ARCHIVED -  Telecom Order CRTC 99-435

Telecom Order

Ottawa, 12 May 1999

Telecom Order CRTC 99-435

On 25 March 1999, pursuant to Telecom Order CRTC 99-148, the Ontario Telephone Association (OTA) requested final approval of its revised 1996 OTA Carrier Access Tariff (CAT).

File No.: 8640-A4-01/98

I SUMMARY

1.The Commission approves AT&T Canada Corp.'s (formerly AT&T Canada Long Distance Services Company) application and will refrain from the exercise of its powers and the performance of its duties under subsections 27(2) and (4) of the Telecommunications Act (the Act) with respect to Interexchange Private Line (IXPL) services provided by Canadian carriers that are subject to Forbearance - Services Provided by Non-Dominant Canadian Carriers, Telecom Decision CRTC 95-19, 8 September 1995 (Decision 95-19) (the competing carriers).

2.The Commission denies Call-Net Enterprises Inc.'s (Call-Net) request that the Commission review and vary Stentor Resource Centre Inc. - Forbearance from Regulation of Interexchange Private Line Services, Telecom Decision CRTC 97-20, 18 December 1997 (Decision 97-20) with regard to forbearance from subsections 27(2) and (4) of the Act for forborne IXPL routes served by the companies formerly known as the Stentor member companies (BC TEL, Bell Canada, Island Telecom Inc., Maritime Tel & Tel Limited, MTS Communications Inc., NBTel Inc., NewTel Communications Inc., and TELUS Communications Inc.) (the Companies).

3.The Commission also denies Stentor Resource Centre Inc.'s (Stentor) request that Canada-wide IXPL forbearance determinations should apply to the Companies.

II THE APPLICATION

4.On 13 April 1998, AT&T Canada Corp. filed a Part VII application requesting that the Commission extend the scope of forbearance for IXPL services offered by Alternate Providers of Long Distance Services (APLDS) to include subsections 27(2) and (4) of the Act.

5.AT&T Canada Corp. noted that in Decision 95-19, the Commission retained its powers under subsections 27(2) and (4) of the Act with regard to issues related to access to networks of competing carriers and the resale and sharing of their services. AT&T Canada Corp. further noted that in Decision 97-20, the Commission granted in part Stentor's application for forbearance of IXPL services provided by the Stentor companies, including forbearance from the application of subsections 27(2) and (4) of the Act.

6.AT&T Canada Corp. submitted that as a result of Decision 97-20, the Companies had been accorded a broader scope of forbearance with respect to IXPL services than that granted to the APLDS in Decision 95-19. AT&T Canada Corp. submitted that in light of the Commission's determination in Decision 97-20 in the IXPL services market, it is no longer necessary to ensure that APLDS do not unjustly discriminate against other service providers or subscribers, or confer any undue preference with respect to access to networks or the resale and sharing of their services.

7.Consistent with the process established in the Commission's staff letter of 29 May 1998, Stentor, Call-Net, Westel Communications Ltd. (Westel) and London Telecom Network (London Telecom) filed comments. AT&T Canada Corp., Call-Net, Westel and Stentor filed reply comments.

8.Call-Net opposed AT&T Canada Corp.'s application. Call-Net proposed that rather than refrain from the application of its powers under subsections 27(2) and (4) of the Act with respect to competing carriers, the Commission should reinstate them for the Companies.

9.On 22 May 1998, AT&T Canada Corp. submitted that Call-Net's proposal is consistent with the underlying objective of its application and that it would remedy the present inconsistency with respect to the treatment of IXPLs. AT&T Canada Corp. also stated that should the Commission grant Call-Net's proposal, it wished to withdraw is application of 13 April 1998. However, AT&T Canada Corp. also requested that its original claim for relief should be granted, if the Commission were to deny Call-Net's application.

III CALL-NET'S REVIEW AND VARY APPLICATION

10.While not characterising its comments as a request that the Commission review and vary Decision 97-20, Call-Net did address the review and variance criteria generally applied by the Commission. Call-Net submitted that there was substantial doubt as to the correctness of the Commission's determination in Decision 97-20 to completely forbear from subsections 27(2) and (4) of the Act in respect of the Companies' IXPL services.

11.Call-Net submitted that this determination in Decision 97-20 is inconsistent with the policy rationale relied upon by the Commission in previous forbearance determinations including Regulation of Wireless Services, Telecom Decision CRTC 94-15, 12 August 1994, Application by Stentor for Forbearance from Regulation of Packet Data Services, Telecom Order CRTC 96-130, 19 February 1996 and Forbearance - Regulation of Toll Services Provided by Incumbent Telephone Companies, Telecom Decision CRTC 97-19, 18 December 1997. Call-Net noted that the reasons given by the Commission for retaining its powers under subsections 27(2) and (4) of the Act in those determinations were to address issues with respect to access to networks and the resale and sharing of services. Call-Net submitted that these objectives are now even more significant with the advent of increased competition in the industry and the growing reliance by service providers on the networks of a relatively few facilities-based carriers, particularly the IXPL services of the Companies and those of the APLDS.

12.London Telecom stated that since it neither owns nor operates its transmission facilities, it is completely reliant on the IXPL services of the Stentor companies and other facilities-based APLDS for its existence. London Telecom submitted that without the guarantees of non-discriminatory access and resale and sharing offered by subsection 27(2) of the Act, London Telecom's ability to operate in the long term is at the whim of these carriers.

13.Stentor submitted that the following circumstances distinguish the scope of forbearance granted by the Commission in Decision 97-20 from that granted in earlier forbearance determinations:

·of all the telecommunications markets, the IXPL market had been open to competition for the longest time, and as a result, competition was well advanced when forbearance was granted in Decision 97-20;

·since forbearance was granted to APLDS, the Commission has demonstrated an increased reliance upon market forces, consistent with government policy; and

·there are two unique factors present in the Commission's forbearance determination in Decision 97-20 that make it particularly appropriate for it to forbear from all of its section 27 powers, namely the narrow definition of the relevant markets and the evidence of the current competitive conditions within those markets.

14.AT&T Canada Corp. and Westel disagreed with Stentor's argument that the circumstances of Decision 97-20 were different from previous forbearance decisions. AT&T Canada Corp. submitted that there was a discrepancy in the policy rationale applied with respect to subsections 27(2) and (4) of the Act in Decisions 95-19 and 97-20 and that such discrepancy raises substantial doubt with respect to the Commission's determination in Decision 97-20 concerning the scope of IXPL forbearance granted to the Companies.

15.London Telecom and Westel supported Call-Net's position that the Commission's powers under subsections 27(2) and (4) of the Act should be reinstated with respect to the Companies' routes forborne from in Decision 97-20.

16.The Commission considers that Call-Net's comments constitute a request that the Commission review and vary Decision 97-20 and notes that Call-Net addressed the review and vary criteria generally applied by the Commission.

17.The Commission is not persuaded that there is substantial doubt with respect to its determination in Decision 97-20 to forbear from its powers under subsections 27(2) and 27(4) of the Act. The Commission notes that in the previous forbearance determinations identified by Call-Net and other parties it retained its powers under subsections 27(2) and (4) of the Act because of concerns with respect to network access and resale and sharing.

18.By contrast, the Commission considers that in the case of IXPL services, the route-specific definition of the relevant market for forbearance purposes adequately addresses concerns with respect to network access and resale and sharing. With respect to London Telecom's submission concerning resale, the Commission is satisfied that there will be sufficient competition on the forborne routes to address London Telecom's concern. In light of this, the Commission denies Call-Net's request that the Commission review and vary Decision 97-20.

IV STENTOR'S PROPOSAL

19.Stentor submitted that the Commission should grant AT&T Canada Corp.'s request that the Commission forbear from its powers under subsections 27(2) and 27(4) of the Act with respect to IXPL services offered by the competing carriers but that this determination need not be made on a route-specific basis. Stentor submitted that determinations on a national market basis are appropriate for all participants in the market, including the Companies.

20.AT&T Canada Corp. submitted that Stentor's submission with respect to the market definition was out of process and should be denied. AT&T Canada Corp. argued that if Stentor wished to alter the extent of the route-specific forbearance determination made by the Commission in Decision 97-20, it should file a separate application requesting that the Commission review and vary Decision 97-20. In addition, AT&T Canada Corp. submitted that in filing its submission, Stentor failed to comply with the Commission staff's letter of 29 May 1998, and that the Commission should accordingly disregard Stentor's comments.

21.London Telecom submitted that Stentor's request would require a complete review and variance of Decision 97-20.

22.Stentor submitted that it did not consider its comments to be a request to review and vary Decision 97-20, but merely a response to what it characterised as "AT&T Canada Corp.'s vague request for relief."

23.The Commission is not persuaded by AT&T Canada Corp.'s argument that Stentor's comments should be disregarded on procedural grounds. However, the Commission is of the view that Stentor's proposal with respect to market definition effectively is, in fact, a request that the Commission vary the route-specific market definition for IXPL services established in Decision 97-20. Accordingly, the Commission has examined Stentor's request in light of the criteria that it generally applies with respect to review and vary applications.

24.The Commission is not persuaded that there is substantial doubt as to the correctness of its determination in Decision 97-20 that each IXPL route constitutes a separate market. The Commission notes that Stentor's primary argument to support its submission that forbearance of the Companies' IXPL services should be on a national basis is one of regulatory symmetry. The Commission further notes that to the extent Stentor offered substantive arguments to support its request, it relied on arguments it had made in the proceeding leading to Decision 97-20, which were rejected by the Commission. As well, Stentor asserted in this proceeding that a national market definition is appropriate because of "the degree of similarity in market conditions which, in Stentor's opinion, currently exists across all routes".

25.The Commission is not persuaded by Stentor's submission with respect to regulatory symmetry. In the Commission's view, asymmetrical regulation as between provision of IXPL services by the competing carriers and those of the Companies is not necessarily inappropriate given that the competing carriers do not have market power. Moreover, the Commission notes that Stentor failed to offer any evidence to support its submission that market conditions are essentially similar on all routes. In the circumstances, the Commission rejects Stentor's proposal that Canada-wide IXPL determinations should apply to the Companies.

V AT&T CANADA CORP.'S INITIAL REQUEST FOR RELIEF

26.In Decision 95-19, the Commission made its determination to forbear from the bulk of the services provided by competing carriers without considering the specific characteristics of each service offered by those carriers. By contrast, in Decision 97-20, the Commission's examination addressed the specific characteristics of IXPL services.

27.Given the Commission's determination in Decision 97-20 that each IXPL route is a separate market, the Commission is of the view that it would be appropriate to forbear from exercising its powers under subsections 27(2) and (4) of the Act with respect to IXPL services provided by competing carriers on routes in respect of which the Companies have been forborne.

28.Based on the record of this proceeding, the Commission is also of the view that it would be appropriate to refrain from exercising its powers under subsections 27(2) and (4) of the Act with respect to IXPL services provided by competing carriers on routes in respect of which the Companies have not been forborne. In the Commission's view, the fact that customers of competing carriers' IXPL services have available to them the Companies' tariffed IXPL services adequately addresses concerns about network access and resale and sharing.

29.Based on the above, pursuant to subsection 34(1) of the Act, the Commission finds as a fact that to refrain from exercising powers and performing duties under subsections 27(2) and (4) of the Act with respect to the provision by competing carriers of IXPL services would be consistent with the Canadian telecommunications policy objectives. Pursuant to subsection 34(2) of the Act, the Commission finds that the provision of the services in question by competing carriers is or will be subject to competition sufficient to protect the interests of users, so that it is appropriate to so refrain. Further, with reference to subsection 34(3) of the Act, the Commission finds that to so refrain would not be likely to impair unduly the establishment or continuance of competitive markets for IXPL services. Pursuant to section 34(4), sections 27(2) and 27(4) of the Act do not apply to the provision of IXPL services by competing carriers.

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