ARCHIVED -  Telecom Order CRTC 99-125

Telecom Order

Ottawa, 11 February 1999

Telecom Order CRTC 99-125

By letter dated 30 October 1998, the law firm of Tacit and Traynor filed an application for exemption from contribution on behalf of Westel Telecommunications Ltd. (Westel) in respect of circuits on four cross-border facilities. Westel provided an affidavit dated 9 October 1998, engineering drawings, and a technical audit dated 18 September 1998 in support of the application.

File No.: 8626-W1-06/98

1.Westel applied for an exemption from contribution in respect of the circuits on three cross-border facilities (SPC 1281, SPC 1282 and FMS6933245), from the date of installation to the date of disconnection. In the case of the fifth facility (should read fourth facility) (SPC 1280, Westel facility number C6129-01) which is still in service, Westel sought an exemption from contribution from the date of installation of the facilities. Westel recognized that there has been a substantial delay in bringing this application relative to the date on which the circuits were installed. However, Westel requested that due to the special circumstances described below, approval of the contribution exemptions be granted effective the date of installation of the circuits in question.

2.Westel stated that on 16 April 1997, Westel started leasing the above-noted cross-border circuits from Sprint Canada Inc. (Sprint Canada). Westel stated that approximately one month later, the circuits on facilities SPC 1281 and SPC 1282 were removed. Westel stated that it was intended that these facilities would be used by the company as cross-border backbone connections to the Internet and as data circuits dedicated to the use of single customers. Westel stated that although they were provisioned, the circuits on SPC 1281 and SPC 1282 were not engineered or used to provide telecommunications services to the public.

3.Westel stated that the DS-3 facility FMS6933245 was utilized until 17 April 1998 as a cross-border connection to the Internet for the purpose of transiting Internet data. Westel stated that facility SPC 1280 which is still in service is provisioned as Frame Relay in order to carry data traffic dedicated to the use of individual end-customers. Westel stated that none of the circuits on facility FMS6933245 or SPC 1280 (C6129-01) carries or has ever carried voice traffic. Westel noted that facility SPC 1280 (C6129-01) is the only one out of the four that is now in service.

4.Westel stated that at the time that the four facilities were installed, Westel believed that Sprint Canada would be filing an application for contribution exemption in respect of the corresponding cross-border circuits. Westel stated that, in its capacity as Sprint Canada's customer, it provided an affidavit to Sprint Canada on a form provided by Sprint Canada to Westel for that purpose, indicating that the cross-border circuits were being used strictly for the carriage of data services. Westel stated that the sworn affidavit was then returned to Sprint Canada. Westel stated that unfortunately, the Westel employee handling the matter also incorrectly assumed that an affidavit only would suffice, since the circuits were only carrying Internet and Frame Relay traffic at that time. Westel stated that the issue was complicated further by the fact that the Westel employee who had been handling the matter passed away quite suddenly. Westel stated that what transpired between the two companies around the time of the installation of the two circuits with respect to the preparation of a contribution exemption application is not clear to Westel. Westel stated that at the same time, Sprint Canada did not pursue the matter since it believed that Westel would be filing the required application for an exemption from the payment of contribution in respect of the circuits on the five (should read four) facilities. Westel stated that, given these circumstances, the issue did not come to the attention of anyone at Westel until recently.

5.Westel stated that during the last few months in the course of dealing between the two companies, it became apparent that neither party had filed the application for contribution exemption. Westel subsequently filed, at Sprint Canada's request, an application for contribution exemption in respect of the circuits on the four facilities on 1 April 1998. Westel then withdrew the application on 14 April 1998 when a Westel employee realized that the circuits in question, with the exception of circuits on facility number SPC 1280 (C6129-01), were scheduled to be taken out of service on 17 April 1998, and that no contribution charges had been assessed with respect to the circuits on any of the four facilities at any time while they were leased to Westel. Westel stated that as a result, the Westel employee mistakenly believed that withdrawing the application was the appropriate course of action.

6.Westel stated that, subsequently, it came to realize that it should have proceeded with the original application. However, additional delays occurred as a result of Westel staff who were responsible for the contribution exemption application being also involved with the recently completed sale and reorganization of Westel. Westel stated that that is the reason the current application is being filed at the present time. Westel stated that since four [sic] of the facilities in question have been disconnected, it would be unable to provide a technical audit with respect to these circuits. Westel stated that in the case of the circuits on facility number SPC 1280 (C6129-01), a technical audit was provided with this application. In addition, Westel stated that the attached affidavit outlines the use of the circuits on all four facilities.

7.Westel apologized to the Commission and to BC TEL for any inconvenience caused by the delays associated with the resolution of this matter and also wished to assure the Commission that it is taking steps to prevent such delays in the future.

8.Westel submitted that certain information contained in Appendix B of Exhibit C to the affidavit of a Westel employee is confidential, since it constitutes commercial information, namely, the identity of individual Westel customers and the level of Frame Relay Service which they obtained from Westel. Westel stated that an abridged version of this was provided for the public record.

9.By letter dated 9 November 1998, BC TEL submitted its comments. BC TEL noted that Westel's application requests an exemption for the following four circuits: (1) a cross-border circuit, identified as SPC 1280, from the date of its installation (16 April 1997) to the present on the basis that the circuit provides frame relay data services which are dedicated to the use of individual end-users; (2) a cross-border DS-3 facility, identified as FMS6933245, from 16 April 1997 to 17 April 1998 on the basis that the facility was used to provide connection to the Internet for the purpose of transiting Internet data; and (3) two cross-border circuits, identified as SPC 1281 and SPC 1282, which Westel claims, at page 1 of its submission, were removed within one month of being provisioned and were not engineered or connected.

10.With respect to circuits SPC 1281 and SPC 1282, BC TEL stated that it is unable to offer any information to either confirm or to refute Westel's claim that the circuits were not used. BC TEL stated that if, as Westel claims, the circuits were intended to be used for Internet or data services, such circuits would have been eligible for an exemption from contribution with the filing of an appropriate application.

11.BC TEL noted that there is a discrepancy in Westel's application with regard to the amount of time that these circuits were provisioned, regardless of whether they were used or not. BC TEL noted Westel's indication at page one of its current application that circuits SPC 1281 and SPC 1282 were removed approximately 16 May 1997 (one month after their installation date of 16 April 1997). However, BC TEL noted Westel's indication at page two, that its 1 April 1998 exemption application was withdrawn on 14 April 1998 because the circuits (with the exception of SPC 1280) were scheduled to be taken out on 17 April 1998. BC TEL stated that this suggests that circuits SPC 1281 and 1282 remained provisioned for approximately one year. BC TEL submitted that Westel should provide further clarification with respect to the period of time these two circuits were in service.

12.BC TEL also noted that Westel's application (at page 2) refers to an affidavit which it provided to its facilities supplier at the time that the circuits in question were installed (16 April 1997). BC TEL stated that it is assumed that this affidavit affirmed that the circuits were being used strictly for the carriage of data services. In light of the absence of evidentiary requirements with respect to these circuits for the exemption period requested, BC TEL also submitted that Westel (or its supplier) should provide a copy of this affidavit to the Commission and BC TEL since it was executed around the time that the circuits were placed into service. BC TEL stated that as such, it might constitute sufficient evidence to satisfy Westel's exemption request, and it may also assist the Commission in determining an appropriate effective date for a contribution exemption.

13.With respect to circuit FMS6933245, BC TEL stated that if, as Westel claims, it was intended to be used for Internet services, the circuit would have been eligible for an exemption from contribution with the filing of an appropriate application. However, as with the above two circuits, BC TEL stated that it is unable to offer any information to either verify the installation and disconnection date of FMS6933245 or to confirm or refute that FMS6933245 was used to provide connection to the Internet for the purpose of providing Internet services. BC TEL stated that the submission of the affidavit executed around the time of the circuit installation might be helpful to the Commission in disposing of the exemption request.

14.With respect to circuit SPC 1280, BC TEL noted that in Telecom Order CRTC 98-740 dated 27 July 1998, the Commission clarified that contribution charges do not apply to international circuits (including Canada-U.S. circuits) used to carry data services. BC TEL stated that it has reviewed the technical audit attached to Westel's application and is satisfied that circuit SPC 1280 is used to provide international data services.

15.However, BC TEL noted that the auditor has not provided a sworn affidavit affirming the accuracy of Westel's application with respect to the circuit in question and confirming that the audit statements accurately reflect the situation at the time of the audit. BC TEL noted that the Commission has defined that such affidavits should accompany technical audits.

16.Accordingly, subject to the provision of the required affidavit, BC TEL stated that it agreed that circuit SPC 1280 is eligible for an exemption from contribution.

17.With respect to the effective date of the contribution exemptions, BC TEL stated that Effective Date of Contribution Exemptions, Telecom Public Notice CRTC 95-26 dated 12 June 1995 (PN 95-26) did not define what constitutes special circumstances, but indicated that the Commission would determine on a case-by-case basis whether applications warranted effective dates which varied from those set out in PN 95-26. Accordingly, BC TEL stated that it will leave the issue of Westel's special circumstances to the Commission's discretion.

18.With respect to unused capacity, BC TEL stated that in part 2 (Nature of Audit) and part 6 (Consultant's Conclusions and Affidavit) of the Auditor's Report, reference is made to unused capacity with the Auditor indicating that a portion of the bandwidth is currently unused.

19.BC TEL noted that pursuant to Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993, exemptions from contribution for unused bandwidth would be contingent upon Westel providing its supplier with monthly reports providing information as to used and unused bandwidth on circuit SPC 1280.

20.By letter dated 24 November 1998, Call-Net Enterprises Inc. (Call-Net), on behalf of Sprint Canada, submitted comments in support of Westel's application.

21.Call-Net stated that while Westel understood that Sprint Canada was responsible for filing the application, Westel's exact understanding will never be known because the Westel employee who ordered the circuits and was handling the matter died in unusual and tragic circumstances. Call-Net stated that at the time of the employee's death, no other employee at Westel was apparently aware of the status of the exemption application and, as a result, the file was not pursued until several months after he passed away. Call-Net stated that Sprint Canada also took no steps to pursue the application, believing that Westel was doing so. Call-Net stated that as a result, no application was filed for a period of time.

22.Given the circumstances described above, Call-Net submitted that special circumstances exist in respect to this application and, pursuant to PN 95-26, approval of the application should be granted effective the date of installation of the circuits in question.

23.By letter dated 4 December 1998, Westel noted that neither BC TEL nor Call-Net opposes the application per se. Westel stated that in fact, Call-Net agreed that the events described in the application amount to special circumstances pursuant to PN 95-26, and therefore approval of the application should be granted effective the date of installation of the circuits in question. Westel stated that although BC TEL has posed a number of questions of clarification, it is otherwise prepared to leave the matter of the assessment of Westel's special circumstances entirely to the discretion of the Commission. Westel believed that it has adequately addressed BC TEL's residual concerns below. Accordingly, Westel requested that the Commission exercise its discretion in favour of approval of the application as of the date of installation of the circuits in question.

24.Although Westel believed that circuits SPC 1281 and SPC 1282 were removed in May 1997, this fact cannot now be confirmed with absolute certainty. However, Westel stated that based on information received from Call-Net, the supplier of the circuits, the latest that circuit SPC 1282 would have been removed is 16 May 1997, while circuit SPC 1281 would have been removed by 1 July 1997. Accordingly, Westel amended the last full paragraph at page 2 of the Application.

25.Westel stated that BC TEL requested a copy of the affidavit that was provided to Sprint Canada at the time that the circuits covered by the application were installed. In response, Westel provided a declaration given by the Westel employee on 8 May 1997. Westel stated that while the declaration was made close to the time that the circuits were installed, it appears that it was never properly sworn before a Commissioner of Oaths. Westel stated that since this employee is now deceased, it is not possible to have him provide any sworn testimony concerning this matter. Westel submitted that, under these special circumstances, the declaration of the employee constitutes sufficient evidence in support of Westel's application.

26.Westel stated that BC TEL has also requested a copy of an affidavit from the auditor that performed the technical audit with respect to the circuits on facility SPC 1280 in support of the audit. In response, Westel provided the affidavit of the auditor sworn on 23 November 1998.

27.Westel noted BC TEL's statement that "exemptions from contribution for unused bandwidth would be contingent upon Westel providing its supplier with monthly reports providing information as to used and unused bandwidth on circuit SPC 1280". In response, Westel confirmed that it will provide such reports on a going-forward basis.

28.Westel submitted that the residual concerns raised by BC TEL have been addressed in a satisfactory manner and to the best of Westel's ability. Accordingly, Westel requested that the Commission exercise its discretion in favour of approval of the application as of the date of installation of the circuits in question.

29.By letter dated 7 December 1998, BC TEL submitted that Westel's reply comments and attached affidavits appropriately address the points raised by BC TEL.

30.The Commission notes that Westel has provided additional evidence as suggested by BC TEL to support its application: (1) a clarification of the removal dates of circuits SPC 1281 and SPC 1282; (2) a declaration by an employee of Westel on 8 May 1997; (3) the affidavit of the technical auditor sworn on 23 November 1998; and (4) an undertaking to provide an unused capacity report on a going-forward basis. The Commission notes that BC TEL stated that the affidavits appropriately address the points raised by it. Based on the first and second rounds of evidence, the Commission approves the application for exemption.

31.The Commission notes that the special circumstances submitted in this case are: (1) miscommunication between Westel and its supplier as to which party would be filing an application; (2) incorrect assumptions as to evidentiary requirements; (3) the death of the Westel employee dealing with exemption applications; and (4) involvement of Westel staff in the sale and reorganization of Westel. The Commission is of the view that the special circumstances support the installation date as the effective date for all the circuits in question, such that no contribution is payable. However, the Commission considers that Westel should review its management practices and directs Westel to provide a report to the Commission within 30 days describing the corrections made to ensure that a similar situation will not occur in the future.

32.In light of the foregoing:

(i) Westel's application is approved effective the date of installation for all the circuits in question, such that no contribution is payable; and

(ii) Westel is directed to provide a report to the Commission within 30 days describing the corrections made to ensure that a similar situation will not occur in the future.

Secretary General

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