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Ottawa, 30 March 1990
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Telecom Decision CRTC 90-7
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NEWFOUNDLAND TELEPHONE COMPANY LIMITED - INTERCONNECTION WITH RADIO COMMON CARRIERS
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I NOVACOM APPLICATION
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On 18 December 1989, Novacom, Inc. (Novacom), a radio paging and dispatch company, applied to the Commission for interim and final orders directing Newfoundland Telephone Company Limited (Nfld Tel):
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(1) to permit Novacom to interconnect its radio communications service with the public switched
telephone network (PSTN) of Nfld Tel and, in the interim, to supply it with two lines for this
purpose;
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(2) to provide a General Tariff for radio common carrier and private radio system (RCC)
interconnection services; and
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(3) to cease providing interconnection services to other RCCs or like suppliers other than by way
of interconnection service tariffs approved by the Commission.
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Novacom stated in its application that it commenced supplying mobile radio communications equipment and services in Newfoundland in July 1989. Novacom also stated that, in September 1989, Nfld Tel disconnected two single line business services used to provide Novacom's customers with access to the PSTN. Novacom submitted that its viability and competitiveness depend on interconnection with Nfld Tel at just and reasonable rates and upon just and reasonable terms and conditions.
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Novacom noted that, in Radio Common Carrier Interconnection With Federally Regulated Telephone Companies, Telecom Decision CRTC 84-10, 22 March 1984 (Decision 84-10), the Commission concluded that the interconnection of conventional public and private mobile radio systems with the PSTNs of the carriers then under its jurisdiction was in the public interest. Novacom noted that this decision had also applied to Terra Nova Telecommunications Inc. (Terra Nova), which was subsequently taken over by Nfld Tel.
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Novacom submitted that Nfld Tel had entered into at least one private arrangement permitting interconnection by at least one other supplier of radio communications services, Sea Link Ltd. (Sea Link). Novacom further stated that Nfld Tel has refused to supply it with interconnection services. Novacom contended that Nfld Tel is in violation of sections 275, 335 and 340 of the Railway Act. Novacom argued that Nfld Tel's refusal to supply services to Novacom to permit it to interconnect its radio communications system with Nfld Tel's PSTN on just and reasonable terms constitutes unjust discrimination.
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On 17 January 1990, the Commission received an intervention from the RadioComm Association of Canada (RAC). RAC submitted that the benefits anticipated in Decision 84-10 have been realized in the territories of other federally regulated carriers and that it would be in the public interest to grant Novacom's application. RAC also submitted that, by not providing Novacom with interconnection for its services, Nfld Tel has unjustly discriminated against actual or potential mobile radio competitors and customers and given itself an undue or unreasonable preference or advantage, contrary to section 340(2) of the Railway Act.
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II POSITIONS OF PARTIES
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On 18 January 1990, Nfld Tel filed its answer to Novacom's application. Nfld Tel stated that Novacom obtained system interconnection contrary to the regulations of its existing General Tariff. Nfld Tel argued that, because Novacom was aware of the regulations regarding interconnection, any investment made by Novacom that relied on interconnection was made entirely at its own risk.
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Nfld Tel stated that it was not a participant in the proceedings leading up to Decision 84-10 and that the findings of the Commission in that decision are not automatically applicable to it. Nfld Tel submitted that, although Decision 84-10 applied to Terra Nova, different considerations apply with respect to Novacom's application because the interconnection sought is in the more metropolitan areas of the province.
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Nfld Tel contended that it could not have refused to provide Novacom with access to permit interconnection because Novacom had never requested such services. In response to Novacom's submission that Nfld Tel provides interconnection to other suppliers of radio communications services, Nfld Tel replied that Sea Link is provided restricted access to the PSTN for its ship-to-shore and air-to-ground communication services for safety related purposes. Nfld Tel stated that its policy is to provide only emergency access for designated public service agencies, such as fire and police departments, regardless of who supplies the associated mobile radio equipment. The company further noted that it applies the same business policy to its own mobile radio system, used for paging and dispatch services, as to any other mobile radio system in that it is not permitted interconnection with the PSTN.
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Nfld Tel denied that it is in violation of sections 275, 335 or 340 of the Railway Act. Nfld Tel contended that, because none of Novacom's competitors in the paging and dispatch business, including itself, are permitted to provide and sell interconnected service to paging and dispatch customers, Nfld Tel is not discriminating against Novacom in any way. Nfld Tel submitted that its interconnected "Public Mobile Telephone Service" is a regulated monopoly service considered to be an extension of basic telephone service.
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Nfld Tel argued that the Commission should dismiss Novacom's request for interim relief on the grounds that Novacom's reasons do not support its request and that the request is merely an attempt by Novacom to gain an advantage over its competitors. In the alternative, Nfld Tel submitted that the application should be dealt with in a full public hearing where Nfld Tel would have an opportunity to present evidence and argument regarding the public interest and the timing, rates, terms and conditions of system interconnection.
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Novacom filed its reply on 29 January 1990. Novacom expressed the view that it is entirely reasonable for it to expect that the change to federal regulation would result in Nfld Tel being made subject to the policies and principles that the Commission had found to be in the public interest for other federally regulated carriers. In response to Nfld Tel's argument that Novacom is not being discriminated against, Novacom submitted that the nature of Sea Link's activities or the activities of any other mobile radio communications supplier do not provide a ground for finding that a preference is not unreasonable. Novacom further submitted that Nfld Tel should not be allowed to define the limits of its monopoly.
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Novacom stated that Nfld Tel should have provided some support for its argument that the Commission's conclusions in Decision 84-10 are not applicable to Nfld Tel's territory. Novacom argued that Nfld Tel failed to indicate any distinguishing circumstances and that, in fact, none exist.
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By letter dated 6 February 1990, the Commission provided Nfld Tel with an additional opportunity (21 days) to support its position. The letter requested the company to provide evidence of the harm that would be caused if Novacom's request for an interim order or final approval for interconnection was granted. In its response of 13 February 1990, Nfld Tel stated that it has several regulatory proceedings to deal with at present and, therefore, would be unable to provide the information requested within the specified time. Nfld Tel requested that the deadline be extended, if possible, until after its current revenue requirement proceeding is completed in May 1990.
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Novacom filed a response on 16 February 1990 to Nfld Tel's letter. Novacom stated that it is financially dependent on the ability to provide interconnected services. Novacom also submitted that the record of this proceeding is already sufficiently developed for the Commission to decide on its request for interim relief.
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III CONCLUSIONS
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The Commission is of the view that Novacom's application raises two primary issues: (1) whether Nfld Tel has unjustly discriminated against Novacom or granted itself or others an undue preference or advantage by providing interconnection to other radio communications suppliers; and (2) whether it is in the public interest to permit interconnection for radio communications suppliers.
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With respect to the issue of discrimination, the record of this proceeding indicates that, except as noted below, Nfld Tel has not provided any mobile radio communications supplier, including itself, with access to permit interconnection. Nfld Tel stated that it provides emergency access to the PSTN to designated public service agencies, regardless of who supplies the associated mobile radio equipment. The company has also provided access, for limited purposes, to Sea Link, which provides safety oriented services. As for Nfld Tel's public mobile telephone service, the company offers this service as part of its basic telephone service and has been specifically licensed by the Department of Communications (DOC) to do so. The Commission finds no evidence to demonstrate that Nfld Tel has unjustly discriminated against Novacom or that Nfld Tel has given itself or others an undue preference or advantage. Moreover, the Commission finds that Nfld Tel had a legitimate right to disconnect Novacom under its existing tariffs.
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With respect to the question of the public interest, the Commission notes that the ability of any RCC to provide interconnected mobile telephone service is limited by DOC's stringent spectrum utilization policies. The primary benefit of interconnection is the increased opportunity for conventional system operators to offer enhancements to their existing paging and dispatch service, such as direct access to the PSTN on an occasional or off-peak basis. In the Commission's experience, RCC interconnection with the PSTN, in both urban and rural areas, has not been a significant economic detriment to the telephone company in question. Moreover, information filed by Nfld Tel in connection with its application for a general rate increase indicates that public mobile telephone service revenues do not represent a significant proportion of the company's local service revenues.
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In Rogers Cantel Inc. - Interconnection with Newfoundland Telephone Company Limited, Telecom Decision CRTC 90-4, 28 March 1990, the Commission concluded that cellular radio interconnection in Nfld Tel's territory is in the public interest. Cellular radio service is expected to provide an improved public mobile telephone service capable of serving a greater number of subscribers than can be served by conventional radio telephone service. In the Commission's judgment, the economic impact of RCC interconnection, relative to that of cellular interconnection, would be minimal. Since cellular interconnection is to be permitted, there would appear to be no remaining grounds to support a prohibition against the interconnection of other mobile radio providers.
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In light of the above, the Commission finds that RCC interconnection with the PSTN of Nfld Tel would be in the public interest. However, the Commission also considers it reasonable and appropriate to provide Nfld Tel with (1) a further opportunity to demonstrate any particular circumstances whereby RCC interconnection would cause it economic harm that should be reflected in the level and structure of final rates, and (2) the time necessary to develop and file proposed final rates. Accordingly, the Commission directs Nfld Tel to file, by 20 April 1990, proposed interim tariffs for RCC interconnection, using the Bell Canada tariffs for switched network access for conventional radio system operators and private mobile system operators.
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Nfld Tel is also directed to file proposed final rates, along with supporting evidence. Those proposed rates may provide for the recovery of the cost of interconnection and, as indicated above, any economic harm demonstrated to result from lost contribution. Once final rates are approved, they will be applied back to the date that service is commenced and an accounting will be made with respect to any differences between interim and final rates. In recognition of the time and effort required to develop such rates, the Commission is not imposing, at this time, any deadline for the filing of proposed final tariffs.
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Fernand Bélisle
Secretary General
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