ARCHIVED -  Telecom Public Notice CRTC 97-13

 Telecom Public Notice

 Ottawa, 22 April 1997

 Telecom Public Notice CRTC 97-13

 ALLOCATION OF SATELLITE CAPACITY AND RELATED RESALE AND SHARING ISSUES

 I INTRODUCTION

1.  The Commission received an application from HomeStar Services Inc. (HomeStar), dated 27 February 1997, filed pursuant to Part VII of the CRTC Telecommunications Rules of Procedure, requesting that the Commission initiate, on an expedited basis, a public proceeding pursuant to its jurisdiction under subsection 28(1) of the Telecommunications Act (the Act) to fully review the manner in which Telesat Canada Inc. (Telesat) allocates scarce satellite capacity. HomeStar filed its Part VII application concurrently with an intervention relating to the application, under the Broadcasting Act, for transfer of control of ExpressVu Inc. (ExpressVu) to BCE Inc. (BCE). The Commission rendered its decision on that application in Decision CRTC 97-149, dated 15 April 1997.

2.  In its Part VII application, HomeStar noted that BCE owned 39.5% of ExpressVu's voting interest and BCE proposed to acquire a controlling interest. It noted also that BCE held a 58.5% equity interest and a 26.1% voting interest in Telesat.

3.  HomeStar submitted that the proposed proceeding should address the following issues: (1) given the interlocking ownership structure between BCE, ExpressVu and Telesat, whether, in its allocation of satellite capacity to ExpressVu, Telesat has conferred an undue preference on ExpressVu; and (2) a full review of Telesat's procedures for allocating satellite capacity under its tariffed Order Priority List (OPL) with a view to requiring that orders for RF channel service and applicants' placement on the OPL should be a matter of public record.

4.  In its application, HomeStar referred to ExpressVu's press release dated 5 February 1997, wherein Express Vu indicated, amongst other things, that it has secured additional satellite capacity on Anik E2 through the OPL procedures and may acquire further capacity prior to the launch of its direct-to-home (DTH) service.

5.  HomeStar submitted that major changes have occurred since the Commission's approval of Telesat's OPL procedures that result in lower supply of and higher demand for RF channel capacity. When the OPL was approved, satellite capacity was not as scarce and there were fewer requests for capacity. HomeStar submitted that, with the current scarcity of supply and the multiplicity of applicants competing for it, the "first come, first served" approach requires review. In addition, according to HomeStar, the corporate affiliation and the customer-vendor relationship of ExpressVu and Telesat create, at a minimum, the risk of preferential treatment and warrant the type of proceeding requested. HomeStar contended that the current OPL procedures, based on a "first come, first served" approach, must be revisited by the Commission in this new environment. HomeStar submitted that its ability to launch its DTH service in a timely, fair and equitable manner is entirely dependent upon the Commission conducting the proceeding it has requested.

6.  In its answer dated 7 March 1997, Telesat strongly objected to HomeStar's suggestions of preferential treatment by Telesat toward ExpressVu. Telesat submitted that the limited amount of capacity it allocated to ExpressVu following the Anik E1 major failure in March 1996, in which ExpressVu lost 14 RF channels, was solely through the restoration procedures and not through OPL procedures. Telesat submitted that these restoration procedures would apply to any customer displaced by a satellite failure of this magnitude. Telesat indicated that it had been able to restore to ExpressVu less than one-third of the 14 RF channels lost and that ExpressVu had obtained the rest of its satellite capacity through sub-lease arrangements with other existing customers without the involvement of Telesat. Telesat noted that other DTH providers have obtained RF channels through resale as well. Telesat submitted that the OPL procedures were created specifically to handle situations where demand for capacity is high, but available capacity is low so that the "first come, first served" approach treats customers equally and without preference. Telesat submitted that it has always applied the terms of the OPL diligently and mandating an alternative method of allocating satellite capacity would jeopardize the competitive environment that currently exists among the DTH licensees and resellers. Telesat submitted its current OPL in confidence to the Commission.

7.  HomeStar, in reply, acknowledged that restoral of capacity may well be a circumstance different from the allocation of new capacity. It also acknowledged that the OPL principle of "first come, first served" was originally designed to be equitable and to ensure no undue preference where there is high demand and limited supply. HomeStar reiterated, however, that there has been a fundamental change since the OPL's inception, namely, that Telesat, the monopoly supplier, is now affiliated with ExpressVu, a Telesat customer. It also stated that its concern is to ensure that both resale and the allocation of new satellite capacity by Telesat to an affiliate is done in an open and transparent way, and indicated that its application is directed to this end.

 II ISSUES

 Undue Preference

8.  The Commission notes that the restoral of capacity is different from the allocation of new capacity and does not bring into play the OPL. The Commission also notes that HomeStar has stated that it simply asked the Commission to give interested parties the opportunity to discuss whether the interlocking ownership amongst Telesat, ExpressVu and BCE has caused, or holds the potential to cause, undue preference to be conferred on ExpressVu. The Commission finds, on the basis of the record of this proceeding, that there is no evidence of undue preference being conferred on ExpressVu by Telesat.

 Provision of Satellite Capacity

9.  The Commission notes that the satellite environment has evolved since the inception of the OPL mechanism. Today's environment is characterized by scarce satellite resources and higher capacity demand from the newly-licenced DTH service providers. The Commission notes that a customer for satellite capacity may obtain capacity through Telesat's OPL or contract privately with an existing Telesat customer to obtain some of that customer's excess capacity by way of sub-lease or resale.

10.  In light of the above, and having regard to the provisions of subsection 28(1) of the Act, the Commission is of the view that it is appropriate to initiate a proceeding to consider whether the OPL and its associated procedures, together with current resale and sharing provisions in Telesat's tariffs should be amended to ensure a fair and equitable allocation of satellite capacity in the context of the current environment of restricted supply.

 III PROCEDURE

11.  HomeStar and Telesat are made parties to this proceeding. Other parties wishing to participate in this proceeding must notify the Commission of their intention to do so by writing to Mr. Allan J. Darling, Secretary General, CRTC, Ottawa, Ontario, K1A 0N2, fax: (819) 953-0795, by 12 May 1997. Parties are to indicate in the notice their Internet email address, if available. If parties do not have access to the Internet, they are to indicate in their notice whether they wish to receive disk versions of hard copy filings. The Commission will issue a complete list of parties and their mailing addresses (including Internet email addresses if available), identifying those parties who wish to receive disk versions.

12.  Parties may file submissions with the Commission, serving copies on all other parties, by 22 May 1997.

13.  Comments on these submissions may be filed with the Commission, serving copies on all other parties, by 23 June 1997.

14.  Parties who have filed submissions may file reply comments with the Commission, serving copies on all other parties, by 7 July 1997.

15.  HomeStar's Part VII application of 27 February 1997, and the answer and reply filed in connection with it, are made part of the record of this proceeding. The record of the proceeding may be examined at the offices of the CRTC in the following locations:

 Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage
Room 201
Hull, Quebec

 Bank of Commerce Building
1809 Barrington Street
Suite 1007
Halifax, Nova Scotia

 Place Montréal Trust
1800 McGill College Avenue
Suite 1920
Montréal, Quebec

 275 Portage Avenue
Suite 1810
Winnipeg, Manitoba

 580 Hornby Street
Suite 530
Vancouver, British Columbia

16.  In addition to hard copy filings, parties are encouraged to file with the Commission electronic versions of their submissions in accordance with the Commission's Interim Telecom Guidelines for the Handling of Machine-Readable Files, dated 30 November 1995. The Commission's Internet email address for electronically filed documents is public.telecom@crtc.gc.ca. Electronically filed documents can be accessed at the Commission's Internet site at http://www.crtc.gc.ca.

17.  Where a document is to be filed or served by a specific date, the document must be actually received, not merely mailed, by that date.

 Allan J. Darling
Secretary General

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