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Ottawa, 4 June 1998
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Telecom Order CRTC 98-548
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In the matter of Application of Contribution on Internet Access Services in the Independents' Territories, Telecom Public Notice CRTC 97-38, 18 November 1997 (PN 97-38).
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File No.: 8646-C24-01/97
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1. In Regulatory Framework for Québec-Téléphone and Télébec ltée, Telecom Decision CRTC 96-5, 7 August 1996 (Decision 96-5), and Regulatory Framework for the Independent Telephone Companies in Quebec and Ontario (Except Ontario Northland Transportation Commission, Québec-Téléphone and Télébec ltée), Telecom Decision CRTC 96-6, 7 August 1996 (Decision 96-6), the Commission established the regulatory framework for most of the independent telephone companies in Ontario and Quebec. In these Decisions, the Commission stated that, among other things, contribution should be paid on all switched voice and data traffic that is interconnected to the Public Switched Telephone Network in the independents' territories.
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2. In Telecom Order CRTC 97-590, 1 May 1997 (Order 97-590), which broadened the scope of contribution-paying services in the territories of the Stentor-member companies, the Commission was not persuaded that it was appropriate, at that time, to extend the application of the existing contribution scheme to Internet Access Services offered in those companies' territories.
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3. By letter dated 29 May 1997, Canadian Satellite Communications Inc. (Cancom) requested that the Commission settle a billing dispute between itself and Télébec ltée (Télébec) regarding whether or not contribution is payable on Internet Access Services provided in Télébec's territory.
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4. Following completion of the record with respect to Cancom's application, the Commission initiated a proceeding by PN 97-38, to determine whether the treatment of Internet Access Services for contribution paying purposes outlined in Order 97-590 should also apply in the territories of the independents subject to Decisions 96-5 and 96-6. The Commission noted that under the regime set out in Decisions 96-5 and 96-6, contribution would be payable on Internet Access Services in the territories of those independents subject to these Decisions. However, the Commission expressed the preliminary view that it is not appropriate that contribution be payable on Internet Access Services in the independents' territories, and that Decisions 96-5 and 96-6 should be varied such that the Commission's determination with respect to contribution on Internet Access Services in the Stentor-members' territories set out in Order 97-590 would also apply in the Independents' territories, effective 1 January 1997. The Commission also indicated that following disposition of this proceeding, the Commission would dispose of the above-mentioned billing dispute between Cancom and Télébec.
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5. On 5 January 1998, the following parties filed submissions: AT&T Canada Long Distance Services Company (AT&T Canada LDS), Cancom, Call-Net Enterprises Inc. (Call-Net), Canadian Alliance of Publicly-Owned Telecommunications Systems (CAPTS), Canadian Business Telecommunications Alliance (CBTA), Québec-Téléphone and Télébec.
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6. AT&T Canada LDS, Cancom, CAPTS and CBTA submitted that the contribution treatment of Internet Access Services in the independents' territories should be consistent with the contribution treatment of Internet Access Services in the Stentor- members' territories. Therefore, contribution should not be payable except where specified in Order 97-590. CAPTS requested that any changes adopted by the Commission in this proceeding be on a going-forward basis only.
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7. AT&T Canada LDS, CBTA and Call-Net referred to the Proposed New Contribution Exemption Regime for Internet Service Providers, Telecom Public Notice CRTC 97-37, 3 November 1997 (PN 97-37), requesting that should the Commission choose a less onerous contribution exemption regime for Internet Services Providers (ISPs), this lighter exemption regime should also apply to ISPs in the independents' territories. The Commission notes that this request is based on the assumption that the Commission determines that Internet services are not required to pay contribution in the independents' territories.
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8. Québec-Téléphone referred to a Federal Government initiative entitled the "Community Access Program (CAP)" launched in 1995. Québec-Téléphone submitted that if contribution were payable on Internet Access Services in the independents' territories, it would curtail the aim of this program which is to help provide rural, small and remote communities with affordable public access to the Internet and the skills to use it effectively.
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9. Cancom argued that if contribution were payable on Internet Access Services in the independent's territories, no business could offer Internet Access Services and charge customers enough to recover the high level of contribution. Cancom also submitted that Télébec's own Internet services cannot be paying the appropriate imputed contribution charges based on the low monthly rate offered to Télébec's customers pursuant to its General Tariff. Télébec did not comment on this issue.
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10. CAPTS was concerned with the potential for service providers to use the Internet as the underlying transmission facility to provide public switched interexchange voice or data.
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11. Télébec submitted that in order to reduce the Carrier Access Tariff, the largest possible number of minutes should be included in its calculation and that Internet minutes should be included on this basis.
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12. The Commission notes that, in general, all parties except Télébec, endorsed the Commission's preliminary view that contribution should not be payable on Internet Access Services in the independents' territories.
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13. The Commission agrees with AT&T Canada LDS, Cancom, CAPTS and CBTA that the contribution regime applicable to Internet Access Services in the independents' territories should be consistent with that in the Stentor-members' territories. The Commission is also of the view that it would be administratively cumbersome to have different contribution schemes for Internet traffic apply in the Stentor-members' territories and the territories of the independents.
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14. The Commission is not persuaded by CAPTS' submission that the decision should only apply on a going-forward basis.
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15. Accordingly, the Commission varies that portion of Decisions 96-5 and 96-6 such that the regime for Internet services in the Stentor-members' territories set out in Order 97-590 also applies to the independents' territories, effective 1 January 1997. The Commission notes that this variance does not affect the requirement that where the Internet network is used as the underlying transmission facility by a service provider to provide public switched interexchange voice or data, the service provider is to register as a reseller and pay contribution.
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16. The Commission notes the submissions of several parties that should the Commission choose a less onerous contribution exemption regime for ISPs as contemplated in PN 97-37, that this lighter exemption regime should also apply to ISPs in the independents' territories. The Commission considers that this issue is beyond the scope of this proceeding.
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17. The Commission finds that given the above mentioned variation to Decisions 96-5 and 96-6, effective 1 January 1997, Cancom is not required to pay contribution on Internet Access Services in Télébec's territory.
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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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