ARCHIVED -  Telecom Decision CRTC 89-2

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Telecom Decision

Ottawa, 7 February 1989
Telecom Decision CRTC 89-2
In a letter dated 5 May 1988, Bell Canada (Bell) informed the Commission of a proposed new telecommunications service called Metroplus, to be offered by Distributel Communications Limited (Distributel) using underlying services provided by Bell. The company advised the Commission that, in its view, the proposed service would violate the provisions of Tariff Revisions Related to Resale and Sharing, Telecom Decision CRTC 87-2, 12 February 1987 (Decision 87-2). Bell also indicated that it would provide the underlying services requested by Distributel and, in accordance with the provisions of Decision 87-2, apply to the Commission for orders to prevent the resale of the services in question.
On 2 September 1988, Bell applied to the Commission requesting orders to prevent the resale of its services by Distributel to provide Metroplus Service. Specifically, Bell requested:
(1) an order stating that Distributel's Metroplus Service is a service that provides basic interexchange voice services with access to the public switched telephone network (PSTN) in a manner contrary to Decision 87-2 and Bell's General Tariff; and
(2)an order denying Distributel's resale of the company's services for the purpose of providing Metroplus Service and directing Bell to cease providing services used by Distributel.
Distributel's Metroplus Service is based on the resale, for a flat monthly fee, of Centrex III Service provided from a Toronto core exchange. This core exchange has Extended Area Service (EAS) with many surrounding exchanges that do not have EAS with each other. Although calls between many of these surrounding exchanges incur toll charges, calls between the surrounding exchanges and the Toronto core exchange are toll-free.
Metroplus Service effectively links two local calls and thus avoids the toll charges that would normally apply to calls between two of these surrounding exchanges. A Metroplus subscriber in a surrounding exchange is assigned a telephone number on Distributel's Centrex III. A call from another surrounding exchange can be placed to the subscriber's assigned telephone number without incurring toll charges. That call can then be routed to the Metroplus subscriber, also without incurring toll charges, using the call-forwarding feature of Centrex III. Distributel plans a similar service that will permit its subscribers to use Centrex III not only to receive calls, but also to make outgoing calls to which toll charges will likewise not apply.
Bell submitted that Distributel provides a service between exchanges for which message toll charges would normally apply and that the service is therefore an interexchange service as defined in Decision 87-2. Decision 87-2 states that the company's services other than Message Toll Service (MTS) and Wide Area Telephone Service (WATS) may be shared or resold to provide interexchange voice services that provide access to the PSTN, subject to a number of restrictions. These restrictions include the following:
(1)each company-provided circuit shall be dedicated to the user; and
(2)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.
In the case under examination, Bell submitted that the user is the Distributel subscriber. Bell noted that the term "circuit" is defined in Decision 87-2 as "one or more facilities which, connected in tandem, provide a single transmission path between two or more points". Bell argued that a portion of the circuit used in the Metroplus Service is provided to a Distributel customer over the PSTN. Therefore, the circuit is not dedicated to the Distributel subscriber as required by the first restriction cited above.
Bell's second argument concerns the Centrex access trunks that connect the Centrex to Bell central office switching equipment. Bell argued that the circuits used by the Metroplus Service pass through a Centrex switch in the central office that is provided by Distributel, and not by the user, the Distributel customer. Bell argued that the Metroplus Service therefore violates the second restriction cited above.
Bell also noted the Commission's ruling in the case of Morgan G. Holdings Ltd., which preceded Decision 87-2, regarding the resale of the company 's services to provide an interexchange service.
Distributel disagreed with Bell's characterization of the Metroplus Service as an interexchange service. Distributel argued that, although the Metroplus Service provides an alternative to certain types of toll service, it is not a service in the nature of MTS or WATS. Rather, Distributel submitted that Metroplus is similar, in terms of both the expanded local calling area that it provides and of its flat-rate price structure, to Foreign Exchange (FX) Service, which also provides an alternative to MTS.
Distributel submitted that Metroplus is also similar to services identified by the Commission as primary exchange voice services. It argued that the resale of Centrex III to provide Metroplus Service constitutes resale of Centrex III Service to provide primary exchange voice services, as envisaged by the Commission in Resale to Provide Primary Exchange Voice Services, Telecom Decision CRTC 87-1, 12 February 1987 (Decision 87-1). Distributel submitted further that, as set out in Decision 87-1, the Commission considers Centrex to be a local service, not an interexchange service.
Distributel stated that it is important in interpreting the definition of an interexchange service to distinguish between (1) the service offered by a reseller and (2) access to that service. Distributel stated that, in Decision 87-2, the Commission made a distinction between the resold services and the PSTN facilities used to access those services. Distributel stated that only a portion of a call placed using the Metroplus Service can be attributed to Distributel. The other portion can be considered access to the service. The Distributel customer receives this access capability as part of basic local service. Distributel submitted that, since there are no toll charges between the exchanges of the Metroplus portion of the call, the service is not an interexchange service as defined by the Commission.
Distributel addressed the restrictions on resale and sharing that would apply to Metroplus if it were, as Bell contended, an interexchange service. Distributel submitted that Bell's interpretation of "circuit" and the associated argument that a portion of the circuit uses the PSTN and is not user-dedicated, would make the Commission's conditions far more restrictive than intended. Distributel submitted that this interpretation would preclude resellers from offering FX Service. Distributel pointed out that the resale and sharing restrictions are a generalization of the restrictions established in CNCP Telecommunications: Interconnection with Bell Canada, Telecom Decison CRTC 79-11, 17 May 1979 (Decision 79-11), applicable to the interconnected services of CNCP Telecommunications (CNCP). Those restrictions allow CNCP to offer FX Service; therefore, the resale restrictions derived from Decision 79-11 should also allow resellers to provide FX Service.
With respect to Bell's second argument i.e., that the circuits used by Metroplus pass through a switch in the central office that is not provided by the user, Distributel submitted that the circuits to which Bell referred do not in fact exist. Distributel submitted that there are no physical "circuits" between the Centrex and the telephone company local central office switching equipment, since there is in reality only one switch.
The disposition of Bell's application centres on a determination as to whether Metroplus Service is more appropriately characterized as an interexchange service or a local service.
In Decision 87-2, the Commission has defined an interexchange service in Decision 87-2 as one that is configured to operate between any two exchanges for which message toll charges would apply. Bell has argued that Distributel's service allows customers to place calls between exchanges for which toll charges would apply and is therefore an interexchange service. Distributel has argued that it is reselling Centrex Service and, since Centrex is considered a local service, Metroplus Service should also be considered a local service.
In Decision 87-1, the Commission concluded that it would be in the public interest to allow resale to provide primary exchange voice services. Furthermore, the Commission identified Centrex as a primary exchange voice service.
Having considered the record of this proceeding, the Commission is of the view that Distributel's Metroplus Service provides a form of Centrex III Service. It provides capabilities that are available to all Centrex III users, with the significant difference that Metroplus is available to smaller users who, because of Bell's 160 line minimum bill, would otherwise be unable to benefit from Centrex III Service. Metroplus Service is accessed using the PSTN and, in this manner, provides the capability to make interexchange calls. However, the Commission finds that, in itself, the service being provided is not configured to operate between exchanges for which message toll charges would apply. Accordingly, in the Commission's view, the service provided by Distributel is appropriately described as a local service.
Accordingly, Bell's application for orders that would prevent the resale of Centrex III service by Distributel is denied.
Fernand Bélisle
Secretary General

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