ARCHIVED -  Telecom Public Notice CRTC 95-26

Telecom Public Notice

Ottawa, 12 June 1995

Telecom Public Notice CRTC 95-26

EFFECTIVE DATE OF CONTRIBUTION EXEMPTIONS

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), the Commission established, among other things, a regime under which competitive service providers are required to pay contribution charges to the telephone companies to assist in the support of local/access service. The Commission also determined that, for certain types of services provided by competitors, an exemption from the requirement to pay contribution (contribution exemption) might be granted upon application to the Commission.

In Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993 (Decision 93-2), the Commission set out a general framework for dealing with future applications for contribution exemptions with respect to various types of services and configurations. The Commission also ruled on the initial group of applications for contribution exemptions. Noting that it would have been inappropriate to require competitors to pay contribution charges for configurations that were found in that Decision to be exempt, the Commission made the exemptions granted therein effective the date the circuits in question were first installed.

Following Decision 93-2, it has generally been the Commission's practice to grant contribution exemptions effective the date of the order approving such exemptions. However, when supported by the evidence, exemptions have been granted with respect to past periods.

The Commission considers that its current general practice of granting exemptions effective only the date of the order may lead to competitors being prejudiced by both the amount of time required for the process whereby the affected carrier may comment on the application, and the amount of time that it takes the Commission to process the application. Accordingly, the Commission considers that a change to this practice would be appropriate.

The Commission considers that applications for contribution exemptions can be distinguished from applications for the approval of new or amended tariff pages, which approval can generally only be granted effective the date of the order approving the pages in question, or a subsequent date. The Commission notes that subsection 25(1) of the Telecommunications Act provides that no Canadian carrier shall provide a telecommunications service except in accordance with a tariff approved by the Commission. The Commission considers that this means that the action for which approval is sought must necessarily follow the approval thereof.

The Commission also notes that, absent interim approval, common law jurisprudence respecting retroactive rate-making prohibits the charging of rates retroactively. The Commission considers that no such statutory or common law impediment arises with respect to contribution exemptions.

The general principle underlying the Commission's approach to contribution exemptions is that there should be no contribution payments required with respect to services that do not result in contribution being foregone by the telephone companies. In implementing this principle, the Commission must be assured, through satisfactory evidence, that exemptions are properly granted in accordance with the framework set out in Decision 92-12, Decision 93-2 and various Commission orders.

In addition, in the interests of certainty for all parties, the Commission considers that applications for contribution exemptions should be made in a timely fashion.

In the Commission's view, there are two alternative options with respect to the effective date of a contribution exemption: (1) the date that the circuits were first installed, as was the case with the initial group of exemptions granted in Decision 93-2, or (2) the date of the application for the exemption.

The Commission is of the view that, absent special circumstances, contribution exemptions should generally not be made effective back to the date that the circuits were first installed (if this is prior to the application date), in order to avoid the evidentiary problem of establishing historical facts. By way of example, the Commission notes that a technical audit is required with respect to many circuit configurations to ensure that an exemption is warranted. In the Commission's view, it is impossible in the majority of cases for an independent auditor to attest to the fact that a system has been configured in a satisfactory manner for a period of time prior to the carrying out of the audit.

Moreover, the Commission notes that Decision 92-12 establishes a regime whereby contribution is not payable on certain configurations "provided that the reseller ... applies to the Commission ... and provides evidence satisfactory to the Commission ...." While the evidence will not actually be found to be satisfactory until the Commission issues an Order, the Commission considers that, once a competitor has provided the required evidence, it has done all that it is required to do and should generally be entitled to an exemption from the date of application forward.

Accordingly, the Commission announces that, effective immediately, contribution exemptions will generally be granted effective the later of the date of the application or the date of installation, absent special circumstances. The Commission will continue to determine, on a case-by-case basis, whether particular contribution exemptions warrant other effective dates. For example, in some cases in the past, applicants have not provided all required evidence in a timely manner. The Commission considers that, in such cases, a later effective date may be appropriate.

As an exception to the foregoing, the Commission will generally grant contribution exemptions for administrative circuits effective the date of installation. The Commission considers that no time-sensitive evidentiary problems are likely to arise with respect to applications for exemptions for such circuits.

Allan J. Darling
Secretary General