ARCHIVED -  Public Notice CRTC 1997-49

Public Notice

Ottawa, 1 May 1997

Public Notice CRTC 1997-49

APPLICATIONS BY TELEPHONE COMPANIES TO CARRY ON BROADCASTING DISTRIBUTION UNDERTAKINGS

Introduction

1.  In its 19 May 1995 report to the Government entitled Competition and Culture on Canada's Information Highway (the Convergence Report), the Commission endorsed increased competition in cable's core business in order to provide consumers with increased choice among distributors of broadcasting services. In that report, the Commission also stated that the perceived need for transitional protection of the core cable business stems essentially from concerns about the market power of the telephone companies and any head start they may obtain in packaging telephony and entertainment. Accordingly, the Commission recommended that applications from telephone companies to enter cable's core business should not be entertained until rules removing regulatory barriers to effective competition in local telephony are established.

2.  The Government, in its Convergence Policy Statement of 6 August 1996, stated that telephone companies should not be permitted to offer broadcasting distribution services until such rules are established, and referred in this context to regulatory proceedings undertaken by the Commission pursuant to the Telecommunications Act. These proceedings are directed towards implementing competition in local telephony by establishing a framework for interconnection, unbundling, co-location, rate restructuring and interim number portability.

3.  In this public notice, the Commission reviews the status of the proceedings with respect to each of these matters and announces determinations concerning:

a)  when the regulatory barriers to local telephone competition will have been addressed sufficiently to permit telephone companies to carry on broadcasting distribution undertakings (BDUs) under the Broadcasting Act, and

b)  when telephone companies should begin to apply for BDU licences.

4.  This public notice does not address matters related to outstanding applications by telephone companies or their affiliates for licences to carry on BDUs on an experimental or test basis.

Status of proceedings directed towards implementing competition in local telephony

a) Interconnection and unbundling

5.  To be effective and efficient, interconnection between the local telecommunications facilities of Canadian carriers should allow customers of one local service provider to complete calls to customers of another local service provider in a transparent fashion. The "unbundling" of the incumbent telephone company's local network makes certain telephone company facilities available for competitors' use. Efficient interconnection and an appropriate degree of unbundling are both important for the successful implementation of competition in local telephony.

6.  The Commission's determinations with respect to these matters are contained in Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Local Competition Decision). In that decision, the Commission directed the Stentor telephone companies to file tariff pages to implement aspects of its determinations with respect to interconnection and unbundling. The Commission expects the required tariff pages to be in place by 1 January 1998.

b) Local number portability

7.  Local number portability will permit customers of a local telephone service provider to keep the same telephone number if they select service from an alternate local service provider. The Commission indicated in its Convergence Report that the issue of local number portability must be adressed.

8.  In Implementation of Regulatory Framework - Local Number Portability and Related Issues, Telecom Public Notice CRTC 95-48, 19 November 1995, the Commission initiated a process to identify what form number portability should take when implemented. This process, which is ongoing, is conducted through industry working groups, which include representatives of the telephone and cable industries.

9.  In its notice concerning local number portability, the Commission indicated that the most desirable solution for local number portability is one that would involve a database structure that could evolve into a long term arrangement. In the Commission's view, work on a database approach to local number portability is progressing satisfactorily. The Commission expects a trial of this approach to be conducted in late 1997, with the objective of making this form of local number portability available in early 1998. Later this year, the Commission intends to announce the criteria that will determine the roll out schedule for local number portability.

c) Co-location

10.  "Co-location" refers to the rates, terms and conditions under which competitors of the incumbent telephone company may terminate their facilities at the telephone company's central offices. The proceeding held to consider this issue was initiated by Implementation of Regulatory Framework - Co-location, Telecom Public Notice CRTC 95-13, 20 March 1995 (Co-location Notice). The record of the proceeding is now complete and the Commission intends to issue its decision on this matter by 16 June 1997. It expects that Stentor co-location tariffs will be in place by 1 January 1998.

d) Rate restructuring

11.  In its Convergence Report, the Commission stated that the then current telephone company rate structure posed a barrier to entry and that there was a need to consider issues of rate rebalancing, rate restructuring, the treatment of rate subsidies in the context of local competition, and the size of the local service subsidy.

12.  The Commission announced determinations with respect to some of these issues in Implementation of Regulatory Framework - Splitting of the Rate Base and Related Issues, Telecom Decision CRTC 95-21, 31 October 1995. The Local Competition Decision issued today addresses the treatment of local rate subsidies in the context of competitive entry into the local telephony market. Further, the Commission's determinations with respect to rate rebalancing are announced in Price Cap Regulation and Related Issues, Telecom Decision CRTC 97-9 of today's date. In addition, the Commission has considered applications for rate restructuring on an on-going basis as they have been received.

Conclusions

13.  In the Commission's view, it is important to provide certainty to industry participants with respect to the date on which telephone companies may begin to carry on BDUs.

14.  The Commission notes that the implementation of local competition will require the efforts and cooperation of many parties, including telephone and cable companies. Specifically, the Commission notes the industry groups which, under the direction of the Canadian Interconnection Steering Committee, have been working to develop local number portability. The Commission considers that these working groups have demonstrated the high degree of cooperation among the parties that will be required to implement local competition and expects that this will continue.

15.  The Commission considers that, by 1 January 1998, barriers to entry into local telephony will have been sufficiently addressed that telephone companies should be permitted to carry on BDUs as of that date. The Commission notes that, although not established as a pre-condition, 1 January 1998 is also the date on which new regulations applicable to broadcasting distribution undertakings made under the Broadcasting Act, are expected to come into force.

16.  The Commission considers it reasonable for telephone companies to apply for BDU licences in advance of the date on which they may commence operation. If this were not the case, given the time required to consider licence applications, telephone companies would not be in a position to enter into competition as operators of BDUs when the Commission has stated they should be permitted to do so. The Commission also notes that, with the release of its decisions on local competition, price caps and co-location, the regulatory framework for local telephony competition will be in place and new entrants may formulate their business plans accordingly.

17.  The Commission has thus concluded that it would be appropriate for telephone companies to apply for BDU licences as of the date of the Co-Location decision. As discussed above, any licence granted pursuant to such an application would be effective no earlier than 1 January 1998.

Allan J. Darling
Secretary General

This document is available in alternative format upon request.

Related Documents:

·  Price Cap Regulation and Related Issues, Telecom Decision CRTC 97-9, 1 May 1997

·  Local Competition, Telecom Decision CRTC 97-8, 1 May 1997

·  The Government's Convergence Policy Statement of 6 August 1996

·  Implementation of Regulatory Framework - Local Number Portability and Related Issues, Telecom Public Notice CRTC 95-48, 19 November 1995

·  Implementation of Regulatory Framework - Splitting of the Rate Base and Related Issues, Telecom Decision CRTC 95-21, 31 October 1995

·  19 May 1995 report to the Government entitled Competition and Culture on Canada's Information Highway

·  Implementation of Regulatory Framework - Co-location, Telecom Public Notice CRTC 95-13, 20 March 1995