ARCHIVED -  Telecom Order CRTC 97-1173

Telecom Order

Ottawa, 25 August 1997

Telecom Order CRTC 97-1173

The Commission received a letter dated 13 March 1997 from Call-Net Enterprises Inc. (Call-Net) submitting an application on behalf of NETCOM Canada Inc. (NETCOM) requesting an exemption from contribution charges for certain cross-border circuits used by NETCOM solely for data traffic.

File No.: 8626-N15-01/97

1. Call-Net stated that the circuit in question is connected to cross-border private line facilities leased by NETCOM from Sprint Canada Inc. (Sprint) (an operating subsidiary of Call-Net). Call-Net attached an affidavit of NETCOM's Vice President of Operations dated 11 March 1997, in compliance with the evidentiary requirements established 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 and Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993 (Decision 93-2).

2. Call-Net noted that its application for a similar configuration was given final approval in Telecom Order CRTC 96-1471, 17 December 1996 (Order 96-1471). Call-Net submitted that where a service provider has obtained an exemption order in respect of a particular service or configuration, it is unnecessary and unreasonable for the service provider to make a new application for exemption every time it signs on a new customer with the same service or configuration. Call-Net submitted that pursuant to Decision 93-2, it should be sufficient if the service provider simply references the existing order in respect of the new or added circuits in the monthly circuit reporting to the telephone companies.

3. Call-Net stated that Bell Canada (Bell) had rejected Call-Net's proposal to reference Order 96-1471 in respect of new or added Internet access circuits. Call-Net stated that Bell has taken the position that Call-Net must file a new application for every new Internet Service Provider (ISP) customer signed on, or alternatively, Call-Net must obtain an umbrella exemption from the Commission in respect of internet access circuits.

4. Call-Net submitted that other competitors, like AT&T Canada Long Distance Services Company (AT&T Canada LDS), are not required to file a new application for exemption for every new customer signed on. Call-Net submitted that this requirement is not only administratively and operationally inefficient, it is discriminatory and unfair and is a significant competitive disadvantage. Call-Net stated that it has been made aware of several situations in which the telephone companies have attempted to discourage Sprint's potential customers by representing to them that only Sprint has to file for a contribution exemption order and that the customer bears a risk that it does not have to bear with the telephone company (if the order is not granted).

5. Call-Net stated that furthermore, the filing of new applications for each customer has put, and continues to put, Sprint in a significant competitive disadvantage in that it has to identify each customer on the public record for each application, thereby essentially providing a shopping list of its cross-border customers to Bell for win-back purposes. In addition, Call-Net stated that the regulatory lag involved in the processing of each and every individual application represents an unfair and discriminatory burden on Sprint.

6. Call-Net requested that in light of the foregoing, in addition to the present specific request in respect of NETCOM, the Commission issue an order declaring that circuits used by Sprint to connect cross-border private lines used for carrying Internet traffic will be considered exempt from contribution, so long as such circuits are clearly identified and reported as such and the umbrella order is referenced, in the monthly circuit report submitted by Sprint to the relevant telephone companies.

7. By letter dated 9 April 1997, Bell noted that the affidavit provided satisfies the evidentiary requirements for such exemptions, as set out in Decision 93-2. Accordingly, Bell agreed with NETCOM's request for an exemption.

8. With reference to Call-Net's request for an umbrella order, Bell noted that the circuits in question are not used by Sprint. Bell stated that the service provider requiring an exemption in this case is NETCOM, not Sprint. Bell stated that similarly, the service provider who was granted an exemption in Order 96-1471, dated 17 December 1996, was UUNET Canada Inc., not Sprint. Bell submitted that an exemption granted to one service provider cannot be used as the basis for assuming an exemption should be granted to another service provider.

9. Bell noted that although Call-Net has chosen to submit the application on behalf of its customer, NETCOM, Call-Net is not required to do so. Bell stated that the onus to apply for an exemption from contribution charges rests with NETCOM or any other service provider leasing services from a carrier for which it believes that contribution should not apply. Bell stated that the carrier's responsibility is to assess contribution charges on such circuits unless or until a contribution exemption is granted by the Commission.

10. Bell noted that its customers for similar services are required to make their own applications for exemptions, and contrary to Call-Net's allegation in its submission, resellers and other service providers who are customers of AT&T Canada LDS are also required to do so. Bell further noted that Sprint is not in a position to provide the evidence required to support NETCOM's application for exemption. Bell stated that an umbrella exemption, such as requested by Call-Net, is therefore inappropriate, since Sprint is not in a position to affirm that no voice services are provided by its customer or that a service provider is using the facility only for the transmission of data traffic.

11. Bell noted that since the reseller customers of all carriers are treated the same, and are required to make their own applications for exemption from contribution charges, there is no difference in treatment from a regulatory perspective. Accordingly, Bell submitted that there is no disadvantage to Sprint. In light of the above, Bell submitted that Call-Net's arguments are unfounded, and its request for an umbrella order should be dismissed.

12. By letter dated 14 April 1997, Call-Net noted Bell's claim that its own "customers for similar services" are required to make their own applications for exemptions, and further that "resellers and other service providers" who are AT&T Canada LDS' customers are also required to make their own applications. Call-Net submitted that Bell has confused the basis for its request. Call-Net stated that it has not requested that the umbrella order apply to its customers who resell its cross-border facilities. Rather, Call-Net has requested that cross-border facilities dedicated to corporate or institutional private lines customers and those used by ISPs be included in such umbrella exemption.

13. Call-Net submitted that, contrary to Bell's claim, Bell's large corporate or institutional cross-border private lines customers have had to file applications for contribution exemption with the Commission. Call-Net stated that similarly, AT&T Canada LDS' large corporate users do not file for contribution exemption on a customer-by-customer basis.

14. Call-Net stated that it is unreasonable, inequitable and impractical in a competitive environment to continue to require one competitor to submit a formal application for contribution exemption every time it signs on a customer for dedicated service, when its major competitors do not have to do the same.

15. The Commission finds that there are three issues: (1) whether Call-Net's customers with dedicated cross-border circuits should be covered under an umbrella order; (2) whether Call-Net's customer ISPs should be covered under an umbrella order; and (3) whether NETCOM's application should be approved.

16. With respect to Issue 1, the Commission disagrees with Call-Net's submission that "other competitors, like AT&T Canada Long Distance Services Company (AT&T Canada LDS), are not required to file a new application for exemption for every new customer signed on". The Commission notes that, in fact, other competitors have applied to the Commission (see Orders 96-1394, 96-830, 96-829, 96-745 for AT&T Canada LDS, Order 96-1003 for ACC TelEnterprises Ltd., Orders 96-932, 95-628 for STN Inc., Order 95-53 for fONOROLA Inc., and Decision 93-2 for various companies.)

17. The Commission notes that Bell's subsidiaries (for example Bell Advanced Communications) are required to file exemptions for contribution, and have been doing so. The Commission further notes that carrier verification is one of the evidentiary requirements approved by the Commission to support a contribution exemption. The Commission agrees with Call-Net that Bell has not been filing applications on behalf of its own large corporate users. However, given that Bell would be essentially verifying its own facilities, the Commission does not consider that any useful purpose would be served by imposing a formal carrier verification on Bell in these circumstances.

18. The Commission agrees with Bell's statement that an umbrella exemption, such as requested by Call-Net, is inappropriate, since Sprint is not in a position to affirm that no voice services are provided by its customer, or that a service provider is using the facility only for the transmission of data traffic. The Commission also considers that since the reseller customers of all carriers are treated the same, and are required to make their own applications for exemption from contribution charges, there is no difference in treatment from a regulatory perspective and that there is no disadvantage to Sprint. Accordingly, the Commission is of the view that Call-Net's request should be denied and that customers of all carriers should continue to be required to make their own applications for exemption from contribution charges on cross-border circuits.

19. With respect to Issue 2, similar to Issue 1, the Commission is of the view that Sprint is not in a position to affirm that no voice services are provided by the ISP, or that an ISP is using the facility only for the transmission of data traffic. Accordingly, the Commission is of the view that Call-Net's request should be denied.

20. With respect to Issue 3, the Commission notes that NETCOM's affidavit satisfies the evidentiary requirements set out in Decision 93-2.

21. Based on the foregoing, the Commission orders that:

(a) NETCOM's application is approved effective the date of application, 13 March 1997; and

(b) Call-Net's request for an umbrella order to cover future applications with respect
to cross-border facilities dedicated to corporate or institutional private lines customers and those used by ISPs is denied.

Laura M. Talbot-Allan
Secretary General

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