ARCHIVED -  Telecom Order CRTC 99-392

Telecom Order

Ottawa, 30 April 1999

Telecom Order CRTC 99-392

Télébec ltée (Télébec) and Québec-Téléphone filed applications on 5 February 1998 and 14 April 1998 respectively, pursuant to section 34 of the Telecommunications Act (the Act), requesting forbearance from the regulation of their Datapac, Hyperpac, future X.25 packet data and frame relay services.

File Nos.: 8640-T5-02/98 and 8640-Q1-02/98

1.Télébec and Québec-Téléphone (the Applicants) requested that the Commission refrain from exercising all powers and performing all duties under sections 24 (in part), 25, 29, and 31 and subsections 27(1), 27(5), and 27(6) of the Act with respect to Datapac, Hyperpac, future X.25 packet data and frame relay services.

2.The Applicants noted that, in Telecom Order CRTC 96-130, 19 February 1996 (Order 96-130), the Commission had forborne from regulating, with respect to the same sections of the Act, the provision of these services by the federally regulated Stentor Resource Centre Inc. (Stentor) companies. The Applicants also noted that the Commission had rendered similar decisions regarding the packet data services offered by Northwestel Inc. (Northwestel) and O.N. Tel, in Telecom Order CRTC 97-572, 29 April 1997 (Order 97-572) and Telecom Order CRTC 97-688, 26 May 1997 (Order 97-688), respectively.

3.On 24 September 1998, the Commission issued Télébec ltée and Québec-Téléphone - Forbearance from the Regulation of Packet Data Services, Telecom Public Notice CRTC 98-27, seeking comments on the Applicants' requests.

4.The Commission, in Order 96-130, forbore from regulating the provision of Datapac, Hyperstream, Pospac, future X.25 packet data and frame relay services by the Stentor companies pursuant to section 34 of the Act, finding that the provision of these services is or will be subject to sufficient competition to protect the interests of users.

5.The Applicants requested that the same treatment be conferred upon them, arguing that their customers are sufficiently protected because the rates they charge for these services are set jointly by the Stentor companies, are the rates employed by these companies, and are thus determined in highly competitive markets.

6.The Applicants submitted that they have limited control over the commercial arrangements for the provision of these services to their customers. The Applicants noted that subscribers for these services within their operating territories are generally large businesses, which utilize these services on a regional or national basis, and have a requirement to extend these services into their respective operating territories.

7.The Applicants further noted that no cross-subsidy between competitive services and the Utility Segment was possible in view of the establishment of a split rate base regime in their territories as of 1 January 1998.

8.In a letter dated 26 October 1998, Vidéotron Télécom ltée (VTL) noted that to the extent there was any competition, it was not sufficiently developed in the territories of the Applicants to justify forbearance pursuant to subsection 34(2) of the Act.

9.VTL also argued that the Commission is not in a position to forbear unless, consistent with subsection 34(1) of the Act, it finds as a question of fact that to refrain would be consistent with the Canadian telecommunications policy objectives.

10.VTL submitted that competition in the former Stentor companies' territories is evolving rapidly. VTL noted the dissolution of Stentor and the consequent realignment in the market of the former Stentor companies. VTL submitted that it would not be possible for the Commission to determine whether Télébec and Québec-Téléphone would use the former Stentor national tariffs, the tariffs of BCT TELUS or those of the consortium led by Bell Canada.

11.VTL submitted that it would be premature for the Commission to approve the Applicants' requests given the uncertainty with respect to the use of the former Stentor national tariffs and the fact that their applications were based on the use of these tariffs.

12.VTL argued that the Commission should deny these applications or, at least, direct the Applicants to submit new applications demonstrating that there is sufficient competition in their respective territories to justify forbearance.

13.VTL submitted that the Commission should also carefully re-examine the situation with respect to packet data services in the territories of Northwestel and O.N. Tel, and if necessary, review its decisions to grant forbearance to those companies.

14.The Applicants submitted that, contrary to VTL's submission, the dissolution of Stentor is likely to enhance, rather than reduce, the level of competition. In view of this, the Applicants submitted that rates would continue to be developed in highly competitive circumstances and would thus protect the interests of their customers.

15.Télébec submitted that although it is impossible to predict what the company's future rates will be, the company will nevertheless generally be compelled to negotiate with a national service provider and to adopt the rates set by that service provider.

16.The Applicants submitted that their applications were not premature and should be approved.

17.In Orders 97-572 and 97-688, the Commission determined that forbearance was appropriate pursuant to subsection 34(1) of the Act as the rates prevailing in Northwestel's and O.N. Tel's territories were set by the Stentor companies, based on the competitive markets that prevailed in the territories of those companies.

18.The Commission agrees with VTL that the dissolution of Stentor raises questions about which rates Télébec and Québec-Téléphone might apply in the future.

19.Regardless of whether the former Stentor national tariffs continue to be applied, the Commission considers that the Applicants will not be able to materially influence the rates for these services.

20.The Commission thus considers that forbearance would not be premature as argued by VTL. Instead, the Commission considers that it would be consistent with the Canadian telecommunications policy objectives of the Act for the Commission to forbear, pursuant to subsection 34(1) of the Act, from regulating the Applicants' provision these services.

21.In Orders 97-572 and 97-688, the Commission determined that, unlike the case of the Stentor companies, it was not possible to forbear with respect to Northwestel and O.N. Tel pursuant to subsection 34(2) of the Act because there was not, nor was there likely to be, sufficient competition in the provision of these services in Northwestel or O.N. Tel's territory to protect the interests of users.

22.The Commission notes that, unlike the case of Northwestel and of O.N. Tel, there is some evidence of competition in the territories of the Applicants. However, the Commission agrees with VTL, that based on the record of this proceeding, the Commission is not in a position to make a finding, pursuant to subsection 34(2) of the Act, that there is sufficient competition in the territories of the Applicants to protect the interests of users.

23.The Commission notes that VTL provided no evidence that the interests of Northwestel's and O.N. Tel's subscribers were being harmed by the Commission's decision to forbear from the regulation of X.25 packet data and frame relay services for those companies. Moreover, VTL did not address the criteria generally used by the Commission to assess review and vary applications. In the circumstances, the Commission is not persuaded that it should review Orders 97-572 and 97-688.

24.In Order 96-130, the Commission partially forbore from section 24 of the Act, retaining it only for existing conditions governing treatment of customer confidential information and by-pass restrictions (and required these conditions to be incorporated into contracts and other arrangements with customers on a going-forward basis) and for the ability to impose conditions in the future.

25.On a going-forward basis, commencing immediately, all such conditions are to be included, where appropriate, in all contracts or other arrangements with customers for the provision of these services.

26.In Order 96-130, the Commission also determined that upon offering any future X.25 packet data and frame relay services, a block diagram must be filed with the Commission by the offering company showing all types of plant resources to be employed and indicating whether such resources are discrete or shared, together with a description of the general types of applications which may be handled by the service in order to demonstrate that the service meets the conditions of forbearance.

27.The Commission notes that, as is the case for the former Stentor companies, it will continue to exercise powers and perform duties under sections 27(2), 27(3) and 27(4) in relation to unjust discrimination and undue or unreasonable preference with regard to issues related to access to the network and the resale and sharing of the services forborne from in this Order.

28.In light of the foregoing, the Commission:

(a) declares that pursuant to subsection 34(4), effective the date of this Order, sections 24 (in part), 25, 29 and 31 as well as subsections 27(1), (5) and (6) of the Act do not apply to Télébec's and Québec-Téléphone's Datapac, Hyperpac and future X.25 packet data and frame relay services, to the extent that they are inconsistent with the Commission's determinations herein; and

(b) orders Télébec and Québec-Téléphone to issue tariff pages, within 15 days of the date of this Order, withdrawing the tariffs for Datapac, Hyperpac and X.25 packet data and frame relay services.

Secretary General

This document is available in alternative format upon request and may also be viewed at the following Internet site: www.crtc.gc.ca