ARCHIVED -  Telecom Order CRTC 97-1471

Telecom Order

Ottawa, 14 October 1997

Telecom Order CRTC 97-1471

By letter dated 3 April 1997, Call-Net Enterprises Inc. (Call-Net), acting on behalf of Sprint Canada Inc. (Sprint Canada), noted that the Commission's practice is to exempt from contribution payments interconnecting line-side access circuits used for providing Internet access service. Call-Net therefore requested an order exempting from contribution payments the interconnecting circuits listed in the affidavit submitted with its application. Call-Net filed the application and attached affidavit and schedule in confidence with the Commission, providing an abridged version to BC TEL, Bell Canada (Bell) and TELUS Communications Inc. (TCI).

File No.: 8626-S2-02/97

1. Call-Net stated that Sprint Canada's Internet network is technically and operationally configured separately from its switched voice services. Call-Net stated that in accordance with the test 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, Sprint Canada's Internet service is not and will not be used significantly for joint-use interexchange voice service. Call-Net stated that moreover, the technical and operational distinctiveness of Sprint Canada's Internet service network is apparent to and can be easily verified by the local telephone companies providing the local access circuits.

2. By letter dated 30 April 1997, Stentor Resource Centre Inc. (Stentor) responded on behalf of BC TEL, Bell and TCI (collectively, the companies). Stentor noted that in accordance with Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993 (Decision 93-2), where a service provider provides both voice and data services, an exemption for data services should be supported by a technical audit confirming that the data circuits are separate from the voice network and cannot be used to carry voice traffic. Stentor therefore submitted that Sprint Canada has failed to satisfy the evidentiary requirements. However, Stentor agreed that, subject to the provision of satisfactory evidence, circuits used solely to carry data traffic would qualify for an exemption from contribution charges. Accordingly, Stentor submitted that Sprint Canada's application should be approved on an interim basis, with final approval subject to the provision of satisfactory evidence, in the form of a technical audit, within a reasonable period of time.

3. By letter dated 9 May 1997, Call-Net submitted that the affidavit filed in support of the application provides satisfactory evidence consistent with the Commission's requirements in Decision 93-2, and that the application should be given final approval on that basis.

4. Call-Net submitted that Internet services do not pay contribution as a general rule. Call-Net submitted that this policy was confirmed in the Commission's recent ruling with respect to the scope of IX contribution paying services in Telecom Order CRTC 97-590, 1 May 1997 (Order 97-590). Call-Net stated that in that Order, the Commission determined that: "it is [not] appropriate at this time to extend the application of the existing contribution scheme to Internet services". Accordingly, Call-Net submitted that there is no requirement that Internet Service Providers (ISPs) or communication service providers who also provide Internet services file an application for exemption with the Commission as a pre-condition to exemption.

5. By letter dated 11 June 1997, Call-Net withdrew its confidentiality request and included unabridged versions of its application and reply comments for the public record.

6. The Commission is of the view that there are three issues.

7. The first issue is whether ISPs (including telecommunications service providers who provide Internet access as but one of several services) are currently required to file contribution exemption applications if they wish not to pay contribution.

8. The Commission disagrees with Sprint Canada that Order 97-590 relieved ISPs of the requirement to file contribution exemption applications.

9. The second issue is whether the requirement for ISPs to file exemptions for contribution is appropriate on a going-forward basis. The Commission is of the preliminary view that, the current regime should, in the case of ISPs, be replaced by a lighter regime in which the Commission would only be involved to the extent that disputes arise between the parties. The Commission intends shortly to initiate an expedited proceeding by way of a public notice to seek comments on, among other things, this proposal. The Commission notes that ISPs would be required to file contribution exemption applications pending disposition of this proceeding.

10. The third issue is whether Sprint Canada's application should be approved, and if so, on what basis. With respect to Sprint Canada's submission that carrier verification, as distinct from a technical audit, is sufficient, the Commission notes that currently, an Internet network is considered a data network, and that, as required by Decision 93-2 regarding competitors that provide both switched voice and data (which is the case here), Sprint Canada should be required to file a technical audit in order to ensure that voice and data are carried on different networks. Moreover, the Commission notes that contrary to Sprint Canada's submission, the local telephone company cannot determine that the two networks are separate. Accordingly, the Commission is of the view that Sprint Canada's application should be approved on an interim basis effective the date of application, 3 April 1997, with final approval subject to the provision of a technical audit within 30 days of the Order.

11. Accordingly, based on the above:

(a) Order 97-590 does not relieve ISPs from the requirement to file contribution exemption applications; and

(b) Sprint Canada's application is approved on an interim basis effective the date of application, 3 April 1997, with final approval subject to the provision of a satisfactory technical audit within 30 days of the Order.

Laura M. Talbot-Allan
Secretary General

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