ARCHIVED -  Telecom Order CRTC 99-515

Telecom Order

Ottawa, 8 June 1999

Telecom Order CRTC 99-515

On 10 May 1999, Northwestel Inc. filed an application for approval of tariff revisions to General Tariff Item 1701.1, "Try It - You'll Like It" Promotion, to suspend the promotion from 10 June to 31 August 1999.

File No.: Bell TN 6173

I INTRODUCTION

1.On 30 December 1997, Bell Canada (Bell) filed Tariff Notice (TN) 6173 to modify the definition of interconnecting circuit for the purpose of applying contribution charges.

2.On 8 January 1998, London Telecom Network, Inc. (London Telecom) commented on the proposal stating that, based on a preliminary review of TN 6173, the company was extremely concerned that a situation may result in which companies such as London Telecom pay double, triple or more times the contribution on some originating toll traffic. London Telecom went on to ask that the Commission establish an interrogatory process and proposed a schedule for such a process.

3.On 14 January 1998, Distributel Communications Limited (Distributel) filed comments supporting London Telecom's submission and also included a set of interrogatories. Distributel stated that TN 6173 was ambiguous and that it was especially unclear how Bell expected contribution to be levied in cases where Direct Inward System Access (DISA) paths, public switched telephone network (PSTN) connections, Centrex locals and interexchange tie-trunks are associated with a single Centrex system.

4.On 25 February 1998, the Commission directed Bell to respond to the above interrogatories and set a revised schedule for comments and reply. On 4 March 1998, Bell filed its answers to the interrogatories.

5.Distributel and London Telecom filed joint comments on 18 March 1998 and Bell filed its reply on 27 March 1998. This was followed by an additional round of comments from Distibutel and London Telecom, and reply comments from Bell.

II BELL'S PROPOSAL

6.In its application Bell stated:

"Pursuant to Telecom Orders CRTC 97-668 and 97-1353, the Commission approved a revision to the Company's General Tariff, Item 24 - Resale and Sharing, expanding the current definition of interconnecting circuit by identifying a fifth interconnecting arrangement that would attract contribution charges.

The Company notes that its Centrex services can be resold in a variety of configurations which should attract contribution charges on the basis that the Centrex services are used to aggregate traffic from the public switched telephone network to carry calls for ultimate termination over an interexchange network provided by a reseller or sharing group.

[...] the Company has identified another arrangement involving the connection of two switches provided by the same reseller or sharing group which would be equivalent to the configuration approved by the Commission in the above noted Orders. The Company has concluded that there is a requirement to assess contribution in such cases when its Centrex services are configured in the manner described in Figure 2. This is necessary to ensure that contribution is applied in a consistent manner whether the traffic is routed from the Centrex of one reseller or sharing group to another switch, provided by the same reseller or sharing group or provided by another reseller or sharing group. Accordingly, the Company requests approval of a further revision to the definition of an interconnecting circuit as described in General Tariff Item 24.1."

III PARTIES' POSITION

7.The interveners' main concerns can be summarized as follows:

i) the proposed changes would introduce unjustifiable ambiguities into Item 24.1 of Bell's General Tariff which would make it unreasonably difficult for Centrex resellers to plan their networks while, at the same time, complicating the administration of contribution, contrary to the principles established by the Commission in Telecom Decision CRTC 92-12;

ii) the proposed changes would result in originating or terminating traffic being subject to contribution more than once, even though such traffic would only be carried over the PSTN once on origination and once on termination;

iii) the proposed changes would be contrary to the principles of competitive equity and would result in contribution being imposed on Centrex configurations in a very different manner from the way it is imposed on private branch exchange (PBX) or comparable configurations; and

iv) the proposed regime would require Centrex resellers to configure their networks in an inefficient and uneconomic manner or face paying multiple contribution charges.

8.The interveners also submitted that, as an alternative to Bell's proposal, the Station Message Detail Recording (SMDR) system could be used to measure the traffic that would attract contribution charges.

9.In its reply, Bell submitted that the wording of its proposed tariff was not ambiguous but was entirely appropriate. Since there are several types of configurations that can be utilized by Centrex resellers, the wording of the tariff must account for the possibility of differing configurations which would affect how contribution would be assessed.

10.With respect to the interveners' submission that, under this proposal, a call could be subject to more than two contribution charges if it is switched through more than two Centrex systems, Bell stated that in these cases the onus should rest with the reseller to, if required, appropriately configure the Centrex system to minimize contribution charges.

11.With respect to the interveners' claims that the proposal violates the principles of competitive equity, Bell submitted that contrary to interveners' allegations, most resellers of the company's Centrex services currently enjoy a competitive advantage over other service providers since few of these Centrex resellers employ DISA paths to route calls through the Centrex system from the PSTN. In such cases, contribution is only assessed once (where the call egresses to the PSTN) rather that twice (once at the PSTN access point and once at the PSTN egress point). In Bell's view, this clearly results in competitive inequity that favours Centrex resellers over other service providers. Such a distortion is not appropriate and should be corrected in order to restore competitive equity to the contribution regime.

12.Bell acknowledged that this alternative might not, in some cases, be attractive to interveners. However, Bell noted that there are other alternative configurations that would result in the assessment of less contribution. These could include:

a) the use of DISA paths instead of Centrex locals for processing all calls from the PSTN, thereby eliminating the need to pay contribution on tie-trunk connections or to reconfigure existing connections; or

b) reconfiguring a Centrex system such that some tie-trunk connections would be eligible for a contribution exemption on the basis that they are provisioned as separate trunk groups to carry only traffic transiting through a Centrex switch. In this case, only those tie-trunk connections used to carry traffic accessing or egressing the PSTN at that switch would attract contribution charges.

13.In light of this, Bell submitted that the approval of its proposed tariff would not force London Telecom et al. to reconfigure networks in an inefficient or uneconomic manner. Rather, the interveners would continue to have relatively efficient alternatives available to them, such as those noted above.

14.With respect to the interveners' suggestion that SMDR could be used as an alternative, Bell submitted that SMDR is not reliable enough to be used as an accounting system and in any case would be too expensive to use to measure traffic on all Centrex lines.

IV COMMISSION DETERMINATION

15.The Commission is of the view that, while the tariff is complex, the proposed revisions are not ambiguous. The existing tariff defines five types of interconnecting circuits that attract contribution payment. The proposed change does not introduce any new principles but simply increases the number of incidences in which the rules apply.

16.The Commission notes that the possibility of charging contribution on the same traffic more than twice is not new to the current proposal. A reseller choosing a particular architecture for its network, can determine based on the tariff, in which cross-sections of that network contribution will be assessed. If these cross-sections contain a mix of traffic including traffic on which contribution is not payable, the reseller can segregate this traffic onto separate circuits and apply for contribution exemption for those circuits. Resellers are currently using this approach so that contribution is not assessed on exempt traffic. Thus, the control over paying the appropriate contribution is with the reseller.

17.The Commission notes that reconfiguring a network into trunk groups that exclusively carry traffic which either attracts contribution or is contribution exempt, will make that network less efficient. However, under the circumstances, the Commission considers that this is the most economical solution to insuring that the proper contribution payments are assessed. The Commission further notes that resellers have the option of using DISAs for the PSTN access and can thus avoid the need to reconfigure their networks.

18.The Commission is of the view that, contrary to interveners' submissions, this proposal will align the contribution imposed on Centrex resellers with the contribution imposed on PBX or comparable configurations.

19.With respect to the interveners' submission that SMDR be used to measure the traffic which would attract contribution, the Commission considers that SMDR is not a suitable means to provide a measure of contribution-eligible traffic.

20.Having regard to the considerations set out above, the Commission approves TN 6173. The Commission considers that resellers will need some time to adjust their operations to this change. The Commission therefore sets the effective date of the tariff revision to be 8 October 1999.

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