Telecom Decision
CRTC 98-10
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Ottawa, 16 July 1998
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APPLICATIONS FOR REVIEW AND VARIANCE OF TELECOM DECISION CRTC 97-7 AND FOLLOW-UP MATTERS RELATING TO THE REQUIREMENT FOR THE ATLANTIC COMPANIES TO FILE GENERAL TARIFFS FOR OPTICAL FIBRE
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File No.: 8662-T10-02/97
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I THE APPLICATIONS
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1. On 9 July 1997, the Commission received a combined application from TELUS Communications Inc. (TCI) and TELUS Communications (Edmonton) Inc. (TCEI) under section 62 of the Telecommunications Act (the Act) to review and vary Telecom Decision CRTC 97-7, Tariff Filings Related to the Installation of Optical Fibres, 23 April 1997 (Decision 97-7). On 16 July 1997, the Commission received a similar application from MTS Communications Inc. (MTS) (formerly MTS Netcom Inc.).
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2. TCI/TCEI in their application, proposed to eliminate the requirement to file general tariffs (GTs) for optical fibres, or alternatively to vary the Decision to allow the companies to withdraw from the future provision of optical fibres. MTS proposed to review and vary the Decision such that MTS need not file nor implement GTs for optical fibre.
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3. The Commission has also received from The Island Telephone Company Limited (now called Island Telecom Inc.) (Island Tel), Maritime Tel & Tel Limited (MT&T), The New Brunswick Telephone Company, Limited (NBTel), and NewTel Communications Inc. (NewTel), (the Atlantic companies), information required pursuant to Decision 97-7, as to the extent of the provision of optical fibre by these companies in the past. The Atlantic companies submitted that they should not be required to file GTs for optical fibre.
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4. The Canadian Cable Television Association (CCTA), fONOROLA Inc. (fONOROLA), Call-Net Enterprises Inc. (Call-Net) and Clearnet Communications Inc. (Clearnet) provided comments opposing the review and variance applications. In their comments, some intervenors also argued that some or all of the Atlantic companies should be required to file GTs for optical fibre.
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5. This Decision addresses the review and vary applications by TCI/TCEI and MTS and whether the four Atlantic companies are to file GTs for optical fibre.
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II BACKGROUND
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6. Subsequent to the filing of a number of Special Facilities Tariffs (SFTs) for optical fibre in 1994 and 1995, the Commission became concerned about the potential for unjust discrimination if optical fibre was not made available to customers under essentially the same terms and conditions. In Telecom Order CRTC 95-1305 dated 22 November 1995 (Order 95-1305), the Commission gave interim approval to separate Bell Canada (Bell) and MTS tariff applications to provide optical fibre to their customers on an SFT basis, and also announced its intention to issue a Public Notice to deal with the issue of whether optical fibre service should continue to be provided under SFTs or whether GTs would be appropriate. Telecom Public Notice CRTC 96-1, Tariff Filings Related to the Installation of Optical Fibres, was issued on 9 January 1996, and culminated with the issuance of Decision 97-7. In general, since Order 95-1305 was issued, the Commission has only issued interim approval for optical fibre SFTs.
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7. In Decision 97-7, the Commission directed BC TEL, Bell, TCI, TCEI, and MTS to file GTs for optical fibres. Prior to the due date for the filing of the GTs, TCI/TCEI and MTS filed their respective review and variance applications, along with applications to stay the filing of such GTs pending the outcome of their review and variance applications. The Commission denied the stay applications in a letter dated 22 July 1997. Shortly thereafter, BC TEL, Bell, TCI, TCEI and MTS filed their tariff applications.
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8. In Decision 97-7, the Atlantic companies were not required to file GTs for optical fibre pending a review of the extent of their provision of optical fibre in the past. The Atlantic companies have since filed the required information.
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9. In Bell Canada, Request to Review that Part of Telecom Decision CRTC 78-7 of August 10, 1978 Dealing with the Saudi Arabian Telephone Project, Telecom Decision CRTC 79-1, 2 February 1979, the Commission outlined the criteria for review and variance of its decisions. The Commission stated that the applicant must demonstrate, on a prima facie basis, the existence of one or more of the following: (1) an error in law or in fact; (2) a fundamental change in circumstances or facts since the decision; (3) a failure to consider a basic principle which had been raised in the original proceeding; and (4) a new principle that has arisen as a result of the decision. In addition to the above, notwithstanding the lack of prima facie evidence that any of the above criteria have been met, the Commission may determine that there is substantial doubt as to the correctness of its original decision, and that reappraisal is accordingly warranted.
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10. The Commission notes in passing that review and vary applications filed after 20 March 1998 are considered in light of the guidelines enunciated in Telecom Public Notice CRTC 98-6, Guidelines for Review and Vary Applications, 20 March 1998.
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III MTS’ APPLICATION AND DETERMINATION FOR THE ATLANTIC COMPANIES
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11. MTS claimed that the Commission erred in fact and that there is substantial doubt as to the correctness of Decision 97-7 as the Decision is inconsistent in its treatment of the Atlantic companies vis-à-vis MTS. The company argued that its policies with respect to the provisioning of optical fibre are very similar to those of the Atlantic companies and it should be treated in the same fashion. MTS noted that the Atlantic companies indicated in the Decision 97-7 proceeding that they have a policy of not providing optical fibre, with few exceptions have not done so, and do not intend to provide optical fibre in the future. MTS stated it has exactly the same policies, and also has provided only negligible amounts of fibre.
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12. Clearnet noted that while the Atlantic companies articulated their positions in the original proceeding, MTS did not, and that MTS’ application is a blatant attempt to change the evidence that was filed in the original proceeding. Call-Net noted that the Commission has not yet made a final determination for the Atlantic companies and submitted that what should be appealed or varied is that final Decision and not Decision 97-7. Call-Net also argued that the Commission has the jurisdiction to prescribe different conditions for each Stentor Resource Centre Inc. (Stentor) company depending on the situation. CCTA submitted that the Commission did not make an error in fact and there is no substantial doubt as to the correctness of the Decision, given that the different treatment of MTS and the Atlantic telephone companies was based on the evidence before it at the time.
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13. In reply, MTS stated that Stentor’s evidence on its behalf in the original proceeding which led to Decision 97-7 did not reflect adequately the company’s position. MTS submitted that preventing third parties from correcting the record of a proceeding if significant errors of fact come to light later would make it difficult for the Commission to review and vary a decision based on an error of fact. MTS also stated that while evidence of having provided dark fibre may be a necessary condition for requiring a GT, such evidence is not by itself a sufficient condition, as the critical element was the "extent" of the past provision of fibre.
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14. The Commission notes CCTA’s submission that at the time of the Decision, there was no evidence on the record to suggest that MTS’ situation was the same as that of the Atlantic telephone companies. As the Decision was made on the basis of the available evidence, the Commission is of the view that there was no error in fact.
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15. Notwithstanding the above, however, the Commission notes that pursuant to section 62, it has a residual discretion to review and vary a decision where there is substantial doubt as to its correctness. In light of MTS’ arguments with respect to its treatment vis-à-vis the Atlantic companies, the Commission has compared MTS’ situation with that of the Atlantic companies to determine if a GTrequirement for MTS remains appropriate.
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16. The Commission notes the following information submitted by the Atlantic companies to identify the optical fibre arrangements they have provided: (i) Island Tel has no optical fibre arrangements, either stand-alone or bundled with other services; (ii) MT&T has one stand-alone fibre arrangement, and 13 bundled (four data and nine video) arrangements; (iii) NBTel has one stand-alone fibre, and 14 bundled (four data and ten video) arrangements; and (iv) NewTel has two stand-alone, and 11 bundled data SFTs. MT&T and NBTel claimed that the optical fibre video SFTs they have provided predate the video access GTs. The Commission also notes MTS’ submission that it has three stand-alone fibre arrangements and four bundled fibre SFTs for video.
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17. In Decision 97-7, the Commission indicated that it would examine the extent to which the Atlantic companies had already provided optical fibre, and would not require them to file GTs if they had only provided negligible amounts of optical fibre. The Commission is of the view that Island Tel meets the criteria in Decision 97-7, having provided no fibre. Thus, Island Tel will not be required to file GTs, at this time.
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18. With respect to the other three Atlantic companies, the Commission’s view is that although they have provided fibre, the amounts involved in the three companies’ SFTs are not significant. The Commission also notes that the three companies now have video access tariffs in place and local area network (LAN) access and connection services tariffs, which can be used to provide services similar to those covered under the SFTs reported. In the Commission’s view, the Atlantic companies should not be required to file optical fibre GTs at this time.
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19. The Commission notes that MTS has provided a limited number of optical fibre SFTs, and the amounts involved are not significant. Further, MTS also has video transmission tariffs and LAN connection GTs. Thus, the Commission is of the view that MTS is in a similar position to the Atlantic companies. Accordingly, the Commission is of the view that there is substantial doubt as to the correctness of Decision 97-7 as it relates to MTS, and concludes that Decision 97-7 should be varied such that MTS is relieved of the obligation to file a GT for optical fibre. The Commission therefore approves a withdrawal of MTS Tariff Notice 208.
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20. Notwithstanding the above, the Commission notes that should the foregoing companies decide to provide optical fibre in the future, GT rates must be filed at the same time as the proposed tariffs for customer-specific tariff offerings, as stipulated in Decision 97-7.
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IV TCI/TCEI’S APPLICATION
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21. TCI/TCEI argued that there is substantial doubt as to the correctness of Decision 97-7 because: (i) the two companies were treated differently from the Atlantic companies even though they are in similar positions; (ii) the Decision is inconsistent with the Commission’s vision of facilities-based competition; and (iii) Decision 97-7 fails to allow for a process enabling the companies to withdraw from optical fibre provisioning. The two companies also claimed that the Commission erred in law as the two companies do not act as telecommunications carriers in the provision of optical fibre, and hence, the Commission does not have the authority to require them to file GTs for optical fibre. They also claimed both error in law and substantial doubt as to the correctness of the Decision, on the basis that: (i) the Decision increased the burden of regulation, which is inconsistent with the Commission’s policy objectives and the requirements of the Act; and (ii) the Commission’s concerns regarding the potential for unjust discrimination are alleviated by the presence of a robust competitive marketplace and an abundance of competitive alternatives.
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22. TCI/TCEI submitted that their situation is similar to the Atlantic companies, they should be treated consistent with those companies, and the Commission’s failure to do so casts substantial doubt as to the correctness of Decision 97-7. In support, TCI restated its policy from the original proceeding that it will no longer provide optical fibre in the future and TCEI’s policy not to offer optical fibre facilities, such as optical fibre, as a separate service offering. TCI indicated that it now has only eight active SFTs, five of which are due to expire in 1998, and the rest by 2001.
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23. Call-Net submitted that the evidence showed clearly that TCI deployed far more SFTs than all of the Atlantic companies combined, and could not possibly be in the same situation as the Atlantic companies.
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24. The Commission notes that the requirement to file GTs in Decision 97-7 was partly based on whether the companies had provided a significant amount of optical fibre in the past. The record of the Decision 97-7 proceeding indicated that TCI provided at least 21 fibre SFTs, of which eight were subsequently identified by TCI as being active. The Commission notes that since the date of the Decision, TCI has also provided a large fibre-based network with a significant local component to a customer. TCEI provided the Edmonton component of that SFT bundled service in conjunction with TCI, and in addition, it has since obtained interim approval for another fibre-bundled SFT network. In both cases, the Commission considers that the amount of revenue involved is not negligible. On the basis of the foregoing the Commission considers that the scope of fibre based services provided by TCI and TCEI is significant. The Commission also notes that potential unjust discrimination in terms of providing service selectively was a concern that was expressed by several intervenors in the original proceeding, and that was addressed by requiring TCI/TCEI to file GTs. In the Commission’s view, TCI/TCEI’s positions are quite different from those of the Atlantic companies and MTS, and accordingly, TCI/TCEI has not shown that the treatment given to them vis-à-vis the Atlantic companies resulted in substantial doubt as to the correctness of the decision.
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25. TCI/TCEI’s second argument in support of their position that there is substantial doubt as to the correctness of Decision 97-7 is that the Decision is inconsistent with the Commission’s vision of facilities-based competition as stipulated in Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8). TCI/TCEI submitted that only essential facilities, i.e. those which are monopoly-controlled, required by competitive local exchange carriers (CLEC) as an input to provide services, and cannot be duplicated by the CLECs economically or technically, should be subject to mandatory unbundling and mandated pricing. TCI/TCEI argued that optical fibre does not satisfy any of the three criteria, nor is it one of the items that the Commission decided should be unbundled on an interim basis. The two companies submitted that the direction to provide tariffs for optical fibre on a GT basis is a form of ad hoc unbundling which has the effect of inhibiting the continued development of the Commission’s vision of facilities-based competition.
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26. CCTA noted that the Commission has not forced TCI/TCEI to unbundle optical fibre. Rather, the companies did so on their own accord by offering the service under SFTs. Clearnet submitted that the issue is not whether optical fibre is an essential facility, but whether facilities that are already available on an SFT basis should be offered on a GT basis. Clearnet further submitted that in light of the fact that the two companies have already provided optical fibre to customers, Decision 97-7 is appropriate to prevent undue discrimination.
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27. The Commission agrees with intervenor arguments that the issue is whether it would be appropriate to require services that were being provided under a SFT to be made available under GTs. The Commission notes that the decision to require TCI/TCEI to file GTs was made on the basis of the Commission’s findings in Decision 97-7 that: (a) the provision of optical fibre is a telecommunications service; (b) the facilities are fungible; (c) there is significant demand as evidenced by the number of filings for customer-specific fibre arrangements; and (d) there is the need to minimize the potential for unjust discrimination in the provision of optical fibres by the telephone companies. The Commission notes that as a matter of practice, GTs are preferred to special tariffs, to ensure that services are made available on an essentially uniform basis.
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28. While the Commission required the incumbent telephone companies to provide essential facilities to competitors to promote competition, this does not mean that non-essential facilities being provided under SFTs should not be provided under GTs. The Commission is of the view that the requirement to file GTs in Decision 97-7 is not inconsistent with the principles set out in Decision 97-8, and accordingly, this argument fails.
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29. TCI/TCEI’s third argument concerning substantial doubt is that the Decision did not allow for a process enabling the companies to withdraw from optical fibre provisioning. The two companies submitted that because the requirement to file GTs has been imposed in response to the existence of contracts for optical fibre, the requirement to file GTs should no longer be maintained if those contracts were terminated.
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30. Call-Net submitted that any prospective decision on the part of TCI to unilaterally terminate all existing SFTs should not affect its obligation to file a GT. CCTA and fONOROLA disagreed with TCI/TCEI that not providing for a process of withdrawal from provisioning optical fibre raises a substantial doubt as to the correctness of the Decision. fONOROLA noted that TCI had provided optical fibre in the past at rates approved by the Commission, and allowing the two companies to withdraw now would allow them to discriminate on a going-forward basis in favour of only selected customers.
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31. The Commission agrees with the intervenors’ arguments that the mere fact that Decision 97-7 did not provide TCI/TCEI a mechanism to allow them to withdraw from optical fibre provisioning does not constitute an error in the Decision. In the Commission’s view, not providing for a process for withdrawal of tariffs does not raise substantial doubt as to the Decision’s correctness. Further, the Commission notes that TCI/TCEI did not propose such a process in the proceeding leading to Decision 97-7.
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32. TCI/TCEI also submitted that if the Commission does not eliminate the tariffing requirement, Decision 97-7 should be varied to allow the two companies to withdraw from the future provision of optical fibre, and to either grandfather the existing optical fibre customers until such time as their contracts expire or until the migration of these customers to alternate service arrangements. Call-Net submitted that the proposals should be rejected as they would simply grandfather the existing unjust discrimination and undue preference.
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33. The Commission considers that giving existing customers access to a service that other customers cannot access would require a persuasive argument that denial of service would not be unjustly discriminatory. On the basis of the record of this proceeding, the Commission considers that no persuasive arguments have been made to justify denial of service. Moreover, TCI/TCEI did not indicate any specific plans as to how it would migrate customers to other service arrangements, or the nature of these service arrangements and the impact on the customers.
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34. TCI/TCEI also argued that the Commission made an error in law in Decision 97-7, in compelling entities over which it has no regulatory authority with regard to the issue of dark fibre provisioning, to file GTs. Among other things, TCI/TCEI claimed that they are not acting as telecommunications common carriers when provisioning dark fibre. TCI/TCEI submitted in this respect that the provision of dark fibre does not involve a "transmission facility" as required by the definition of telecommunications common carrier in that (i) dark fibre is not supplied for the purposes of transmission between "network termination points", and (ii) dark fibre, considered by itself, is not a "system". TCI/TCEI also argued that the provisioning of dark fibre is not a "telecommunications service" as dark fibre is not a "telecommunications facility" as that term is defined in the Act. TCI/TCEI submitted in this regard that dark fibre cannot be used, or is not capable of being used, by itself, for telecommunications in the absence of the associated optoelectronic equipment.
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35. Clearnet submitted that if a wire or cable is not a "transmission facility" because it cannot on its own transmit intelligence, then none of the telecommunications infrastructure of the Stentor-member companies would qualify as a transmission facility as no individual piece of the network operates in isolation. The intervenors also submitted that the legal arguments were similar to previous arguments that were examined in the Decision 97-7 proceeding and rejected by the Commission.
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36. The Commission disagrees with TCI/TCEI’s position that dark fibre is not a "telecommunications facility" because it is not used, or capable of being used for telecommunications. The Commission is also unable to agree that dark fibre is not a transmission facility as submitted by TCI/TCEI. The Commission considers in this regard that dark fibre is a system for the transmission of intelligence between network termination points.
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37. TCI/TCEI also claimed that the Commission made an error in law and that there is substantial doubt as to the correctness of Decision 97-7, as it increases the burden of regulation and thus is inconsistent with the Commission’s policy directives and the requirements of the Act. The two companies submitted that the Commission failed to fully consider the competitive forces present in the optical fibre marketplace and the array of service alternatives and technologies available to customers. The two companies cited sections 7(f) and 34(2) of the Act to support their argument.
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38. fONOROLA disagreed with TCI/TCEI that the Commission had failed to fully consider the competitive forces present in the marketplace before it rendered its Decision, given that the telephone companies have a dominant position in all local markets, and that alternate supply is not competitively significant at this time. CCTA noted that the Act establishes numerous regulatory obligations, including the requirement to file tariffs under section 25 and the prohibition against unjust discrimination under section 27(2). According to CCTA, the fact that Decision 97-7 requires TCI/TCEI to comply with these requirements does not constitute an error of law nor does it raise substantial doubt as to the correctness of the Decision.
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39. The Act sets out a number of requirements including sections 25 and 27. The Commission also notes that section 34(2) of the Act states that the Commission shall forbear where it finds that the service is or will be subject to competition sufficient to protect the interest of users. The Commission considers that the companies have not provided persuasive evidence in this proceeding to suggest that the section 34(2) condition is satisfied.
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40. The Commission is further of the view that TCI/TCEI’s argument that the presence of competition will render any concerns for unjust discrimination moot, is not valid. The Commission notes that there are services where competition in various degrees exists, but that GTs apply. Until the Commission finds that the required conditions have been met to grant forbearance from regulation of optical fibre service, a GT as determined in the Decision 97-7 proceeding is appropriate.
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41. On the basis of the foregoing, the Commission concludes that TCI/TCEI has not shown substantial doubt as to the correctness of the Decision nor an error in law.
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V DISPOSITION
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(a) MTS’ review and variance application is granted.
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(b) TCI/TCEI’s review and variance applications are denied.
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(c) Island Tel, MT&T, NBTel and NewTel are not required to file GTs for optical fibre at this time.
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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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