ARCHIVED -  Telecom Order CRTC 97-1382

Telecom Order

Ottawa, 26 September 1997

Telecom Order CRTC 97-1382

By letter dated 17 February 1997, Rogers Network Services (RNS) responded to Telecom Order CRTC 96-1472, 17 December 1996 (Order 96-1472).

File No.: 96-2128

1. RNS noted that the Commission, in Order 96-1472, granted interim approval to RNS' application dated 21 May 1996 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.

2. RNS submitted that the following procedures serve to verify the ongoing compliance of the circuit as contribution exempt: (1) the absence of any voice services offered by RNS; (2) the absence of interconnection with the public switched telephone network (PSTN); (3) the ownership and control of the cross-border circuit by an arms-length third-party; and (4) approval by senior management before any of the above three control procedures may be changed. RNS submitted that since there would need to be changes to one or more of these controls and because such a change would be highly visible to senior management and, in some cases, to Bell Canada (Bell), these will serve as effective controls.

3. In addition, RNS noted that the Commission also ordered that the cross-border configuration is subject to future random audits to ensure compliance. RNS submitted that the prospect of random audits together with the controls identified above will ensure that RNS will maintain the configuration for which the contribution was granted.

4. By letter dated 16 April 1997, Bell submitted that this list of conditions does not constitute sufficient controls and does not satisfy the requirements for such controls as set out in Order 96-1472. Bell then described evidence that was provided in similar cases.

5. By letter dated 13 June 1997, RNS stated that in the proceeding leading to Order 96-1472, it explained that it was a provider of data-only services, it does not provide any voice services, and it does not have interconnection with the telephone companies' PSTN. RNS stated that such interconnection would require RNS to enter into an agreement with Bell.

6. RNS cited several cases, specifically Telecom Order CRTC 97-703, dated 28 May 1997 (Order 97-703) for Shaw FiberLink Ltd. (Shaw FiberLink) and applications for Bell Advanced Communications Inc. (BAC) wherein the applicants did not have to file control procedures.

7. By letter dated 7 July 1997, Bell submitted that the BAC and Shaw FiberLink cases were not applicable. Bell cited two cases which are more similar to that of RNS specifically Bell Global Solutions (BGS), and EDS of Canada, Ltd. (EDS) (reference Telecom Order CRTC 97-750 dated 4 June 1997).

8. Bell also noted that, pursuant to Telecom Order CRTC 97-590 dated 1 May 1997 (Order 97-590), the contribution exemption regulations with respect to the data and other services will be modified effective 1 January 1998. Bell stated that in light of this, any contribution exemption granted to RNS for data use under this current application may need to be reviewed to determine its exempt status under the new regulations.

9. By letter dated 22 July 1997, RNS submitted that Bell has not provided a sufficient explanation for its submission that "...the requirement for RNS to implement control procedures is similar to and consistent with the manner in which these other applications have been treated by the Commission."

10. RNS stated that it has reviewed Order 97-590 to determine how it will affect the contribution status of a cross-border circuit used exclusively for data services. RNS submitted that in fact, the Commission has not required any "new regulations" for cross-border circuits used exclusively for data services. RNS stated that unless and until Bell, or another party, requests the Commission to review and vary Order 97-590 and the Commission decides to make changes, it is inappropriate to delay final approval of RNS' application.

11. The Commission is of the view that there are two issues: (1) the requirement for internal control procedures to verify the ongoing compliance of the configuration, or if it is altered, to maintain an audit trail of records; and (2) the possibility of a review of the configuration on 1 January 1998.

12. With respect to Issue 1, the Commission notes that its practice is generally to require the filing of internal control procedures when applications are supported by technical audits. However, in this case, given that: (a) RNS has stated that it is a data-only provider; and (b) pursuant to Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993, applications by data-only providers are generally granted when the applicant attests in an affidavit that no voice services are provided, the Commission considers that the filing of an affidavit would satisfy the requirements in Order 97-1472 for final approval.

13. With respect to Issue 2, in Order 96-1472, RNS' configuration was described as a cross-border DS-3 circuit used to concentrate Internet protocol traffic for routing to the United States. The Commission notes that in Order 97-590, it stated that "[it] is not persuaded that it is appropriate at this time to extend the application of the existing contribution exemption scheme to Internet Services". Therefore, as long as RNS' circuits are transporting Internet services, no contribution would apply after 1 January 1998. However, the Commission also stated that "where the Internet network is used as the underlying transmission facility by a service provider to provide public switched IX voice or data services, the service provider is to register as a reseller and to pay contribution". Accordingly, if the circuits are carrying public switched voice and/or data traffic other than Internet services, but using the Internet protocol as the underlying platform, then the Commission is of the view that any contribution exemption granted to RNS under this current application will need to be reviewed to determine its exempt status under the new regulations.

14. Accordingly, based on the above:

(i) RNS' application is granted final approval subject to RNS filing an affidavit within 30 days of this Order affirming that it is solely a data services provider, and does not provide joint-use voice services to its customers; and

(ii) since the Commission stated in Order 97-590 that circuits used to carry public switched IX data attract contribution after 1 January 1998, then if the circuits in question are used to carry public switched IX data services (other than Internet services) using the Internet protocol (TCP/IP) as the underlying transmission facility, then the contribution exemption granted to RNS under this application will need to be reviewed to determine its exempt status under the new regulations.

Laura M. Talbot-Allan
Secretary General

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