Patenaude
Secretary General