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Ottawa, 23 April 1998
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Telecom Order CRTC 98-385
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By letter dated 3 April 1997, Call-Net Enterprises Inc. (Call-Net), on behalf of Sprint Canada Inc. (Sprint), submitted an application requesting a contribution exemption with respect to circuits used for Internet traffic.
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File No.: 8626-S2-02/97
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1. In Telecom Order CRTC 97-1471 dated 14 October 1997 (Order 97-1471), the Commission granted interim approval of Call-Net's application, effective the date of the application, with final approval subject to the provision of a satisfactory technical audit within 30 days of the Order.
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2. By letters dated 7 November and 9 December 1997, Call-Net advised that the audit would be delayed. By letter dated 2 February 1998, Call-Net filed a technical audit report pursuant to Order 97-1471, and by letter dated 18 February 1998, Call-Net filed an engineer's affidavit related to the technical audit.
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3. By letter dated 12 March 1998, Stentor Resource Centre Inc. (Stentor) submitted comments on behalf of and with the concurrence of BC TEL, Bell Canada, Maritime Tel & Tel Limited, MTS Communications Inc. (formerly known as MTS NetCom Inc.) and TELUS Communications Inc. (collectively, the companies).
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4. Stentor noted that the auditor has examined circuit documentation and has inspected network arrangements at two of Sprint's four Internet hub locations and four of Sprint's regional points of presence. Stentor stated that the auditor has also conducted tests of the interconnecting line-side circuits. Stentor stated that further, the auditor has confirmed that the above-noted facilities are used only to carry Internet protocol traffic and are configured to operate separately from Sprint's switched voice network. Stentor stated that the companies also assume that the configuration operates separately from any other Sprint network, such as an interexchange data network, which might attract contribution charges even though the auditor has not specifically stated so in the technical audit.
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5. Stentor submitted that consistent with the current contribution exemption regime, the auditor must also confirm that appropriate control procedures are in place to ensure that the arrangement remains configured to qualify for an exemption on a going-forward basis. Stentor submitted that in this respect, the auditor has not verified that appropriate internal control procedures have been put in place by Sprint.
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6. Stentor submitted that in light of the above, it appears that Call-Net has generally satisfied the evidentiary requirements for the requested contribution exemption. Accordingly, Stentor agreed with the requested exemption, subject to the requirement that Sprint or the auditor identify the internal control procedures that apply and confirm that they are in place to ensure that the configuration qualifies for an exemption on a going-forward basis. Stentor also submitted that the configuration should be subject to the possibility of future random audits.
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7. The Commission is of the view that Call-Net has filed a satisfactory technical audit. The Commission agrees with Stentor that: (1) the exemption should be subject to the requirement that Sprint or the auditor identify the internal control procedures and confirm that they are in place to ensure that the configuration qualifies for an exemption on a going-forward basis; and (2) the configuration should be subject to the possibility of future random audits, pursuant to the Commission's precedent.
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8. In light of the foregoing, the Commission:
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(i) grants final approval to Call-Net's application, effective the date of the application, subject to Sprint or the auditor filing a report within 30 days of the date of this Order identifying the internal control procedures and confirming that they are in place to ensure that the configuration qualifies for an exemption on a going-forward basis; and
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(ii) finds that the configuration is subject to the possibility of future random audits.
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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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