ARCHIVED -  Telecom Order CRTC 97-928

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Telecom Order

Ottawa, 30 June 1997
Telecom Order CRTC 97-928
The Commission received an application by TELUS Communications (Edmonton) Inc. (TCEI) on 20 January 1997, pursuant to section 34 of the Telecommunications Act (the Act), requesting forbearance from the regulation of its Internet access service (PLAnet Service).
File No.: 97-8640-T10.01
1. TCEI requested that the Commission refrain from exercising all powers and performing all duties under sections 25, 27 and 29 of the Act.
2. TCEI's PLAnet Service is provided pursuant to the company's General Tariff Network Access Services - Item 2230.
3. TCEI argued that it requires forbearance from regulation of rates to be able to adapt PLAnet Service offerings both in response to changing customer needs and to react quickly to the competitive initiatives of other suppliers.
4. TCEI argued that, for the purposes of its application, the relevant market is the Internet services (IS) market in its operating territory.
5. TCEI submitted that the Edmonton IS market is highly competitive, noting that 41 other known Internet Service Providers (ISPs) operate in its territory.
6. TCEI argued that it is not a dominant provider of IS. It estimates that it holds only a 13.3% share of the Edmonton IS market.
7. TCEI argued that there are no regulatory, financial or technological barriers to entry into the IS market.
8. TCEI submitted that there is intense rivalry among IS competitors as evidenced by the rapid growth in the number of competitors and the flexibility that customers have in selecting their provider.
9. TCEI noted that the recent entry of cable companies in the IS market and the offering of Asymmetric Digital Subscriber Line (ADSL) technology-based Internet access have further increased both the competitiveness of the market as well as the choice of facilities with which to provide IS.
10. TCEI noted that all of the telecommunications access services required by ISPs are readily available on non-discriminatory terms at tariffed rates.
11. TCEI stated that the regulatory and competitive environment in which it operates ensures that there is no risk that the company will engage in anti-competitive behavior and submitted that it has no incentive to engage in predatory pricing as it does not possess the requisite market power to recoup losses from pricing below cost.
12. TCEI submitted that forbearance with respect to PLAnet Service would be consistent with the Canadian telecommunications policy objectives set out in section 7 of the Act, thereby satisfying the requirements of subsection 34(1) of the Act.
13. TCEI argued that, as PLAnet Service is subject to intense competition that is more than sufficient to protect the interests of users, the requirements of subsection 34(2) of the Act are met.
14. TCEI submitted that, forbearance with respect to PLAnet Service would not unduly impair the level of competition in the market for this service and thus, subsection 34(3) of the Act does not apply.
15. Comments on TCEI's application were received from Internet Connect Inc. (ICI).
16. ICI expressed concern that TCEI benefits from an unfair competitive advantage in that it is the only ISP to have access to discounted line charges and service charges.
17. The Commission is of the view that the Edmonton IS market exhibits all the characteristics of a highly competitive market.
18. The Commission is of the view that barriers to entry into the Edmonton IS market are very low, and that many ISPs have entered the market in a very short time.
19. The Commission finds that the necessary components to enter the IS market are readily available, in particular, that all the underlying telecommunications transmission facilities are available at tariffed non-discriminatory rates.
20. The Commission further finds that alternative sources of supply of underlying transmission facilities used by ISPs are becoming available.
21. The Commission is confident that there are adequate safeguards in place to protect against the cross-subsidization of IS from revenues generated by the telephone companies' monopoly services for the purpose of predatory pricing in the IS market and that predatory pricing would not be a workable strategy in light of the highly competitive and dynamic nature of the IS market and the low barriers to entry.
22. The Commission finds that it would be appropriate to forbear from TCEI's PLAnet Service with respect to sections 25, 29 and 31 and subsections 27(1), 27(5) and 27(6) of the Act.
23. The Commission finds that it would not be appropriate to refrain from exercising all of its powers and duties under section 24 and subsections 27(2), 27(3) and 27(4) of the Act.
24. The Commission considers it necessary to retain powers with respect to section 24 of the Act in order to maintain and impose certain duties on the provision of underlying telecommunications services to ISPs, to ensure that existing conditions regarding confidential competitive information continue to apply and to retain the power to impose conditions on the offering and provision of IS as may be necessary in the future.
25. On a going-forward basis, commencing immediately, conditions concerning customer confidentiality are to be included where appropriate, in all contracts or other arrangements with customers for the provision of Internet access services.
26. The Commission is of the view that it is important for it to retain subsections 27(2), 27(3) and 27(4) of the Act in regard to issues related to access to the underlying network components of the services forborne from in this proceeding.
27. The Commission is further of the view that retaining subsections 27(2), 27(3) and 27(4) of the Act would provide an additional safeguard against TCEI granting its IS any undue preference.
28. Pursuant to subsection 34(1) of the Act, the Commission finds as a question of fact, that to refrain from exercising powers and performing duties under sections 25, 29 and 31 and subsections 27(1), 27(5) and 27(6) of the Act, and under section 24 to the extent set out in this Decision, with respect to TCEI's PLAnet Service would be consistent with Canadian telecommunications policy objectives.
29. Pursuant to subsection 34(2) of the Act, the Commission finds as a question of fact that the provision of these services is subject to sufficient competition to protect the interests of users.
30. Pursuant to subsection 34(3) of the Act, the Commission finds that to refrain from exercising the powers and performing the duties to the extent set out in this Decision would not be likely to impair unduly the establishment or the continuance of a competitive market for these services.
31. In light of the foregoing, the Commission orders that:
a) Pursuant to subsection 34(4) of the Act, effective the date of this Order, sections 24 (in part), 25, 29 and 31 as well as subsections 27(1), 27(5) and 27(6) of the Act do not apply to TCEI's PLAnet Service to the extent that they are inconsistent with the Commission's determinations herein.
b) TCEI is directed to issue tariff pages, within 15 days of the date of this Order, withdrawing the tariffs for PLAnet Service.
Laura M. Talbot-Allan
Secretary General
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