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ARCHIVED -  Telecom Decision CRTC 94-21

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Telecom Decision

Ottawa, 26 October 1994
Telecom Decision CRTC 94-21
ED TEL - APPLICATION FOR A REVIEW AND VARIANCE OF TELECOM DECISION CRTC 93-17
I BACKGROUND
In AGT Limited - Interconnection of Interexchange Carriers and Related Resale and Sharing Issues, Telecom Decision CRTC 93-17, 29 October 1993 (Decision 93-17), the Commission established the terms and conditions for competition in the provision of public long distance voice telephone services in the territory of AGT Limited (AGT). In that Decision, the Commission established the manner in which competitors would contribute towards the recovery of local/access costs in AGT territory. Based on the principles underlying the recovery of contribution established in Competition in the Provision of Public Long Distance Voice Telephone Services and Related Resale and Sharing Issues, Telecom Decision CRTC 92-12, 12 June 1992 (Decision 92-12), and on its interpretation of the 1987 Decision of the Arbitration Committee (the Arbitration Decision) concerning the sharing between AGT and the City of Edmonton (Edmonton) of long distance toll revenues generated in Edmonton, the Commission concluded that competitors' toll traffic originating in Edmonton, like toll traffic originating elsewhere in Alberta, should continue to contribute towards non-self-supporting services in the rest of the province on the basis of foregone contribution. Moreover, the Commission considered that direct contribution payments to AGT for toll traffic originated and terminated in Edmonton by interexchange carriers (IXCs) and resellers was the most efficient means of accomplishing this objective.
On 11 February 1994, Edmonton Telephones Corporation (Ed Tel) filed an application requesting that the Commission review and vary Decision 93-17 pursuant to section 62 of the Telecommunications Act (the Act). Ed Tel requested that the Commission alter the contribution regime to require contribution payments to AGT only in those instances where there is interconnection with AGT.
Ed Tel also filed an application with the Federal Court of Appeal for leave to appeal Decision 93-17. At Ed Tel's request, the Court is holding that application in abeyance, pending the Commission's decision on Ed Tel's application to review and vary Decision 93-17.
II THE APPLICATION
A. General
The criteria by which the Commission determines whether or not to review and vary its telecommunications decisions (see Telecom Decision CRTC 79-1, 2 February 1979) require that, in order for the Commission to exercise its power under section 62 of the Act, the applicant must demonstrate, on a prima facie basis, the existence of one or more of the following:
(1) an error in law or in fact;
(2) a fundamental change in circumstances or facts since the decision;
(3) a failure to consider a basic principle which had been raised in the original proceeding;
(4) a new principle which has arisen as a result of the decision.
In addition, notwithstanding the lack of prima facie evidence that any of the above criteria have been met, it is open to the Commission to determine that there is substantial doubt as to the correctness of its original decision and that reappraisal is accordingly warranted. This is not so much a fifth criterion, however, as it is a statement of the residual discretion that exists within section 62 of the Act.
Ed Tel sought relief based on three of the above-noted grounds:
(1) an error in law
(2) a new principle that has arisen as a result of the decision; and
(3) substantial doubt as to the correctness of the original decision.
B. Error in Law
Ed Tel argued that the Commission erred in law in finding that both the terms of the Arbitration Decision and Decision 92-12 are consistent with the concept that competitors' toll traffic generated in Edmonton should continue to contribute towards local/access services in the rest of Alberta on the basis of foregone contribution. Ed Tel contended that it was a distortion of the Arbitration Decision to require that carriers interconnecting with Ed Tel make a payment to AGT when the interconnecting traffic is not carried on AGT facilities.
Ed Tel further submitted that the Commission denied it natural justice by failing to consider concerns raised by Ed Tel regarding the reasonableness of AGT's contribution requirement. According to Ed Tel, the Commission was aware that, although Ed Tel could not be joined as a respondent to the proceeding because it was not regulated by the Commission, it had a significant interest in the outcome of the proceeding. Further, the Commission was aware that Ed Tel intended to file extensive comments. Ed Tel contended that the Commission nonetheless disregarded its comments on the grounds that there was not an opportunity to adequately test or review them. Ed Tel argued that, by doing so, the Commission had offended the administrative law principle audi alteram partem (i.e., the duty to hear all sides) and had thereby failed to fulfil its duty of providing Ed Tel with procedural fairness. Ed Tel also argued that the Commission did not provide proper or adequate reasons for disregarding its comments.
C. New Principle
Ed Tel noted that, in Decision 93-17, the Commission stated that it was:
 ... not bound by law to compensate AGT for the loss of traffic associated with a decision by Ed Tel to allow its customers to choose their long distance carrier. However, the question arises as to whether, as a matter of regulatory policy, revenues associated with Edmonton toll traffic, regardless of the toll carrier, should contribute to the support of local/access services throughout Alberta and on what basis. In Ed Tel's view, the Commission established a new principle in Decision 93-17 by requiring IXCs to make contributions to one local service provider out of revenues generated from interconnection with another independent local service provider. Ed Tel stated that this principle had not been applied by the Commission previously.
D. Substantial Doubt
Ed Tel contended that Decision 93-17 is anti-competitive and discriminatory, in that it inhibits competition by creating a "double" contribution payment for IXCs other than AGT who wish to interconnect with Ed Tel's network and provide competitive toll services in the Edmonton market. Ed Tel submitted that Unitel Communications Inc. (Unitel) finds this uneconomic and has indicated that it will not now compete in Edmonton.
Ed Tel also argued that the requirement for a double contribution payment undermines potential or existing agreements between IXCs and Ed Tel, contrary to Decision 92-12 in which the Commission encouraged interconnection agreements between IXCs and independents.
Finally, Ed Tel argued that, by requiring contribution to be paid to AGT on traffic originated and terminated in Edmonton, the Commission failed to recognize the existence of two distinct local markets. Ed Tel argued that the Commission's decision has a negative impact on it, although Ed Tel's market was not the subject of any interconnection application to the Commission and Ed Tel was not subject to the Commission's jurisdiction at the time of the Decision.
III COMMENTS
The Commission received comments from AGT opposing Ed Tel's application, and from Cam-Net Communications Inc. (Cam-Net), Canadian Business Telecommunications Alliance, Smart Talk Network and Unitel in support of the application.
AGT submitted that Ed Tel's application was inappropriate and that it failed to establish grounds for a review of Decision 93-17. AGT stated that Ed Tel's application does not seek a review and variance of matters that were decided in Decision 93-17; rather, the issue of which traffic should pay contribution was decided in Telecom Order CRTC 93-774, 20 September 1993 (Order 93-774), in which the Commission approved the interconnection agreement between Ed Tel and Unitel. In Order 93-774, the Commission stated that all interexchange traffic originated in Edmonton should contribute to offsetting the costs of providing basic service throughout Alberta and that it would address the contribution issue more fully in the Decision resulting from the proceeding initiated by Telecom Public Notice CRTC 93-1, 8 January 1993 (Public Notice 93-1), i.e., the proceeding that led to Decision 93-17.
AGT further argued that Ed Tel's application does not identify a new principle, but represents a disagreement with the Commission's findings in Order 93-774. AGT also noted that, while Ed Tel's proposal seeks to alter the mechanism used to collect contribution for AGT, Ed Tel did not present any new arguments relating to how the contribution mechanism should operate; rather, it was simply recasting its position on issues that were already considered by the Commission in the proceeding leading to Decision 93-17.
AGT further noted that Ed Tel had sought leave to appeal Decision 93-17 to the Federal Court of Appeal on 26 November 1993. AGT considered that it is therefore improper for Ed Tel to seek a review and variance based on matters that are properly the subject of such an appeal, such as questions of law or jurisdiction.
Cam-Net submitted that the Act does not give the Commission jurisdiction to order resellers to make additional contribution payments to AGT when they interconnect with Ed Tel. Furthermore, the Commission does not have the statutory authority to mandate the extension of the Arbitration Decision.
Cam-Net further submitted that the imposition of a "surcharge" payable to a third party on all interconnecting traffic has resulted in a new principle that did not arise in Decision 92-12. It stated that, in Decision 92-12, the Commission expected IXCs to negotiate interconnection agreements directly with the independent telephone companies, and noted that Cam-Net and Unitel had done that.
Cam-Net also submitted that Decision 93-17 runs contrary to the principles of equal access, since competitors will have to pay more than AGT to interconnect with Ed Tel. According to Cam-Net, this negates the opportunity for all competitors to enter the Edmonton market on equal terms.
Unitel submitted that the double contribution charge in Edmonton raises doubt as to the correctness of Decision 93-17. Unitel stated that double contribution causes traffic from Edmonton to generate more towards AGT's local/access shortfall than traffic originating in the rest of Alberta, resulting in higher rates in Ed Tel's territory. Therefore, competitors are unlikely to compete for toll traffic to or from Edmonton. To correct this, Unitel proposed a single contribution charge for all of Alberta that would provide support towards the recovery of the local/access shortfalls of both Ed Tel and AGT.
In reply, Ed Tel stated that all parties except AGT supported its application. In reply to AGT, Ed Tel argued that, in Order 93-774, the Commission specifically deferred its decision regarding contribution towards Alberta's shortfall from Edmonton traffic to the proceeding established by Public Notice 93-1. Further, Ed Tel argued that it has the right to appeal Decision 93-17 to the Federal Court and, at the same time, make an application to the Commission for a review and variance of the Decision.
Ed Tel disagreed with Unitel's method for calculating a province-wide contribution rate. In Ed Tel's view, Unitel's proposal would perpetuate the misconception that AGT should continue to receive contribution, even when its facilities are not used.
On April 11, AGT filed further comments. AGT was of the view that Cam-Net and Unitel had raised new matters not covered by Ed Tel's application. AGT argued that Unitel had made a new proposal on how contribution rates should be set and collected in Alberta. AGT also noted that Cam-Net's comments alleged an error in law other than that described in Ed Tel's application.
IV CONCLUSIONS
A. Errors of Law
AGT argued that the Commission is without jurisdiction to review and vary its decision on legal grounds, when the same legal grounds are the subject of an application for leave to appeal to the Federal Court of Appeal. AGT argued that jurisdiction cannot lie concurrently in both bodies to review the decision on the same grounds. In reply, Ed Tel sought to distinguish the case law cited by AGT and argued that the plain meaning of section 18.5 of the Federal Court Act, cited by AGT, does not support AGT's position. The Commission is of the view that it does have jurisdiction to consider the legal grounds raised by Ed Tel.
Ed Tel argued that the Commission made two errors of law in Decision 93-17: (1) the Commission distorted the Arbitration Decision in requiring carriers that connect with Ed Tel to make a payment to AGT when interconnecting traffic is not carried on AGT facilities, and (2) it denied Ed Tel natural justice by failing to consider Ed Tel's concerns regarding AGT's contribution requirements.
With respect to the first point, the Commission notes that it stated clearly in Decision 93-17 that it did not consider itself "bound by law to compensate AGT for the loss of traffic associated with a decision by Ed Tel to allow its customers to choose their long distance carrier". Rather, the Commission viewed its determination as to whether or not to require such contribution as a question of regulatory policy. In addressing this question in Decision 93-17, the Commission was not making a legal interpretation of the Arbitration Decision; rather, as indicated in Decision 93-17, it was taking into account the settlement principles underlying the Arbitration Decision in making its own policy determination.
The second error of law argued by Ed Tel relates to the Commission's treatment of certain submissions made by Ed Tel in the proceeding leading to Decision 93-17. Contrary to Ed Tel's assertion, the Commission did not disregard Ed Tel's comments. Rather, in the Decision, the Commission noted Ed Tel's concern, stating that, because Ed Tel's evidence on the matter was not submitted until final argument, it was never tested. Ed Tel is therefore incorrect in its assertions that the Commission disregarded its comments and that it failed to provide proper or adequate reasons for so doing.
Moreover, it was open to any party to the proceeding established in Public Notice 93-1 to request that the Commission amend the procedure if it considered that it was being denied an opportunity to participate fully. Ed Tel, as an experienced interested party that has participated in a variety of proceedings, including the proceeding culminating in Decision 92-12, should have been aware of this. However, Ed Tel gave the Commission no indication that it wished to file evidence, as opposed to comments, until it actually filed that evidence in the final stages of the proceeding. In fact, as noted by AGT, when the Canadian Association of Petroleum Producers requested that the Commission make Ed Tel a respondent in the proceeding leading to Decision 93-17, Ed Tel opposed the request, indicating that it had already filed evidence in the proceeding leading to 92-12 and that it would submit comments in this proceeding.
In light of the above, the Commission finds that it did not err in law as maintained by Ed Tel and that Ed Tel was not denied natural justice in the proceeding leading to Decision 93-17.
B. New Principle
Ed Tel submitted that the Commission established a new principle in Decision 93-17 in requiring IXCs to make contributions to one local service provider out of revenues generated from interconnection with another local service provider.
Prior to the introduction of competition in Alberta, all toll traffic, including traffic originated and terminated in Edmonton, was carried over AGT's interexchange network. The payments mandated in Decision 93-17 are intended to ensure that contribution which, prior to competition, would have flowed to AGT on traffic carried to or from Ed Tel's territory would not be eroded. This is entirely consistent with the principle set out in Decision 92-12 that, in order to support local/access service, competitors compensate telephone companies for foregone contribution.
Because of particular circumstances in Alberta, i.e., the existence of Ed Tel within the operating territory of AGT and the nature of the settlement arrangements between the two companies, the contribution mechanism had to be adjusted in order to ensure that competitors compensate AGT for foregone contribution. It is not a new principle to adjust a contribution mechanism to take into account the particular circumstances of a carrier in order to remain consistent with a general principle, in this case, the principle of requiring competitors to compensate the telephone company for foregone contribution.
In light of the above, the Commission concludes that no new principle has arisen as a result of Decision 93-17.
C. Substantial Doubt
Ed Tel argued that there is substantial doubt as to the correctness of Decision 93-17 because it requires "double" contribution payments from competitors wishing to carry toll traffic originating and terminating in Edmonton.
As noted above, prior to the introduction of competition in Alberta, all toll traffic, including traffic originated and terminated in Edmonton, was carried over AGT's interexchange network. Consistent with the principle established in Decision 92-12, i.e., that competitors compensate telephone companies for foregone contribution to support local/access service, Decision 93-17 required that contribution continue to be paid to AGT on Edmonton traffic, including that carried by competitors.
At the time the Commission issued Decision 93-17, the Commission had no jurisdiction over Ed Tel. Thus, it was not possible for the Commission to address directly the issue of competition in Ed Tel's territory, to inquire into Ed Tel's costs or to create a contribution scheme that would compensate AGT for foregone contribution without requiring that competitors make direct payments to AGT for Edmonton traffic.
Accordingly, in Decision 93-17, the contribution rate payable to AGT took into account the settled revenue from Ed Tel traffic in order to ensure that Edmonton traffic contributed to support service in the rest of Alberta, just as it had prior to Decision 93-17. Similarly, the agreement negotiated between Ed Tel and Unitel, approved in Order 93-774, provides that Unitel's payments to Ed Tel represent the same percentage of revenues as paid by AGT under the Arbitration Decision. Thus, Decision 93-17 and the agreement approved in Order 93-774 combine to preserve the status quo prior to the issuing of Decision 93-17. If interconnection costs are too high in Edmonton, it is not as a result of Decision 93-17 alone, but rather as a result of the combination of the settlement regime between AGT and Ed Tel established in the Arbitration Decision, the introduction through Decision 93-17 of competition in AGT territory and settlement arrangements such as that negotiated between Ed Tel and Unitel.
In light of the above, the Commission finds that Ed Tel has not demonstrated that there is substantial doubt as to the correctness of Decision 93-17.
D. Disposition
In light of the above, the Commission finds that Ed Tel's application to review and vary Decision 93-17 fails to establish sufficient grounds with respect to an error in law, a new principle or substantial doubt as to the correctness of the decision.
V NEW PROCEEDING
Despite its findings with respect to Ed Tel's application, the Commission notes that there have been changes in circumstances since Decision 93-17 that warrant a re-examination of the contribution regime in Alberta. Specifically, on 26 April 1994, Ed Tel came under the Commission's jurisdiction as a result of the Supreme Court of Canada's decision in Attorney-General of Quebec et al. v. Téléphone Guèvremont. The Commission's jurisdiction over Ed Tel permits the Commission to re-examine the contribution regime in Alberta in a manner that takes into consideration the local/access shortfall in the operating territory of each company.
In addition, on 16 September 1994, the Commission issued Review of Regulatory Framework, Telecom Decision CRTC 94-19 (Decision 94-19), in which it determined that the rate bases of the telephone companies subject to the Decision (which include AGT) should be split into Competitive and Utility segments and that charges for contribution, bottleneck services and start-up costs should be recovered through a Carrier Access Tariff (CAT). In the Commission's view, a CAT may provide a useful mechanism to recover contribution in Ed Tel territory.
Consistent with the above, concurrent with this Decision, the Commission is issuing Contribution Regime in Alberta, Telecom Public Notice CRTC 94-51, 26 October 1994, initiating a proceeding to develop an alternative method for collecting contribution from facilities based carriers and resellers operating in Alberta. This proceeding will provide an opportunity for a detailed examination of Ed Tel's costs and related traffic information. In addition, the Commission is inviting proposals from parties for an alternative contribution approach that would better balance the contribution requirements of both AGT and Ed Tel and reflect the local/access revenue requirement of each company in an equitable manner. Ed Tel, AGT and other parties that commented with respect to Ed Tel's application in this proceeding have been made parties to the new proceeding.
Allan J. Darling
Secretary General
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