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Ottawa, 12 February 1987
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Telecom Decision CRTC 87-2
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TARIFF REVISIONS RELATED TO RESALE AND SHARING
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I BACKGROUND
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A. General
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In Interexchange Competition and Related Issues, Telecom Decision CRTC 85-19, 29 August 1985 (Decision 85-19), the Commission denied an application by CNCP Telecommunications (CNCP) to be permitted to compete with Bell Canada (Bell) and British Columbia Telephone Company (B.C. Tel) in providing Message Toll Service (MTS) and Wide Area Telephone Service (WATS). With regard to resale and sharing of these and other services, the Commission directed Bell, B.C Tel, CNCP, NorthwesTel Inc. (NorthwesTel), Telesat Canada (Telesat) and Terra Nova Telecommunications (Terra Nova) to file, by 26 November 1985, tariff revisions allowing sharing to provide primary exchange voice services, sharing of MTS to provide MTS, and resale and sharing to provide all services other than MTS and WATS and primary exchange voice services. In addition, the Commission invited the carriers to file rate revisions for interexchange services, other than MTS/WATS, which they believed necessary prior to the introduction of resale and sharing in that market.
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The carriers' proposals were filed under Bell Tariff Notice 1896, B.C. Tel Tariff Notice 1239, CNCP Tariff Notice 325, NorthwesTel Tariff Notice 209, Telesat Tariff Notice 122 and Terra Nova Tariff Notice 327. In CRTC Telecom Public Notice 1986-17, (Public Notice 1986-17), CRTC Telecom Public Notice 1986-18 (Public Notice 1986-18) and CRTC Telecom Public Notice 1986-19 (Public Notice 1986-19), all issued on 24 February 1986, the Commission called for comment on all the carriers' proposed revisions allowing resale and sharing to provide all services except MTS/WATS and primary exchange voice services and on proposals for rate revisions for interexchange services filed by Bell and B.C. Tel. In these public notices, the Commission stated that the carriers' proposed revisions could result in varying interpretations of the resale and sharing permitted by Decision 85-19. Further, the Commission noted that it would be desirable for the carriers' tariffs to reflect a consistent interpretation of Decision 85-19 with respect to resale and sharing and, accordingly, invited comment on restrictions to be included in these tariffs that would apply to the resale and sharing of facilities so as to preclude the offering of MTS/WATS services.
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With regard to resale and sharing, parties responding to Public Notices 1986-17, 18 and 19 generally agreed that a consistent interpretation of the resale and sharing permitted by Decision 85-19 should be reflected in the carriers' tariffs. There was disagreement, however, as to whether resale and sharing restrictions should be facilities-based or service-based. CNCP argued that any restrictions necessary to prevent competition in the provision of MTS/WATS should apply equally to CNCP and to resellers and sharers.
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In its reply, Bell suggested specific wording for resale and sharing restrictions, utilizing facilities-based restrictions as described in CNCP Telecommunications: Interconnection with Bell Canada, Telecom Decision CRTC 79-11, 17 May 1979 (Decision 79-11) with modifications for resale and sharing. In letters dated 20 May 1986, Canada Systems Group (CSG) and Canadian Business Telecommunications Alliance, Association of Competitive Telecommunications Suppliers, Canadian Association of Data and Professional Service Organizations, Canadian Bankers' Association and Canadian Business Equipment Manufacturers' Association (collectively, CBTA et al) requested an opportunity to file comments on these proposed restrictions.
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In CRTC Telecom Public Notice 1986-42, dated 3 July 1986 (Public Notice 1986-42), the Commission approved, with some modifications, the rate revisions filed in Bell Tariff Notice 1896 and B.C. Tel Tariff Notice 1239.
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In Public Notice 1986-42, the Commission also stated that, having considered all submissions in response to Public Notices 1986-17, 18 and 19, it was satisfied that, in order to provide a clear framework for the early introduction of resale and sharing in the non-MTS/WATS market, facilities-based restrictions on resale and sharing would be desirable. The Commission stated, in this public notice, that restrictions of the type set out in Bell's reply would be responsive to the Commission's desire to introduce resale and sharing in the non-MTS/WATS market on a consistent basis for all the carriers. The Commission stated further that examination of such facilities-based restrictions by interested persons, as requested by CSG and CBTA et al, could be best achieved by first requiring the telephone companies to file specific tariff provisions which would then be the subject of comments.
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Accordingly, the Commission directed the carriers to file proposed tariffs to implement facilities-based restrictions for resale and sharing using the restrictions described in Decision 79-11 suitably modified for resale and sharing. The Commission stated that this should permit, in accordance with Decision 85-19, resale and sharing to provide interconnected and non-interconnected data services, non-interconnected voice services and certain interconnected voice services. The Commission set out a procedure to afford interested persons the opportunity to comment on the proposed tariffs.
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B. Sharing Agreements
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In its Tariff Notice 122, filed pursuant to Decision 85-19, Telesat, in addition to submitting proposed tariff revisions for resale and sharing, proposed that sharers be required to submit formal sharing agreements to Telesat and that the parties to a sharing agreement be jointly and severally liable.
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Canadian Satellite Communications Inc. argued, in response to Public Notice 186-19, that the requirement for a formal sharing agreement should be applicable only when each sharer wants to be billed by Telesat but not in cases where one sharer is appointed to represent others in dealing with, and being billed by, Telesat.
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Telesat replied that its proposed requirements are needed to ensure that, if a sharer in a given arrangement defaults, Telesat can recover from the others without unnecessary litigation.
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In Public Notice 1986-42, the Commission stated the view that this issue may be relevant to other carriers where there are joint sharing agreements under which a carrier bills each sharer directly. Accordingly, the Commission invited further comment on this issue.
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C. Centrex
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In its Tariff Notice 1239, filed pursuant to Decision 85-19 B.C. Tel included proposed tariff revisions allowing the sharing of Centrex but including a requirement that, in any given sharing arrangement, each sharer be obliged to pay the Centrex line bill minimum. Bell did not propose such a requirement.
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In responding to Public Notice 1986-18, CBTA et al stated that, because the Centrex line rates are lower than individual business line rates, there is every incentive for users to obtain Centrex lines instead of individual business lines if this can be arranged. CBTA et al stated further that allowing the Centrex line bill minimum to apply to sharers as a group, rather than to each sharer within a group, would have a definite impact on the market for PBX's with which Centrex competes.
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CBTA et al proposed that there be a proceeding dealing with a variety of issues related to Centrex, following which a decision on the resale and sharing of Centrex could be rendered.
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With regard to B.C. Tel's proposed requirement concerning the minimum bill obligation each Centrex sharer, the Commission did not find, in Public Notice 1986-42, that any additional burden would be placed on B.C. Tel that would justify the application of the bill minimum in the manner proposed. With regard to the effect of Centrex sharing on the PBX market, the Commission noted that, since it regulates Centrex rates, it can ensure that the bill minimum remains appropriate and that Centrex rates are just and reasonable.
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The Commission concluded that it would be more appropriate to consider concerns related to Centrex in the context of general rate proceedings and, accordingly, denied CBTA et al's proposal. In addition, the Commission denied B.C. Tel's proposed minimum bill obligation for each Centrex sharer. The Commission stated that B.C. Tel's proposed tariff revisions to permit sharing were to be amended accordingly.
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In response to Public Notice 1986-42, comments were received from the carriers; Cam-Net Communications Inc. (Cam-Net); CSG; the Canadian Business Equipment Manufacturers' Association (CBEMA); CBTA et al, including Canadian Petroleum Association and Hotel Association of Metropolitan Toronto; Canadian Manufacturers' Association (CMA); Canadian Network Services Inc.; Comshare; T. Eaton Co.; Dupont Canada Inc.; IBM Canada Ltd.; Infotron Canada; Livingston Group Inc.; Ministry of Transportation and Communications, Government of Ontario (Ontario); Ontario Hydro; Royal Trust; Stelco Inc.; Telecomsyst Services Inc. (TSI); and Westinghouse Canada.
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A. Proposed Restrictions
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1) Proposed Tariffs
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In response to Public Notice 1986-42, Bell and B.C. Tel filed tariffs under Tariff Notices 1896B and 1239A respectively, containing proposed restrictions on resale and sharing similar to those proposed in Bell's reply to comments received in response to Public Notices 1986-17, 18 and 19. As such, the proposed restrictions were based on the restrictions established by the Commission in Decision 79-11, including provisions which would require resellers and sharers of interconnected data services to apply for exemption from the restrictions.
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NorthwesTel's proposed restrictions were much like Bell's and B.C. Tel's, except that they did not include the restrictions on interconnected data services proposed in Bell's and B.C. Tel's filings.
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Bell, under Tariff Notice 1896A, and B.C. Tel, under Tariff Notice 1239A, filed proposed amended restrictions with respect to customer-provided terminal equipment in order to make these restrictions consistent with their proposed restrictions on resale and sharing of interexchange services.
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CNCP filed restrictions, based on Decision 79-11, on shared and resold services and on services provided by CNCP. CNCP proposed that the Decision 79-11 restrictions be modified for resale and sharing by excluding the data service restrictions and the restrictions stating that the circuit and service must be dedicated to the subscriber's private use. CNCP also filed rates which were intended to match those approved for Bell and B.C. Tel in Public Notice 1986-42.
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Terra Nova filed restrictions similar to those it had filed originally.
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Telesat's filing was the same as its original one and dealt primarily with liability under a joint sharing agreement.
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Interveners generally expressed concern that the restrictions proposed by Bell and B.C. Tel would prohibit a number of attractive resale and sharing opportunities and would severely limit any benefits that could be achieved through resale and sharing. Many interveners also opposed the proposed requirement for Commission approval of sharing and resale to provide interconnected data services.
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CMA submitted that facilities-based restrictions modelled on the Decision 79-11 restrictions would be particularly inappropriate for resale and sharing; these restrictions were developed when all resale and sharing was prohibited and were specifically focussed on preventing provision by CNCP of MTS and WATS. It contended that such restrictions are often difficult to interpret and that definitions of MTS and WATS would still be required. CMA further stated that the restrictions proposed by Bell and B.C. Tel would effectively eliminate many, if not all, of the opportunies for resale and sharing. Finally, CMA submitted that the proposed data restrictions are contrary to the intent of Decision 85-19 and to Enhanced Services, Telecom Decision CRTC 84-18, 12 July 1984 (Decision 84-18).
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CBEMA took issue with Bell's proposed definition of circuit as "a single electrical transmission path". CBEMA noted that this would exclude fibre optic and radio transmission technologies from the definition of a circuit.
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Cam-Net, CBTA et al, CMA and CSG argued that the proposed requirement that each circuit be dedicated to a particular user would preclude resale and sharing operations from developing and passing on the real efficiencies of joint use arising from advanced technologies such as dynamic assignment of bandwith and circuits on a real time basis, or at varying times.
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CBTA et al and CSG argued that facilities-based restrictions of the Decision 79-11 type would be inappropriate in the context of resale and sharing. CBTA et al and CSG noted that the restrictions established by Decision 79-11 were designed to prevent CNCP from competing directly with the telephone companies in the MTS and WATS market. They argued that these restrictions were also designed to ensure that the then existing rules against resale and sharing could not be circumvented by users ordering services from CNCP.
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CBTA et al noted that all private line services divert traffic from MTS/WATS and therefore erode MTS/WATS revenues. It was therefore of the view that the Commission's concern in this proceeding should not be preventing any MTS/WATS revenue erosion but rather striking a balance between permitting a reasonable amount of resale and sharing on the one hand and preventing an unreasonable amount of MTS/WATS revenue erosion on the other.
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Having stated its preference for service-based restrictions, CBTA et al submitted that, in the event facilities-based restrictions were preferred, the key facilities-based feature to be considered which distinguishes MTS/WATS from private line or other non-MTS/WATS voice services is some form of dedicated access. CBTA et al supported CSG's proposed facilities-based restrictions, under which each voice services customer of a reseller or member of a sharing group would be required to establish a primary dedicated access link. Having done so, the customer or member of a sharing group would then be entitled to secondary dial access. CSG stated that the high costs of the local loop required for a dedicated access link would have the effect of limiting resale and sharing. CBTA et al and CSG were of the view that the requirement for a primary dedicated access link would promote the benefits of resale and sharing while protecting MTS/WATS revenues from significant erosion. They indicated that the Commission could provide further protection of MTS/WATS revenues by imposing a required ratio of dedicated access facilities to dial access facilities.
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CBTA et al and CSG opposed the Bell and B.C. Tel proposal of a requirement for sharers and resellers of interconnected data services to apply to the Commission for orders removing the restrictions applying to interconnected voice services. CSG noted that, for over a decade, companies providing shared data processing services have shared or resold data circuits amongst their customers. CBTA et al and CSG were of the view that the proposed restrictions on interconnected data services would result in the imposition of an expensive and unwarranted regulatory burden on sharers and resellers of such data services, especially if the restriction were applied on a circuit-by-circuit basis.
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Bell and B.C. Tel objected to CNCP's proposal in Tariff Notice 325A to exclude the requirement, currently applicable to interconnected services provided by CNCP, that the circuit and service must be dedicated to the subscriber's private use. Bell noted that the proposed exclusion would permit the use of an individual circuit by more than one end user, in contravention of Decision 79-11. B.C. Tel argued that it would increase the potential for the provision of MTS and WATS equivalent services.
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2) Sharing Agreements
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In response to Public Notice 1986-42, Bell submitted that a member of a sharing group willing to assume full responsibility for all charges for service provided to the sharing group would be the company's customer and a sharing agreement would not be required. Bell submitted that, otherwise, a sharing agreement would be appropriate. With respect to the issue of liability in cases where a sharing agreement is required, Bell proposed joint and several liability for sharers leasing services that are subject to initial service periods exceeding one month. Regarding the sharing of services leased on a month-to-month basis, Bell suggested two options for the assignment of liability: first, that all sharers would be jointly and severally liable; or second, that each sharer be responsible only for his portion of the service. Noting that the second option involved more risk for the company, Bell suggested that a one-time charge to each sharer might be appropriate to compensate the company for that risk.
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B.C. Tel and CNCP were of the view that, in all cases, sharing agreements providing for joint and several liability would be appropriate. CNCP stated that, unless sharers were jointly and severally liable for all charges incurred by the sharing group, the carrier would be unnecessarily vulnerable in the event of a default by one or more of the sharers.
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B.C. Tel proposed that billing arrangements could be flexible. In the event that each member of a sharing group was billed separately, however, administrative charges would be required to cover the extra billing costs. CNCP indicated a preference for billing one member only of a sharing group due to the added administrative costs of billing each member separately.
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NorthwesTel and Terra Nova stated that they would prefer that one party assume full responsibility, including payment of bills, for the services shared by the group. They stated that to do otherwise would result in unnecessary administrative expense.
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CBTA et al was of the view that, especially where one party in a sharing group agreed to assume full responsibility for payment, it would be unnecessarily burdensome and costly to require each member of the group to sign an agreement assuming joint and several liability for the carrier's benefit.
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CSG was of the view that a joint sharing agreement would be neither practical nor appropriate and would result in increased administrative costs.
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B. Other Matters
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1 CNCP Price Differentials
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In its comments in response to Public Notice 1986-42, Bell took issue with the way in which CNCP's proposed tariffs apply the 5% and 10% price differentials that were established for CNCP's interconnected voice services in CNCP Telecommunications - Rates for the Provision of Interconnected Private Line Voice Services, Telecom Decision CRTC 83-10, 26 July 1983 (Decision 83-10). Bell noted that, as a result of the rate revisions approved in Public Notice 1986-42 for its interexchange voice grade channel and Telpak services, bulk discounts will commence with the lease of 7 channels rather than 12. Bell objected to CNCP's tariff revisions that proposed to continue to permit those channels qualifying for bulk discounts up to and including 11 channels to be subject to a price differential of 10%. Bell submitted that for 7 or more channels between the same two points, CNCP should be limited to a price differential of 5%.
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2) Centrex
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Regarding Centrex, CBTA et al stated in response to Public Notice 1986-42 that, while some benefits could accrue to business users from Centrex sharing arrangements, the telephone companies' approach to Centrex could lead to the re-monopolization of significant parts of the terminal equipment market. CBTA et al requested that the Commission schedule a full proceeding to deal with all aspects of Centrex.
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C. The Carriers' Replies
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Regarding the issue of service-based restrictions as opposed to facilities-based restrictions, Bell argued that, while service-based restrictions are clear as to intent, effective implementation of this intent requires a description of the facilities provided to subscribers and of the restrictions on their use. Bell submitted that its proposed restrictions do not represent a change from the resale and sharing activities intended to be permitted by the Commission in Decision 85-19.
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B.C. Tel, NorthwesTel and Terra Nova supported this view. B.C. Tel stated that service-based restrictions would result in the Commission ruling on disputes on a case-by-case basis. Such a process, B.C. Tel submitted, would be costly, difficult and time consuming and would place an undue burden on the Commission and the telephone companies.
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B.C. Tel disagreed with CSG's argument that the Decision 79-11 restrictions would be inappropriate in the resale and sharing context. B.C. Tel stated that these restrictions were designed to prevent MTS/WATS competition but not the sharing of CNCP services.
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Bell submitted that the intent of the Commission in Decision 85-19 with respect to resale and sharing is consistent with the Commission's intent in Decision 79-11 with regard to the provision of services analogous to MTS/WATS.
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Bell and B.C. Tel agreed with CBEMA that the definition of circuit as an "electrical transmission path" is inappropriate given current technology. Bell suggested that the term "transmission path" would be more valid.
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In response to the argument that the proposed restrictions prevent the efficiencies which could arise out of joint use of telecommunications services through the use of advanced technologies, Bell and B.C. Tel argued that use of such technological devices by resellers and sharers would permit the provision of services in the nature of MTS/WATS. SICT/WATS.
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Concerning CSG's proposal that the sole restriction be a ratio, set by the Commission, of dedicated to dial-up local access facilities for each customer, Bell replied that this would result in significant MTS/WATS revenue erosion. Bell submitted that interconnected voice networks that do not dedicate interexchange facilities to individual customers are MTS equivalents. B.C. Tel agreed but also argued that, regardless of whether dial-up facilities provide access to dedicated or switched interexchange facilities, the resultant service would be the equivalent of MTS.
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In reply to arguments against their proposed data restrictions, Bell and B.C. Tel argued that the proposed restrictions do not represent an attempt to impose restrictions on data services. They argued that, rather, the restrictions, if approved, would provide potential entrants with the opportunity to assure themselves that carriers could not arbitrarily impose restrictions to prevent the provision of data services by such entrants.
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Bell submitted that the application for exemption, required under the Decision 79-11 data restrictions, need not be as onerous as described by CBTA et al. In this regard, Bell noted that CNCP has required only one application to the Commission to enable it to provide data services to all subscribers with dial access to its Infoswitch services. With respect to CMA's concerns about enhanced services, B.C. Tel stated that it has no intention of applying the data restrictions to enhanced service providers, as Decision 84-18 has already established the framework for the provision of such services.
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Telesat reiterated its position that, regardless of billing arrangements, all members of a sharing group should be jointly and severally liable.
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Regarding Bell's and B.C. Tel's arguments concerning CNCP's proposed restrictions, CNCP submitted that its proposals are in conformity with the Commission's direction that the carriers file facilities-based restrictions using restrictions established in Decision 79-11 suitably modified for resale and sharing. CNCP argued that the revisions proposed to the existing tariff were those necessary to permit resale and sharing. Regarding the application of the price differentials established by Decision 83-10, CNCP defended its approach by stating that the decision established that a 5% discount was applicable to the equivalent of Telpak A which was 12 channels.
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III CONCLUSIONS
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A. Introduction
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The tariff revisions proposed by the carriers in this proceeding have regard to resale and sharing to provide all services other than MTS and WATS and primary exchange voice services, sharing to provide primary exchange voice services and sharing of MTS to provide MTS.
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For the purposes of this decision, the Commission has classified the resale and sharing dealt with in this proceeding as follows:
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i) resale and sharing to provide interexchange voice services other than MTS and WATS that
provide access to the public switched telephone network (interconnected voice services);
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ii) resale and sharing to provide interexchange voice services that do not provide access to the
public switched telephone network (non-interconnected voice services);
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iii) resale and sharing to provide data services;
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iv) resale to provide all local voice services other than primary exchange voice services;
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v) sharing to provide local voice services; and
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vi) sharing of MTS to provide MTS.
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The tariff revisions necessary to implement Items iv), v) and vi) above were not at issue in this proceeding and, accordingly, are dealt with in Part IV of this decision without further discussion.
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B. Resale and Sharing to Provide Interconnected Interexchange Voice Services Other than MTS and WATS
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1) Basis for Restrictions
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In Decision 85-19, the Commission decided that it was not in the public interest at that time to permit resale and sharing to provide MTS/WATS services. At the same time, the Commission's determination, in Decision 85-19, to allow resale and sharing to provide non-MTS/WATS interexchange voice services was made on the basis that there would be no substantial erosion of MTS/WATS contribution. In implementing Decision 85-19, therefore, the Commission has been mindful of the need, for both of these reasons, to ensure that the competitive entry of resellers and sharers that is permitted does not result in the provision of services that are in the nature of MTS/WATS. The Commission continues to be of the view expressed in Public Notice 1986-42 that tariff revisions are required that provide a clear framework from the outset for resellers, sharers and carriers to implement the resale and sharing permitted by Decision 85-19.
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In this regard, the Commission considers that, if a resale and sharing market were to be established in accordance with service-based restrictions, precise and unequivocal service-based definitions of MTS and WATS would be required to ensure the necessary clear framework. In the Commission's view, the record has not provided definitions having the necessary clarity and precision to serve as the basis for service-based restrictions that would ensure that resale and sharing is implemented in Accordance with Decision 85-19.
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The Commission considers that, if service-based restrictions were applied in the absence of precise and unequivocal definitions, the Commission would be required to rule frequently and on a case by case basis on whether services to be provided through resale and sharing comply with approved restrictions. The resulting process would necessarily entail considerable ongoing uncertainty in the market, and increased cost arising from the regulatory burden that would be imposed on resellers, sharers and the carriers.
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Facilities-based restrictions, on the other hand, would, in the Commission' opinion, be more objective in nature and leave substantially less room for the kind of uncertainty that would arise with service-based restrictions. Accordingly, the Commission has concluded that the restrictions relating to resale and sharing to provide non-MTS/WATS interconnected interexchange voice services should, for the purposes of this decision, be facilities-based.
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Having decided to use facilities-based restrictions, there remains the question of which specific facilities-based restrictions would be acceptable. The restrictions advanced by CBTA et al and CSG would permit a mix of dedicated and dial access facilities for each customer of a reseller, and each member of a sharing group, according to a ratio which would be set by the Commission. The Commission is of the view that such restrictions would permit resale and sharing to provide WATS and MTS equivalents and, as such, would not be consistent with the intent of Decision 85-19. Accordingly, the Commission considers that such restrictions are not acceptable.
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The Commission notes that the resale and sharing envisaged in Decision 85-19 permits entry by resellers and sharers into the non-MTS/WATS market where there is currently facilities-based competition permitted pursuant to Decision 79-11. This being the case, the Commission considers that the use, as a departure point, of the existing facilities-based restrictions applicable to CNCP, with modifications suitable for resale and sharing, is the appropriate means of carrying out the intent of Decision 85-19. The Commission is of the view that applying these restrictions will meet the objective of preventing MTS/WATS type competition and of avoiding substantial MTS/WATS contribution erosion while at the same time ensuring that there is a clear framework for the introduction of resale and sharing in the non-MTS/WATS market.
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2) Determinations Regarding Specific Restrictions
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As indicated above, the Commission recognizes that certain modifications to the Decision 79-11 facilities-based restrictions are required to make them suitable for the resale and sharing market.
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The first modification has regard to the development of technology since Decision 79-11 was issued. The Commission considers that the change proposed by CBEMA, namely, to remove electrical from the current definition of circuit as an electrical transmission path, is appropriate. In modifying the definition in this way, the Commission is taking account of the variety of transmission technologies with which a circuit may be provided, while maintaining the concept of a circuit as a physical path.
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With regard to the second set of modifications, Decision 79-11 includes a restriction requiring dedication of the use of the interconnected voice circuit to a single subscriber. In the market contemplated by Decision 79-11, however, the subscriber and the user are one and the same while, in a resale market, the reseller will be the subscriber and the reseller's customers will be the users.
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Bell's and B.C. Tel's proposed restrictions would require that resold or shared circuits be dedicated to a particular customer of a reseller or member of a sharing group. With regard to resale, the Commission agrees with Bell's and B.C. Tel's proposed approach. The Commission considers that the provision of services in the nature of private line voice services entails a relationship in which the user of the service leases a fixed number of circuits for a fixed amount of time. Further, the Commission considers that joint use of reseller-provided circuits by the reseller's customers, as would be allowed under CNCP's proposed restrictions, could result in services in the nature of MTS/WATS that would result in substantial MTS/WATS contribution erosion. For example, under such an arrangement, customers would have access to the reseller's circuits, with the attendant financial obligation of each customer generally being based on the customer's own usage.
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The resale of circuits which are dedicated to a particular user, on the other hand, would give rise to a relationship between the reseller and the user similar in nature to the relationship between the carrier and the subscriber/user contemplated by Decision 79-11. The resultant services provided for dedicated use, would be in the nature of the private line voice services described above and would be in conformity with the intent of Decision 85-19.
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The Commission considers that, by contrast with the effect of joint use of reseller-provided circuits, the joint use of circuits dedicated to a sharing group would not result in services in the nature of MTS/WATS. To ensure that no instances could arise in which sharing would in fact amount to resale for joint use of services, the Commission has decided to add the requirement that, where a sharing group wishes to provide interconnected voice services to its members, the sharing group shall obtain its services directly from a carrier and shall enter into and file with the carrier an agreement pursuant to which each member of the sharing group shall be jointly and severally liable for all charges payable to the carrier.
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Consistent with the foregoing conclusions with respect to restrictions on resale and sharing to provide interconnected voice services, the Commission has established a definition of a user as
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a sharing group or a customer of a reseller using the company's telecommunications services
for the user's private communications needs
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and, as stated above, it has established a restriction that requires that each circuit be dedicated to a user.
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C. Resale and Sharing to Provide Non-Interconnected Interexchange Voice Services
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The Commission notes that non-interconnected voice services can be terminated on customer provided equipment in a manner which could permit these services to provide access to the public switched telephone network (PSTN). The Commission considers, therefore, that the necessary tariff revisions should include, in addition to a statement allowing such resale and sharing, a requirement for an affidavit from the reseller or sharing group stating that the system is and will continue to be configured so that access to the PSTN will not be permitted.
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D. Resale and Sharing to Provide Data Services
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The Commission is of the view that it is not necessary to require resellers and sharers who provide interconnected data services to apply for exemption from the restrictions established in Part III B above. The Commission is of the view that such an application process would place an undue regulatory burden on resellers and sharers and, with respect to enhanced services, would be contrary to the intent of Decision 84-18.
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E. Other Matters
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1) Resolution of Disputes
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In situations where a carrier considers that a reseller or a sharing group is providing service in violation of the restrictions on resale and sharing, the Commission considers that a process similar to that established for enhanced services in Decision 84-18 would be appropriate. The Commission has decided, therefore, that where a carrier considers that a resale or sharing service contravenes the approved restrictions on resale and sharing, the carrier may apply to the Commission to deny the resale or sharing for the purpose of providing that service. The carrier will be required, however, to permit the resale or sharing to continue pending disposition of the application.
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2) CNCP Price Differentials
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One of the determinations made in Decision 83-10 was that a 5% price differential should apply to interconnected private line voice channels that are subject to bulk discounts. The Commission considers that determination to be applicable in this case and, accordingly, approves CNCP's proposed rates in Tariff Notices 325A and 325B with the exception of the proposed method of applying the price differential.
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With regard to applying the differential, the Commission notes that, in Public Notice 1986-42, it approved changes to Bell's and B.C. Tel's tariffs for Trans-Canada Telpak Service which permit Telpak discounts to be applied to groups of seven channels or more. In that public notice, the Commission also approved similar changes for Bell's intra-company Telpak tariff. Consistent with these changes, the Commission considers that tariffs which provide for a 10% price differential on the first 6 channels and a 5% differential thereafter, where bulk facilities rates would apply, would be appropriate.
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3) Centrex
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CBTA et al, in its comments in response to Public Notice 1986-42, requested that the Commission schedule a separate proceeding on Centrex. The Commission notes, as it did in Public Notice 1986-42, that since Centrex is required to be offered pursuant to approved tariffs, it can ensure that such rates and conditions remain appropriate in a resale environment. The Commission is satisfied, therefore, that concerns with regard to any re-monopolization of significant parts of the terminal equipment market arising from Centrex rates are unfounded. Accordingly, CBTA et al's request is denied.
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IV TARIFF REVISIONS
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To provide for the implementation of resale and sharing pursuant to Decision 85-19, the carriers are directed to file tariff revisions reflecting the restrictions set out in Appendix A, modified as required to be consistent with the services offered by each carrier. Further, the Commission directs Bell and B.C. Tel to modify their tariffs for interconnection with CNCP and BC Rail Ltd. (B.C. Rail) to permit the provision of interconnected voice services so that they are in accordance with the restrictions set out in Appendix A.
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With regard to Bell's and B.C. Tel's proposed restrictions on customer provided terminal equipment, the Commission directs the carriers to file new restrictions that are consistent with the restrictions in Appendix A.
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Finally, CNCP is directed to file tariff revisions in respect of price differentials to reflect the Commission's finding set out above.
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Bell and B.C. Tel currently have tariffs providing for joint use of individual business line, PBX, semi-public telephone and TWX services. As the tariffs to be filed pursuant to Decision 85-19 would allow joint use of these services at lower cost to users than is the case under the current joint use tariff, Bell and B.C. Tel have proposed that the existing tariffs be withdrawn. In view of its conclusions in this decision in respect of tariff filings for joint use of these services, the Commission considers this appropriate and directs Bell and B.C. Tel to file tariff revisions accordingly.
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The Commission directs that the tariff revisions required above be filed within 15 days of the date of this decision.
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With regard to the rates for interexchange services that were approved in Public Notice 1986-42, the Commission reiterates its direction, contained in that public notice, that these rates are to come into effect coincident with the effective date of the tariff revisions referred to above.
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CNCP and B.C. Rail may file with the Commission and serve on Bell and B.C. Tel comments on the proposed revisions to Bell's and B.C. Tel's interconnection tariffs within 10 days of the filing date of the proposed revisions and Bell and B.C. Tel may file replies within 10 days of receipt of comments.
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Finally, the Commission points out that the restrictions on resale arising from Resale to Provide Primary Exchange Voice Services, Telecom Decision CRTC 87-1, 12 February 1987, are set out in Appendix A. Further, for ease of reference, the restrictions on resale and sharing arising from Decision 84-18 have been incorporated into Appendix A.
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Fernand Bélisle
Secretary General
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APPENDIX A
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1. For purposes of this tariff item:
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"circuit" means one or more facilities which, connected in tandem, provide a single transmission path between two or more points;
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"data service" means telecommunications service other than a voice service:
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"Foreign Exchange Service" is an interexchange service;
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"interexchange service" means a service configured to operate between any two exchanges for which Message Toll Service charges would apply;
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"resale" means the subsequent sale or lease on a commercial basis, with or without adding value, of telecommunications services leased from the Company;
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"reseller" means person engaged in resale;
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"sharing" means the use by two or more persons, in an arrangement not involving resale, of telecommunications services leased from the Company;
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"sharing group" means group of persons engaged in sharing;
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"user" means a sharing group or a customer of a reseller using the Company's telecommunications services for the user's private communications needs;
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"voice service" means a two-way telecommunications service involving direct real-time voice communication between two or more natural persons, but does not include a service the voice aspect of which is limited to the coordination or setting up of a data service.
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2. The Company's telecommunications services may be shared or resold in accordance with the conditions set out below.
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(1) The Company's services may be shared or resold to provide enhanced services whose
primary function is not the provision of a basic service precluded hereunder.
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(2) The Company's services may be shared or resold to provide data services.
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(3) The Company's services may be shared or resold to provide basic interexchange voice
services that do not provide access to the public switched telephone network subject to the
following. Where a basic interexchange voice service of this type utilizes a company-provided
circuit which is not dedicated to the user and is terminated at user's equipment that has
access to the public switched telephone network, the reseller or sharing group shall file with
the Company an affidavit stating that the system is and will continue to be configured so as
not to permit bridging or other connection of the circuit to the Company's public switched
telephone network.
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(4) (a) Subject to subparagraph (b), the Company's services may be shared or resold to provide
basic local voice services, with the exception that resale to provide public pay telephone
service is not permitted.
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(b) Resellers offering shared tenant services must provide the company with direct access,
under reasonable terms and conditions, to tenants who choose to receive service from the
company rather than, or in addition to, service from the reseller.
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(5) The Company's services other than Message Toll Service and Wide Area Telephone Service
may be shared or resold to provide basic interexchange voice services that provide access to
the public switched telephone network, subject to the following restrictions:
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(a) each Company-provided circuit shall be dedicated to the user;
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(b) one end of each Company-provided circuit shall be terminated at equipment dedicated to
the user or at a Centrex facility dedicated to the user;
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(c) where a Company-provided circuit used by a reseller service terminates at the Company's
local central office switching equipment, the circuit shall not pass through a non-user
provided switch;
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(d) a sharing group shall obtain services directly from the Company;
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(e) a sharing group shall enter into and file with the Company a sharing agreement pursuant
to which each member of the sharing group shall be jointly and severally liable for all
charges payable to the Company.
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(6) The Company's Message Toll Service may be shared or resold to provide message toll
service.
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