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Telecom Public Notice
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Ottawa, 10 June 1988
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Telecom Public Notice CRTC 1988-25
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RESALE TO PROVIDE ENHANCED SERVICES
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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 provided 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).
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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.
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On further reviews by the Commission and the Governor in Council, Decision 87-5 was upheld. 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.
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The Commission has received an application from Bell, dated 26 April 1988, requesting that the Commission commence a proceeding with a view to ensuring that Call-Net comes into conformity with Decision 87-5 by 19 August 1988.
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Bell submits 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 CDAR and SCF services, such that by 19 August 1988 these services will indeed conform to the relevant Commission decisions. The company contends 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.
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Bell notes 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 notes 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 submits 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 contends that it is both necessary and expedient for the Commission to establish a proceeding which will 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.
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The Commission has also received an application from Call-Net, dated 24 May 1988, requesting that the Commission reassess the present enhanced services regime. Call-Net further requests 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 proposes to implement these features if they are found to meet regulatory requirements. In its application, Call-Net describes these features as:
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. the real time transmission to Call-Net subscribers of the telephone numbers of callers;
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. incoming call management, which provides detailed information on incoming calls, including call origination, duration, time of day, number of calls per hour, type of calls through user interaction (incoming call tagging), and incoming call trends;
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. the activation by Call-Net of an alerting message at 30-second or 1-minute intervals to indicate the lapsed time of the voice message; and
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. the addition of a call-recording capability that will record voice messages and permit the Call-Net subscriber to retrieve them, either during or after the termination of the voice message.
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Call-Net contends that serious problems exist with the present enhanced services regime. For example, Call-Net suggests 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) could qualify as an enhanced service under the Commission's definition arising out of Decision 84-18.
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In particular, Call-Net contends that, since the Commission permitted resale to provide any data services 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.
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Call-Net further argues that, as a result of Decision 87-5, little scope (if any) remains for enhanced voice services. Call-Net contends that the Commission 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 contends 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 services 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.
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Call-Net notes 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.
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There is, 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 is 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.
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Call-Net argues that concerns about competition and revenue erosion may influence the technical classifications of a service as enhanced or basic. It contends 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.
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Call-Net states 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 argues 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.
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Call-Net contends 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.
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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.
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The Commission notes that, although Call-Net has not yet filed a restructuring plan, it has provided in its application some information about the features it proposes to add to its CDAR service. In order to provide timely assistance to Call-Net, the Commission has determined that it would be appropriate to make a preliminary finding with respect to these refinements. Based on the record to date concerning CDAR service, including the information provided regarding the proposed refinements, the Commission considers, on a preliminary basis, that the CDAR service provided by Call-Net would remain a basic service even with the proposed refinements. Further, in the Commission's preliminary view, it would continue to have as its primary purpose the provision of public long distance service via resale. If that preliminary view is confirmed as a result of the proceeding commenced herein, 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 would expect Call-Net to have planned appropriate alternative measures for bringing its operations into conformity with these decisions by 19 August 1988.
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The Commission notes as well that the public record associated with Decision 87-5 demonstrates that Call-Net's CDAR service could be restructured to bring it into conformity with existing regulatory policy. Such restructuring would involve reselling Bell's MTS and offering CDAR service as an adjunct to MTS or offering certain CDAR services on a stand alone basis. The record indicates that other companies are operating in this fashion.
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Nevertheless, the Commission considers that it would be in the public interest to seek comment on the classification of Call-Net's CDAR service with its proposed refinements, 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 are requested to comment on:
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(a) whether Call-Net's proposed refinements would conform with the Commission's rules governing resale to provide enhanced services;
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(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;
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(c) whether Call-Net's proposed refinements would conform to any proposals made under (b) above.
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The Commission notes that those aspects of the proceeding set out in (b) above are 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/WATS. This issue was addressed in Interexchange Competition and Related Issues, Telecom Decision CRTC 85-19, dated 29 August 1985 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. Accordingly, any review of the prohibitions on resale to provide MTS/WATS service is beyond the scope of this proceeding.
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Procedure
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The procedures to be followed in connection with this proceeding are as follows:
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(1) Interested persons wishing to participate in this proceeding must notify the Commission of their intention to do so by writing to Fernand Bélisle, Secretary General, CRTC, Ottawa, Ontario, K1A 0N2, by 27 June 1988.
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(2) Bell, British Columbia Telephone Company, CNCP, Northwestel Inc., Terra Nova Telecommunications Inc., Telesat Canada and Call-Net are joined as parties to this proceeding.
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(3) The Commission will issue a list providing the names and mailing addresses of the parties named in paragraph (2) and those who have indicated their intention to participate in the proceeding.
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(4) Any party wishing to submit comments in this proceeding must submit them to the Commission, with a copy to all other listed parties, by 8 July 1988.
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(5) Any party wishing to submit reply comments in this proceeding must submit them to the Commission, with a copy to all other listed parties, by 29 July 1988.
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(6) It would be the Commission's intention to issue its decision by 19 August 1988.
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(7) Copies of the applications of Call-Net and Bell and of related documents can be obtained by writing to the CRTC at the address noted in paragraph (1). The documentation can be examined at the offices of the CRTC, Room 201, Central Building, Les Terrasses de la Chaudière, 1 Promenade du Portage, Hull, Québec.
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(8) All documents are to be received by the dates specified, not merely mailed by those dates.
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Fernand Bélisle
Secretary General
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