ARCHIVED -  Telecom Public Notice CRTC 97-30

Telecom Public Notice

Ottawa, 7 August 1997

Telecom Public Notice CRTC 97-30

DEFINITION OF BUSINESS AND RESIDENCE SERVICE FOR STENTOR MEMBER COMPANIES

File No.: Tariff Notices 3520/A

INTRODUCTION

1. On 16 September 1996 and 3 October 1996, BC TEL filed Tariff Notices 3520 and 3520A (TNs 3520/3520A) respectively, proposing various tariff revisions related to the classification of individual line exchange service as business or residence.

2. Among the changes proposed by BC TEL in TNs 3520/3520A were the following:

(i) the introduction of nine line threshold applicable to a residential service address served by multiple individual lines. The threshold would operate such that up to nine individual lines may be presumed to be classified as residence and any additional lines may be classed as business service;

(ii) deletion of the phrase "domestic or family purposes" from the residence and business service definitions, and deletion of the term "substantially" from the definition of business service;

(iii) the addition of a reference specifically to BC TEL's White Pages Directory in the provision creating a presumption of business use when information in a directory listing indicates such a use, and the addition of a reference specifically to BC TEL's Yellow Pages Directory creating a presumption of business use when the service is advertised or publicized in connection with a business use; and

(iv) the inclusion of the following two additional circumstances in which service is presumed to be of a business nature: (1) in premises owned by a business used to provide temporary accommodation to employees; and (2) when a property management company initiates or adjusts service on behalf of a title owner, tenant, or other resident in the operation of a business associated with an institution or management of a property.

3. On 31 October 1996, the Commission issued BC TEL - Classification of Individual Line Exchange Service As Business or Residential Service, Telecom Public Notice CRTC 96-34, making BC TEL, TELUS Communications Inc., MTS NetCom Inc., Bell Canada, The New Brunswick Telephone Company, Limited, Maritime Tel & Tel Limited (MT&T), The Island Telephone Company Limited and NewTel Communications Inc. (collectively, Stentor or the Stentor member companies) parties to the proceeding. Among other things, Stentor was invited to provide proposals for new or alternative service classifications, and to provide comments on the appropriateness of the proposals in TNs 3520/3520A to the Stentor member companies.

4. In addition to Stentor's comments, the Commission received comments from ACC Long Distance Inc., AT&T Canada Long Distance Services Company, Call-Net Enterprises Inc., the Canadian Cable Television Association and Westel Telecommunications Ltd. Reply comments from BC TEL were also received.

FINDINGS

5. The Commission has a number of concerns regarding the proposed revisions set out in TNs 3520/3520A.

6. The Commission notes that BC TEL's revenue impact statement, which forecasted positive revenue impacts on both a net corporate basis and on the company's utility segment, was based in part on a projected increase in revenues from the sale of enhanced services within the entire in-home office subscriber segment. BC TEL indicated that this increase would result from subscribers being freed from having to constrain their home-based business activities out of fear of being found out by the telephone company. The Commission questions the extent to which this is a valid assumption.

7. A further concern arises in connection with the proposed deletion of the word "substantially" from the definition of business service, such that service would be classified as business only where it is used primarily for commercial and other purposes, rather than "primarily or substantially" for such purposes, as is presently the case. In the Commission's view, the deletion of "substantially" would enable subscribers presently classed as business, who utilize service substantially although not primarily for business purposes, to be reclassified as residential service subscribers, thereby increasing the number of subscribers qualifying for service at subsidized rates.

8. Item 26(B) of BC TEL's General Tariff presently defines residence service as follows: "Service is classified as residence when it is used primarily for domestic or family purposes and when none of the conditions requiring the business classification exists." Item 26(A) of the Tariff defines business service thus: "Service is classified as business when it is used primarily or substantially for commercial, industrial, professional, institutional, vocational or otherwise occupational purposes or any purpose other than that of a domestic or family nature."

9. The proposed deletion of the phrase "domestic or family purposes" from the definitions of both residential and business service appears to render the residence classification a default category, applicable only when none of the business conditions are applicable. The Commission notes that this revision could also have the effect of increasing the numbers of subscribers qualifying for the residence classification. This is because, in contrast with the present definitions, which classify service for customers who do not fall within the ambit of the listed business purposes (i.e. commercial, industrial, professional, institutional, and vocational) to the business class on the basis of the catch-all phrase "or any purpose other than that of a domestic or family nature", the revised definitions would result in these customers being classed as residence.

10. A further concern arises regarding BC TEL's view that the cumulative effect of its proposed changes would be to provide the company with flexibility and to reduce or eliminate the requirement that the company constantly monitor subscriber use of service. In the Commission's view, the proposed revised tariff would not have met BC TEL's stated objectives. In this regard, the Commission notes that: (i) the proposed nine line threshold provision, and the references to BC TEL's White and Yellow Page Directories would have operated as rebuttable presumptions of business service only and not as conclusive bases of service classification, (ii) Tariff Item 26(A), which contains the primary test for the application of the business classification, would have continued to prescribe that service be classified as Business depending upon its primary use, and (iii) Tariff Item 26(B) as amended would have continued to make the residence classification contingent upon consideration of the primary use of the service (i.e. the absence of the existence of conditions requiring business classification, or a primarily non-business purpose).

11. On the basis of the above findings, the Commission considers that it is likely that the revisions proposed in TNs 3520/3520A, particularly the proposed nine-line residential line threshold, would result in greater numbers of subscribers obtaining local exchange service at rates which do not recover their underlying costs, and in a commensurate increase in the contribution required to offset this increased shortfall.

UNIFORM DEFINITIONS OF BUSINESS AND RESIDENCE SERVICE

12. In light of the portable subsidy mechanism to be made available to basic residential service, established in Telecom Decision 97-8, Local Competition, 1 May 1997, the Commission considers that it would be appropriate to adopt unambiguous uniform definitions of business and residence service which will ensure to the greatest possible extent that only those subscribers utilizing service for truly residential purposes are classified as residence subscribers.

13. The Commission also considers that uniform tariff definitions of business and residence service would also have the benefit of bringing greater certainty to the marketplace, and would likely contribute to a reduction in the number of disputes concerning classification for rate purposes. Uniform definitions of business and residence service utilizing clear definitions and common parameters, would, in the Commission's view, also serve to promote the efficiency of and competitiveness within the Canadian telecommunications market.

14. The Commission considers that it is appropriate to examine the feasibility and desirability of implementing uniform tariff language establishing the basis upon which service is classified as business and residence service, as well as uniform definitions of these two classifications, and the circumstances in which business usage should be presumed.

15. Accordingly, the Commission hereby announces a public proceeding calling for comment on the proposed uniform tariff provisions respecting the classification of service as business and residence, attached hereto as an appendix.

16. The Commission recognizes that in some of the Stentor member companies' territories circumstances may exist which would justify exceptions from the application of the proposed uniform tariff provisions. For example, the Commission notes in this regard the provisions of MT&T's Tariff, providing for business service at reduced rates for certain charitable institutions, volunteer fire departments and seasonal businesses.

PROCEDURE

17. The Stentor member companies are made parties to this proceeding.

18. The Stentor member companies are directed to file their submissions, including any alternative proposals, by 5 November 1997. Copies of the Stentor companies' submissions may be obtained on that date upon request directed to Mrs. Catherine R. Cooper, Director - Tariffs, Stentor Resource Centre Inc., Document Control & Distribution Centre, Floor 22, 160 Elgin Street, Ottawa, Ontario, K1G 3J4, fax: (613) 781-3514. The documents may be examined at the offices of the CRTC in the following locations:

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

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

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

Suite 1810
275 Portage Avenue
Winnipeg, Manitoba

Suite 530
580 Hornby Street
Vancouver, British Columbia

19. Persons wishing to comment on the Commission's proposals and/or Stentor's submissions may do so by writing to Mrs. Laura M. Talbot-Allan, Secretary General, CRTC, Ottawa, Ontario, K1A 0N2, fax: (819) 953-0795 by 5 December 1997. Copies of any comments are to be served on the Stentor member companies at the address noted above by the same date. 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 adresses if available), identifying those parites who wish to receive disk versions.

20. The Stentor member companies may file reply comments, serving copies on interveners or parties who filed comments by 5 January 1998.

21. 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.

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

This document is available in alternative format upon request.

Laura M. Talbot-Allan
Secretary General

APPENDIX

PROPOSED TARIFF PROVISIONS REGARDING CLASSIFICATION OF SERVICE

BUSINESS AND RESIDENCE SERVICES

The Company classifies a customer's service as business or residence for the application of exchange service rates on the basis of the purpose and character of usage.

BUSINESS SERVICE

1. The business classification shall apply when the service is used primarily or substantially for a commercial, industrial, professional, institutional, vocational or other occupational purpose or for any purpose other than that of a domestic or family nature.

2. The business classification shall be presumed to apply in such circumstances as the following:

(a) When a directory listing indicates other than primarily domestic use.

(b) When the service is advertised or publicized in connection with any non-domestic use; except that residence service of a person authorized by this Tariff to use an existing business service in the same local-service area may be publicized in connection with such business service.

(c) In bed and breakfast establishments, boarding and rooming houses in which four or more persons are accommodated for payment, and when any such person has general access to service which is provided to the proprietor or his appointed agent.

(d) In residence quarters of any club, institution or similar place, where guests, employees or other persons have general access to the service.

(e) When the service is used for an activity or activities involving the payment or collection of fees, charges or dues.

(f) In premises owned by a business which are used to provide temporary accommodation to employees.

(g) When a property management company, or other business, initiates or adjusts service on behalf of a strata title owner, tenant, or other type of resident for the purpose of operating a business associated with an institution or management of a property.

RESIDENCE SERVICE

1. The residence classification shall apply when the service is used primarily for domestic or family purposes and none of the requirements for the business classification exist.

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