ARCHIVED -  Telecom Order CRTC 99-905

Telecom Order

Ottawa, 17 September 1999

Telecom Order CRTC 99-905

Télébec ltée (Télébec) and Québec-Téléphone (the Applicants) filed applications on 5 and 13 February 1998 respectively, pursuant to section 34 of the Telecommunications Act (the Act), requesting forbearance from the regulation of their dedicated interexchange private line (IXPL) services.

File Nos.: 8640-T5-02/98 and 8640-Q1-01/98

1.Télébec requested that the Commission refrain from exercising all powers and performing all duties under sections 24 (in part), 25, 29 and 31 and 27(1), 27(2), 27(3) (in part), 27(4), 27(5) and 27(6) of the Act with respect to the company's current and future High Capacity and Digital Data System (DDS) services.

2.Québec-Téléphone requested that the Commission refrain from exercising all powers and performing all duties under sections 24, 25, 27, 29 and 31 of the Act with respect to High Capacity and DDS services.

3.The Applicants submitted that in Stentor Resource Centre Inc. - Forbearance from Regulation of Interexchange Private Line Services, Telecom Decision CRTC 97-20, 18 December 1997 (Decision 97-20), the Commission had forborne, with respect to the same sections of the Act, from the regulation of the High Capacity and DDS services of the former Stentor Resource Centre Inc. (Stentor) member companies.

4.The Applicants noted that in order to expedite the treatment of their requests, they had limited their applications to the types of IXPL services that the Commission had forborne from regulating with respect to the former Stentor companies.

5.The Applicants submitted that the market for IXPL services was national and that their customers' interests were sufficiently protected because their rates for these services are based on those of the former Stentor companies.

6.Télébec argued that the market for IXPL services in its territory is competitive. Télébec submitted that the establishment and administration of prices for IXPL services are not within the company's control.

7.Québec-Téléphone submitted that the Commission should grant its application for forbearance from regulation, for the same reasons as it granted the company toll forbearance in Forbearance - Regulation of Toll Services Provided by Incumbent Telephone Companies, Telecom Decision CRTC 97-19, 18 December 1997 (Decision 97-19).

8.In Review of Regulatory Framework, Telecom Decision CRTC 94-19, 16 September 1994, (Decision 94-19), the Commission stated that the circumstances of Québec-Téléphone and Télébec warranted a less rigorous application of the six forbearance pre-conditions set out in Decision 94-19 than was appropriate for the Stentor companies.

9.Québec-Téléphone submitted that the same circumstances exist with respect to its IXPL services and that if competition in the market for IXPL services in its territory is not as strong as it is in the territories of the former Stentor companies, it will only be enhanced by forbearance.

10.Québec-Téléphone noted that in Forbearance - Services Provided by Non-Dominant Canadian Carriers, Telecom Decision CRTC 95-19, 8 September 1995, the Commission had granted its competitors forbearance for the same type of services as covered by its application.

11.On 24 September 1998, the Commission issued Télébec ltée and Québec-Téléphone - Forbearance from the Regulation of Interexchange Private Line Services, Telecom Public Notice CRTC 98-26, seeking comments on the Applicants' requests. Coincident with the issuance of the public notice, interrogatories were sent to the Applicants.

12.On 23 November 1998, AT&T Canada Long Distance Services Company [now AT&T Canada Corp.] (AT&T Canada), Vidéotron Télécom ltée (VTL), and the Canadian Business Telecommunications Alliance (CBTA) filed comments. On 14 December 1998, the Applicants filed reply comments.

13.CBTA submitted that forbearance should not be granted, in any part or all of the Applicants' territories, in respect of any or all of the services for which it was requested, until a workably competitive environment exists. The CBTA argued that if forbearance is granted to the Applicants, it should be route-specific.

14.VTL was of the view that the reasons set out in Decision 97-19 to justify forbearance from regulation for the Applicants' toll services are not applicable to the IXPL market.

15.VTL submitted that, prior to granting forbearance on a specific route, the Commission should be satisfied that one of the Applicants' competitors offer or furnish IXPL service at DS-3 bandwidth to at least one customer, using terrestrial facilities not belonging to the Applicants or to one of their affiliates.

16.VTL submitted that the information provided by the Applicants in response to the Commission's interrogatories was insufficient to justify forbearance on a route-specific basis.

17.AT&T Canada also objected to the lighter application of the criteria for forbearance proposed by Québec-Téléphone. AT&T Canada submitted that a determination made in the context of the toll services market is not applicable to the IXPL market.

18.AT&T Canada noted that in Decision 97-19, the Commission had found the toll market to be national in scope. In contrast, in Decision 97-20, the Commission determined that to the extent that IXPL forbearance was appropriate, it should be with respect to routes for which competition exists or will exist in the near future.

19.AT&T Canada noted that the applications filed by Québec-Téléphone and Télébec contemplate complete forbearance for the entirety of their territories rather than the route-specific forbearance granted to the Stentor companies in Decision 97-20.

20.AT&T Canada argued that, given the existence of competition on some IXPL routes in the Applicants' territories, and the Applicants' complete domination and the absence of competition on others, the rationale for route-specific forbearance set out in Decision 97-20 is entirely applicable to the Applicants.

21.AT&T Canada submitted that several of the Applicants' responses to the Commission's interrogatories contain debatable assertions with respect to the existence of competition with regard to IXPL services in their territories.

22.AT&T Canada submitted that the Commission should deny the Applicants' requests for complete forbearance with respect to IXPL services on the basis that the Applicants have failed to demonstrate that sufficient levels of competition exist in their territories.

23.AT&T Canada submitted that alternatively, the Commission could hold these applications in abeyance pending resolution of the proposed criterion for additional route-specific IXPL forbearance in the territories served by the former Stentor companies.

24.Télébec noted that all its High Capacity and DDS services' customers are national customers. Télébec reiterated that subscribers for High Capacity and DDS services within its operating territory are generally large businesses, which use these services on a national basis, and have a requirement to extend these services into Télébec's operating territory. Télébec submitted that it has very limited control over the terms or rates under which High Capacity and DDS services are offered, as a third party bills these services on its behalf.

25.Télébec argued that while it retains a very large presence in the High Capacity and DDS services market in its territory, it is not a significant provider of these services in the national market. Télébec submitted that the Commission should consider the company's share of the national market to determine whether it has the potential to influence that market.

26.Télébec submitted that the criterion set out in Decision 97-20 is not relevant to the IXPL market in its territory in view of (1) the small share of the national IXPL market held by the company, (2) the company's rates must be aligned with those of a national service provider, (3) the nature of its territory, and (4) the profile of its customer base.

27.Télébec argued that its request met the criteria for forbearance from regulation set by the Commission and that no risk of unjust discrimination exists, and thus that the Commission should forbear from regulating the provision of its High Capacity and DDS services.

28.Québec-Téléphone argued that while competition in the market for High Capacity and DDS services in its territory is concentrated in the areas around Rimouski and Québec City, the IXPL market is national in scope.

29.The Applicants submitted that with the dissolution of Stentor, they have no choice but to ally themselves with one of the national carriers and to align their rates with those of that carrier.

30.Québec-Téléphone submitted that its ability to launch new High Capacity and DDS products and services or to react to competitors' actions is limited by the need to obtain prior regulatory approval. Québec-Téléphone argued that it was time for the Commission to put an end to the competitive disadvantage the company has with respect to its competitors.

31.The Commission notes that like the former Stentor companies in the proceeding that led to Decision 97-20, the Applicants argued that the market IXPL services is national.

32.In Decision 97-20, the Commission disagreed with the former Stentor companies with respect to the market for IXPL services being national. In particular, the Commission determined that each route should be considered as a separate market for purposes of forbearance analysis.

33.The Commission is not persuaded by the Applicants' arguments that the market for IXPL services is national. Therefore, the Commission denies the Applicants' request for complete forbearance from regulation.

34.In Telecom Order CRTC 99-434, dated 12 May 1999 (Order 99-434), the Commission essentially adopted the criterion it had proposed in Decision 97-20 for considering future IXPL forbearance applications from the former Stentor companies.

35.The criterion adopted in Order 99-434 is worded as follows:

"The Companies' domestic High Capacity/DDS services on a particular route will be granted forbearance upon the Commission being satisfied that one or more competitors of a Company are offering or providing, on that route, the equivalent of DS-3 bandwidth (or greater) on a private line basis to at least one customer, using terrestrial facilities from other than the Company in question or an affiliate of that Company."

36.The Commission considers that it would be appropriate to apply the criterion established in Order 99-434 to consider forbearance for the Applicants' High Capacity and DDS services on specific routes.

37.In Order 99-434, the Commission also established an expedited process for considering further forbearance for the High Capacity and DDS services offered by the former Stentor companies. It directed competitors of these companies, including broadcast distribution undertakings (BDUs), to file with the Commission, serving copies on the relevant company, a report identifying their routes that meet the Commission's criterion, on a semi-annual basis. Based on this evidence, and without further process, the Commission expected to quickly issue determinations granting forbearance on the routes in question.

38.The Commission considers that it would be appropriate to apply the process established in Order 99-434 to consider forbearance for High Capacity and DDS services on specific routes in the Applicants' territories.

39.The Commission directs all competitors of the Applicants, including BDUs and BDU affiliates, that provide telecommunications services, to file with the Commission, within 90 days of this Order, serving copies on the relevant companies, a report identifying all IXPL routes for which they provide or offer IXPL service that meet the criterion established in Order 99-434.

40.The Commission expects to issue quickly an order granting forbearance to the appropriate companies for the routes in question, based on the criterion having been met. The scope of the forbearance granted would be consistent with that granted to the former Stentor member companies in Decision 97-20.

41.The first semi-annual report is to be submitted on 1 April 2000. In subsequent years, this information is to be submitted semi-annually, on 1 April and 1 October.

42.The Applicants are not precluded from submitting applications for forbearance with respect to High Capacity/DDS services on routes not identified by competitors. If filed, such applications will be disposed of following an appropriate process.

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