ARCHIVED -  Telecom Decision CRTC 94-4

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Telecom Decision

Ottawa, 25 February 1994
Telecom Decision CRTC 94-4
The Commission has received applications from AGT Limited (AGT), BC TEL, Bell Canada (Bell), The Island Telephone Company Limited, Maritime Telegraph and Telephone Company Limited, The New Brunswick Telephone Company Limited and Newfoundland Telephone Company Limited (the Stentor companies) for approval of proposed tariff revisions related to 900 Service. The applications provide for the introduction of premises-based 900 Service, whereby 900 Service calls could be terminated on equipment located on service providers' premises, thus permitting them to offer passive, interactive and/or live programming to the general public. The applications also provide for revisions to network-based 900 Service, which would continue to be utilized for either information arrangements (bulletins) or call-count arrangements (polling).
The Stentor companies also filed a proposed Service Provider Agreement and a proposed 900 Service Accounts Receivable Management (ARM) Agreement. The proposed Service Provider Agreement sets out, among other things, the conditions under which the Stentor companies would offer 900 Service, as well as the obligations of the service provider in subscribing to 900 Service. Pursuant to this Agreement, the service provider would be obliged, among other things, to disclose certain information to the telephone company, including the type of program for which 900 Service is to be used. The proposed Service Provider Agreement also sets out the conditions under which the provision of 900 Service to a service provider would be terminated.
Under the Service Provider Agreement, all 900 Service providers are required to apply for the services offered under the ARM Agreement. The ARM Agreement outlines the terms and conditions under which the Stentor companies would agree to purchase the accounts receivable for a service provider's 900 Service program and include charges for calls to the program on the caller's monthly telephone bill. The ARM Agreement also identifies the types of programs or services for which the Stentor companies would not purchase the service provider's accounts receivable, which include, among other things, adult programs, group access bridging (GAB) lines and the provision of personal identification numbers for access to other services.
The Service Provider Agreement sets out the procedures applicable when a Stentor member bills for calls to a 900 service program and the customer subsequently disputes the charge. Specifically, in the event of such a dispute, the Stentor member company would offer call blocking service to the caller. If the caller accepted call blocking service, all 900 Service charges accrued prior to the implementation of call blocking would be waived by the telephone company and absorbed by the service provider. If a caller refused call blocking, the telephone company would waive all 900 Service charges to the caller and charge them back to the service provider, who would then be responsible for their collection. In such cases, the Stentor companies propose, as is currently the case with respect to 976 Service, to provide the service provider, in confidence, with sufficient information to effect collection, i.e., the complete billing record, including the subscriber's name and billing address and the amounts due.
On 23 March 1993, the Commission issued Telecom Public Notice CRTC 93-34 requesting comment on the applications. Comments were received from B.F.D. Productions Inc., CORE Network Consulting, Canadian American Travel Tours Ltd., DFD Telebroadcasting Inc. (DFD), David Leibold, Manitoba Association of Women's Shelters Inc., Phone Programs Incorporated (Phone Programs), Portage Women's Shelter, STAT Publishing, Telesphere Canada Inc. (Telesphere), 2PM Group, and Watts Telemarketing Inc.. The Commission also received numerous letters from individual subscribers in support of the Stentor companies' applications.
The Commission approves the arrangements proposed by the Stentor companies, subject to those companies making revisions to their tariffs and to the related Agreements to incorporate the determinations set out below.
Article 8 would give the Stentor companies discretion to terminate service or demand remedial action when a service provider breaches any applicable laws or regulations, Stentor tariffs or the Service Provider Agreement.
Article 2.3 of the Service Provider Agreement provides that, in the event that "a non-mass calling program" is subsequently shown to be a "mass calling program", the Stentor company may, at its sole discretion, move the program to a "choked" network, thereby requiring a program number change, or may suspend or terminate the Agreement pursuant to Article 8. Article 2.10 of the Agreement would permit the Stentor member to restrict, refuse to provide, or discontinue service forthwith, if it determines that the commencement or continuation of a specific program is adversely affecting its ability to provide, complete or maintain the level of or quality of its service to other subscribers.
Various interveners commented on these Articles and on the notice that Stentor members would be required to provide pursuant to them.
The Commission notes that the Terms of Service of the respective Stentor members set out the conditions under which service may be terminated and the notice that the telephone company must provide to the subscriber. The Commission is of the view that, where termination of service is contemplated, the notice periods in the Terms of Service should apply.
With respect to provisions permitting the Stentor member to move a service provider's program to a choked network, the Commission notes that 900 Service is carried on the public switched telephone network and that, when there is a high volume of calling to a specific 900 number in a short period of time, congestion can adversely affect service to the general public. The choked network limits the number of calls entering the public network, thereby ensuring no degradation in service. As indicated above, moving a service provider's program to a choked network would require a change in the service provider's telephone number. Accordingly, the Commission considers it appropriate that, when moving programs to a choked network, Stentor members abide by the notice period required by the Terms of Service for company-initiated changes in telephone numbers.
As presently worded, the Service Provider Agreement obliges service providers to comply with the tariffs of all Stentor members. It is the Commission's view that a service provider should be subject to the tariffs of only the company or companies from which the service provider obtains service.
DFD questioned the appropriateness of requiring service providers to maintain a free customer service line, arguing that a requirement to provide a seven digit inquiry line would be sufficient. In the Commission's view, the requirement to provide a free customer service line is appropriate in order to ensure that all consumers are able to seek assistance free of charge and express their views with respect to any particular service.
As noted above, Article 3.14 of the Service Provider Agreement provides that all subscribers to 900 Service are required to apply for provision of the ARM Agreement. The Commission considers that, as a matter of principle, service providers should not be required to assign their accounts receivable to the Stentor companies as a condition of subscribing to the underlying 900 Service. Rather, 900 Service subscribers should have the option of choosing any other available alternative billing arrangement.
The Stentor companies filed the ARM Agreement "for the Commission's information". In the proceeding leading to 976 Services - Billing and Collection, Telecom Letter Decision CRTC 92-5, 26 June 1992 (Letter Decision 92-5), the Commission determined that it has jurisdiction over the terms and conditions contained in the ARM Agreement. Further, the Commission is of the view that the billing and collection services provided by a telephone company pursuant to the ARM Agreement are telecommunications services under the Telecommunications Act, and that, as such, they are subject to the Commission's approval.
Several interveners objected to the ARM Agreement, as filed. Their comments centred on the ability of the Stentor member companies to restrict access to the ARM Agreement, given past Commission decisions, the requirements of the Bell Canada Act, the Railway Act and the Canadian Charter of Rights and Freedoms (the Charter).
Phone Programs and DFD asserted that Article 2.3 of the ARM Agreement, which states that Stentor will not purchase any accounts receivable for programs that do not comply with the Guidelines for Program Content set out in Schedule "C" of the Agreement, violated section 8 of the Bell Canada Act, which prohibited Bell from controlling the contents or influencing the meaning or purpose of messages it transmits, emits or receives. Phone Programs and DFD also asserted that the availability of the ARM Agreement to some, but not all, service providers is unjustly discriminatory.
Phone Programs, DFD and Telesphere submitted that the ARM Agreement is an integral part of 900 Service and that the refusal to offer billing and collection through the ARM Agreement would be equivalent, from a commercial point of view, to termination of the program itself. In support of its view, Phone Programs noted the Commission's conclusion in Letter Decision 92-5 that "... refusal to provide a 976 Service Provider with access to billing and collection service through the ARM Agreement jeopardizes the ability of that person to offer 976 Service."
In reply, Stentor stated that, in including the Guidelines in the administration of the ARM Agreement, it was attempting to avoid the substantial problems encountered in the United States with 900 Service in respect of consumer fraud, customer complaints and access by minors. Stentor stated that it is reasonable to require alternative billing mechanisms in order to limit access to certain programs by minors and to limit consumer exposure to abuses by telemarketers.
Stentor further submitted that, while service providers might find their operations more cumbersome if they cannot bill using the ARM Agreement, they are in no way restricted from using alternative billing mechanisms. In support of its position, Stentor provided several advertisements for telephone information services showing the use of credit cards for billing and collection. Stentor submitted that the availability of these alternatives indicates that the Stentor companies would not, in any way, control the content of a service provider's program by limiting access to the ARM Agreement. Stentor emphasized that 900 Service without the ARM Agreement would be available to all service providers on a tariffed basis.
Phone Programs submitted that it had been unable to obtain merchant account numbers from a number of credit-granting institutions, and filed letters of refusal from several such institutions. Phone Programs stated that Stentor had not disputed that credit card companies discourage their customers from giving their credit card numbers over the telephone, nor had it disputed that these institutions would not grant merchant account numbers to companies that intend to operate by means of telephone ordering.
In reply, Stentor stated that it had provided ample evidence of programs that currently exist in the Canadian marketplace utilizing credit cards for billing purposes. Stentor also stated that, while Phone Programs contends that credit card customers are discouraged from divulging their credit card numbers for purchases made over the telephone, it is currently possible to purchase any number of goods or services by telephone using a credit card.
Stentor noted that no clear reason was evident for the refusal by certain credit-granting institutions to provide merchant account numbers to Phone Programs. Stentor submitted that the high level of chargebacks incurred by merchants such as Phone Programs could, in fact, be the reason.
Phone Programs and DFD submitted that the proposed restrictions set out in the Program Content Guidelines violate the right to freedom of expression contained in section 2(b) of the Charter. Specifically, Phone Programs stated the Commission would be acting contrary to the Charter if it established a regulatory regime for 900 Service that discriminated against certain service providers on the basis of the content of their programs.
Stentor argued that, assuming that the Guidelines require the Commission's approval, such approval would be consistent with the Charter, given the availability of viable billing alternatives, the important objectives underlying the Program Content Guidelines and the minimal impact on service providers.
The Commission notes that section 8 of the Bell Canada Act was repealed and replaced by section 36 of the Telecommunications Act. Section 36 extends to all Canadian carriers the general prohibition with respect to the control of content, subject to a determination otherwise by the Commission.
In Letter Decision 92-5, the Commission concluded that, in the absence of specific evidence of any clear alternatives in Bell territory, Bell's refusal to provide a 976 Service Provider with access to billing and collection service through the ARM Agreement would jeopardize the ability of that person to offer 976 Service and that such refusal based solely on content could amount to controlling the contents or influencing the meaning or purpose of messages, contrary to section 8 of the Bell Canada Act. In this proceeding, the Stentor companies have supplied evidence that alternative billing and collection mechanisms exist. Further, in the Commission's view, Phone Programs' assertion that it cannot obtain merchant account numbers because it operates a service provided over the telephone has not been adequately supported. Finally, the Commission notes that alternative billing and collection mechanisms, such as presubscription accounts and credit cards, are currently used by certain 900-type service providers.
In light of the above, the Commission finds that viable alternatives to the ARM Agreement exist for billing and collecting for the provision of 900 service programs.
The Commission is also of the view that the concerns of interveners relating to the protection of minors and of consumers generally are best addressed, and the public interest best served, by requiring the use of credit cards, presubscription accounts or other alternative billing mechanisms for access to certain programs.
However, the Commission notes that the Guidelines in Schedule C permit Stentor to refuse to provide the service where, "in its sole discretion", a program is "thought to be", among other things, inflammatory or adult programming. The Commission is of the view that this discretion should be subject to some standard of reasonableness. Accordingly, the Commission finds that a Stentor company should be permitted to exercise its discretion to refuse service only where it is "of the reasonably held view" that a program does not comply with the Guidelines.
Phone Programs and DFD noted Article 7.9 of the proposed ARM Agreement, which provides that the Stentor member companies may terminate the Agreement if the chargebacks associated with a service provider's program are at a level of 25% or more of the total caller charges for three consecutive months. Both DFD and Phone Programs submitted that this Article would confer on Stentor an arbitrary and unjustified right to terminate the ARM Agreement.
In reply, Stentor stated that the 25% threshold is a reasonable one, in that chargebacks in excess of 25% generate prohibitive administrative costs to the telephone company in handling caller enquiries and complaints and in processing the chargebacks.
In the Commission's view, the Stentor member companies should be permitted to terminate the ARM Agreement when the level of chargebacks for a particular program is such that excessive administrative costs are incurred. The Commission finds a threshold of 25%, over three consecutive months, to be reasonable.
In light of the above, the Commission finds that the proposed ARM Agreement, amended to specify that a Stentor company's right to refuse to provide the service is subject to a standard of reasonableness (as described above), will not result in any unjust discrimination.
Further, in the Commission's view, those interveners who challenged the constitutionality of the Stentor companies' proposal have failed to demonstrate that the operation of the ARM Agreement would constitute an infringement of the freedom of expression guaranteed in section 2(b) of the Charter.
The Commission notes that the courts have stated that the threshold test for demonstrating an infringement of section 2(b) is whether the activity for which protection is claimed has expressive content. If the activity does not attempt to convey a meaning, it does not fall within the scope of the protection afforded under the Charter. In the Commission's view, the activity of billing and collecting for services does not involve an attempt to convey a meaning and cannot be said to have expressive content. Accordingly, section 2(b) of the Charter does not extend to 900 service providers the right to obtain billing and collection services from Stentor companies.
The Commission further notes that the ARM Agreement does not limit the availability of 900 Service itself to any potential service provider. Rather, it would operate to restrict access by certain classes of service providers to the billing and collection services of the Stentor companies. Furthermore, all service providers will have available to them alternative billing mechanisms. Thus, if section 2(b) extends a right to a service provider to obtain 900 service, neither the purpose nor the effect of the ARM Agreement is to infringe that right.
Alternatively, in the event that the ARM Agreement were found to violate section 2(b) of the Charter, the Commission considers that the requirement that access to certain programs be obtained through the use of credit cards, presubscription accounts or other alternative billing and collection mechanisms would involve only a minimal impairment of the rights afforded under that section. The Commission is also satisfied that this requirement, when weighed against the objective of achieving an adequate level of protection for minors and consumers generally, is a reasonable limit that is demonstrably justified in a free and democratic society, in accordance with section 1 of the Charter.
Telesphere submitted that the proposed network-usage rates for 900 Service are too high in relation to the rates currently charged for 976 Service. In reply, the Stentor companies stated that differences between the current 976 and the proposed 900 Service justify the difference in rates. Specifically, they stated that 976 Service is only offered within a Numbering Plan Area, while 900 Service would be a national offering.
DFD submitted that the level of chargebacks would be reduced if the maximum allowable charge per call per subscriber was $13, rather than $50 as specified in the proposed ARM Agreement. In reply, the Stentor companies submitted that the charge for the call, established by the service provider, should be commensurate with the value of the information provided. They stated that chargebacks would be limited to the extent that callers perceive they have received value for the charge they have incurred.
The Commission notes that the Resource Cost Study filed in support of the application demonstrates that the rates proposed by the Stentor companies are compensatory and would make an appropriate contribution. Accordingly, the Commission is of the view that the proposed rates are appropriate. Similarly, the Commission considers Stentor's proposed maximum charge of $50 per call to be reasonable.
Mr. David Leibold submitted that, given Bell's intention to accelerate its Switching Equipment Modernization program, the Commission should order free call blocking of 900 Service to any subscriber who desires it. In its reply, Bell stated that its tariffs currently provide for call blocking at compensatory rates, as was directed in Bell Canada - Application to Discontinue 976 Service, Telecom Decision CRTC 89-14, 14 November 1989. Bell noted that the other Stentor member companies either currently offer or have filed proposed tariffs providing for call blocking/call denial.
AGT proposed the provision of 900 Call Denial at no charge to any subscriber who requests it.
The Commission is of the view that the Stentor companies should offer call blocking to any subscriber who requests it, at a nominal one-time set-up charge of up to $10, with no recurring monthly charges. Any additional cost to the company of providing call blocking should be recovered through the rates charged for 900 Service.
As noted earlier, under the proposed ARM Agreement, where a Stentor company waives disputed charges to a caller who has declined call blocking, the company would provide billing information to service providers to assist them in the collection of the unpaid bills. In the Commission's view, the availability of such information would facilitate the operation of alternative billing and collection mechanisms. Accordingly, under such circumstances, Stentor members should be required to provide, to any service provider who requests it, detailed billing information, including customer name, address and telephone number, as well as details about the calls made and the amount of money due.
Allan J. Darling
Secretary General
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