ARCHIVED -  Telecom Order CRTC 98-1264

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Telecom Order

Ottawa, 16 December 1998
Telecom Order CRTC 98-1264
File Nos.: Stentor Tariff Notice (TN) 441 and Northwestel TN 615
1.On 24 March 1997, Stentor Resource Centre Inc. (Stentor) filed TN 441 on behalf of BC TEL, Bell Canada (Bell), The Island Telephone Company Limited (now called Island Telecom Inc.), Maritime Tel & Tel Limited, MTS Communications Inc., NBTel Inc. (NBTel), NewTel Communications Inc. and TELUS Communications Inc., and on 23 April 1997 Northwestel Inc. (Northwestel) filed TN 615, both requesting approval of Electronic Directory Database Access (EDDA) service providing for real-time electronic access to a company's non-confidential directory assistance listings database.
2.Both Stentor and Northwestel filed copies of proposed EDDA Service Agreements with their respective TNs.
3.These filings are pursuant to Provision of Directory Database Information and Real-time Access to Directory Assistance Databases, Telecom Decision CRTC 95-3, 8 March 1995, (Decision 95-3), Order in Council P.C. 1996-1001, dated 25 June 1996, and Telecom Order CRTC 96-1522, 23 December 1996 (Order 96-1522), as well as negotiations with interested parties through the Canadian Interconnection Liaison Committee (CILC) that were directed by these proceedings.
4.On 30 June 1997, the Commission issued Electronic Directory Database Access (EDDA) Service, Telecom Public Notice CRTC 97-25 (PN 97-25).
5.In its application, Stentor stated that, as directed in Decision 95-3, Stentor had participated, on behalf of the companies, in the development of the technical specifications to permit mediated real-time access to a company's non-confidential directory assistance (DA) database through CILC. Stentor further stated that based on these specifications, it has defined the software and hardware modifications necessary to comply fully with the Commission's directions in Decision 95-3 and Order 96-1522, at reasonable cost and in a reasonable time-frame. Similar submissions were made by Northwestel.
6.EDDA service allows operators of a user to access a database of current directory assistance listings in order to provide DA service to the user's end customers. The database system is designed to meet stringent availability and response-time specifications as set out in the CILC agreements.
7.Both Stentor and Northwestel defined "user" as the person subscribing to the EDDA service under the proposed tariff and who executes the proposed EDDA Service Agreement. Stentor and Northwestel proposed that the user must be a Canadian Cellular Carrier or a service provider with trunk-side access in Canada and stated that this would include registered resellers with equal access, Interexchange Carriers (IXCs) with equal access and cellular carriers.
8.Following are the main proposed rate elements:
a) Access Monthly Charges apply to each user for access to EDDA service for one or more Stentor carriers (including Northwestel). The charges are $10,000 per month for a minimum of 60 months (Stentor noted that this is a vintage rate for the year 1997).
b) The carrier specific rates include a one-time set-up charge of $2,500 and an on-going per screen usage charge that ranged from $0.14 for Bell to $0.93 for Northwestel.
c) The service is proposed to be available (subject to facilities being available) within 120 days of the first user commitment to the Access Monthly Charge by signed contract.
9.Comments were received from AT&T Canada Long Distance Services Company (AT&T Canada LDS), Call-Net Enterprises Inc. (Call-Net), and Canadian Wireless Telecommunications Association, Clearnet Communications Inc. (Clearnet), Microcell Communications Inc. (Microcell), and Rogers Cantel Inc.
10.The main themes of the interventions were that the proposed rates for the service are high and that the five year commitment period is excessive. The proposed definition of a "user" and the non-resale provision were also seen as too restrictive. Parties suggested that an interrogatory process would be useful and requested the release of costing information which Stentor and Northwestel had filed in confidence with the Commission.
11.Call-Net stated that Stentor's study did not include any demand for Competitive Local Exchange Carriers (CLECs).
12.On 9 May 1997, Stentor indicated that as a result of Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8), it would modify the definition of "user" in relation to EDDA service to include CLECs. However, Stentor stated that, with Decision 97-8 and the expanded use of Directory File Service (DFS), the demand for EDDA service is even more uncertain, and further that Stentor cannot be certain whether, as a result of Decision 97-8, demand for EDDA service will increase or decrease.
13.With respect to its proposed definition of an EDDA user, Stentor stated that the definition is based on the Commission's directions in Decision 95-3 as well as the concerns expressed in Order in Council P.C. 1996-1001 regarding protection of consumer privacy.
14.In PN 97-25, the Commission provided parties with the opportunity to address interrogatories to Stentor and Northwestel.
15.AT&T Canada LDS stated that it was hampered in its effort to evaluate the proposed service by the lack of detailed information provided on the public record, and focused its comments on two issues: rates for the service; and resale and sharing of EDDA and DA service.
16.AT&T Canada LDS compared EDDA service to a free internet directory service offered by NBTel, concluding that EDDA is overpriced. AT&T Canada LDS stated that, indeed, EDDA rates may be designed to subsidize free internet directory service. The company questioned the validity of the cost estimates and also stated that, if mark-ups on Phase II costs are included, such mark-ups should not exceed 25%.
17.AT&T Canada LDS stated that Stentor's choice of a new, separate system to provide EDDA service was too costly and that it would be less expensive to modify existing DA systems to allow for access by prospective customers.
18.AT&T Canada LDS stated that the Commission should use the rates filed by Stentor in its response to interrogatory SRCI(CRTC)30July97-8 EDDA as a basis for setting rates and reduce them further to reflect the questionable and possibly inflated cost for EDDA service.
19.AT&T Canada LDS objected to any restriction on the resale and sharing of EDDA service and submitted that such restrictions are unreasonable since they are not consistent with, nor supportive of, the Commission's past determinations regarding the protection of customer privacy.
20.AT&T Canada LDS stated that its preference was that the definition of "user" of EDDA service be modified to allow any entity to resell or share EDDA service. The company further stated that, if the Commission preferred to allow carriers and other entities to resell DA service and not EDDA service, the Commission should direct Stentor to modify its tariff to reflect such a provision.
21.Clearnet suggested that the DA service of the telephone companies is overpriced and that therefore Stentor has a strategic incentive to also overprice EDDA service. Clearnet proposed a reduction in the per screen usage rate. In addition, the company suggested that the $10,000 per month access charge be eliminated in favour of a slight increase in the per screen usage charge.
22.Further, Clearnet stated that the tariff should be modified to allow users of EDDA service to make copies of the information they receive in the course of providing DA service. Clearnet argued that this information is paid for by the user in the per-screen charge and should therefore be available to the user for later reference.
23.Clearnet also stated that the definition of user should be modified to include Personal Communication Service (PCS) and Enhanced Special Mobile Radio (ESMR) service operators.
24.Microcell objected to the "high rates and outrageous terms and conditions" for the proposed EDDA service and further stated that Stentor must provide undiscriminatory mediated real-time access to their directory databases at reasonable, cost-based prices.
25.Call-Net stated that the five year minimum commitment was too long and that a 24 month contract period would provide customers with the necessary flexibility and facility for the development of competitive alternatives.
26.Stentor replied on behalf of the companies and Northwestel.
27.Stentor stated that the study period could be extended beyond the five years chosen for this project. However, information technologies typically change over short time spans, creating new options for users and, thus, any forecast for a period longer than five years is highly uncertain. In response to interrogatory SRCI(CRTC)30July97-8 EDDA, Stentor noted that it would be utterly unreasonable to base rates on revenues from beyond the study period without including the corresponding costs required to support the service. Stentor stated that such costs cannot be reasonably estimated beyond a five year period and, therefore, the study life should not exceed five years.
28.With respect to contract life, Stentor stated that the likelihood of cost recovery depends on the maintenance of the Access Charge rate element of $10,000 per month, and a customer's commitment to the service. Stentor further stated that it would be possible to reduce the period for which a user must commit to the service; however, in order to recover development costs, which remain unchanged regardless of the commitment period, the monthly Access Charge would have to increase to maintain an acceptable level of risk for the companies.
29.In response to comments on the proposed restrictions on resale and sharing of EDDA service, Stentor stated that, while the proposed tariff restricts the resale of EDDA service, this does not prevent users from offering their own DA service to third parties. Further, Stentor stated that there is nothing in the terms for EDDA service that would prohibit or preclude a DA service provider from offering a branded service to customers.
30.Further, Stentor stated that its proposed definition of an EDDA service user would enable the Commission to have an effective means to maintain control over the ultimate user of subscriber listings. Stentor observed that, with no restrictions preventing resale of EDDA service, virtually anyone could gain access to the EDDA database, for any purpose.
31.Stentor also stated that permitting resale would effectively enable other users to bypass the monthly Access Charge and jeopardize the companies' ability to recover costs.
32.In response to Clearnet's request that the Commission require that the EDDA service contract be amended to specifically permit storage and re-use of data for DA, Stentor stated that EDDA service was specifically developed to provide users with on-line access to DA listings. DFS, and other services currently under development, are available to eligible users who require the ability to store data and subsequently re-use it.
33.With respect to arguments by AT&T Canada LDS and Microcell that the system proposed by Stentor is too costly, Stentor stated that the implementation of a new, separate system to provide EDDA is the most cost-effective way of providing the service. Further, Stentor submitted that what is provided via free internet directory services and what is proposed to be provided by EDDA service are not comparable, as the internet directory service does not meet the CILC requirements.
34.The Commission notes that Stentor received three quotes on provisioning this service, and considers that Stentor, by choosing to develop a new separate system to provide EDDA service, has chosen the most cost-effective means of providing the service. The Commission notes that EDDA service criteria are consistent with specifications developed through CILC, an industry-wide forum.
35.The Commission notes that, in order to recover the estimated development and other up-front costs of an estimated $6.647 million for the national EDDA database alone, plus substantial investments in equipment and other development costs, Stentor proposed a rate structure that includes a five year commitment (a Monthly Access Charge of $10,000 for 60 months) plus an on-going usage charge that varies depending on which company's listing information is requested.
36.The Commission considers that, in light of the large investment required to build this system, the requirement of a five year commitment by customers is appropriate.
37.The Commission further notes that most interveners argued that Stentor's demand forecast was too low. However, parties did not provide any evidence regarding appropriate demand levels for this service. The Commission considers that there are substantial difficulties in forecasting demand for this service (e.g., possible alternate services and the small number of potential customers) and, in this light, the Commission accepts the evidence submitted by Stentor and Northwestel.
38.The Commission notes that the five year study period used by Stentor may be appropriate for the type of system used to provide this service. However, the Commission considers that, given the five year commitment required for users and the likelihood that the majority of the forecasted users will not have finished their initial contract period when the proposed five year study period expires, a seven year study period is more appropriate for this service.
39.The Commission notes that the per screen usage rates under the scenario in Attachment 1 to response to interrogatory SRCI(CRTC)30July97-5 EDDA range from $0.13 for Bell to $0.89 for Northwestel, and considers that these rates reflect the appropriate cost levels and mark-up.
40.The Commission notes that parties attempted to relate the rates for DA service in various markets to the proposed rates for EDDA service. The Commission has given minimal weight to this evidence, and considers it appropriate to rely primarily on causal cost principles in setting rates for EDDA service.
41.With respect to the definition of a "user" and the restrictions on resale and sharing, the Commission accepts Stentor's arguments in favour of maintaining the proposed definition of a "user" of EDDA service and the restrictions on resale and sharing.
42.In Order 96-1552, the Commission considered that in order to insure that use of the listing information is consistent with the purpose for which the subscriber provided it, tariff conditions should provide that information accessed via mediated access to a company's DA database (i.e., EDDA) is to be used only in the provision of DA.
43.The Commission considers that the EDDA tariff should provide that the listing information should not be shared, resold, rented or otherwise disposed of to third parties. However, the Commission considers that this does not prevent users from offering their own DA service to any person.
44.The Commission notes that the wording of the clause restricting the use of the information is different in the proposed agreement from the proposed tariff pages, in that the agreement includes the word "resale", while the tariff pages do not.
45.The Commission notes that Stentor stated that amended tariff pages would be required to reflect the Commission's ruling in Decision 97-8 to allow access for CLECs to EDDA and further that it had no objection to broadening the definition of "user" to include providers of PCS and SMR/ESMR services as proposed by Clearnet.
46.With respect to the AT&T Canada LDS submission regarding a lack of detailed information on the public record, the Commission notes that parties had the opportunity to address interrogatories to Stentor and Northwestel. The Commission further considers that the direct harm to Stentor and Northwestel if detailed costing information filed in confidence were released would outweigh the public interest in disclosure.
47.Accordingly, the Commission approves Stentor TN 441 and Northwestel TN 615 and the format of the associated EDDA Service Agreement, with the following modifications:
(a) In each of the proposed tariff pages under the definition of "user" the words "Wireless Service Provider" are to replace the words "Cellular Carrier". In addition, the definition of "user" is to be extended to include CLECs.
(b) The word "resold" is to be inserted in the section under Terms and Conditions in the proposed tariffs so that the clause under Stentor Tariff Item 920.3(f) and Northwestel Tariff Item 409(f) will read as follows: "The listing information provided under the terms of this tariff may not be shared, resold, rented, or otherwise disposed of to any person."
(c) The rates filed in Attachment 1 to response to interrogatory SRCI(CRTC)30July97-5 EDDA are to be substituted for the proposed per-screen usage rates.
Secretary General
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