ARCHIVED -  Telecom Public Notice CRTC 1994-23

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Telecom Public Notice
Ottawa, 27 April 1994
Telecom Public Notice CRTC 94-23
The Commission has received an application from TelRoute Communications Inc. (TelRoute), dated 9 December 1993, requesting that the Commission direct Bell Canada (Bell), BC TEL and Unitel Communications Inc. (Unitel) to enforce their tariffs, contracts and interconnection and service agreements with respect to certain cross-border services. In this context, TelRoute stated that it has informal knowledge of significant bypass of Canadian services in violation of the companies' tariffs and the Commission's rulings, and that the companies have knowledge that such bypass is occurring.
The Commission has already received some comment with respect to Telroute's application. Teleglobe Canada Inc. (Teleglobe) supported the application, stating that it too has informal knowledge of bypass occurring. Other parties noted that TelRoute had not provided any firm evidence of bypass and that the application should accordingly be denied.
Fonorola Inc. stated that Canadian private line rates continue to be priced far above levels in the United States and that, since there is little competition in Canada in the provision of private lines, resellers are left with few options. Unitel submitted that Canada-U.S. rate differentials have been significantly reduced in recent years, thereby eliminating any economic incentive for bypass.
Various parties requested that the Commission initiate a proceeding with respect to the issues raised by TelRoute's application.
The Commission notes that section 7(e) of the Telecommunications Act states that the Canadian telecommunications policy has as one of its objectives the promotion of the use of Canadian transmission facilities for telecommunications within Canada and between Canada and points outside Canada.
The Commission recognized the difficulty of attempting to quantify the extent of the bypass problem in Teleglobe Canada Inc. - Resale of Transborder Services, Telecom Decision CRTC 91-10, 26 June 1991 (Decision 91-10). The Commission also recognized that incentives to bypass Canadian facilities exist, and that avenues for responding to those incentives are increasingly available to users of telecommunications services.
As stated in Decision 91-10, the Commission considers the most effective long-term solution for the reduction of bypass to be the lowering of Canadian message toll service and private line rates. In the Commission's view, recent reductions in rates for switched voice services have lessened the incentives for some types of bypass. However, private line rates have not been significantly reduced since the release of Decision 91-10. The Commission considers that this may continue to provide a significant incentive to bypass Canadian transmission facilities. In addition, the contribution regime 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) may be providing incentive to bypass.
The Commission notes that, on 7 January 1994, Stentor Resource Centre Inc. (Stentor) filed revised Interconnection and Service Agreements between the members of Stentor Canadian Network Management and each of MCI International Inc. (MCI) and Sprint Communications Company LP (Sprint). Schedule H of the Agreements would permit, on an interim basis, MCI and Sprint calling-card customers to complete Canada-Canada calls through the United States.
In response to Commission interrogatories relating to Schedule H, Stentor stated that this interim arrangement does not represent an economic bypass of the Canadian telephone network, in that the settlement mechanism ensures that the Stentor companies would be at least as well off as if the calls were carried on Canadian facilities.
The Commission gave interim approval to Stentor's Agreements with MCI and Sprint in Telecom Orders CRTC 94-308 and 94-309, both dated 30 March 1994, stating that it would issue a public notice in connection with the issue.
The Commission seeks comment on the issues raised by the above, particularly on the following:
(1) whether concerns related to bypass apply to all types of services and, if not, whether the bypass restrictions should be amended to apply only to certain types of services;
(2) whether the contribution regime established in Decision 92-12 should be revised to alleviate any bypass incentives and, if so, what revisions would be appropriate;
(3) whether the rates and rate structure for private line services should be revised to reduce the incentive to bypass and, if so, what revisions would be appropriate (for example, lower rates, route de-averaging, changes to the short haul/long haul differential); and
(4) Schedule 4 of Stentor's Agreements with MCI and Sprint.
The Commission also requests that parties provide their best estimates, with any supporting information, of the current extent of bypass.
1. AGT Limited, BC TEL, Bell, The Island Telephone Company Limited, Manitoba Telephone System, Maritime Telegraph and Telephone Company Limited, The New Brunswick Telephone Company Limited, Newfoundland Telephone Company Limited, the Competitive Telecommunications Association, Telecommunications Workers' Union, Teleglobe, TelRoute and Unitel are made parties to this proceeding. TelRoute's application of 9 December 1993 and the comments already received by the Commission relating to it are made part of the record of this proceeding.
2. Other persons wishing to participate in this proceeding must notify the Commission of their intention to do so by writing to Mr. Allan J. Darling, Secretary General, CRTC, Ottawa, Ontario, K1A 0N2, (fax: 819-953-0795), by 3 June 1994. The Commission will issue a complete list of parties and their mailing addresses.
3. Parties may file comments with the Commission, serving copies on all other parties, by 23 June 1994.
4. Parties may file reply comments, serving copies on all other parties, by 15 July 1994.
5. Where a document is to be filed or served by a specific date, the document must be actually received, not merely mailed, by that date.
Allan J. Darling
Secretary General
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