ARCHIVED -  Telecom Decision CRTC 90-19

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Telecom Decision

Ottawa, 4 September 1990
Telecom Decision CRTC 90-19
On 17 May 1990, Fonorola Inc. (Fonorola) filed an application requesting orders from the Commission that would require Bell Canada (Bell), Unitel Communications Inc. (Unitel), British Columbia Telephone Company (B.C. Tel), Telesat Canada (Telesat) and Teleglobe Canada Inc. (Teleglobe) to provide for interconnection between Teleglobe's facilities and the domestic facilities currently leased by Fonorola. Under the requested arrangement, telephone traffic originated by Fonorola subscribers would be carried over (1) facilities obtained by Fonorola from Bell, B.C. Tel, Telesat or Unitel and resold by Fonorola to its customers for the intra-Canada portion of the call and (2) Teleglobe's facilities for the overseas portion of the call. Fonorola requested interconnection with Teleglobe on a basis equivalent to that provided to the member companies of Telecom Canada.
On 29 May 1990, the Commission received a similar application from ACC Long Distance Ltd. (ACC). The respondents named in the ACC application were the same as in the Fonorola application except that Telesat was not included.
By letter dated 8 June 1990, the Commission joined the two applications.
Fonorola and ACC argued that failure to provide the requested interconnection would unjustly discriminate against Canadian resellers who wish to provide overseas service, contrary to section 340(2) of the Railway Act. ACC argued that allowing resellers interconnection with Teleglobe would be in the public interest. ACC submitted that the benefits that would result from such an arrangement would include reductions in rates, increases in types of services available, improvements in the responsiveness of suppliers and more efficient use of facilities.
Unitel and Telesat did not oppose the applications. Unitel was of the opinion that the arrangement requested by Fonorola and ACC is a matter that only concerns those two companies and Teleglobe. Unitel stated that it would not object to providing private lines terminating at Teleglobe's premises. Telesat stated that it foresaw no problem with the proposed arrangement and that Telesat has always taken the position that it would allow interconnection of customer facilities with those of Telesat.
Bell, B.C. Tel and Teleglobe opposed the applications. B.C. Tel argued that approval of the applications would introduce competition to Teleglobe's overseas Message Toll Service (MTS) in the form of bypass of the domestic carriers' public switched telephone networks (PSTNs). B.C. Tel submitted that the effect of such bypass would be a reduction in the contribution to the access costs of the domestic telephone companies provided by the settlement revenues paid by Teleglobe to the member companies of Telecom Canada.
Bell and Teleglobe submitted that the proposals set forth in the applications essentially amount to a request that the Commission fundamentally change the terms and conditions under which resellers may obtain and resell Teleglobe's services. As such, the proposals amount to a request for a review and variance of the terms and conditions for resale established by Teleglobe Canada Inc. - Resale and Sharing of International Services, Telecom Decision CRTC 90-2, 23 February 1990 (Decision 90-2). Both Bell and Teleglobe pointed out that Decision 90-2 does not allow the resale for joint use of Teleglobe's international private lines. Bell submitted that the applicants have failed to satisfy the Commission's criteria for review and variance of its decisions.
Bell also argued that the rules established by the Commission in Decision 90-2 result in no unjust discrimination.
With respect to the request by the applicants for interconnection and settlement arrangements equivalent to those provided to the members of Telecom Canada, Bell and Teleglobe argued that such arrangements are neither appropriate nor necessary. Bell and Teleglobe submitted that interconnection and settlement arrangements are appropriate between carriers, whereas resellers are subscribers and therefore acquire services pursuant to carrier tariffs as opposed to interconnection and settlement agreements.
ACC referred to the distinction drawn by Bell and Teleglobe between facilities-based carriers that enter into interconnection agreements under the Railway Act, and resellers that obtain services from such carriers under the latter's tariffs. ACC did not contest the correctness of the distinction; instead, it argued that its application is consistent with Bell's and Teleglobe's position, since the relief sought is by way of revisions to Teleglobe's tariffs and, to the extent necessary, to those of the other respondents.
ACC submitted that the status of the respondents as facilities-based carriers and "companies" within the meaning of the Railway Act does not justify the conferral of a preference upon them relative to resellers that are neither facilities-based carriers nor "companies" under the legislation.
ACC and Fonorola stated that their applications do not seek to compete with or bypass Teleglobe's international MTS. Both applicants submitted that approval of the applications would have no adverse impact upon Teleglobe but, rather, would presumably lead to an increase in MTS traffic carried by Teleglobe and a resulting increase in revenues.
In Decision 90-2 and in Resale and Sharing of Private Line Services, Telecom Decision CRTC 90-3, 1 March 1990 (Decision 90-3), the Commission established the resale and sharing rules applicable to the respondents' services. These rules allow the resale and sharing of their message toll services. Further, the rules permit Teleglobe's private lines to be resold and shared if dedicated to the end user, while the private lines of the remaining respondents may be resold for joint use.
The Commission considers that any disposition of the Fonorola and ACC applications must be consistent with the Commission's findings in Decisions 90-2 and 90-3.
With respect to the request by the applicants for interconnection and settlement with Teleglobe, the Commission is of the view that this arrangement would be inconsistent with the existing regulatory regime. Under this regime, carriers can interconnect their facilities pursuant to interconnection agreements or tariffs in order to provide services. Resellers, on the other hand, lease services from the carriers subject to the applicable tariffs and subject also to the underlying interconnection agreements or tariffs.
While the Commission finds the regulatory regime proposed by the applicants to be inappropriate, this finding does not preclude a resale arrangement that would be consistent with the existing regulatory regime.
The Commission notes that, at present, the only way to access Teleglobe's MTS network is by way of Telecom Canada's MTS network. The Commission considers that this arrangement gives a preference to Telecom Canada member companies.
In the Commission's view, permitting resellers to access Teleglobe's MTS network through the resale of the other respondents' private lines would provide a number of benefits similar to those cited in Decisions 90-2 and 90-3. These include a reduction in rates, more efficient use of facilities and an increase in choice of suppliers of telecommunications services.
It is also notable that the volume of traffic carried by Teleglobe would not decrease and might increase. As a result, Teleglobe's revenues could increase. Moreover, to the extent that Canada-overseas calling is currently being diverted through the U.S., Teleglobe's revenues could also increase by recovering some of this traffic.
With respect to B.C. Tel's concern regarding the potential adverse impact on the contribution revenues that Telecom Canada members receive from Canada-overseas calling, the Commission notes that B.C. Tel did not attempt to quantify such revenue impact or to argue that the impact would be significant. In the Commission's view, the net revenue impact on the Telecom Canada member companies would not likely be significant.
In light of the above, the Commission finds that providing for an alternate form of access to Teleglobe's MTS network would be in the public interest and that, accordingly, the present restrictive arrangement constitutes an undue preference contrary to section 340 of the Railway Act.
The Commission notes that providing resellers with the access contemplated above in a manner consistent with the existing regulatory regime would involve appropriate interconnection arrangements between Teleglobe and the other respondents together with resale of their respective services. The interconnection arrangement would provide for the termination of the private lines of Bell, B.C. Tel, Telesat and Unitel on Teleglobe's message toll network. In the case of Bell, B.C. Tel, Telesat and Unitel, the resale would involve the resale of their private lines for either dedicated or joint use. Such resale would, in the Commission's view, be consistent with its findings in Decision 90-3. In the case of Teleglobe, the resale would involve the resale of its overseas MTS, excluding the portion currently carried exclusively over Telecom Canada facilities, to provide message toll services. Such resale would, in the Commission's view, be consistent with its findings in Decision 90-2.
With respect to the implementation of this decision, in addition to making the necessary operational modifications, Teleglobe must file two tariffs. First, it must file an interconnection tariff to provide for the direct termination of Bell, B.C. Tel, Telesat and Unitel private lines on its MTS network. Second, it must file a revised MTS tariff applicable to those who access its MTS network through private lines. It is noted that the existing Teleglobe MTS rates include amounts retained by Telecom Canada. The Commission is of the view that this component of Teleglobe's existing rates should not be charged to those who access its MTS network directly through private lines.
In light of the above, Teleglobe is hereby directed to file, by 26 October 1990, the proposed tariff revisions necessary to implement this decision.
B.C. Tel, Bell, Telesat and Unitel are hereby directed to file, also by 26 October 1990, any proposed tariff revisions they consider necessary to give effect to this decision.
Alain-F. Desfossés
Secretary General

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