ARCHIVED -  Telecom Decision CRTC 88-11

Telecom Decision

Ottawa, 16 August 1988

Telecom Decision CRTC 88-11

RESALE TO PROVIDE ENHANCED SERVICES

I BACKGROUND

In Bell Canada - Application to Deny the Resale by Call-Net Telecommunications Ltd. of Services and Facilities Provided by Bell Canada and CNCP Telecommunications, Telecom Decision CRTC 87-5, 22 May 1987 (Decision 87-5), the Commission determined that the Customer Dialed Account Recording (CDAR) equipped service and the Selective Call Forwarding (SCF) service by Call-Net Telecommunications Ltd. (Call-Net) are basic services as defined by Enhanced Services, Telecom Decision CRTC 84-18, 12 July 1984 (Decision 84-18).

As a result of this finding, the Commission determined that resale of the services of Bell Canada (Bell) and CNCP Telecommunications (CNCP) to provide these basic services contravened Decision 84-18. Accordingly, the Commission directed Bell and CNCP to cease supplying Call-Net with the underlying services and facilities for those services within 30 days.

Upon consideration of applications for review, Decision 87-5 was upheld by both the Commission and the Governor in Council. However, by Order in Council P.C. 1988-265, dated 11 February 1988, the Governor in Council permitted Call-Net continued access to Bell and CNCP services until 19 August 1988 in order to provide it with further time to restructure its business operations to conform with Decision 87-5.

On 26 April 1988, the Commission received an application from Bell requesting that a proceeding be commenced with a view to ensuring that Call-Net comes into conformity with Decision 87-5 by 19 August 1988. Bell submitted that, as a result of the various determinations and pronouncements of the Commission and of the Governor in Council, Call-Net is subject to an obligation to commence action to restructure its SCF and CDAR equipped services, such that, by 19 August 1988 these services would indeed conform to the relevant Commission decisions. The company contended that non-conformity as of that date would require that Bell and CNCP implement the Commission's directive in Decision 87-5 to cease supplying Call-Net with the underlying services and facilities used by Call-Net to provide these services to its subscribers.

Bell noted that, while Order in Council P.C. 1988-265 provides a clear timeframe within which Call-Net must undertake and complete a restructuring of its services, the Order is silent with respect to certain related matters. Bell noted that the Order does not specify a procedure by which to determine the adequacy of the restructuring of Call-Net's services; nor does it specify the role to be played by the Commission in making such a determination and, prior thereto, in supervising Call-Net's restructuring of its services during the grace period that concludes on 19 August 1988. Bell submitted that such a procedure would eliminate the prospect of further prolonged delays extending beyond 19 August 1988. Accordingly, in order to resolve the situation by 19 August 1988, Bell contended that it was both necessary and expedient for the Commission to establish a proceeding which would allow the parties an opportunity to state clearly their respective views on the adequacy of the steps taken or proposed to be taken by Call-Net to ensure that its services conform with existing regulatory requirements.

On 24 May 1988, the Commission received an application from Call-Net, requesting that the Commission reassess the present enhanced services regime. Call-Net further requested that the Commission evaluate Call-Net's services, including proposed new features, following the Commission's reassessment and prior to Call-Net incurring further expenditures in order to implement those new features. Call-Net proposed to implement these features if they are found to meet regulatory requirements. In its application, Call-Net described the features it would provide to its subscribers as:

° the real time transmission of the telephone numbers of callers (incoming call identification);

° detailed information on incoming calls including call origination, duration, time of day, number of calls per hour, type of calls through user interaction and incoming call trends (incoming call management);

° an alerting message at 30 second or one minute intervals to indicate the lapsed time of the voice message (alerting message); and

° call-recording capability that records voice messages and permits their retrieval, either during or after the termination of the message (voice recording, storage and retrieval).

Call-Net contended that serious problems exist with the present enhanced services regime. For example, Call-Net suggested that it is doubtful that any voice service - as defined by the Commission in CNCP Telecommunications: Interconnection With Bell Canada, Telecom Decision CRTC 79-11, 17 May 1979 (Decision 79-11) - could qualify as an enhanced service under the Commission's definition arising out of Decision 84-18.

In particular, Call-Net contended that, since the Commission permitted resale to provide any data service in Tariff Revisions Related to Resale and Sharing, Telecom Decision CRTC 87-2, 12 February 1987 (Decision 87-2), only providers of voice services must still look to Decision 84-18 for guidance as to whether or not they may resell carrier services.

Call-Net further argued that, as a result of Decision 87-5, little scope (if any) remains for enhanced voice services. Call-Net contended that the Commission has interpreted the definitions in Decision 84-18 to the effect that if underlying telecommunications services are capable of being used with or without a given enhancement - and notwithstanding the fact that they are not available to customers without the enhancement - the combined service is basic. Call-Net contended that it is axiomatic that telecommunications facilities providing two-way real-time voice communication between two or more persons can be used with or without an enhancement, and that the determination in Decision 87-5 effectively means that a voice service, as defined by the Commission, may never be considered enhanced. In its opinion, if this were the case, given that resale to provide any data service is permitted already under Decision 87-2, there would seem to be no substance to Decision 84-18 or to the provisions in the Appendix to Decision 87-2 relating to resale to provide enhanced services.

Call-Net noted that since the Commission developed its enhanced services regime in 1984, it has relaxed restrictions on resale and sharing and significantly reduced Message Toll Service (MTS) rates, thus allowing some revenue erosion and reducing the MTS profit margins that contribute to potential revenue erosion.

There was, in Call-Net's view, a clear need to re-examine the enhanced services tests in light of these regulatory developments and in light of the approach taken by the Commission in other regulatory proceedings regarding the introduction of new services. It was Call-Net's position that there should be some mechanism to determine if the impact of a new service on carriers' revenues is outweighed by the benefits of that new service to the public.

Call-Net argued that concerns about competition and revenue erosion may influence the technical classifications of a service as enhanced or basic. It contended that the technical definitions in Decision 84-18 have been interpreted restrictively to the point that they no longer provide clear guidelines to potential entrants as to what services will be considered enhanced. There is a need, in Call-Net's opinion, to return to the original tests as formulated in Decision 84-18, and to apply them in the straightforward manner intended.

Call-Net stated that the primary function test, because it focuses on the function of the service provided, rather than on such factors as its utility to users, demand in the marketplace, and availability from other sources, does not appear to be a particularly good test upon which to base enhanced services policies. Moreover, Call-Net argued that the primary function test fails to assess the projected impact of the new service on long distance revenues and fails to take into account other Commission policies that permit similar revenue erosion to occur.

Call-Net contended that the public interest test applied in interconnection proceedings is a more appropriate test. In this test, the Commission carefully considers any significant benefits or disadvantages, including the benefits (especially to small and mid-size users) of introducing a new service and the possible adverse effects of undue revenue erosion, which would arise if the application was approved.

In Call-Net's view, this type of test is much better suited to the goals of the enhanced services policy and is more consistent with the tests applied by the Commission in similar circumstances where competing regulatory interests are involved.

In Resale To Provide Enhanced Services, CRTC Telecom Public Notice 1988-25, 10 June 1988 (Public Notice 1988-25) the Commission initiated this proceeding. In that public notice, the Commission noted that, although Call-Net had not yet filed a restructuring plan, it had provided in its application of 24 May 1988 some information about the features it proposed to add to its CDAR equipped service. In order to provide timely assistance to Call-Net, the Commission determined that it would be appropriate to make a preliminary finding with respect to these features. Based on the record concerning Call-Net's CDAR equipped service, including the information provided regarding the proposed added features, the Commission considered, on a preliminary basis, that the CDAR equipped service would remain a basic service even with the addition of the new features. Further, it was the Commission's preliminary view that the service would continue to have as its primary purpose the provision of public long distance service via resale.

The Commission noted that if its preliminary view was confirmed as a result of the proceeding commenced by Public Notice 1988-25, then Call-Net's CDAR equipped service would continue to contravene the rules specified in Decision 84-18, as well as the more recent rules governing resale and sharing specified in Decision 87-2. Accordingly, the Commission noted that it would expect Call-Net to have planned appropriate alternative measures for bringing its operations into conformity with these decisions by 19 August 1988. The Commission noted that the public record associated with Decision 87-5 demonstrates that Call-Net's CDAR equipped service could be restructured to bring it into conformity with existing regulatory policy, by reselling Bell's MTS and offering CDAR equipped service as an adjunct to MTS or offering certain CDAR equipped services on a stand alone basis.

However, the Commission considered that it would be in the public interest to seek comment on the classification of Call-Net's CDAR equipped service with its proposed new features, on whether there is a need to clarify the Commission's rules and on the general issues raised by Bell and Call-Net. In particular, interested persons were requested to comment on:

(a) whether Call-Net's proposed modifications would conform with the Commission's rules governing resale to provide enhanced services:

(b) the need for changes or clarifications to the Commission's rules governing resale to provide enhanced services, including proposals for any such changes or clarifications;

(c) whether Call-Net's proposed modifications would conform to any proposals made under (b) above.

The Commission noted that those aspects of the proceeding set out in (b) above were intended to focus on the rules governing the provision of enhanced services, not on the general issue of the extent to which resale should be permitted in competition with MTS and Wide Area Telephone Service (WATS). Since this issue was addressed in Interexchange Competition and Related Issues, Telecom Decision CRTC 85-19, 29 August 1985 (Decision 85-19) and again in Decision 87-2, and is currently being studied in the context of the Federal-Provincial-Territorial Examination into Competition in Public Long Distance Telephone Service, the Commission determined that any review of the prohibitions on resale to provide MTS/WATS service would be beyond the scope of this proceeding.

Under the procedure established in the public notice, parties were invited to submit comments by 8 July 1988 and reply comments by 29 July 1988. The Commission indicated that it would be its intention to issue its decision by 19 August 1988.

II POSITIONS OF PARTIES

A. General

A large number of the parties in this proceeding - including small businesses, telecommunications manufacturers, distributors and high tech companies - either directly supported Call-Net or supported the need to clarify the Commission's rules. Comments from these parties generally cited the benefits of Call-Net's CDAR equipped service, particularly with respect to cost savings arising from reductions in administrative overhead, unauthorized use and personal calls. Many parties noted an increase in efficiency arising from the ability to assign calls to particular customers. Many stated that CDAR equipped service is unavailable from Bell for small businesses and that stand-alone systems are too expensive and less efficient. As a result, they argued, small firms are at a disadvantage due to their inability to generate sufficient traffic volume to obtain the discounts and value-added features available to large firms. They took the position that if the present rules prohibit the provision of such service at affordable rates for small business, particularly where the record demonstrates significant benefits, then the rules must be changed.

Many of these parties argued that the Commission's enhanced service policies run counter to its own objective of fostering a competitive marketplace. As well, some argued that these policies run counter to federal government policies promoting competition and favouring small business, and to provisions of the Free Trade Agreement (FTA) regarding enhanced services.

Other parties argued that Call-Net's application constitutes an attempt to restructure the system to conform with its service rather than restructure its service to conform with Decision 87-5. Some noted that the rules prohibiting MTS/WATS competition were found to be in the public interest by the Commission and were clearly stated in Decisions 85-19 and 87-2. It was noted that while government policy favours competition in the enhanced and computer service markets, it does not advocate NTS/WATS competition. In support of this, it was further noted that the Governor in Council has twice upheld Decision 87-5. Moreover, it was noted that the FTA proposes the use of each country's definitions for enhanced services rather than a uniform approach.

Bell argued that the number of entrants in the enhanced service market has increased since 1984 and includes a number of providers - such as General Electric Canada, Immedia Telematics Inc., McDonnell Douglas, IBM Canada, IP Sharp and Canada Systems Group - who, unlike Call-Net, are able to conform with the rules. Moreover, it was argued that CDAR equipped service is available from other providers acting within the regulatory framework. Conversely, some parties argued that there are no providers of enhanced voice services and that virtually all existing enhanced service providers were offering their services prior to 1984.

A number of parties raised the matter of the tight timeframe in which the Commission proposed to adjudicate upon the important matters raised in Public Notice 1988-25. Parties were concerned about the amount of time they were given to formulate their submissions to the Commission and, in turn, the amount of time which the Commission afforded itself to dispose of the issues raised.

B. Call-Net's Proposed Service Modifications

A number of parties contended, in support of Call-Net's CDAR equipped service, that the service is already enhanced since it involves more than basic transmission service. It was argued that subscribers act upon information and that the memory or storage within the network does more than facilitate the transmission of information. Some of these parties argued that the Commission should review Decision 87-5. Others suggested that without clarity in the primary function test there was no way to ascertain if the refinements were sufficiently enhanced.

Other parties argued that the CDAR equipped service could be restructured to be in conformity with Decision 87-5 by reselling MTS with CDAR. Opposing argument held that this would run contrary to the intent of permitting resale under Decision 84-18 by removing price/cost margins that could contribute to the viability of service and by incurring added inconvenience such as double billing. Call-Net argued that this restriction would put it out of business, causing harm and economic loss to its customers.

With regard to its first proposed modification, incoming call identification, Call-Net stated that it is interested in further developing this feature to recognize, display, screen and route calls. However, Call-Net noted that, to provide this feature, it would need access to Bell's automatic number identification (ANI) and that Bell does not provide this service. In support of this proposed modification, Call-Net noted that it would display the same type of information to a Call-Net subscriber as is displayed to a 911 service operator, and that 911 service has been found by the Commission to be enhanced. Conversely, some parties argued that Call-Net would only be passing on Bell generated information and that, in any event, incoming call identification would not alter the essential nature of CDAR equipped service which is the real time transmission of voice messages.

With regard to incoming call management, Call-Net noted that provision of this feature would also require access to ANI. In support of incoming call management, some parties cited analogies to 911 service. Conversely, other parties contended that this proposed modification is similar in nature to CDAR, which provides outgoing call management, and which was found to be basic in Decision 87-5. Call-Net argued that analogies to CDAR do not constitute a technical test.

Call-Net stated that access to ANI would also facilitate provision of its alerting message feature. In support of this proposed modification, Call-Net noted that the signalling required would be similar in nature to that used in the provision of radio-paging service, which the Commission has found to be enhanced. Opposing parties argued that the addition of signalling would not alter the basic nature of the service.

In support of the proposed voice recording, storage and retrieval modification, some parties noted similarities between it and voice-mailbox. Opposing parties argued that the addition of this feature would not affect the transmission of the message being recorded, and that the voice-mailbox aspect of the feature would be severable or could be provided as an adjunct to the transmission function.

Some parties suggested that Bell should be required to tariff services like ANI and answer supervision so that enhanced service providers could utilize these features as underlying components to a range of new services. It was argued that the unavailability for resale of enhancements built into the basic network only contributes to further monopolization of the provision of new enhanced services.

C. Need for Clarification or Changes to the Rules

Many parties submitted that in adopting the Federal Communications Commission (FCC) definition of enhanced services, the Commission had intended to provide clear guidelines to potential market entrants. These parties argued that in applying criteria that resulted in a classification of CDAR that differs from the FCC's, the Commission has contributed to market uncertainty and risk which may result in reduced investment and a reduction in the number of market entrants. It was argued that the Commission should clarify what differences exist with respect to the application of rules in the differing regulatory environments of Canada and the U.S. Some parties suggested that differences in regulatory environment should have no relationship to the application of technical rules

Some parties argued that, rather than change its rules, the Commission should apply the underlined portions of the definitions set out in Decision 84-18, namely:

A basic service is one that is limited to the offering of transmission capacity for the movement of information.

An enhanced service IS any offering over the telecommunications network which is more than a basic service.

It was argued that under these definitions the addition of CDAR to basic service would clearly result in more than a basic service. It was also suggested that any additional function that merely facilitates the transmission of information would not be considered enhanced.

Some parties argued that, by stating in Decision 87-5 that CDAR functions are external to the network and that the network could be used with or without CDAR, the Commission had adopted a more restrictive criterion than that contemplated under the definitional test adopted in Decision 84-18. These parties contended that enhanced voice services, by their nature, must utilize basic voice services as underlying facilities. In their opinion these underlying services could always, in the case of any enhanced voice service, function without enhancement. They contended that the effect of the Commission's interpretation of its rules in Decision 87-5 would be to prohibit the provision of any enhanced voice service, since all voice services under Decision 79-11 involve real-time transmission. It was argued that, if this was the case, it should be recognized in the definition when dealing with a voice service that is more than a basic service.

Some parties submitted that, if it had been the intent of the Commission in Decision 84-18 to preclude enhanced voice services, it should have been explicitly stated. Moreover it was suggested that, under the rules of Decision 87-2, the Commission continues to imply that enhanced voice services are permitted.

Some parties felt that there is confusion about the manner in which the definitions are applied. In Identification of Enhanced Services, Telecom Decision CRTC 85-17, 13 August 1985 (Decision 85-17), the Commission determined that the availability rather than the use of an enhanced feature is relevant for the purpose of characterizing a service as enhanced. However, in Decision 87-5 the Commission found that Call-Net's CDAR features are external to the network and that the network would be fully capable of being used with or without CDAR. These parties suggested that 911 service would have been considered basic under Decision 87-5 Rules.

Many parties also argued that the primary function test should either be abandoned or clarified since it provides no guidance as to when a service becomes more than marginally enhanced. Some of these parties argued that the test has no valid technical basis, but rather considers technical issues from a policy driven perspective based on speculation about revenue erosion. In that respect, it was noted that the test provides no assessment of revenue erosion.

It was the position of some parties that the Commission has adopted non-technical and restrictive criteria in defining enhanced voice services due to concern about revenue erosion. They argued that concern about revenue erosion is overstated. Further, it was submitted that, since Decision 84-18, changes in regulatory policy have reduced the need for concern. In particular, it was noted that significant reductions in MTS/WATS rates have both eroded revenues and reduced margins for potential resellers. Moreover, it was noted that any interexchange service other than MTS contributes to revenue erosion and that private line and bulk discounts available to large businesses are the most significant forms of revenue erosion.

In reply, Bell argued that there is still a significant contribution from MTS/WATS towards the costs of access. It was argued further that the purpose of an enhanced service is not to provide MTS/WATS discounts.

Some parties contended that there is no requirement to change the Commission rules regarding resale to provide enhanced services. They argued that both Decision 84-18 and Decision 87-2 are structured to permit a variety of resale activities other than resale to provide MTS/WATS. In this regard, they noted that the FCC permits MTS/WATS competition and thus has no requirement for a primary function test.

D. Proposed Changes to the Rules

Many parties suggested the adoption of a public interest or revenue erosion test for determining the acceptability of a proposed voice service either in addition to or instead of the present enhanced services tests. Among the criteria proposed for measuring either the degree of enhancement or the public interest were:

(1) Price Parties supporting this criterion argued that, where the rates for an enhanced voice service are similar to MTS rates, it can be assumed that subscribers would take the service for the enhancement. Opposing parties contended that use of this criterion would require regulation of resellers' rates to ensure that comparable rates would be charged for comparable service. In response to criticism that this approach would allow combined services to be subsidized by price margins, Call-Net submitted that it was the intent of Decision 84-18 to provide resellers such pricing flexibility in order to increase the viability of their offerings.

(2) Availability It was submitted that where proposed reseller services are not available for small business from the telephone company, the benefits of permitting them are increased.

(3) Demand Parties supporting this criterion suggested that consumer acceptance and market demand can indicate the value placed on a service by users. Opposing parties noted that resale to provide NTS/WATS could prove popular, yet be basic.

(4) Cost It was submitted that the greater the cost of the enhancement relative to the underlying service, the more likely the service is to be enhanced.

(5) Marketing It was argued that an examination of a reseller's marketing strategy can provide evidence as to the purpose of a service.

Some parties suggested that the Commission should move in the direction of the FCC towards open network architecture with the freedom to resell, coupled with an obligation by enhanced service providers to contribute towards the recovery of fixed basic network costs. It was noted that the development of telecommunications protocols in Canada and the U.S. and internationally was necessary for trade in enhanced services. Policy barriers could only stifle the logical development of open and integrated networks.

Some parties recommended that the Commission adopt an advance ruling process to help avoid problems in the future.

Parties arguing against changing the rules contended that tests such as the public interest test are more appropriate for matters such as interconnection. They submitted that a public interest test or prior approval mechanism would require increased regulatory intervention and create proceedings on every application.

Some of these parties argued that the issue of resale to provide NTS/WATS had been fully canvassed in the proceedings resulting in Decision 85-19 and Decision 87-2. Others noted that a review of resale to provide MTS/WATS was not within the scope of this proceeding. Some suggested that Call-Net's proposed public interest test is meant to enable it to do what it is prohibited from doing under Decision 84-18 and Decision 87-5. Call-Net denied that this was the case, arguing that it only proposed this test as an alternative to the primary function test in order to assess the potential advantages of allowing enhanced services that were in dispute .

III CONCLUSIONS

The first major issue in this proceeding is whether Call-Net's CDAR equipped service, with the proposed modifications, would conform with the Commission's rules governing resale to provide enhanced services. In assessing this issue, the Commission is cognizant that, in the view of some parties, Decision 87-5 should be reviewed and varied to find that CDAR equipped service is enhanced even without the proposed modifications. In this regard, the Commission notes that in Call-Net Telecommunications Ltd. - Application To Review and Vary Telecom Decision 87-5, Telecom Decision CRTC 87-14, 23 September 1987 (Decision 87-14), it concluded that Call-Net had not demonstrated any errors of fact in Decision 87-5 or substantial doubt as to the correctness of the decision. Consequently, Call-Net's application for review and variance of Decision 87-5 was denied. Further, the Commission notes that Decision 87-5 has been reviewed and subsequently upheld twice by the Governor in Council. Accordingly, the Commission finds that it is neither necessary nor appropriate for Decision 87-5 to be reviewed yet again.

Based on Call-Net's description of its four proposed modifications, the Commission finds that two of the proposed modifications, incoming call identification and voice recording, storage and retrieval, are enhanced. However, the Commission notes that all of the proposed modifications are intended to operate in conjunction with a basic voice transmission service and that the basic service could operate independently of the modifications. This is the same finding that the Commission made in Decision 87-5 with respect to Call-Net's CDAR equipped service. The Commission also concluded in that decision that Call-Net was providing a basic voice transmission service and that the nature of the service was unchanged even though it may be offered in conjunction with an enhanced service. Accordingly, pursuant to Decision 84-18, resale of interexchange private lines or WATS to provide Call-Net's basic voice transmission service is prohibited, with or without the proposed modifications.

The second major issue in this proceeding concerns the need for changes or clarifications to the present rules.

The Commission notes that the liberalized resale rules implemented under Decision 84-18 allow resale to provide enhanced services whose primary function is not the provision of a basic service. Decision 87-2 goes considerably further in adding to the permissible types of resale. The Commission notes, however, that although it is the intent of these decisions to promote competition, in neither case has the Commission found it in the public interest to permit direct competition in the provision of MTS/WATS.

In this proceeding, Call-Net and some other parties have proposed to replace the primary function test with a public interest test. The Commission notes that, as a result of the further liberalization permitted under Decision 87-2, these tests have application only in the case of resale of interexchange private lines and WATS to provide enhanced interexchange voice services with access to the public switched telephone network. Since direct competition in the provision of MTS/WATS has been found not to be in the public interest at this time, the focus for these tests should be the establishment of limits for this type of resale, beyond which it would constitute such competition. A prerequisite for the establishment of these limits is a clear definition of MTS/WATS

The Commission notes that it has already addressed this problem in the proceeding leading to Decision 87-2. In that proceeding, the issue arose in the context of trying to establish a service-based definition for MTS/WATS. The Commission ultimately found the definitional approach unacceptable and opted instead to place restrictions on the ways in which telephone company facilities could be used for resale. In the Commission's view, the rules established by Decision 87-2 provide a clear technical approach to determining which forms of resale should, in the public interest, be permitted.

The Commission notes that the public interest tests as proposed by Call-Net and some other parties contemplate a change to the rules such that the Commission would make determinations, on a case by case basis, as to whether it would be in the public interest to permit specific exemptions from the prohibition against direct competition in the provision of MTS/WATS. In the Commission's view, a regime of this nature would be extremely difficult to administer and would lead to the type of confusion and uncertainty that many parties to this proceeding seek to avoid. In any event, as stated in Public Notice 1988-25, any review of the prohibitions on resale to provide MTS/WATS is beyond the scope of this proceeding.

In light of the above, and having considered the record of this proceeding, the Commission finds it in the public interest to clarify the current rules by hereby requiring all resellers who provide interexchange voice services with access to the public switched telephone network to comply with the type of facilities-based restrictions established in Decision 87-2. This will make it absolutely clear that resale of interexchange private lines and WATS to provide direct competition with MTS/WATS, whether or not the competing service is enhanced, is currently not permitted. In practical terms, it will also have the effect of eliminating the need for resellers to distinguish between enhanced and basic services, since the same facilities-based restrictions will apply to both.

Applying the rules, as clarified, to Call-Net's CDAR equipped service, the Commission finds that, with or without the proposed modifications, the service continues to be prohibited. The Commission notes in this regard that its direction to Bell and CNCP in Decision 87-5 to cease providing Call-Net with the underlying facilities used to offer its SCF and CDAR equipped services would have been no different had the clarification made in this decision been made at that time.

The Commission is aware that many parties to this proceeding support Call-Net's CDAR equipped service as providing a useful and attractively priced tool for small and medium business. The Commission concludes, however, that this type of service cannot be provided through the resale of private lines or WATS until such time as the rules prohibiting the competitive provision of MTS/WATS are changed. For reasons already cited, it is premature and beyond the scope of this proceeding to consider such changes.

With respect to the comments of many parties concerning the high cost of telecommunications services used by small and medium sized businesses, the Commission notes that, over the past two years, it has reduced Bell's intra-company MTS rates by 26% and its inter-company MTS rates by 31%. The Commission considers that such reductions provide significant benefits to small and medium sized companies.

The Commission further notes that, contrary to the assertions of some parties, the FTA does not require that Canada and the U.S. use the same definitions for enhanced services. While it has, as an objective, the promotion of open competition in enhanced services, it only requires the same treatment for all providers under each country's respective rules.

Some parties have expressed concern regarding the tight timeframe in this proceeding, which deals, among other things, with Call-Net's application of 24 May 1988. The Commission notes that in Decision 87-5, having found that Call-Net's services, except its voice mailbox service and the routing of calls thereto, contravene Decision 84-18, the Commission directed Bell and CNCP to cease supplying underlying services and facilities to Call-Net for resale effective thirty days from the date of that decision. Thereafter, the deadline has been extended to a total of 330 days from the date of Decision 87-5. This extension represents the determination on this matter by the Governor in Council in P.C. 1988-265, after having considered the particular issue of the appropriate number of days on two previous occasions. In this context, it is, in the Commission's view, inappropriate as a matter of public policy that the Commission fail to respect the final date of the extension. It follows that any determination concerning whether Call-Net services would be permissable should be made having respect for that deadline.

Moreover, the Commission notes that subsection 64(1) of the National Telecommunications Powers and Procedures Act, under which authority the deadline was extended, provides that any order that the Governor in Council may make under this subsection is binding upon the Commission and upon all parties. In the circumstances, the Commission may well lack jurisdiction to specify any date that differs from that selected by the Governor in Council.

The Commission directs Bell, British Columbia Telephone Company, CNCP, Northwestel Inc., Terra Nova Telecommunications Inc., and Telesat Canada to file for approval, forthwith, proposed tariff revisions reflecting the clarification made in this decision.

Finally, in light of the record of this proceeding, the Commission considers that provision of services by resellers might be facilitated by the availability from Bell of features such as ANI and answer supervision. Accordingly, Bell is directed to file a report with the Commission, within 90 days from the date of this decision, commenting on the development of tariffs for the provision of such features.

Fernand Bélisle
Secretary General