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ARCHIVED -  Telecom Order CRTC 96-1158

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Telecom Order

Ottawa, 18 October 1996
Telecom Order CRTC 96-1158
IN THE MATTER OF an application by Sprint Canada Inc. (Sprint) dated 19 July 1994, for contribution exemption in respect of certain dedicated cross-border circuits provided by Sprint to Rochester Communications Inc. (RCI).
Reference: 95-1289
WHEREAS in Telecom Order CRTC 96-65 dated 23 January 1996 (Order 96-65), the Commission deferred disposition of Sprint's application for contribution exemption for the circuits in question;
WHEREAS the Commission directed Sprint to provide a technical audit verifying that a fixed bandwidth is dedicated to each of the dedicated local loops (DLLs) through the multiplexer, or end user affidavits from RCI customers attesting that the circuits are dedicated to their use;
WHEREAS by letter dated 27 March 1996, Sprint stated that it would be unable to provide the technical audit until 15 April 1996;
WHEREAS by letter dated 15 April 1996, Sprint provided the required audit performed by an independent professional engineer, as well as the auditor's sworn affidavit;
WHEREAS the auditor stated that he was satisfied that the audit provided sufficient evidence to conclude that all of the circuits in question are used to provide a dedicated voice or data service to customers of RCI or were not assigned at the time of the audit, and confirmed that a fixed bandwidth is dedicated to the DLLs identified at the time of the audit;
WHEREAS by letter dated 21 May 1996, Bell Canada (Bell) provided comments;
WHEREAS by letter dated 27 May 1996, Sprint submitted its reply;
WHEREAS Bell noted its concern with the delay between the date of application (19 July 1994) and the date of audit provision (15 April 1996), a period of more than 18 months;
WHEREAS Bell stated that Sprint itself noted that the services assigned to various circuits have changed, or have been discontinued, over time;
WHEREAS Bell submitted that the circuits assigned to RCI customers at the time of the audit, as identified by the auditor, should be exempted from contribution charges effective the date of the audit;
WHEREAS for the period from Sprint's original application to the time of the audit, Bell submitted that, unless Sprint can provide satisfactory evidence to show that the circuits were in place and unchanged for this period, the requested exemption should be denied;
WHEREAS Sprint submitted that it has diligently pursued the application within the prescribed limitation periods and that the Commission did not issue a ruling on its application until January 1996, 16 months after the application was originally filed;
WHEREAS Sprint also noted that in Effective Date of Contribution Exemptions, Telecom Public Notice CRTC 95-26, 12 June 1995 (PN 95-26), the Commission stated that contribution exemptions will generally be granted effective the later of the date of the application or the date of installation, absent special circumstances;
WHEREAS Sprint stated that it is clear that special circumstances exist in the present case;
WHEREAS Sprint stated that until the issuance of Order 96-65, it was unclear whether "end user" referred to the applicant's customer or the customer's customer;
WHEREAS Sprint submitted that although the Commission determined that, for the purposes of contribution exemption, an "end user" refers to the customer at the end of the circuit, that is the customer of the applicant's customer (RCI's customers in the present case), it would be unfair and inappropriate to penalize Sprint for the Commission's delay in providing a timely ruling on that contentious issue;
WHEREAS Sprint submitted that the Commission's and Bell's delays constitute special circumstances which warrant that an exemption be granted effective the date of installation, as indicated in PN 95-26;
WHEREAS the Commission considers that it may not have been clear to all parties from the start of the process that a technical audit would be required;
WHEREAS the Commission considers that Sprint has diligently pursued its application and that, in the circumstances, Bell's request that the effective date be the audit date is not appropriate;
WHEREAS in PN 95-26, the Commission stated that contribution exemptions will generally be granted effective the later of the date of the application or the date of installation, absent special circumstances;
WHEREAS in this case, the date of application is the later date;
WHEREAS the Commission is not persuaded that the exemption should be effective to the date of installation, but, rather, should be effective the date of application (19 July 1994);
WHEREAS Bell noted that at the time of the audit, 34 DS-0s were in use and 14 were unused and agreed that all 48 DS-0s would qualify for an exemption at the time of the audit;
WHEREAS Bell submitted that with respect to the circuits purportedly provided to RCI and subsequently discontinued at the time of the audit, the requested exemption should be denied, since no evidence can be provided to substantiate the exemption;
WHEREAS Bell submitted that the circuits identified at the time of the audit as unused should be exempted from contribution charges effective the date of the audit, pursuant to a previous exemption granted to Sprint for unused facilities, and subject to their inclusion in Sprint's monthly reports of unused bandwidth;
WHEREAS Bell stated that for the period prior to the audit, if these circuits had been included in Sprint's reports, as they should have been in Bell's view, they would have already received an exemption;
WHEREAS Sprint disagreed with the above assertion by Bell stating that none of the 48 DS-0s provided to RCI, which are the subject of this application, had been terminated;
WHEREAS Sprint submitted that it would be unfair to penalize it for the fact that several customers chose to terminate their dedicated services with RCI during the time that it has taken the Commission to determine this application;
WHEREAS Sprint stated that it had no objection to reporting these circuits as unused bandwidth on a going-forward basis, but objected to Bell's submission that exemption should not be granted for the period prior to the audit, if the circuits had not been claimed as unused bandwidth;
WHEREAS the Commission notes that the circuits characterized by Bell as discontinued actually continued to exist as circuits dedicated to an end user (RCI the customer), but became unused after Sprint's request for an exemption;
WHEREAS had Sprint reported these as unused circuits when they first became dormant, they would clearly have qualified for a contribution exemption;
WHEREAS in these circumstances and given that had these circuits continued be used, they would have been eligible for a contribution exemption because they would have been dedicated to an end user, the Commission considers that the circuits in question should be exempt from contribution;
WHEREAS Bell pointed out that Sprint has not identified if any controls or procedures were in place: (1) to ensure that the configuration is not altered; or (2) to provide an audit trail for any changes that might be made which may affect the ongoing validity of the exemption;
WHEREAS Bell submitted that an exemption should only be granted if Sprint confirms that appropriate controls or procedures are in place;
WHEREAS the Commission agrees with Bell that the exemption be subject to Sprint identifying whether any controls or procedures are in place to ensure that the configuration is not altered, or to provide an audit trail for any changes that might be made which may affect the ongoing validity of the exemption; and
WHEREAS the Commission also agrees with Bell that the exemption be subject to the possibility of future random audits -
IT IS  HEREBY ORDERED THAT:
1. Sprint's application is approved effective the date of application (19 July 1994), subject to the receipt of a report, within 30 days, identifying the controls or procedures in place: (1) to ensure that the configuration is not altered; or (2) to provide an audit trail for any changes that might be made which may affect the ongoing validity of the exemption.
2. The configuration is subject to the possibility of future random audits.
3. Sprint should commence reporting circuits as unused as soon as they become unused, notwithstanding any pending application for an exemption from contribution.
Allan J. Darling
Secretary General

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