|
|
|
Ottawa, 13 November 1998
|
|
Telecom Order CRTC 98-1143
|
|
By letter dated 23 June 1998, Call-Net Enterprises Inc. (Call-Net), on behalf of Sprint Canada Inc. (Sprint Canada), provided a submission in response to Telecom Order CRTC 98-385 dated 23 April 1998 (Order 98-385) wherein the Commission granted Sprint Canada final approval of a contribution exemption with respect to facilities used to carry Internet traffic. Order 98-385 stated that such approval was subject to Call-Net filing a report to the Commission outlining the control procedures Sprint Canada has in place to ensure that the configuration continues to qualify for an exemption on a going-forward basis.
|
|
File No.: 8626-S2-02/97
|
|
1.By letter dated 8 July 1998, Stentor Resource Centre Inc. (Stentor) submitted comments on behalf of and with the concurrence of BC TEL, Bell Canada (Bell), Maritime Tel & Tel Limited, MTS Communications Inc. and TELUS Communications Inc.
|
|
2.Stentor noted Call-Net's list of proposed conditions: (1) all the Internet Service Provider Primary Rate Interface (ISP PRI) access lines are data-capable only and can be verified as such simply by testing each line to ensure that modem tones only are encountered; (2) Sprint Canada can easily demonstrate, and a third party can verify, that the circuits all terminate on Cisco 5200 or 5300 server ports; these devices are designed to accept data-only terminations; and (3) the ISP network is subject to future random audits.
|
|
3.Stentor submitted that the list of conditions outlined by Call-Net do not constitute controls and are clearly inadequate to ensure continued compliance of the configuration. Stentor submitted that the purpose of establishing such controls is both to prevent changes to the configuration which would change the exempt status and to establish a record for the purposes of future audits, should such audits be required.
|
|
4.Stentor submitted that in other applications for exemption from contribution which require the identification or establishment of control procedures, written approval from an officer of the company is typically required to authorize any change in the configuration, including changes to switch or server programming which could alter the configuration. Stentor stated that such written approval is kept on file for future inspection or random audits. Further, Stentor stated that ongoing additions of access circuits are reviewed and verified to ensure that they will be configured to maintain the contribution exemption and records of such additions are retained for audit purposes. Also, Stentor stated that written documentation of internal compliance procedures is usually prepared and made available to employees responsible for monitoring compliance. In addition, Stentor stated that periodic or monthly reviews of the configuration may be performed by technical staff and the resulting reports approved by an officer of the company, and retained for future use if a random audit is required.
|
|
5.Stentor submitted that these or similar procedures would also be appropriate in the specific circumstances involved in the Sprint Canada arrangement. Stentor noted that resellers and carriers have in the past implemented more comprehensive procedures in similar circumstances which are consistent with those described above.
|
6.Stentor cited additional examples of control procedures used by other companies: (1) ACC TelEnterprises Ltd. (ACC) letter dated 8 April 1998; (2) AT&T Canada Long Distance Services Company report to the Commission dated 6 September 1996; (3) Telecom Order CRTC 98-560 dated 8 June 1998 re Tick Talk Communications Inc.; (4) Telecom Order CRTC 97-207 dated 19 February 1997 re Advanced Network; and (5) Telecom Order CRTC 96-1592 dated 23 December 1996 re Call for Less.
|
|
7.In light of the above, Stentor submitted that Sprint Canada has failed to meet the condition established in Order 98-385 for final approval of its application. Stentor further submitted that Sprint Canada should be directed to provide a revised report identifying and confirming the implementation of controls as required by the Commission and in accordance with established practice as described above.
|
|
8.By letter dated 14 August 1998, Call-Net submitted that there is no merit in Stentor's comments and urged the Commission to accept the procedures implemented by Sprint Canada.
|
|
9.Call-Net reiterated its previous arguments and also noted that all the contribution-exempt ISP PRI access circuits are acquired from the telephone companies; telephone companies' PRI access trunks carry Internet calls from the local Central Offices to Sprint Canada's Point of Presence (POP); Sprint Canada submitted that it, or any other third party, can easily confirm that the access circuits are terminated on only ISP network devices in the POPs.
|
10.Call-Net noted Stentor's claim that the procedures put in place by Sprint Canada are not "control procedures" and that, in any event, they are not effective. In response, Call-Net noted that similar procedures have been put in place before by Sprint Canada and accepted as effective by the Commission. Call-Net stated that for instance in Telecom Order CRTC 96-1158 dated 18 October 1996 (Order 96-1158), the Commission granted Sprint Canada's application for contribution exemption in respect of certain dedicated cross-border circuits provided by Sprint Canada to Rochester Communication Inc. subject to Sprint Canada identifying internal procedures to ensure that the configuration is not altered and to provide an audit trail for any changes that might be made. In a letter dated 21 November 1996, Call-Net identified the following internal procedures Sprint Canada had put in place to ensure the validity of the configuration: (1) Sprint Canada provides Bell with a monthly reporting of all circuits in respect of which a contribution order has been issued; the report identifies each individual DS-1 by its associated Bell circuit number and a description of the service that it is used for; and (2) the configuration is subject to possible future random audits.
|
|
11.Call-Net argued, among other things, that: (1) Stentor's allegation that the procedures are ineffective is based upon an ad hoc assessment of each procedure, rather than assessing the procedures as a whole; and (2) the procedures put in place by ACC to remedy that situation are not relevant to Sprint Canada whose Internet network is totally within its control and distinctly configured.
|
|
12.The Commission is of the view that the control procedure regime that it has established for other companies should also apply to Call-Net. The Commission considers that at a minimum, control procedures require Call-Net to put in place mechanisms which generate documentation showing what changes, if any, have been made subsequent to the technical audit. Such documentation is an essential tool in the event of a future random audit. The Commission notes that this description of control procedures is consistent with previous Commission pronouncements on the matter.
|
|
13.The Commission disagrees with Call-Net that the mere fact that third parties may verify that a particular configuration is in compliance with a contribution exemption is sufficient to constitute control procedures.
|
|
14.The Commission also disagrees with Call-Net that Order 96-1158 supports Call-Net's interpretation. The Commission notes that, unlike this case which involves Internet access circuits, Order 96-1158 pertained to cross-border facilities and that self-reporting is the basis upon which cross-border circuits are demonstrated to be contribution exempt.
|
|
15.The Commission is of the view that the following control procedures would be appropriate in this case:
|
|
(a) written approval from an officer of the company is required to authorize any change in the configuration, including changes to switch or server programming which could alter the configuration;
|
|
(b) such written approval is to be kept on file for future inspection or random audits;
|
|
(c) ongoing additions of access circuits are to be reviewed and verified to ensure that they will be configured to maintain the contribution exemption and records of such additions are retained for audit purposes;
|
|
(d) written documentation of internal compliance procedures is to be prepared and made available to employees responsible for monitoring compliance; and
|
|
(e) periodic or monthly reviews of the configuration is to be performed by technical staff and the resulting reports are to be approved by an officer of the company, and retained for future use if a random audit is required.
|
|
16.In light of the foregoing, Call-Net is invited to file the control procedures set out above within 30 days of this Order, failing which the condition to the approval granted in Order 98-385 will not be satisfied. In that event, the application runs the risk of being denied.
|
|
Secretary General
|
|
This document is available in alternative format upon request.
|
|
|