ARCHIVED -  Telecom Decision CRTC 90-2

Telecom Decision

Ottawa, 23 February 1990

Telecom Decision CRTC 90-2

TELEGLOBE CANADA INC. - RESALE AND SHARING OF INTERNATIONAL SERVICES

I BACKGROUND

During the course of the proceeding initiated by Resale and Sharing of Private-Line Voice Services, CRTC Telecom Public Notice 1989-1, 11 January 1989 (Public Notice 1989-1), the Commission received letters from Canadian Business Telecommunications Alliance (CBTA) and Marathon Telecommunications Corp. (Marathon), dated 17 February and 21 February 1989, respectively, requesting that the Commission make Teleglobe Canada Inc. (Teleglobe) a party to that proceeding. CBTA and Marathon also submitted that Teleglobe should be subject to the rules governing resale and sharing, which are set out in Appendix A of Tariff Revisions Related to Resale and Sharing, Telecom Decision CRTC 87-2, 12 February 1987 (Decision 87-2), and to any changes in the rules as a result of the proceeding initiated by Public Notice l989-1. The rules set out in Decision 87-2 apply to Bell Canada, British Columbia Telephone Company, Northwestel Inc., CNCP Telecommunications (CNCP) and Telesat Canada (Telesat). They allow the resale and sharing of domestic interex-change private lines for the provision of data services and of voice services that are dedicated to a user or that are not interconnected.

In a letter to Teleglobe, CBTA and Marathon dated 2 March 1989, the Commission stated that it considered the matter of the resale and sharing of Teleglobe's services to be outside the scope of the proceeding initiated by Public Notice 1989-1. However, the Commission asked Teleglobe to respond to the matters raised by CBTA and Marathon. After considering the submissions of the three parties, the Commission issued Teleglobe Canada Inc. - Resale and Sharing of International Services, CRTC Telecom Public Notice 1989-37, 2 August 1989 (Public Notice 1989-37). In that Public Notice, the Commission sought specific comment on the following:

(1) whether it would be in the public interest to permit the resale and sharing of international services;

(2) to what extent the rules set out in Decision 87-2 should apply to the resale and sharing of international services; and

(3) what limitations, if any, would be necessary in order for Canada to fulfil its international obligations, should the resale and sharing of international services be permitted.

The submissions made with respect to this matter by CBTA, Marathon and Teleglobe prior to the issuing of Public Notice 1989-37 were made part of the record of this proceeding. In its submissions, Teleglobe stated that the Recommendations of the International Telegraph and Telephone Consultative Committee (CCITT) do not provide for resale in general, although sharing is permitted under special circumstances. Teleglobe indicated that it is possible to deviate from the CCITT regulations by special arrangements on a case-by-case basis, subject to the mutual agreement of the administrations involved.

CBTA, supported by Marathon, submitted that resale and sharing could constitute special arrangements, as provided for under Article 9 of the World Administrative Telegraph and Telephone Conference (WATTC) Regulations, which comes into force on 1 July 1990. Accordingly, any organization or person could enter into resale or sharing arrangements, as long as such arrangements are permitted in both countries. CBTA submitted that Teleglobe should therefore modify its tariffs to conform with Decision 87-2, with the addition of the following term:

Any resale and sharing arrangements between Canada and any other country must be allowed by the other country.

II POSITIONS OF PARTIES

In response to Public Notice 1989-37, the Commission received comments from CBTA, Marathon, Telesat, CNCP, Canadian Bankers' Association (CBA), and Broadcast Holdings (CDN) Ltd. (Broadcast Holdings).

All parties to this proceeding, with the exception of Broadcast Holdings, were of the view that it would be in the public interest to permit the resale and sharing of international services. CBTA and Marathon indicated that the reasons for permitting domestic resale and sharing cited in Interexchange Competition and Related Issues, Telecom Decision CRTC 85-19, 29 August 1985, also apply to international services. Among the benefits of allowing the resale and sharing of international services, parties noted an increase in service options for users, improvements in the international competitiveness of Canadian businesses, and a reduction in the bypass of Teleglobe's services.

Broadcast Holdings did not consider the existing resale and sharing rules sufficiently clear as to what is or is not permitted. Therefore, Broadcast Holdings was of the view that it would not be in the public interest to allow the resale and sharing of additional services, particularly international voice facilities, at this time.

Most parties in favour of the resale and sharing of international services indicated that the rules set out in Decision 87-2 should apply. Marathon, Telesat and CBA further submitted that any changes to the rules as a result of the proceeding initiated by Public Notice 1989-1 should also apply to international services. However, CNCP submitted that any liberalization of the rules set out in Decision 87-2 should wait until after the introduction of facilities-based competition. CBTA proposed that, regardless of the outcome of the proceeding initiated by Public Notice 1989-1, the resale of international services for joint use should be allowed. CBTA argued that the reason for not permitting resale for joint use of domestic private line services (i.e., to prevent the erosion of the contribution to the provision of local service made by revenues from Message Toll Service (MTS) and Wide Area Telephone Service (WATS)) does not apply in the case of Teleglobe, because Teleglobe does not provide contribution to local service.

With the exception of Teleglobe, all parties in favour of the resale and sharing of international services supported the inclusion in Teleglobe's tariffs of the limitation suggested by CBTA, i.e., that any resale and sharing arrangements between persons in Canada and persons in another country must be allowed in the other country.

In its reply, Teleglobe indicated that it supports in principle the extension to international services of the resale and sharing rules in Appendix A of Decision 87-2. Teleglobe noted that the application of these rules to international services would create regulatory conditions that are less restrictive than in most other countries. The company noted that, contrary to CBTA's argument in support of permitting resale of international services for joint use, Teleglobe pays a per-minute settlement to members of Telecom Canada, and that this settlement takes into account the need for an appropriate contribution to local service. Teleglobe submitted that any liberalization of the rules that may result from the proceeding initiated by Public Notice 1989-1 should not apply to it until the changes have been examined for their applicability to international services. Teleglobe proposed that, with respect to international services, the following limitation should be added to the terms and conditions governing resale and sharing:

Any resale and sharing arrangements between persons in Canada and persons so allowed in another country are subject to agreement and concurrence of the far-end international service operator and conditional upon such arrangements being so allowed in both countries.

III CONCLUSIONS

Most parties to this proceeding agreed that the resale and sharing of international services should be allowed, at least to the extent permitted by the rules in Decision 87-2. As to the appropriateness of also allowing the resale of international services for joint use, the Commission notes that this type of resale would have the potential to affect contribution to access. That possible impact was not considered in this proceeding.

Accordingly, the Commission concludes that, at this time, the resale and sharing of Teleglobe's international services should be permitted, subject to the restrictions set out in Appendix A of Decision 87-2. Those restrictions do not permit the resale on a joint-use basis of interexchange private line services to provide interconnected voice services.

With respect to Canada's international obligations, the Commission notes that Teleglobe supported including in the restrictions on the resale and sharing of its services a condition that the international service operator in the far country must agree to the arrangement, as well as a condition that the arrangement must be allowed in both countries. In support of this position, Teleglobe noted that it normally only fills service orders if the far-end international service provider agrees. Teleglobe also stated that foreign countries have a right to regulate their telecommunications as they see fit.

The Commission is of the view that, in order to ensure compliance with the regulations of the far country and protect the sovereign right of each country to regulate its own telecommunications, it is sufficient that Teleglobe's tariffs specify that the resale or sharing arrangement must be permitted in both countries. In the opinion of the Commission, it is neither necessary nor appropriate that Teleglobe's tariffs include the additional requirement that the permission of the international service operator in the far country be obtained. The Commission therefore directs that the following words be included in Teleglobe's tariffs regarding the resale and sharing of international services:

Any resale and sharing arrangements between persons in Canada and persons in another country are conditional upon such arrangements being allowed in both countries.

The Commission directs Teleglobe to issue, by 14 March 1990, tariff pages incorporating the restrictions on resale and sharing set out in the appendix to this Decision, modified as required to be consistent with the services offered by the company. The revised tariffs are to have an effective date of 28 March 1990.

Fernand Bélisle
Secretary General

APPENDIX

RESALE AND SHARING RULES

1. For the purposes of this tariff item:

"circuit" means one or more facilities which, connected in tandem, provide a single transmission path between two or more points;

"data service" means a telecommunications service other than a voice service;

"Foreign Exchange Service" is an interexchange service;

"interexchange service" means a service configured to operate between any two exchanges for which Message Toll Service charges would apply;

"resale" means the subsequent sale or lease on a commercial basis, with or without adding value, of telecommunications services leased from the company;

"reseller" means a person engaged in resale;

"sharing" means the use by two or more persons, in an arrangement not involving resale, of telecommunications services leased from the company;

"sharing group" means a group of persons engaged in sharing;

"user" means a sharing group or a customer of a reseller using the company's telecommunications services for the user's private communications needs;

"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.

2. Except where otherwise noted, the company's telecommunications services may be shared or resold in accordance with the conditions set out below.

(1) The company's services may be shared or resold to provide data services.

(2) The company's services may be shared or resold to provide interexchange voice services that
do not provide access to the public switched telephone network subject to the following.
Where an interexchange voice service of this type utilizes a company-provided circuit which is
not dedicated to the user and is terminated at the 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.

(3) The company's services other than Message Toll Service may be shared or resold to provide
interexchange voice services that provide access to the public switched telephone network,
subject to the following restrictions:

(a) each company-provided circuit shall be dedicated to the user;

(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;

(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;

(d) a sharing group shall obtain services directly from the company;

(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.

(4) The company's Message Toll Service may be shared or resold to provide message toll
service.

(5) Any resale and sharing arrangements between persons in Canada and persons in another
country are conditional upon such arrangements being allowed in both countries.