ARCHIVED -  Telecom Decision CRTC 95-5

Telecom Decision

Ottawa, 24 April 1995

Telecom Decision CRTC 95-5

DISCONNECTION OF EQUAL ACCESS SERVICE PROVIDERS AND TRANSFER OF CUSTOMER BASE BETWEEN EQUAL ACCESS SERVICE PROVIDERS

I BACKGROUND

By letters dated 23 December 1994 and 9 January 1995, the Commission made certain findings with respect to, among other things, the assignment, transfer or sale of the customer base of TelRoute Communications Inc. (TelRoute) in the event that the underlying services or facilities leased by TelRoute from Bell Canada (Bell) were disconnected.

On 17 January 1995, Sprint Canada Inc. (Sprint) wrote to the Commission regarding those findings. In particular, Sprint was concerned that the Commission's requirement that the entire customer base be re-confirmed in the event of a transfer or acquisition would remove any financial advantage associated with an entrant company acquiring the customer base of any long distance service provider in financial distress. In addition, Sprint sought clarification as to whether the requirement to re-confirm would apply in all circumstances.

By letter dated 23 January 1995, Sprint proposed that a long distance service provider purchasing or otherwise acquiring the customer base of another service provider not be required to re-confirm the customer base.

By letter dated 25 January 1995, the Commission initiated a proceeding seeking comment on the issues raised by Sprint, as well as the following:

(1) the applicability and adequacy of the consumer safeguards contained in Schedule 4 of the Inter-carrier Group (ICG) Agreements with respect to (a) the confirmation of a change in the end-customer's Primary Interexchange Carrier (PIC) in the event of the assignment, sale or transfer of ownership of a service provider's customer base, or (b) the reversion of customers to their previous (validly selected) carrier because an equal access service provider ceases, or is about to cease, to provide long distance services (as provided for in the Commission's letters of 23 December 1994 and 9 January 1995);

(2) the applicability of slamming charges in the event of a dispute arising from a change in PIC due to the transfer or reversion of the customer base;

(3) the applicability of PIC order processing charges to PIC changes due to the transfer or reversion of the customer base;

(4) the appropriate form and time-frame for notifying end-customers of a change in their PIC due to the transfer or reversion of the customer base;

(5) options for minimizing disruption in the provision of long distance service to end-customers in the event that their chosen equal access service provider ceases, or is about to cease, to provide such service;

(6) the feasibility of the provision of automatic announcements and casual calling dialing codes to end-customers in the event that their chosen equal access long distance carrier ceases, or is about to cease, to provide long distance services; and

(7) the ability of the PIC processing systems of all service providers (both telephone companies and their competitors) to handle a flash-cut transfer or reversion of a large volume of PIC subscriptions in a timely manner.

Comments were received from ACC Long Distance Ltd. (ACC), Cam-Net Communications Inc. (Cam-Net), fONOROLA Inc. (fONOROLA), Smart Talk Network, Sprint, Stentor Resource Centre Inc. (Stentor) on behalf of AGT Limited, BC TEL, Bell, The Island Telephone Company Limited, Manitoba Telephone System, Maritime Tel & Tel Limited, The New Brunswick Telephone Company Limited and Newfoundland Telephone Company Limited (collectively, the telephone companies), Unitel Communications Inc. (Unitel) and Westel Telecommunications Ltd. (Westel). Reply comments were received from Sprint, Stentor and Westel.

Parties were generally of the view that a distinction should be made between (1) the treatment of a customer base when an equal access service provider is disconnected by the carrier providing the underlying facilities, occasioning an interruption in service to the end-user, and (2) the transfer of a customer base in circumstances where there is no interruption in long distance service to the end-customers.

II DISCONNECTION OF EQUAL ACCESS SERVICE PROVIDERS

A. Positions of Parties

Most parties did not support the reversion of customers to their previous validly selected service provider in the event that their current provider was disconnected or otherwise ceased to provide long distance services. Rather, they submitted that an automatic announcement should be provided that would inform customers attempting to place long distance calls of the situation and of the need for them to select a new service provider, as well as provide them with information as to how to make casual calls.

Stentor was of the view that, when the long distance service of an equal access service provider is terminated, customers' calls should be routed to a network announcement informing them that their service provider is no longer in service, and instructing them (1) to contact another service provider to obtain long distance service, and/or (2) how to place casual calls.

Sprint submitted that automatic announcements should be made prior to the termination of service, informing customers that, as of a specific date, service would no longer be available from their service provider. Sprint also submitted that the announcement should include the names and contact telephone numbers of service providers offering casual calling, and that customers should be informed of their right to choose a permanent provider of long distance service. Sprint stated that the cost of providing automatic announcements should be borne by the service provider ceasing operations.

Unitel submitted that the automatic announcement should be neutral and that customers should be able to continue to make 1-800 calls and calls using the casual calling codes of active equal access service providers. Stentor stated that customers would still be able to dial 1-800 calls.

ACC supported the use of automatic announcements providing the number of an independent agency with whom customers could discuss their options, and submitted that such a service should be established under tariff. Cam-Net also suggested that an 800-type telephone number could be established to provide such information. Westel submitted that the customer should be the party responsible for selecting a new carrier and that, in the interim, casual calling would provide the customer with the means of completing long distance calls. Cam-Net stated that reversion of the customer base should be used only as a last resort, and that automatic announcements were unnecessary.

Unitel and fONOROLA submitted that, should the Commission require the reversion of the customer base, the acquiring carrier should be required to provide notification to customers in a form and within the same time frame as would apply when customers were transferred by sale or acquisition (discussed below).

B. Conclusions

Based on the record of the proceeding, the Commission concludes that the provision of automatic announcements to the customers of service providers that have been disconnected and can no longer provide long distance services would be more appropriate than the reversion of those customers to their previous validly selected service provider. Accordingly, the Commission directs that, when an equal access service provider has been disconnected or for other reasons can no longer provide long distance service, and no other such service provider has acquired its customers in a seamless transfer, automatic announcements are to be provided by the telephone companies. The Commission directs that the announcement inform customers that:

(1) their equal access service provider is no longer able to provide long distance services;

(2) the customer can directly contact another equal access service provider to obtain long distance services; and

(3) 1-800 calls and calls to the telephone company operator can still be completed.

The announcement should also provide casual calling information, including that (1) casual calls can be placed by dialing "10" plus the three or four digit carrier identification code, followed by the area code and seven digit telephone number, (2) the customer may directly contact another equal access service provider to obtain its carrier identification code and, where necessary, arrange for casual calling billing, and (3) using another service provider to place casual calls does not result in the customer's service being permanently switched to that service provider.

The Commission does not consider it practical that such an announcement include the contact names and numbers of all equal access service providers, as this could result in disputes as to the form and accuracy of such announcements.

Consistent with the foregoing, the Commission directs the telephone companies (or Stentor on their behalf) to file, by 23 May 1995, the text of a proposed announcement providing the information noted above. The telephone companies are also to propose the time period during which the announcement would be made to customers of a disconnected equal access service provider. Copies are to be served on interested parties, also by 23 May 1995. Interested parties may file comments on the proposals, serving copies on the telephone companies (or Stentor, as the case may be), by 5 June 1995. The telephone companies (or Stentor) may file a reply, serving copies on all parties who comment, by 19 June 1995. Having considered the submissions, the Commission will approve the final text of the announcement to be used.

The Commission considers that the cost of providing the automatic announcement should be recovered from all equal access service providers, since the provision of the information in question is to their benefit. In the Commission's view, it would be impractical to attempt to recover charges from the service provider that ceases operations, because it is likely that the service provider would already be unable to meet its other obligations. Accordingly, the telephone companies are directed to file proposed tariff revisions providing for the recovery of the costs generally from all equal access service providers. The proposed revisions are to be filed with the Commission and served on interested parties by 19 June 1995.

III TRANSFER OF A CUSTOMER BASE WITH NO SERVICE INTERRUPTION

A. Positions of Parties

Parties other than Stentor were generally of the view that it would be inappropriate to require an acquiring service provider to re-confirm the customer base in adherence to the Schedule 4 consumer safeguard requirements, because the transfer of a customer base does not raise the same concerns as an unauthorized change in service provider where the intent is to mislead or defraud the customer. For similar reasons, they also submitted that the application of a slamming charge would not be appropriate.

The parties generally agreed that the acquiring service provider should have to comply with some notification process. fONOROLA and Sprint noted that section 3.7 of the PIC/CARE (Customer Account Record Exchange) Access Customer Handbook states that, in cases of an acquisition or merger, it is the responsibility of the acquiring service provider to notify affected customers of the change in their PIC selection and of any billing implications.

Most parties submitted that the notification should provide the customer with an explanation of the transaction, and notice of any changes in the rates, billing process or other terms and conditions of service. Some parties considered that the notification should include an indication that the customer may select a different equal access service provider.

fONOROLA stated that, in the United States, an acquiring service provider is required to mail a notification to customers, usually with the first bill. That notification informs the customer of what has occurred, and why, states that existing rates and billing frequency will not change (either for a certain period of time or indefinitely), and provides the business office telephone number of the acquiring service provider.

Sprint submitted that all carriers (including non-regulated providers) should be required to include in their tariffs and/or service contracts a clause indicating that any assignment of the customer's service, in any manner, must be accompanied by notification to the customer by the service provider making the assignment. Sprint also stated that customers of the assigning service provider who have fixed-term contracts should be assignable to the acquiring carrier only under the original terms and conditions of those contracts.

Stentor noted that the procedures in Schedule 4 provide for a process to obtain customer authorization; however, should the Commission determine that this process is not appropriate, the acquiring service provider should be required to notify customers of any potential billing or service implications. Stentor also submitted that the acquiring carrier should be required to report to the Commission when the notification is complete, providing a copy of the script or form of the notice provided and noting the date that notification was completed. Stentor submitted that, if the original service provider had performed an unauthorized change in the customer's PIC prior to the transfer of the customers, the Schedule 4 process should apply, and that responsibility for that unauthorized transfer should pass to the acquiring service provider.

The parties suggested various time limits within which notification should be provided. Stentor submitted that notification should be received by customers within 10 business days of the transfer, while Unitel submitted that notification should be mailed within 14 days. ACC suggested that notification should occur in the next billing cycle. Sprint and Westel submitted that no specific time limit should be established, as it would be in the best interests of the acquiring service provider to notify the affected customers as promptly as practicable. Westel submitted that, generally, notification should occur prior to, or co-incident with, the customer being billed in the name of the new service provider. Cam-Net and fONOROLA suggested that the notification occur within 90 days of the change in PIC, with fONOROLA noting that this is the period specified in the United States for such notification. Cam-Net stated that notification of rate changes should be made before they occur.

Stentor expressed concern that regulated carriers might be in contravention of section 27(2) of the Telecommunications Act (concerning non-discriminatory pricing) if newly acquired customers were charged different rates from their existing customer base.

In reply, Sprint submitted that the time limits suggested by Stentor and Unitel would be inappropriate, because they would impose an unnecessary administrative burden on the acquiring service provider and because there are no compelling consumer-protection reasons for requiring such a short notification period. Sprint stated that, if the Commission wishes to impose a specific time limit, the 90-day period suggested by fONOROLA would be appropriate.

Parties other than Stentor submitted that the telephone companies' Carrier Services Group (CSG) should develop a procedure and an appropriate tariff for processing a batch of PIC orders or for changing the carrier identification code assignment on the relevant trunks. Stentor submitted that it would be appropriate to recover from the acquiring carrier all costs incurred as a result of the transfer, and that the applicable charges should reflect those costs.

Most of the competitors suggested that there would be few or no problems, in the case of an acquisition or merger, with respect to the ability of the PIC processing systems to handle a flash-cut transfer of a customer base. However, Unitel suggested that it may face billing delays and require several weeks of pre-planning and system changes to deal with a large volume of PIC transfers. Westel stated that the CSG should not process related PIC transfers at the expense of delaying or failing to meet the daily quotas for processing another service provider's PIC orders. fONOROLA submitted that the CSG should be required, at a minimum, to follow the service interval guidelines in section 7 of the PIC/CARE Access Customer Handbook.

Stentor stated that the time and effort required for the transfer of a customer base would vary depending on the circumstances, and that considerable coordination among the affected carriers would be necessary.

2. Conclusions

The Commission notes that, when a customer actively chooses to change service provider, it can be expected that the customer will have considered the applicable rates, terms and conditions of service. However, when an entire customer base is transferred, customers may not be aware of the rates, terms and conditions of the acquiring service provider. Since such information may affect the customer's decision whether or not to remain with the acquiring service provider, the Commission considers that, whenever customers are transferred from one equal access service provider to another, they should be made aware of the change.

The Commission considers that the provisions in the United States, cited by fONOROLA, provide a basis for requirements for the protection of customers in these circumstances. However, the Commission considers that those requirements should be supplemented with some of the notification requirements suggested by other parties. Accordingly, the Commission directs that an equal access service provider acquiring a customer base of another such service provider is to send to the individual customers a notification that includes the following information:

(1) an explanation of the change in service provider and the reasons why it has occurred (excluding, as necessary, any carrier or customer confidential information, pursuant to provisions in the carriers' terms of service);

(2) details of the impact, if any, on the customer's service, including any change in rates, billing frequency, contract terms or other conditions of service;

(3) a statement that customers may change to a different service provider without penalty; and

(4) a toll-free number at which customers can reach the acquiring service provider to discuss the change in service provider and any changes in their service, and through which they may cancel their subscriptions to that service provider.

The Commission further directs that the notification be issued in a document separate from the customer's bill, although it may be mailed or delivered in the same envelope.

In the Commission's view, it is important that customers not experience any substantive changes in service, such as changes to rates, billing frequency or other terms and conditions of service, without first receiving notice. The Commission agrees with Sprint and Westel that it is in the interests of the acquiring service provider to notify the affected customers as soon as practicable. The Commission also considers that to require a notification period as short as those suggested by Stentor and Unitel would impose an excessive administrative burden on many service providers.

In light of the above, the Commission directs that, when a customer base is transferred from one equal access service provider to another, the acquiring service provider must issue a notification to the affected customers, within 90 days of the transfer, providing the information set out above. In addition, the Commission directs that, where an acquiring service provider makes any material change in the rates, terms or conditions of the acquired customers' service prior to the end of the 90-day period, notification must be received by the customers prior to the effective date of any such change. The Commission further directs that, at the time that notification is provided to affected customers, the acquiring service provider is to file a copy of the notice with the Commission for information purposes.

With respect to Stentor's concerns related to section 27(2) of the Telecommunications Act, the Commission does not consider it unduly discriminatory for an acquiring carrier, during a transitional period, to continue to provide service to newly acquired customers under the rates, terms and conditions that those customers had established with their previous service provider.

In the Commission's view, the determinations noted above will require amendments to the PIC/CARE Access Customer Handbook and/or to Schedule 4 of the ICG Agreements between the telephone companies and competitors. Accordingly, the Commission directs that the telephone companies (or Stentor on their behalf) file, by 23 May 1995, any proposed amendments to those documents considered necessary for the implementation of this Decision. Copies are to be served on interested parties by the same date. Parties may comment on the proposed amendments, serving copies on the telephone companies (or Stentor, as the case may be), by 5 June 1995. The telephone companies (or Stentor) may file a reply, serving copies on all parties who comment, by 19 June 1995.

With respect to submissions regarding the applicability of the PIC processing charge, the Commission considers it reasonable that the telephone companies, or Stentor on their behalf, develop bulk PIC processing tariffs. Accordingly, the Commission directs that tariffs be developed to apply to a bulk transfer of customers from the carrier identification code of one service provider to that of another, and to changes in carrier identification code assignments. The proposed tariffs are to be filed with the Commission and served on interested parties by 19 June 1995. The proposed tariffs should be based on the costs associated with such a bulk transfer or change in carrier identification code assignments. Any necessary procedural changes (for example, for the handling of bulk PIC transfers) should be included with the proposed tariffs.

Allan J. Darling
Secretary General