ARCHIVED -  Telecom Order CRTC 96-1472

Telecom Order

Ottawa, 17 December 1996

Telecom Order CRTC 96-1472

IN THE MATTER OF an application filed by Rogers Network Services (RNS) on 21 May 1996, for exemption from contribution charges for a cross-border DS-3 circuit used to concentrate Internet protocol traffic for routing to the United States.

Reference: 96-2128

WHEREAS by letter dated 3 July 1996, RNS provided a copy of a technical audit in support of its application;

WHEREAS by letter dated 15 August 1996, Bell Canada (Bell) stated that the audit generally meets the Commission's evidentiary requirements;

WHEREAS Bell stated that the auditor has verified the usage and separation of the circuits, and has confirmed with testing that the DS-3 circuit was configured with all of the available bandwidth allocated to RNS and that it carried only data traffic;

WHEREAS, Bell noted that in accordance with the Commission's requirements for contribution exempt service configurations, control procedures must be in place to ensure the continued compliance of the configuration to the conditions on which the exemption is based and that the auditor had not identified the existence of such procedures;

WHEREAS Bell submitted that RNS should be required to maintain an audit trail of records which would permit the confirmation of future changes to the circuits assignments or configuration;

WHEREAS Bell submitted that such procedures should be implemented and communicated to the Commission prior to granting a contribution exemption;

WHEREAS, given the nature of the configuration, Bell submitted that the Commission may wish to consider the possibility that future random audits could be required, as discussed in Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993 (Decision 93-2);

WHEREAS by letter dated 29 August 1996, RNS submitted that it has complied with the requirements in Decision 93-2, and took issue with Bell's claims that control procedures must be in place to ensure the continued compliance of the configuration to the conditions on which the exemption is based;

WHEREAS RNS requested that the Commission reject the imposition of this new obligation on RNS for the following reasons: (1) control procedures are not a requirement for a contribution exemption; (2) RNS is prohibited from providing switched voice services without first notifying the Commission and filing tariffs; and (3) the telephone companies' unregulated Advanced Communications subsidiaries are not subject to the requirements which Bell proposes for RNS;

WHEREAS RNS stated that it is not aware of any Commission requirement for control procedures nor has Bell provided any reference to an Order, Decision or other Commission document which sets out what these requirements may be;

WHEREAS RNS stated that it finds itself in the same position as the telephone companies' unregulated data service providers;

WHEREAS RNS stated that both Bell Advanced Communications and MT&T Advanced Communications have requested and received contribution exemptions;

WHEREAS RNS stated that in Telecom Order CRTC 95-756, 4 July 1995, the Commission approved MT&T Advanced Communication's application for a contribution exemption, noting that it is a data-only provider;

WHEREAS RNS stated that there was no requirement for the telephone companies' Advanced Communications affiliates to provide the Commission with control procedures nor have the affiliates offered such procedures;

WHEREAS by letter dated 18 September 1996, Bell noted that the evidentiary requirements associated with contribution exemptions have been evolving over time since the Commission rendered Decision 93-2;

WHEREAS Bell stated that the Commission has acknowledged this evolutionary trend in a recent order, Telecom Order CRTC 96-942 dated 27 August 1996 wherein it makes reference to the current "period of changing evidentiary requirements";

WHEREAS Bell also noted that recent contribution exemption applications, which called for a technical audit, required the implementation and verification of appropriate control procedures as an element of the audit;

WHEREAS Bell cited a number of exemption Orders as having, in its view, recognized this requirement;

WHEREAS Bell stated that in Telecom Order CRTC 96-507, the Commission defines this requirement as follows: "the audit should also verify ... the existence of, as well as the nature of, any controls in place to ensure the continued compliance of the configuration to the conditions on which the exemption is based";

WHEREAS Bell stated that the service configuration in question is unlike other contribution exempt configurations such as some of those leased by affiliates of the telephone companies, where the reseller does not control the configuration;

WHEREAS Bell submitted that RNS does have control over this configuration in that the facilities connect to router equipment which is maintained and controlled by RNS;

WHEREAS given the nature of the current RNS business and the control that RNS exercises over the configuration, Bell submitted that RNS should be required to comply with the generic guidelines that are now considered to be inherent with a technical audit;

WHEREAS Bell submitted that appropriate control procedures ensure that the configuration is not altered, or if it is altered necessitate that RNS advise the Commission of any future changes in the configuration on which the exemption is based;

WHEREAS, Bell submitted that RNS should also be required to maintain an audit trail of records which would permit the confirmation of future changes to the circuits assignments or other aspects of the configuration;

WHEREAS Bell submitted that an appropriate control procedure in this case might be defined as follows: (1) written documentation of internal compliance procedures would be prepared and made available to employees responsible for monitoring compliance; (2) written approval from an officer of the company would be required to authorize a change in the network configuration; such written approval would be kept on file for future inspection; and (3) monthly internal reviews of the configuration would be conducted to ensure continued compliance; the resulting monthly verification report would be prepared by a technician responsible for maintenance of the service configuration and signed off by an officer of the company; the reports would be kept on file for future inspection;

WHEREAS Bell submitted that the above referenced procedure does not inconvenience or unduly burden RNS in that the procedure can be readily implemented internally;

WHEREAS Bell stated that, at the same time, the procedure provides an appropriate audit trail to ensure that the RNS configuration remains compliant and can be more easily audited and verified should there be a requirement to review the configuration at a later date;

WHEREAS in light of the lack of adequate control procedures as identified by the technical audit and subsequent submission, Bell recommended that interim approval be granted pending the establishment of appropriate control procedures to verify the ongoing compliance of the configuration;

WHEREAS Bell submitted that final approval should be granted only after RNS has satisfied the Commission that a documented, auditable control procedure for verifying the service configuration on an ongoing basis is in place;

WHEREAS finally, given the nature of the configuration, Bell submitted that the Commission may wish to consider the possibility that future random audits could be required;

WHEREAS the Commission notes that the auditor has verified the usage and separation of the circuits, and has confirmed with testing that the DS-3 circuit was configured with all of the available bandwidth allocated to RNS and that it carried only data traffic;

WHEREAS, the Commission is of the view that RNS has met the relevant evidentiary requirements, with the exception of control procedures;

WHEREAS the Commission agrees with Bell that RNS is in a different situation than the telephone companies Advanced Communications affiliates;

WHEREAS, unlike RNS, the telephone companies Advanced Communications affiliates do not control the configurations they make use of;

WHEREAS the Commission agrees with Bell with respect to the requirement of control procedures; and

WHEREAS the Commission agrees with Bell that a practice has been established over time requiring the establishment of control procedures to ensure the continued compliance of the configuration on which the audit is based and also to provide an audit trail for any future random audits, if and when ordered -

IT IS HEREBY ORDERED THAT:

RNS' application is granted interim approval effective the date of application, with final approval subject to the filing of a satisfactory report within 30 days that demonstrates the establishment of appropriate internal control procedures to verify the ongoing compliance of the configuration, or if it is altered, to maintain an audit trail of records.

The configuration in question is subject to the possibility of future random audits to ensure continued compliance with the conditions on which the exemption is based.

Allan J. Darling
Secretary General