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Ottawa, 8 April 1998
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Telecom Order CRTC 98-320
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By letter dated 30 December 1997, Westel Telecommunications Ltd. (Westel) applied for exemption from contribution for a number of interconnecting circuits which are used by its Internet Service Provider (ISP) customers to carry data traffic. Westel attached an affidavit to support its application.
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File No.: 8626-W1-02/97
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1. By letter dated 30 January 1998, BC TEL noted the Commission's finding in Telecom Order CRTC 97-590 dated 1 May 1997 (Order 97-590) that it was no longer appropriate to allow exemptions from contribution for line-side connected data services. However, BC TEL stated that the Commission also determined that, as an exception to this finding, line-side interconnecting circuits used to provide Internet services would continue to be exempt from contribution. BC TEL stated that subsequently, the Commission issued Telecom Public Notice CRTC 97-37 dated 3 November 1997 (PN 97-37) to initiate a proceeding to consider an appropriate "lighter" contribution exemption regime to apply to ISPs.
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2. BC TEL submitted that since no decision has been made in the proceeding initiated by PN 97-37, it is not in a position to determine whether the information provided in Westel's application constitutes sufficient evidence to warrant an exemption for Internet services.
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3. BC TEL stated that it reviewed the interconnecting circuits identified in Westel's application and found that, with few exceptions, modem tones were received when the numbers were called. BC TEL stated that these circuits appear to terminate at Westel points of presence (POPs) in various locations throughout British Columbia. BC TEL stated that as well, none of these numbers appear to be listed in the directory. BC TEL stated that while Westel's application refers to ISP customers, it is not able to determine if the Internet services are being provided by Westel or by a customer of Westel.
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4. BC TEL stated that given that the circuits identified in Westel's application appear to terminate at Westel POPs, it is possible that both Internet services and contribution-eligible services are being provided at the same location. BC TEL submitted that if this is the case, technical evidence in the form of a technical audit should be required as proposed in Stentor Resource Centre Inc.'s (Stentor) comments to PN 97-37. BC TEL stated that the requirement for a technical audit under these circumstances was, in Telecom Order CRTC 98-27 dated 23 January 1998, a condition of final approval of ACC TelEnterprises Ltd.'s application for an exemption from contribution for line-side interconnected circuits used to provide Internet services. BC TEL noted that as well, AT&T Canada Long Distance Services Company recently submitted a technical audit with respect to its interconnecting circuits used to provide Internet services.
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5. By letter dated 5 February 1998, Westel noted BC TEL's statement that it is unable to determine if the Internet services are being provided by Westel or by a customer of Westel. Westel noted that its affidavit dated 31 December 1997 clearly states that the interconnection circuits are used by Westel solely for data traffic dedicated to its ISP customers. Westel stated that as a condition of approval for this application, it would be willing to file, in confidence with the Commission, billing records that show the circuits in question are being utilized by ISP customers. Westel stated that in principle, however, it objects to dedicating resources to this exercise simply because BC TEL has chosen to take exception with, and question the validity of, the information sworn to in its affidavit.
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6. Westel stated that the Commission initiated PN 97-37 with the intent that the current contribution exemption regime should, in the case of ISPs, be replaced by a "lighter" regime. Westel stated that in its initial comments, Stentor itself summed up the current exemption process as follows: "The existing exemption process can be both costly and time-consuming for the applicant, the Commission and the companies. Exemptions may not be approved until months after an initial application, particularly in cases where the applicant is unfamiliar with the evidence requirements or regulatory processes. Where a technical audit is required, the costs to the applicant of obtaining such an audit can be significant. As well, because the carrier is required, in accordance with its tariffs, to bill contribution charges until the application is disposed of by the Commission, billing adjustments are often required for significant periods of time." Westel stated that it is currently awaiting the Commission's decision in the PN 97-37 proceeding.
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7. Westel noted that BC TEL has acknowledged that modem tones were received when the numbers in question were called and none of the numbers are listed in BC TEL's directory. Westel submitted that given that this is the case and that the Commission will soon be imposing a "lighter" contribution exemption regime for ISPs, its application should be granted approval based on its signed affidavit which attests to the fact that the circuits in question are dedicated to the use of traditional Internet traffic.
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8. The Commission notes that, as set out in Order 97-590, line-side interconnecting circuits used to provide Internet services are exempt from contribution. The Commission also notes Westel's request that its application be granted approval based on its affidavit which attests that the circuits in question are dedicated to the use of traditional Internet traffic, given that the Commission will soon be "imposing" a "lighter" contribution exemption regime for ISPs in PN 97-37. In Telecom Order CRTC 97-1471 dated 14 October 1997 the Commission stated that while it intended to initiate an expedited proceeding to examine a lighter regime, it also noted that ISPs would be required to file contribution exemption applications pending disposition of the proceeding. Accordingly, the current rules continue to hold for those applications filed while the Commission is considering evidence that is filed with respect to PN 97-37.
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9. The Commission notes that its current evidentiary requirements (set out in Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993) require that: (1) for data only providers (now restricted to Internet traffic pursuant to Order 97-590), an exemption will be granted where the competitor attests in an affidavit that no voice services are provided, and (2) for providers of switched voice and Internet, an exemption will be granted provided that the applicant can satisfy the Commission by way of a technical audit by a professional engineer that the voice and Internet traffic are carried on different networks. The Commission also stated that alternatively, competitors may choose to attach equipment to its network that precludes voice usage (Voice Data Discriminators) supported by a technical audit. This allows competitors to carry fax over voice networks and be exempt from contribution. However, for the case of Internet providers, no such equipment appears to have been developed.
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10. The Commission notes BC TEL's comment that it is not able to determine if the Internet services are being provided by Westel or by a customer of Westel.
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11. In light of the foregoing:
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(i) Westel is directed to clearly indicate whether: (1) Westel is providing the Internet services to end-users; or (2) a customer, or customers, of Westel (i.e., a reseller or an ISP) is providing the Internet services to end-users;
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(ii) if Westel is providing the Internet services to end-users, a technical audit is required as set out above, as Westel offers both voice and data services;
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(iii) if a customer is providing the Internet services to end users, then: (1) for a customer which offers only Internet service an affidavit from the customer is required, attesting that it provides only Internet service, it does not offer voice services, and that the services for which contribution exemption is being requested are used only to provide Internet services, and (2) for a customer which offers both voice and Internet services to end-users, then a technical audit will be required as set out above; and
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(iv) Westel is directed to provide the appropriate evidence within 30 days of the date of this Order.
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Laura M. Talbot-Allan
Secretary General
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This document is available in alternative format upon request.
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