ARCHIVED -  Telecom Order CRTC 99-1127

Telecom Order CRTC 99-1127

Ottawa, 8 December 1999

Microcell's tariff application to provide local services

File No.: Tariff Notice 1

Summary

The Commission denies a tariff application by wireless service provider Microcell Connexions Inc. (Microcell) because it fails to comply with existing local competition rules.

On 1 May 1997, the CRTC released a decision to open the door to local competition that is technology-neutral. Telecom Decision CRTC 97-8 determined that wireless competitive local exchange carriers (CLECs) would be subject to the same terms and conditions as wireline CLECs.

However, in its attempt to qualify as a CLEC, Microcell filed a tariff that is significantly different from the tariffs of the incumbent local exchange carriers (ILECs) and CLECs.

This order notes specific areas of concern in the tariff application that Microcell may wish to address if it chooses to file a subsequent tariff. For instance, the Commission wants to know how local contribution charges payable will be determined when wireless customers are roaming and making calls from outside their home calling area.

This order also specifies that Microcell will be prohibited from selling wholesale local services to an affiliate, unless that affiliate provides end-users with a choice of long distance service providers.

The Commission continues to support the notion of wireless local service providers becoming CLECs, but finds that Microcell's tariff application is inconsistent with the interconnection framework that underpins local competition in Canada.

Microcell's application

1. On 26 May 1999, Microcell Telecommunications Inc., on behalf of Microcell, filed an application under Tariff Notice (TN) 1 for approval of its General Tariff (CRTC 21300). On 30 June 1999, Microcell filed an amendment to its application under TN 1A.

2. Microcell filed proposed General Tariff Terms and Conditions, as well as terms and conditions for the provision of access services for interconnection with local exchange carriers (LECs), interexchange service providers and wireless service providers (WSPs).

3. Microcell noted that there are differences between its proposed tariff and existing CLEC and ILEC tariffs which are due principally to two factors: its operation as a wholesale company, and the functionality and structure of Microcell's fully digital network, which uses global services for mobile communications (GSM) technology to provide mobile personal communications services (PCS).

Interventions

4. Comments with respect to TN 1 were received on 28 June 1999 from Bell Canada on behalf of itself, Island Telecom Inc., Maritime Tel & Tel Limited, MTS Communications Inc., NBTel Inc., and NewTel Communications Inc. (collectively Bell) and from TELUS Communications Inc., on behalf of itself and BC TEL (collectively TCI). On 8 July 1999, Microcell filed reply comments addressing the issues raised by Bell and TCI.

5. Comments pertaining to TN 1A were received on 30 July 1999 from Bell, TCI and AT&T Canada, on behalf of AT&T Canada Corp. and AT&T Canada Telecom Services Company. AT&T Canada included comments pertaining to TN 1. Microcell filed reply comments on 9 August 1999.

6. Microcell submitted that AT&T Canada's comments addressing TN 1 should be rejected by the Commission as they are neither timely, as they were not filed within the period established by the CRTC Telecommunications Rules of Procedure, nor pertinent. Microcell however addressed the substance of AT&T Canada's comments with respect to TN 1.

7. The Commission notes that TN 1 and TN 1A could not have been meaningfully considered independently of one another. The Commission considers that AT&T Canada's comments with respect to TN 1 should not be rejected and notes that it has considered the comments of all parties identified above in arriving at its decision.

Equal access considerations

8. Microcell noted that in accordance with Telecom Order CRTC 99-379 dated 29 April 1999 (Order 99-379), the selection of interexchange service provider will be made by Microcell's wholesale customers, who will in turn provide retail services to end-users.

9. Bell and TCI submitted that Microcell should be required to provide a clear explanation as to the manner in which it intends to comply with the Commission mandated CLEC obligations in respect of equal access. Bell and TCI were concerned that Microcell's proposal to offer its services to wholesale customers could be used as a means of circumventing the Commission's directives regarding the right of end customers to choose their toll carriers under equal access.

10. TCI noted that, in Local competition, Telecom Decision CRTC 97-8 dated 1 May 1997 (Decision 97-8), the Commission had indicated support for customer choice and equal access. TCI submitted that Microcell's wholesale customers may enter into exclusive arrangements with interexchange service providers, and consequently Microcell's end-customers would not have a choice of interexchange service provider.

11. AT&T Canada noted that Microcell could circumvent its CLEC equal access obligation by directing an affiliate not to offer equal access to any interexchange service provider that requests it. AT&T Canada submitted that a local reseller which is an affiliate of Microcell in essence enjoys all of the advantages of being a CLEC without necessarily abiding by the equal access commitment. AT&T Canada argued that this is not similar to the situation described in Order 99-379, where the Commission determined that a local reseller is not subject to an equal access obligation because it does not possess the benefits of being a CLEC, such as access to portable subsidies.

12. AT&T Canada submitted that in order to ensure that Microcell abides by its CLEC equal access obligations, it should be subject to a local resale affiliate rule, which would prohibit Microcell from reselling its local services to an affiliated company unless the affiliate itself offers equal access to interexchange service providers. AT&T Canada further noted that without such a rule, Microcell would gain a competitive advantage vis-à-vis other LECs that do not offer local service through a reseller affiliate.

13. Microcell submitted that its operations as a wholesale CLEC would in no way result in the circumvention of the Commission's equal access directives as its tariff offers equal access arrangements to the interexchange service providers selected by its customers. Microcell noted that in Order 99-379, the Commission made it clear that resellers of local services, such as Microcell's wholesale customers, are under no obligation to offer equal access to their end-users.

14. Microcell submitted that AT&T Canada's suggestion that the Commission impose a local resale affiliate rule applicable to only Microcell is inappropriate and unfounded. Microcell argued that there is clearly no justification for creating or applying any type of affiliate rule to CLECs and submitted that AT&T Canada's proposal should be dismissed.

15. The Commission notes that if Microcell's approach was accepted, a local reseller affiliated with Microcell could in sum and substance enjoy all of the advantages of being a CLEC, without having the obligation to provide equal access to end-customers.

16. The Commission notes that it was concerns related to consumer choice that led to its finding in Decision 97-8 that exclusive arrangements between CLECs and interexchange service providers would not be in the public interest.

17. The Commission considers that CLECs should not be able to restrict consumer choice by selling their local services through an affiliate which does not offer equal access to any interexchange service provider that requests it.

18. The Commission considers that it would be appropriate to impose a local resale affiliate rule prohibiting Microcell, if operating as a CLEC, from reselling its local services to an affiliated company unless the affiliate itself offers equal access to interexchange service providers at terms and conditions as would be appropriate for Microcell operating as a CLEC. The Commission notes that it will be issuing a public notice shortly to address this issue for CLECs generally.

Integrity of contribution system

19. TCI noted that pursuant to Decision 97-8, any CLEC-generated call between the ILECs' exchanges where the ILECs' toll charges are applicable is to be treated as a toll call for contribution payment purposes, regardless of the structure or extent of the CLEC's serving area.

20. Bell stated that due to the nature of wireless technology, the contribution-eligibility of a given call is dependent on the variable physical location of the wireless customer at a particular time. Bell noted that the local calling areas of established wireless service providers, such as Microcell, could differ from those of the ILECs.

21. TCI noted that roaming wireless customers would have telephone numbers that are not associated with the exchange in which they may originate or terminate calls. TCI also noted that this was not anticipated when formulating the interconnection standards developed for LECs in the CRTC Steering Interconnection Committee (CISC), and may in turn affect the rating, routing and billing of interexchange calls. Or, it could corrupt the operation of the many services which depend on the originating telephone number.

22. TCI submitted that the treatment of roaming wireless customers might also affect the integrity of the toll contribution mechanism and the availability of certain calls for carriage by an interexchange service provider through equal access. TCI noted that the potential effects of out-of-exchange telephone numbers have already been addressed by the Commission and the industry, when consensus was reached that local number portability must be confined to the ILEC's existing exchange boundaries.

23. Bell and TCI submitted that it was unclear how Microcell proposes to determine in which circumstances contribution charges will apply because the charges are assessed on the basis of the location of the calling and called party, and wireless service entails the physical movement of customers while using Microcell's services.

24. Bell and TCI submitted that well-defined procedures are required to ensure the integrity of the contribution regime and to ensure that wireless CLECs do not benefit from an undue advantage relative to the contribution regime that applies to wireline CLECs. The procedures would identify the specific location of roaming wireless end-customers relative to the ILEC Extended Area Service (EAS)/Enhanced Flat Rate Calling (EFRC) boundaries and the location to which they are placing calls.

25. Bell further submitted that a wholesale customer of Microcell, which operates as an interexchange service provider, would be liable for contribution charges and be required to report and remit such contribution. Bell requested that the Commission require Microcell to provide a description of how it expects that contribution will be reported and remitted by any reseller of Microcell's services, operating as an interexchange service provider, where long distance is defined pursuant to the applicable ILECs' exchange boundaries.

26. Microcell noted that the Commission itself endorsed the possibility of wireless CLECs in Decision 97-8. Microcell stated that it had devoted considerable time and other resources to being a full participant in the CISC, and had taken care to identify to the appropriate CISC working groups where the needs of wireless networks vary from those of the wireline networks.

27. Microcell submitted that it had implemented systems to ensure its compliance with the contribution regime applicable to CLECs and would file audit reports with the Commission and the central fund administrator as required.

28. Microcell noted that roaming was an inherent feature of wireless networks and need not affect toll contribution.

29. The Commission notes that the existence of roaming wireless customers raises issues for the current contribution system where the applicability of the contribution rate is based on the location of the calling and called parties relative to the ILECs' EAS/EFRC boundaries.

30. The Commission notes that while Microcell submitted that it would be in full compliance with all requirements of Decision 97-8 concerning its contribution obligations as a CLEC, the company provided no details demonstrating how it would ensure its compliance with those obligations.

31. The Commission considers that it is necessary for Microcell to specify the manner in which it will apply contribution charges with respect to the location of the calling and called parties relative to the ILEC EAS/EFRC boundaries.

32. The Commission notes that a reseller of Microcell's services which is also operating as an interexchange service provider would be responsible to collect and remit contribution charges. The Commission considers that in any future CLEC tariff proposal, Microcell should address how it plans to ensure that contribution charges, where interexchange traffic is defined based on the applicable ILEC's exchange boundaries, and how it will be collected and remitted by a reseller of Microcell's services operating as an interexchange service provider.

National rates

33. Microcell submitted that it will offer CLEC services across Canada and adopt national rates wherever possible. Microcell stated that it considered that Bell Canada's rates were reasonable proxies for its costs and proposed to use them as its national rates.

34. Microcell proposed national rates for a number of services which, as a CLEC, it would be required to provide to interexchange service providers and WSPs.

35. Bell and TCI noted that the ILEC rates for these services are not national rates, and that Microcell's rates exceed some of the current ILEC rates. Bell and TCI noted that no justification for these rates was provided. Bell and TCI submitted that as Decision 97-8 states that CLEC rates cannot exceed ILEC rates, Microcell should file rates specific to each ILEC operating territory that are no higher than the relevant ILEC's rates.

36. The Commission notes that Decision 97-8 requires a CLEC to either file rates for services that are capped at the ILEC's rates in each territory where it operates, or else to adequately justify any (higher) proposed rates.

37. The Commission notes that CLECs which operate in more than one ILEC territory have tariffs that reflect the relevant ILEC's rates in each territory where these CLECs operate.

38. The Commission considers that Microcell's proposal to offer components of its interconnection services for interexchange service providers and WSPs at national rates based on Bell's rates is inconsistent with the general policy enunciated in Decision 97-8. Further, the Commission is of the view that Microcell has not adequately justified the differences between its proposed tariffs and those of the ILECs as required by Decision 97-8.

Interconnection arrangements for interexchange service providers and WSPs

39. Microcell stated that it developed switching and aggregation charges that are unique and appropriate to recover the costs to Microcell of providing trunk-side interconnection to interexchange service providers.

40. Microcell proposed to make two forms of interconnection available to interexchange service providers:

National Equal Access (NEA), at a rate of $0.0123 per minute, which allows the interexchange service provider to interconnect with trunk-side access at each of Microcell's mobile switching centres (MSCs) currently located in Vancouver, Calgary, Toronto and Montréal.

Local Equal Access (LEA), at a rate of $0.01454 per minute, which allows the interexchange service provider to interconnect with trunk-side access at any of Microcell's points of interconnection in the region served by any one of Microcell's MSCs.

41. Microcell noted that LEA was offered in recognition that some interexchange service providers would not operate on a national basis and might wish to interconnect on a regional scale only.

42. Microcell filed a resource cost study in support of its proposed switching and aggregation rates.

43. Bell and TCI submitted that the interexchange service provider interconnection arrangements proposed by Microcell were not contemplated in Competition in the provision of public long distance voice telephone services and related resale and sharing issues, Telecom Decision CRTC 92-12 dated 12 June 1992 (Decision 92-12) or Decision 97-8. TCI and Bell argued that services such as NEA and LEA could be offered but only in addition to mandated equal access services.

44. TCI noted that in Unbundled rates to provide equal access, Telecom Decision CRTC 97-6 dated 10 April 1997, the Commission determined that Phase II costs plus a 25% mark-up are appropriate for establishing the rates for switching and aggregation.

45. Bell and TCI submitted that Microcell included many costing elements in its resource cost study that go beyond those permitted pursuant to the Phase II costing methodology in general, and beyond those that should be included in direct connection charges in particular.

46. Specifically, Bell and TCI were concerned that certain costs, more appropriately charged to Microcell's end-users, which benefit directly from the wireless service functionality being provided, may have been included in the proposed rates. Bell added that interconnecting carriers should not be expected to subsidize Microcell's services.

47. Bell stated that it would have expected Microcell's proposed costs and the associated rates to be lower than those of the ILECs. Bell argued that Microcell would be deploying the most modern network facilities and that its interconnection arrangements should be at least as efficient as the ILECs' interconnection arrangements at a lower cost.

48. Bell and TCI submitted that Microcell had significantly departed from the terms and conditions governing the provisioning of switching and aggregation services to interexchange service providers provided by the ILECs and that these departures have not been justified.

49. Bell and TCI stated that they would not object to the interim approval of TN 1A if the rates were set equal to the approved direct connection charge of $0.007 per minute should Microcell request such approval.

50. AT&T Canada submitted that Microcell should be directed to adopt a switching and aggregation rate which is less than or equal to the appropriate rates applicable to the ILEC territory in which it plans to operate.

51. Microcell noted that the switching and aggregation function involves all associated switching, transport and signalling functions performed by Microcell at the originating or terminating end of a call. Microcell stated that LEA service includes an additional backhaul component associated with the carriage of traffic between the point of interconnection where the interexchange service provider interconnects and Microcell's MSC in the corresponding region.

52. Microcell submitted that the Commission's incremental cost study guidelines were followed to the greatest extent possible and that only those costs that are causal to the provision of switching and aggregation services were included in the resource cost study filed in support of TN 1A.

53. Microcell submitted that the NEA offering should be considered the "default" option and that LEA is offered solely for the convenience of interexchange service providers that elect to operate only within the region served by a single Microcell switch. Microcell stated that in developing LEA, it was attempting to offer the functionality of the ILECs' direct connection option, which requires interconnection at a local switch despite the fact that no comparable local switch is contained in Microcell's network architecture. Microcell submitted that its NEA option with connection to MSCs actually provides geographic coverage analogous to the ILECs' access tandem interconnection option.

54. Microcell submitted that, while its NEA and LEA offerings differ from those contemplated with respect to the wireline telephone companies' networks in Decision 92-12, they are in conformity with Decision 97-8. Microcell submitted that its tariff is fully compliant with the requirement of Decision 97-8 to justify any departure from the terms and conditions of the ILEC equal access tariffs, both as to form and as to rates.

55. At paragraph 190 of Decision 97-8, the Commission required CLECs to file proposed tariffs for interexchange equal access, and to justify any departure from the terms and conditions contained in the ILECs' tariffs.

56. The Commission has expressed concerns in previous decisions with respect to the wireline CLECs' proposals to use the term "subject to the availability of facilities" in tariffs for interconnection facilities for interexchange service providers and WSPs. The Commission found that these CLECs were likely to provide local service over very large areas with a minimal number of local switches for some time to come and determined that a clause making interconnection to interexchange service providers and WSPs subject to the availability of suitable facilities could be used to deny them access. The Commission accordingly directed that the words "subject to availability" be deleted from these CLECs' tariffs and replaced with wording to the effect that the CLEC would provide interexchange service providers and WSPs with at least one suitably equipped point of interconnection in each exchange in which it operates.

57. The Commission notes that some CLECs are providing service over large geographical areas using only one switch. Because of their network architecture, these CLECs are required to backhaul traffic from each exchange to their switch in the same manner as would Microcell.

58. The Commission notes that if an interexchange service provider is to be provided with a point of interconnection in each ILEC exchange where a CLEC operates, it would not be appropriate to burden the interexchange service provider with the costs of facilities outside of the ILEC exchange.

59. In addition, the Commission has concerns regarding the methodology and the appropriateness of many of the cost inclusions with respect to the resource cost study filed by Microcell. The Commission is not persuaded that only causal costs were included.

60. The Commission considers that in proposing its NEA and LEA forms of interconnection Microcell has not adequately justified its proposed departure from the terms and conditions contained in the ILECs' tariffs.

61. The Commission notes that Microcell also proposed to provide WSPs access to its network "subject to the availability of suitable facilities, including the availability of a Microcell switching centre with appropriately equipped switching equipment." The Commission notes that Microcell has only four switching centres across the country and that the proposed tariff implies that not all four locations may be suitably equipped.

62. The Commission notes that at paragraph 192 of Decision 97-8, it required CLECs to file proposed tariffs providing for WSP interconnection that are equivalent to the terms and conditions contained in the ILECs' tariffs.

63. The Commission notes that in decisions with respect to wireline CLECs' tariffs, it applied the same analysis to WSP interconnection which it applied to interexchange service provider interconnection, and required CLECs to provide WSPs with at least one suitably equipped point of interconnection in each exchange in which the CLEC operates.

64. The Commission finds that Microcell's proposed tariff for access services to WSPs is not equivalent to the terms and conditions contained in the ILECs' tariffs and that Microcell has not justified this.

Other considerations

65. Microcell's proposed tariff for access services for interconnection with interexchange service providers does not include charges associated with the provision of interconnecting circuits with trunk-side access for the provinces of Newfoundland and Nova Scotia although Microcell appears to plan to offer service there.

66. Microcell's proposed tariff also does not reflect the current contribution rates for Alberta, British Columbia and Nova Scotia.

67. The Commission notes that pursuant to Decision 97-8, CLECs are required to file serving area maps, and on this basis, a determination of whether or not the appropriate tariffs have been filed can be made. The Commission notes that Microcell did not file serving area maps.

68. Further, the Commission notes that the proposed tariff does not:

i) include provisions for collection of contribution on line-side access;

ii) correctly reflect the determinations of Telecom Order CRTC 99-302 dated 31 March 1999, with respect to contribution charges associated with overseas circuits; and

iii) include provisions for the collection of contribution on Canada - U.S. circuits.

69. Microcell has proposed one-time service charges to be applied to interexchange service providers seeking CCS7 interconnection that are not in the ILECs' tariffs and has provided no justification for these charges.

70. Microcell omitted rates and terms with respect to two tariff items related to primary interexchange carrier processing that are in the ILECs' tariffs, and provided an incomplete list of the dialing arrangements that an end-user may use to access an interexchange service provider's network.

71. The Commission considers that Article 3 of Microcell's proposed Terms of service would more appropriately be found in a customer's contract or in specific tariffs. The Commission considers that Microcell should not include this article in the Terms of service in any future filing.

72. The Commission considers that in any future tariff filing, Article 9 of Microcell's Terms of service should address to whom and under what circumstances confidential customer information would be released.

73. The Commission notes that it does not regulate the sale of tariffs for CLECs. In the event that a revised proposal is submitted, this tariff item should not be included.

74. The Commission considers that Microcell's proposal to operate as a wholesaler of local services also raises a question as to whether a CLEC should be eligible for contribution subsidies for local services that are provided to residential customers by a reseller.

75. Finally, the Commission considers that it is not clear how Microcell will be able to fulfil the obligations imposed on CLECs to satisfy all existing and future regulatory requirements designed to protect customer privacy including the following:

i) delivery of the privacy indicator when invoked by an end-customer;

ii) provision of automated universal per-call blocking of call line identification;

iii) provision of per-line call display blocking to qualified end-customers;

iv) disallowance of Call Return to a blocked number;

v) enforcement of the Commission's restrictions on automatic dialing announcing devices, and unsolicited facsimiles applicable in the ILEC territory where they operate; and

vi) provision of universal Call Trace.

Conclusion

76. In light of the foregoing, TN 1, as amended by TN 1A is denied. The Commission notes that in this order it has outlined areas of concern that Microcell should address if it chooses to re-file its application.

Secretary General

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