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Telecom Decision
Ottawa, 22 May 1987
Telecom Decision CRTC 87-5
BELL CANADA - APPLICATION TO DENY THE RESALE BY CALL-NET TELECOMMUNICATIONS LTD. OF SERVICES AND FACILITIES PROVIDED BY BELL CANADA AND CNCP TELECOMMUNICATIONS
I BACKGROUND
In Enhanced Services, Telecom Decision CRTC 84-18, 12 July 1984 (Decision 84-18) the Commission established the ground rules for distinguishing between enhanced and basic services, removed the restrictions on resale and sharing to provide enhanced services, and thus created the opportunity for competition to develop with respect to the provision of enhanced services. In order to facilitate the development of these competitive opportunities, a method of dispute resolution was established which puts the onus on the carrier to show that a service is not permissible. This procedure was adopted to ensure that a carrier cannot delay the provision of service to a reseller based solely on its opinion of whether a particular service is basic or enhanced. Rather, it allows a reseller the option of proceeding to provide a service based on the reseller's own opinion as to the nature of the service and its assessment of the attendant business risk involved. This method of dispute resolution remains in force and is now, pursuant to Tariff Revisions Related to Resale and Sharing, Telecom Decision CRTC 87-2, 12 February 1987, applicable to the full range of resale and sharing opportunities currently permitted.
On 20 October 1986, Call-Net Telecommunications Ltd. (Call-Net) applied to the Commission pursuant to section 59 of the National Transportation Act and Decision 84-18 for an interim ex parte order requiring Bell Canada (Bell) to furnish Call-Net immediately with the telecommunications services and facilities specified in its application. Call-Net stated that its object was to provide enhanced telecommunications services in accordance with Decision 84-18.
Bell had advised Call-Net by letter to Call-Net's agent, Telecommunications Terminal Systems, dated 17 October 1986, that it would not provide the services and facilities requested until Call-Net could satisfy Bell that the services that Call-Net proposed to offer were enhanced.
By letter dated 21 October 1986, the Commission invited Bell to comment on the Call-Net application. Bell filed its reply comments on 23 October 1986.
On 24 October 1986, the Commission advised Bell and Call-Net that it was granting Call-Net's application. It noted Bell's position that the proposed Call-Net services would be basic services. The Commission, however, said in its letter that it
is not now in a position to determine the nature or primary function of the proposed services. Accordingly, the Commission is not determining their nature or primary function at this time. As contemplated in Decision 84-18, Bell can apply at any time to deny the resale or sharing should it be able to provide evidence upon which the Commission could make such a determination. Should the Commission determine that the primary function of the proposed services is to provide a basic service, of course Bell would no longer be obliged to provide the underlying services and facilities.
Shortly thereafter, Call-Net began to provide telecommunications services.
II INTRODUCTION
On 3 February 1987, Bell filed an application pursuant to section 57 of the National Transportation Act, requesting approval of several orders: first, an order stating that Call-Net's proposed services are basic in nature and are not to be provided through the resale of Bell's services and facilities or those of CNCP Telecommunications (CNCP); second, an order denying resale by Call-Net of Bell's services and facilities and permitting Bell to cease providing the underlying services and facilities; and third, an order requiring CNCP to cease supplying Call-Net with services and facilities. Bell argued that Call-Net is currently providing a basic telecommunications service or, in the alternative, that services that Call-Net is providing to the extent that they may not be basic have as their primary function the provision of a basic service. Bell added that, more specifically, the Call-Net services constitute an alternative to Bell's Message Toll Service (MTS) and Wide Area Telephone Service (WATS). Call-Net and CNCP filed their answers on 6 March 1987. Bell filed its reply on 23 March 1987.
III CALL-NET'S SERVICES
A. Description
1. Call-Net's Network
In its answer, Call-Net described the services that it leases from Bell and CNCP and the services that it offers to its customers. Call-Net has obtained WATS, local access services, and interconnected private lines from Bell and CNCP. Call-Net's customers gain access to these facilities through Call-Net's PBXs in Montreal and Toronto to route calls to points in Ontario and Quebec. Call-Net's network is also connected to the facilities of RCI Corporation, a long distance services provider situated in the United States, which permits Call-Net customers to route calls to the U.S.
2. Customer Dialed Account Recording
Call-Net offers a service called customer dialed account recording (CDAR), that it described as its core service. All its customers subscribe to CDAR. Customers routing long distance or local calls over the Call-Net network are provided with the following CDAR features:
i) call account codes that are 2 to 21 digit codes;
ii) call authorization codes that are required to complete calls, thus providing security to customers; and
iii) bi-monthly billing that provides billing detail by account code.
3. Selective Call Forwarding
Selective Call Forwarding (SCF) is an optional service that permits a Call-Net customer to redirect incoming calls to another telephone number of the customer's choice.
4. Voice Mailbox
Customers of SCF automatically receive a voice mailbox accessible from remote locations to which they may direct calls. A pager option is also available which indicates to the customer whether there is a message in the mailbox.
B. CDAR and the Network
1. Positions of Parties
In its application, Bell asserted that its customers had advised it of offers of discounted long distance services by Call-Net representatives: services providing reduced rates compared with Bell's MTS rates. Bell added that the copies of Call-Net's long distance rate tables that Bell had appended to its application show such rate discounts.
Bell stated that, as shown by Call-Net documents appended to the Bell application, Call-Net provides a two-way voice grade service between Call-Net customers and the general body of telephone service subscribers. The company argued that Call-Net's network replicates Bell's MTS network and that its primary purpose is to provide a direct substitute for MTS between cities.
Bell stated that the CDAR feature uses customer authorization and account codes to offer the Call-Net customers billing options, records of calls placed or received by customers and security for certain applications. It stated further that CDAR type features are obtainable from Bell and from most terminal equipment suppliers. Bell argued that they are additions to basic services, serve only to facilitate the transmission of information, and cannot be considered to be enhanced services pursuant to Decision 84-18.
Call-Net indicated in its answer that CDAR equipped services involve "computer processing applications used to act on the content ... and other aspects of the subscribers' information" and that ".. different or restructured information may be provided the subscriber through various programming applications performed on the transmitted information."
According to Call-Net, it is clear from the Commission's definition of a basic service that CDAR equipped service is enhanced. Specifically, Call-Net noted that the Commission, in defining a basic service in Decision 84-18, stated that
in the provision of a basic service, memory or storage within the network is used only to facilitate the transmission of the information from the origination to its destination....
According to Call-Net, account code information is not required for the completion of the customer's call and, therefore, its use renders CDAR equipped service enhanced. Call-Net noted that the U.S. Federal Communications Commission (FCC) found, for this reason, that CDAR equipped service is an enhanced service. Call-Net noted further that the Commission's definitions of basic and enhanced services are identical to the FCC's in all relevant aspects.
In support of its position on CDAR, Call-Net noted that in Decision 84-18 the Commission stated that
in a basic service, once information is given to the communication facility, its progress towards the destination is subject to only those delays caused by congestion within the network or transmission priorities given by the originator.
Call-Net argued that with CDAR equipped service, delays result because the service does not allow calls to proceed to their destination until appropriate authorization and accounting information is entered and that these delays are not related to network congestion or transmission priorities given by the originator. Call-Net submitted that, therefore, this service is not basic.
Call-Net stated that CDAR, not voice transmission, is the service's primary function. It added, in support, that only 44% of its expenses relate to the lease of carrier transmission services and that CDAR cannot be viewed solely as a "marginal" service enhancement.
In its reply, Bell noted that in Identification of Enhanced Services, Telecom Decision CRTC 85-17, 13 August 1985 (Decision 85-17) the Commission found Centrex III to be a basic service. Bell noted further that Centrex III's Station Message Detail Recording (SMDR) includes account and authorization code features similar to those provided with CDAR. Bell submitted that the Commission was explicitly aware of these features when it reached its conclusion on Centrex III.
Bell noted that, in 1986, the Commission found that a CDAR equipped service offered by a company known as Morgan G. Holdings Ltd. was basic.
Bell argued that CDAR itself merely facilitates the transmission of the call by providing needed authorization information and that no delays occur with regard to the transmission of the actual voice conversation.
With respect to the FCC's finding that a CDAR equipped service is enhanced, Bell argued that there were different regulatory environments then existing in Canada and the U.S. It suggested that the FCC may now be changing its approach to the classification of enhanced services.
Bell further argued that even if a CDAR equipped service were to be considered as enhanced, the primary function of Call-Net's service would be the provision of a basic service analogous to MTS/WATS.
2. Conclusions
Call-Net's network permits its customers to make long distance calls to other telephones in much the same way as would be done using MTS but at rates that are in general lower than those applicable to MTS. It is beyond question that, without the addition of CDAR capabilities, Call-Net's service would be basic. In the Commission's view, even with the addition of CDAR capabilities, the service's primary function is still one of providing a basic service similar to MTS.
The Commission is satisfied, moreover, that Call-Net's CDAR equipped service is directed specifically to the provision of a pure transmission capability and, as such, is a basic, as opposed to an enhanced, service. The addition of CDAR billing does not make Call-Net's service enhanced any more than automated billing makes MTS enhanced. In this regard, the Commission notes two precedents. Centrex III, which is equipped with SMDR, a system similar to CDAR, was found by the Commission to be a basic service. Similarly, the Commission found the Morgan G. Holdings Ltd. service offering, which was stated to be CDAR equipped, to be basic also.
The Commission notes Call-Net's argument that CDAR equipped service is not a basic service because in "the provision of a basic service, memory or storage within the network is used only to facilitate the transmission of the information from the origination to its destination...". The Commission is not persuaded by this argument. It agrees with Call-Net that CDAR functions are not needed or used to facilitate the completion of the transmission of subscriber information. However, in the Commission's view, Call-Net's argument rests on the assumption that CDAR functions are, in fact, carried out within the network. The Commission considers that they are not: they are external to the Call-Net network. The network would be fully capable of being used with or without CDAR.
With respect to the argument that the use of authorization codes involves a delay in information transmission, the Commission notes that this delay occurs before any information to be transmitted is given to the communications facility. The Commission notes further that there is a similar type of delay with respect to MTS calls requiring credit card authorization and those that are billed to a third number.
Finally, the Commission has taken into account the references in this proceeding to the FCC's position with respect to the classification of CDAR equipped service. In this regard, the Commission notes that the FCC's decisions are made in the context of a different regulatory environment. Moreover, the Commission is satisfied that, based on the circumstances disclosed by the record of this proceeding, and taking into account the circumstances underlying its decisions regarding SMDR equipped Centrex III service and the Morgan G. Holdings Ltd. service offering, its determination that CDAR equipped service is a basic service is appropriate and correct.
C. Selective Call Forwarding
1. Positions of Parties
In its application, Bell described the SCF feature as one that provides a circuit switching function permitting Call-Net customers to have calls routed to designated telephone numbers.
Bell stated that, as in the case of CDAR, SCF type features are obtainable from Bell and from most terminal equipment suppliers. It argued that such features are additions to basic services and that they only facilitate the transmission of information and cannot be considered to be enhanced services pursuant to Decision 84-18.
In its answer, Call-Net argued that SCF is not a basic service as it is not limited to the offering of transmission capacity for the movement of information or transmission capability between two or more points suitable for a subscriber's needs. Rather, it is an interactive service which involves computer input on the routing of incoming calls so that they are handled in a manner that is most convenient and expeditious from the customer viewpoint.
In its reply, Bell argued that SCF simply performs a circuit switching function to establish a transmission link suitable for the movement of information.
2. Conclusions
In the Commission's view, notwithstanding Call-Net's characterization of its SCF service, SCF serves merely as a means of routing traffic from point of origin to desired destination. Accordingly, the Commission considers that Call-Net's SCF service falls within the definition of a basic service.
D. Voice Mailbox
1. Positions of Parties
In its application, Bell acknowledged that what it described as paging with voice mailbox may, in and of itself, be an enhanced service. It stated its belief, however, that Call-Net, through its network, would provide the links but that the paging with voice mailbox would be offered by separate paging service providers. Bell added that paging with voice mailbox is offered by many Radio Common Carriers and is standard in the paging industry. Bell submitted that, therefore, these features should not be considered by the Commission in determining the nature and function of Call-Net's service.
Call-Net's position was that as long as a service includes enhanced features it is enhanced. In this regard, it referred to Decision 85-17 wherein the Commission stated that
it is of the view that it is the availability rather than the use of the enhanced feature that is relevant for the purpose of characterizing a service as enhanced. The definition of a basic service in Decision 84-18 states clearly that a basic service is one that is limited to the offering of transmission capacity for the movement of information. If a service is not so limited in its applications, then the Commission considers that the service should be classified as enhanced.
In its reply, Bell reiterated that the fact that voice mailbox is enhanced does not mean that Call-Net should be permitted to bundle the service with its SCF service and then classify the combined service as enhanced.
Bell's position was that the statement of the Commission in Decision 85-17, quoted by Call-Net, was made in the context of a stand alone service that could be used for either basic or enhanced purposes. It argued that it should not be applicable in the case of two bundled services. Bell noted that primary exchange services and MTS/WATS can be used to connect to enhanced features such as a voice mailbox and that it would be ludicrous on that basis to classify them as enhanced services.
2. Conclusions
In the Commission's view, voice mailbox service is an enhanced service and, as with all enhanced services, it makes use of basic services. This, of course, does not imply that those same basic services are enhanced when used on a stand alone basis. Nor does it imply, in the Commission's view, that those same basic services can be considered enhanced simply because, at the customer's option, they may also be used in the provision of an enhanced service.
The Commission notes that its statement in Decision 85-17 referred to by Call-Net was made in the context of protocol conversion features associated with Bell's Datapac service. In that decision, the Commission found that the service was enhanced even though protocol conversion may not necessarily take place on every transmission.
Whether or not protocol conversion takes place in such cases, however, does not result from a choice made by a customer but rather results from the fact that, in certain circumstances, the sending and receiving terminals use the same protocol. In the context of this proceeding, the situation is different in that the customer in every case chooses whether to route a call to a mailbox or to another telephone.
In the Commission's view, Call-Net is in effect providing two separate services: (1) SCF service and (2) voice mailbox service that is accessed using SCF. The first of these services is a basic service. The second of these services is an enhanced service. In the Commission's view, the act of providing the two services in a single marketing package does not change the status of either component.
IV THE COMMISSION'S DECISION
In light of the above, the Commission finds that resale of Bell's or CNCP's services and facilities to provide Call-Net's services, except its voice mailbox service and the routing of calls thereto, contravenes Decision 84-18. Accordingly, effective 30 days from the date of this decision, the Commission directs both Bell and CNCP to cease supplying underlying services and facilities to Call-Net for resale to provide its services other than voice mailbox service and the routing of calls thereto.
Fernand Bélisle
Secretary General
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