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ARCHIVED -  Telecom Order CRTC 98-322

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Telecom Order

Ottawa, 8 April 1998
Telecom Order CRTC 98-322
By letter dated 11 April 1997, MunicipalTel Telecommunications Inc. (MunicipalTel) requested an exemption from contribution charges with respect to Megalink services, and provided an affidavit dated 17 April 1997 which stated that the Megalink services are used to provide a local service. MunicipalTel requested an interim order approving the application retroactive to the date of installation.
File No.: 8626-M17-01/97
1. By letter dated 21 May 1997, Bell Canada (Bell) noted that it provides the Megalink service which terminates on the premises of MunicipalTel. Bell understood that these facilities are connected to customer provided equipment controlled by MunicipalTel. Bell stated that in this respect, it has no means to verify if the use of these services is restricted to local services.
2. Bell also noted that MunicipalTel has previously been granted a contribution exemption for single-hop services (reference Telecom Order CRTC 96-625 dated 21 June 1996) which was the subject of a technical audit. Bell submitted that a technical audit is also required in this case to demonstrate that the Megalink services which are the subject of this application are configured correctly so as not to attract contribution charges and to confirm that ongoing control procedures are in place as appropriate.
3. Accordingly, Bell requested that MunicipalTel's application be deferred pending submission of a satisfactory technical audit to verify that the configuration is used solely to provide local services.
4. By letter dated 19 September 1997, MunicipalTel filed a technical audit report, in support of its application dated 11 April 1997.
5. By letter dated 21 October 1997, Bell noted that the auditor has confirmed the following: (1) calls made to the Megalink service are first screened by MunicipalTel at its Kitchener location; (2) calls from unauthorized end-users and calls from outside the Kitchener area are rejected; (3) local calls from authorized end-customers are routed by MunicipalTel over its facilities to the destination location; and (4) long distance calls from authorized end-customers which are destined for termination in North America are routed over a local private line DS-1 facility to the interexchange network of another reseller (the Centrex reseller).
6. Bell noted that, pursuant to the network description provided by the auditor, the Megalink facilities in question are used to route traffic destined for locations outside the Kitchener calling area, via a local private line connection, to an interexchange network of the Centrex reseller. Bell noted that in this respect, under the current contribution regime, such traffic attracts contribution charges in the same way such facilities would attract contribution charges if accessing an interexchange network provided by MunicipalTel.
7. Bell stated that the Commission has determined that other similar service configurations should attract contribution charges. Bell noted that, in Telecom Order CRTC 93-682 dated 6 August 1993 (Order 93-682), the Commission denied an application for a contribution exemption from Airway Broadcasting Co. Ltd. (Airway) because a local private line connection existed between Airway's switching equipment and AT&T Canada Long Distance Services Company's (AT&T Canada LDS) VRoute Express service network. Bell noted the Commission's conclusion in that Order that: "Airway's network is configured to gather incoming traffic on DALs and/or PSTN local access lines and deliver that traffic to MT&T's MTS/WATS services and or Unitel's [now "AT&T Canada LDS"] VRoute Express service. In effect, Airway is providing PSTN access to VRoute and thus contribution is applicable."
8. Bell noted that, in support of the recommendation for a contribution exemption, the auditor cited the Commission's determination in Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993. At page 7 of that Decision, the Commission noted that where a reseller has local access channels used only for local calling or MTS/WATS calling, it should not be required to pay contribution on the local access channels as, in this configuration, competitors do not have an interexchange private line network.
9. Bell submitted that the configuration referenced by the auditor does not apply to the case under consideration in this application. Bell stated that in such a service arrangement, contribution charges are paid by the interexchange service provider on its equal access connections. Bell noted that MunicipalTel accesses the interexchange private line network of the Centrex reseller, via a private line connection or tie trunk, to terminate its customer's long distance traffic. Bell stated that therefore, it would not be accurate to conclude that the competitor does not have access to an interexchange private line network.
10. Bell stated that moreover, it is apparent from the auditor's network description that traffic routed over the Megalink facilities is not limited to calls which are local to the Kitchener area as affirmed by MunicipalTel in its affidavit dated 17 April 1997. In light of the above, Bell concluded that the configuration described in the technical audit report is one which should attract contribution.
11. By letter dated 28 November 1997, MunicipalTel advised that a reply would be forthcoming by 5 December 1997.
12. By letter dated 5 December 1997, the auditor replied to Bell's comments on behalf of MunicipalTel. The auditor referred to another application for exemption and the associated reply from Bell without naming the applicant. The auditor stated that, in that case Bell was able to examine its records and determine that the facilities in question were operating in the manner described by the applicant. The auditor stated that Bell agreed with the requested exemption.
13. The auditor stated that the calls handled by MunicipalTel are local access calls which are then terminated on local facilities. The auditor submitted that how the calls are handled once they are passed to that operator is not the subject of the application. The auditor stated that the subject of the application is the leased Megalink facilities used for access. The auditor stated that these leased Megalink facilities are not connected to an interexchange private line network nor are they connected to the equal access facilities of the Centrex reseller. The auditor submitted that Bell should be able to determine from its records that this is the configuration used by MunicipalTel using the same methods that were used in the previously-noted application which was found to be exempt. The auditor submitted that the reference to the case of Airway (Order 93-682) does not apply in the case of MunicipalTel's application.
14. By letter dated 10 December 1997, the auditor, again acting for MunicipalTel, stated that it did not wish to place on the public record the name of the applicant (the company) referred to in its letter dated 5 December 1997. The auditor submitted that disclosure of the specific details contained therein reflect upon the commercial relationship between the company and MunicipalTel and would assist MunicipalTel's existing and potential competitors, including Bell, in developing more effective business strategies thereby causing MunicipalTel specific direct harm. MunicipalTel provided an abridged copy for the public record.
15. By letter dated 12 January 1998, Bell stated that it is unable to comment on the validity of MunicipalTel's allegation since the identity of the company and the contribution exemption application has been filed in confidence with the Commission. Bell noted that it is unaware of any contribution exemption proceeding whereby Bell has agreed with, and the Commission has approved, a configuration whereby Megalink services are used to access an interexchange network without the requirement to pay appropriate contribution charges.
16. In light of the above, Bell submitted that MunicipalTel's submissions are without merit and that the configuration for which MunicipalTel seeks a contribution exemption is one which should attract contribution charges. Accordingly, Bell disagreed with the requested exemption.
17. The Commission reviewed the technical audit and agrees with Bell that contribution is payable in this situation. The Commission notes that, based on the auditor's network schematic diagram, the circuit route between MunicipalTel's Kitchener Point of Presence (POP) and the Centrex reseller's Kitchener POP is an interconnecting circuit route which is subject to contribution, since calls carried over MunicipalTel's network can access an interexchange network.
18. However, the Commission notes that the interconnecting circuit route is composed of a Megalink route in tandem with a DS-1 route. Based on the auditor's network schematic diagram, MunicipalTel appears to be the customer of record for the Megalink route and the Centrex reseller appears to be the customer of record for the DS-1 route. Therefore, the route is shared between two companies.
19. The Commission notes that contribution should only be paid once on this interconnecting circuit route. Based on the technical audit, staff is of the view that MunicipalTel should be responsible for contribution on its traffic carried over this configuration. However, there is a possibility that the Centrex reseller is already paying contribution on its DS-1 circuit.
20. In light of the foregoing, the Commission orders that:
(i) MunicipalTel's application for exemption is denied;
(ii) contribution is payable on this circuit configuration and MunicipalTel is liable for this contribution;
(iii) however, Bell is directed to examine its records and determine whether contribution is already being paid by the Centrex reseller on its DS-1 circuit;
(iv) if contribution is already being paid by the Centrex reseller on its DS-1 circuit, no additional payment is required by MunicipalTel, since contribution should only be paid once on the interconnecting circuit route; and
(v) if contribution is not being paid by the Centrex reseller, then MunicipalTel is directed to pay the appropriate contribution.
Laura M. Talbot-Allan
Secretary General
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