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Ottawa, 28 November 1986
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Telecom Decision CRTC 86-21
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SED SYSTEMS INC. v. TELESAT CANADA, BELL CANADA, BRITISH COLUMBIA TELEPHONE COMPANY, NORTHWESTEL INC. AND TERRA NOVA TELECOMMUNICATIONS
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I INTRODUCTION
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On 10 June 1986, SED Systems Inc. (SED) filed with the Commission an application seeking relief against Telesat Canada (Telesat), Bell Canada (Bell), British Columbia Telephone Company (B.C. Tel), NorthwesTel Inc. (NorthwesTel) and Terra Nova Telecommunications Inc. (Terra Nova) (together, the respondents) under sections 265, 320 and 321 of the Railway Act and Part IV of the National Transportation Act. In its application, SED applied for orders
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a) directing Telesat to file tariffs within 90 days for the provision of interconnected private line
services with respect to the respondents;
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b) fixing the appropriate compensation to be paid by Telesat to Bell, B.C. Tel, NorthwesTel and
Terra Nova for the interconnection of Telesat's facilities to their facilities for the purpose of
providing interconnected private line services; and
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c) directing the respondents to permit the attachment of customer-provided earth station
equipment to their facilities where such equipment is used in the provision of interconnected
private line services.
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SED also applied for interim relief pending final disposition of its application.
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Answers to the SED application were filed by Terra Nova on 15 July 1986, by NorthwesTel on 16 July 1986, and by Bell, B.C. Tel and Telesat on 18 July 1986. SED filed its reply on 28 July 1986.
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II THE SED APPLICATION
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In its application, SED stated that, since its incorporation in 1972, it has been involved in the manufacturing and marketing of satellite television receivers, microwave components and agricultural monitors. Among SED's products is the Skyswitch satellite communications system which is used in private communication networks.
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In support of its application, SED referred to the 16 July 1985 Memorandum of Agreement (the amendments) amending Schedule A to the 1976 Connecting Agreement between Telesat and the members of Telecom Canada (the Connecting Agreement) and noted that, under the amendments, Telesat can provide satellite-based interconnected private line services. Before this development can become a reality, however, it is essential, in SED's view, that Telesat file the necessary tariffs.
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SED also noted that the compensation to be paid by Telesat to the federally regulated telephone companies for such interconnection must also be determined by the Commission. Lastly, business users must, in SED's submission, be permitted to attach customer-provided equipment such as the SED Skyswitch to Telesat's facilities.
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III THE RESPONDENTS' ANSWERS
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The respondents opposed the SED application and urged the Commission to dismiss it. Telesat characterized the SED application as an application for interconnection with a company falling under CRTC jurisdiction. In such a case, in Telesat's submission, consistent with the Commission's findings in CNCP Telecommunications: Interconnection with Bell Canada, Telecom Decision CRTC 79-11, 17 May 1979 (Decision 79-11), the applicant must make out a prima facie case in support of its application. Telesat argued that SED has assumed that interconnection will be granted as of right and that SED need not establish a prima facie case. Telesat took the position that SED had filed no evidence in support of its application.
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With reference to the relief sought by SED in paragraph (a) above, Telesat argued that SED is seeking an order directing Telesat to file tariffs to offer services the company currently does not offer. Telesat argued that the Commission cannot order a company to provide a particular service and that its jurisdiction is limited to approving, modifying or rejecting the terms, conditions and rates of a service once a company has decided to offer it.
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Telesat took the position that the issue of compensation in paragraph (b) above is ancillary to the filing of tariffs and arises only when the service requiring compensation is offered.
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Regarding the relief sought in paragraph (c) above, Telesat noted that, as of 1 April 1986, earth station equipment owned either by a subscriber or by SED can be attached to Telesat's space segment facilities provided it complies with the appropriate technical standard issued by the Department of Communications (DOC). Further, Telesat noted that SED may deal directly with Telesat by virtue of the amendments to the Connecting Agreement. In Telesat's submission, SED has the right to attach its earth station facilities to Telesat's facilities; however, only Telesat may offer interconnected private line services. Those who are not parties to the Connecting Agreement would need to negotiate interconnection agreements with the relevant telephone company. In summary, Telesat took the position that SED cannot obtain through Telesat the right to provide interconnected private line services.
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In its answer, Bell took the position that the issue of the appropriate compensation to be paid by Telesat to Bell need only be addressed at such time as Telesat decides to introduce interconnected private line service. As regards the attachment of customer-provided earth station equipment for use in the provision of these services, Bell submitted that the SED application is deficient with respect to numerous matters specified in Decision 79-11. Accordingly, in Bell's submission, a proper evaluation of the nature of the proposed attachment cannot be made. B.C. Tel expressed similar concerns.
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NorthwesTel submitted that approval of the SED application as it affects NorthwesTel's operating areas is not in the public interest. Terra Nova submitted that the SED application should be denied until such time as a number of matters, including an interconnection agreement between Telesat and Terra Nova, have been resolved.
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IV THE SED REPLY
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In reply, SED referred to Telesat Canada and Bell Canada - Amendments to Connecting Agreement Between Telesat Canada and Telecom Canada, Telecom Decision CRTC 86-9, 8 May 1986 (Decision 86-9), in which the Commission approved the amendments to the Connecting Agreement. SED noted the statement in that decision that the amendments would allow all users of satellite services to deal directly with Telesat, an arrangement the Commission has long supported. SED also referred to the Commission's statement in that decision that the amendments will allow Telesat to offer interconnected private line services and that, in offering such services, the Commission considered that it would be appropriate for Telesat to pay contribution charges similar to those which CNCP is required to pay pursuant to Decision 79-11. SED emphasized that its application simply requests that Telesat file tariffs to offer satellite-based interconnected private line services.
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As regards the attachment of customer- provided equipment, SED noted that, while Telesat would appear to permit the necessary attachment, the order sought in paragraph (c) above would be nevertheless necessary in the cases of the other respondents.
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V CONCLUSIONS
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Telesat filed its application for approval of the Connecting Agreement in January 1977. This agreement provided for, inter alia, the interconnection of Telesat's satellite facilities with the facilities of the members of Telecom Canada. In Telesat Canada, Proposed Agreement with Trans-Canada Telephone System, Telecom Decision CRTC 77-10, 24 August 1977, the Commission concluded that approval of the Connecting Agreement would not be in the public interest on the basis that, inter alia, approval of the agreement would raise a substantial likelihood of undue preference to Telecom Canada. On 3 November 1977, the Commission's decision was reversed by Order in Council P.C. 1977-3152 and the Connecting Agreement was approved.
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Telesat's application for approval of the amendments to the Connecting Agreement was filed on 15 July 1985. Bell filed a similar application on 16 July 1985. The Commission also received an application from Telesat, under Tariff Notice 114, dated 15 July 1985, for the approval of revisions to its General Tariff CRTC 8001 to reflect the proposed changes. In Telecom Orders CRTC 85-534 and 85-535, dated 21 August 1985, the Commission granted interim approval to the proposed amendments and tariff revisions. On 30 August 1985, the Commission issued CRTC Telecom Public Notice 1985-61 inviting comments from interested persons. Comments were submitted by Canadian Business Telecommunications Alliance; CNCP Telecommunications (CNCP); the Director of Investigation and Research, Combines Investigation Act; edmonton telephones; Ministry of Transportation and Communications, Government of Ontario; and NorthwesTel.
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In Decision 86-9, the Commission granted final approval to the amendments to the Connecting Agreement. These amendments, taken together with the interconnection rights granted by the Connecting Agreement, provided Telesat the contractual right to offer private line services interconnected with the public switched telephone network. In its decision, the Commission noted that it had long supported the regime established by the amendments under which all users of satellite services could deal directly with Telesat. The Commission also noted the need to establish, and the agreement by Telesat to pay, contribution charges similar to those which CNCP is required to pay pursuant to Decision 79-11. However, rather than address the details of implementation of this regime in Decision 86-9, the Commission decided that the tariff revisions of the respondents dealing with interconnected services to be provided by Telesat should be dealt with outside the context of the proceeding dealing with the amendments to the Connecting Agreement.
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The application by SED has been characterized by some of the parties as a request for systems interconnection between SED-provided earth stations and the public switched telephone network. In the Commission's view, however, the arrangement sought by SED with respect to the use of customer-provided earth stations is properly viewed as being in the nature of attachment of customer-provided terminal equipment rather than systems interconnection. In this context, SED is seeking from the Commission an order allowing users to attach customer-provided earth stations to Telesat's space segment facilities in order to derive interconnected satellite-based private line services.
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By virtue of the amendments to the Connecting Agreement, Telesat has the right to offer its space segment facilities directly to end users and to have these facilities interconnected to the public switched telephone network. These rights having been achieved, Telesat and the mother respondents who are members of Telecom Canada should not, in the Commission's view, be permitted to preclude the type of arrangement sought by SED. By so doing, they would be granting themselves a preference vis à vis suppliers who wish to provide users with earth stations for this purpose. The Commission has concluded that this preference would not be in the public interest and would consequently be undue and constitute a breach of section 321(2) of the Railway Act. Accordingly, the Commission grants relief to SED as regards the respondents which are members of Telecom Canada as set out in the order below.
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To facilitate the derivation of interconnected satellite-based private line services using customer-provided earth stations, changes to Telesat's tariff for partial channels would be desirable. In Telesat Canada - Proposed General Tariff CRTC 8001, Telecom Decision 82-7, 24 September 1982, the Commission noted that it would review the increment size of Telesat's partial channel service offering. Presently, satellite capacity is available from Telesat in increments of 1% of a full R transponder. Since private line services may require capacity in other than 1% increments, the Commission finds it appropriate to require modifications to Telesat's partial R channel service tariff so that a customer may obtain and pay for units of capacity closer to actual customer requirements.
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The finding of an undue preference by Telesat and the other respondents who are members of Telecom Canada arises by virtue of the Connecting Agreement, as amended, between Telesat and the members of Telecom Canada. By contrast, in the cases of NorthwesTel and Terra Nova, which are not parties to the Connecting Agreement, the same finding cannot be reached. Accordingly, the Commission denies relief to SED as regards the respondents Terra Nova and NorthwesTel.
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In view of the fact that, as set out below, the tariff revisions required to implement relief on a final basis are to be filed within 30 days of the date of this decision, the Commission has decided not to grant the application for interim relief.
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VI ORDER
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The Commission therefore orders the following relief:
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1. Bell and B.C. Tel are directed to file, within 10 days of the date of this decision, proposed tariff
revisions providing for the interconnection of Telesat's space segment facilities with the public
switched telephone network. These proposed tariffs shall contain terms and conditions similar
to those contained in their respective tariffs for the interconnection of CNCP's facilities.
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2. Telesat is directed to file, within 30 days of the date of this decision, proposed tariff revisions
specifying:
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(a) that customer-provided earth stations complying with appropriate standards may be
attached to Telesat's space segment facilities to derive interconnected private line services;
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(b) the rates, terms and conditions associated with interconnection to the public switched
telephone network based on the proposed tariffs filed pursuant to article 1. above; and
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(c) amendments to Item 4.4.2(a) and Item 4.4.2(b) of Telesat Tariff CRTC 8001 for Partial RF
Channel Service providing that a customer may obtain and pay for units smaller than
increments of one percent of a full period R channel service.
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Fernand Bélisle
Secretary General
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