ARCHIVED -  Telecom Order CRTC 97-1176

Telecom Order

Ottawa, 27 August 1997

Telecom Order CRTC 97-1176

Following a process initiated by Definition of Customer in the General Tariffs of the Telephone Companies, Telecom Public Notice CRTC 95-54, 13 December 1995, the Commission directed the federally regulated Stentor member companies (the companies) to adopt a new definition of customer in Definition of Customer, Telecom Decision CRTC 97-4, 26 February 1997 (Decision 97-4).

File No.: 8662-S1-01/97

1. In Decision 97-4, the Commission directed the companies to include the following definition of customer in their General Tariffs:

A person or legal entity, including a reseller or sharing group, that purchases telecommunications services from the company, and is liable to the company for those services.

2. The Commission further directed the companies to include the following qualifications adjacent to the definitions of "resale" and "sharing":

(x) For the purposes of this paragraph

"affiliate" means a person that controls or is controlled by the customer or that is controlled by the same person that controls the customer.

For greater certainty, a customer is deemed not to act as a reseller or a sharing group if the telecommunications services that it purchases from the company are used only by itself and one or more affiliates.

(x) For greater certainty, a government is deemed not to act as a reseller or sharing group if the telecommunications services that it purchases from the company are used only by departments, agencies, crown corporations or other entities:

(a) declared by statute to be part of the government in question; or

(b) with respect to the employees of which the government has the obligations of employer.

3. Stentor applied to the Commission for a stay of Decision 97-4 on 4 March 1997 pending disposition of a subsequent application filed on 27 March 1997.

4. The Commission granted the stay on 10 March 1997, pending the outcome of the review and vary application.

5. On 27 March 1997, Stentor filed an application to modify the definition of customer set out in Decision 97-4, or, failing that, to provide for a period of time for the transition to the new definition of customer.

6. Stentor proposed that those aspects pertaining to the definition of "affiliate", and when a non-governmental customer is deemed not to act as a reseller or a sharing group, be replaced with the following:

For greater certainty, a customer is deemed not to act as a reseller or sharing group if the telecommunications services that it purchases from the company are used only by: a company or one or more affiliates, a company and its franchises or authorized franchisees; a co-operative organization and its associated member companies; or a company and its authorized agents and/or employees regularly conducting business at fixed or designated locations outside the principal business premise or business premises of the company.

7. Stentor submitted that (i) the Commission had made an error in fact; (ii) there has been a fundamental change in circumstances or facts since Decision 97-4; (iii) the Commission had failed to consider a basic principle in the proceeding; (iv) a new principle has arisen as a result of the Decision; and (v) there is substantial doubt as to the correctness of the Decision.

8. Comments on Stentor's application were received from: the Credit Union Central of Canada (CUCC), the Canadian Cooperative Association (CCA), the Canadian Business Telecommunications Alliance (CBTA), and Call-Net Enterprises Inc. (Call Net), which filed a joint submission on behalf of ACC TelEnterprises Inc., AT&T Canada Long Distance Services Company, Call-Net, fONOROLA Inc., and Westel Telecommunications Ltd., (the Competitors). Stentor filed a reply to their comments.

9. The Competitors submitted that Stentor's application should be denied, arguing that Stentor had failed to demonstrate that the criteria for review and variance cited by Stentor to justify approval of its application had been met. CUCC, CCA, and CBTA supported Stentor's application.

10. The Commission notes that the fundamental issue in this proceeding is whether it is appropriate to modify the circumstances set out in Decision 97-4 as to what constitutes a non-governmental single customer, as distinct from a reseller or sharing group.

11. In light of the record of this proceeding, the Commission considers that there is a substantial doubt as to the correctness of Decision 97-4. In the Commission's view, the criteria set out in Decision 97-4 as to what constitutes a non-governmental customer, as distinct from a reseller or a sharing group reveal an inappropriate balance between competitive safeguard considerations and not unduly restricting the companies' ability to participate in the market. The Commission is also concerned that the effect of these circumstances as set out in Decision 97-4 may have a disruptive impact on the market in that many long-standing customers may be found to be resellers or sharing groups.

12. The Commission agrees with Stentor that because it excludes "related persons", the definition of "affiliate" set out in Decision 97-4 is too restrictive and burdensome.

13. The Commission is of the view that Decision 97-4 should be varied so that the definition of "affiliate" for the purposes of clarifying when a customer is not a reseller or sharing group is consistent with the definition of "affiliate" contained in the tariffs of the companies for the purposes of the Affiliate Rule (Affiliate Rule, Telecom Decision CRTC 94-6, 4 March 1994). The Commission notes that this definition includes both controlled and related entities and that "related person" is defined as an entity in which either the company or its parent has at least a 20% interest.

14. For similar reasons, the Commission concludes that Decision 97-4 should be varied so as to permit co-operatives and franchise arrangements to be considered single customers.

15. The Commission, however, does not agree with Stentor's proposal that "a company and its authorized agents and/or employees regularly conducting business at fixed or designated locations outside the principal business premise or business premises of the company" be allowed to constitute a single customer. In the Commission's view, their inclusion as single customers would be difficult to enforce given the problems associated with trying to identify such vaguely defined relationships.

16. In light of the above, the Commission has concluded that Decision 97-4 should be varied by (1) deleting the definition of "affiliate" in that Decision, and (2) substituting the following qualifications for the qualifications in Decision 97-4 which immediately precede the qualification as to when a customer is deemed not to act as a reseller or sharing group:

(x) For greater certainty, a customer is deemed not to act as a reseller or sharing group if the telecommunications services that it purchases from the company are used only by a company and one or more affiliates (as defined in this tariff item with the substitution of "customer" for "Company"); a company and its franchises or authorized franchisees; or a co-operative organization and its associated member companies.

17. The companies are directed to issue revised tariff pages, reflecting the changes in Decision 97-4, as modified by this Order, within 45 days of the date of this Order.

Laura M. Talbot-Allan
Secretary General

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