ARCHIVED -  Telecom Order CRTC 99-1016

Telecom Order CRTC 99-1016

Ottawa, 22 October 1999

Bell Canada - Forbearance from Regulation of Single Line Inside Wiring Services

File No.: 8640-B2-01/98

Summary

Bell Canada requested forbearance from the regulation of inside wiring activities associated with single line inside wiring on the customer's side of the demarcation point for residence and business subscribers with jacks. In this Order, the Commission has conditionally forborne from the regulation of inside wiring activities. The Commission will continue to use its powers to ensure that competitors have access to customer inside wiring and to ensure the confidentiality of customer information. Bell Canada is required to provide free diagnostic services to customers who do not have the ability to determine the location of inside wiring troubles.

1.On 1 October 1998, Bell Canada (Bell) filed an application, pursuant to section 34 of the Telecommunications Act (the Act), requesting forbearance from the regulation of the installation, rearrangement, repair and maintenance associated with single line inside wire and jacks (Single Line Inside Wire services) on the customer's side of the demarcation point for all residence and business customers with jacks.

2.Bell requested full and unconditional forbearance from sections 24, 25, 27, 29 and 31 of the Act in relation to the provision of the company's Single Line Inside Wire services, as identified in Tariff Item 75, including any new applications of these services, any related insurance plans and any similar services that the company may offer in the future that can be characterized as Single Line Inside Wire services.

3.Bell did not request forbearance from regulation of inside wiring and jacks for two and four party-line services, nor for "hard-wired" (without jacks) single-line services until such time as jacks are installed.

4.The Commission issued Bell Canada -Forbearance from Regulation of the Provisioning of Single Line Inside Wire, Telecom Public Notice CRTC 98-41, 18 December 1998, seeking comment on Bell's application.

5.Bell was made a party to the proceeding, and the Commission received comments or reply comments from the Public Interest Advocacy Centre (PIAC) and Bell.

Background

6.Since 1 February 1996 (pursuant to Telecom Order CRTC 95-559, 11 May 1995), Bell's single line customers with jacks have been responsible for installation, moves, repair and maintenance of inside wiring. The Commission stated in the Order that transferring responsibility for inside wiring to customers would permit competitive entry into markets for inside wire installation and repair services.

7.In Telecom Order 98-856, 27 August 1998 (Order 98-856), the Commission forbore from regulation of inside wiring services provided by Télébec ltée (Télébec), as the Commission found that the market for inside wiring in the company's territory was competitive, and that there were no barriers to entry. Télébec had indicated in its application that it might offer an insurance plan to cover repair and maintenance of inside wiring at some time in the future. In Order 98-856 the Commission found that in light of the high degree of competition, Télébec would not obtain an undue preference from offering an insurance plan for inside wiring.

8.In Order 98-856 the Commission did not forbear with respect to Télébec's diagnostic service and installation of jack-ended demarcation devices, and required that Télébec provide diagnostic and inside wiring services at no charge to customers without a jack-ended demarcation device.

9.In Order 98-856 the Commission retained its powers and duties under section 24 of the Act so as to be able to specify possible future conditions on the offering and provision of inside wiring installation, maintenance and repair services, including possible conditions of access by competitors to inside wiring owned by the telephone company. The Commission also retained its powers under section 24 to ensure that existing conditions regarding the confidentiality of customer information continue to apply.

10.The Commission retained its powers and duties under subsection 27(3) of the Act to ensure compliance with powers and duties not forborne from in Order 98-856.

Views of Parties

11.Bell submitted that there are no legal, regulatory, institutional or financial barriers to entry into the inside wire market. As part of its evidence Bell included copies of Yellow Page advertisements of numerous competitors.

12.Further, Bell submitted that since February 1996, when customers became responsible for inside wiring, there have been significant decreases in service orders for installation of inside wiring per new network access service (NAS) and in service orders per NAS reporting inside wiring troubles.

13.Bell stated that revenues and costs associated with Single Line Inside Wire services would be transferred to the Competitive segment of the split rate base if the Commission approves the application. Bell argued that this accounting treatment, and the incentives created by the price cap regime, provide adequate protection against cross-subsidization from Utility Segment services, and ensure that the company's shareholders, and not customers, assume all risks associated with Single Line Inside Wire services.

14.PIAC agreed that the market for inside wiring has become more competitive, but argued that competition in the market for Single Line Inside Wire services was encouraged by Bell's high rates for inside wire work. PIAC argued that following forbearance, Bell could engage in below cost pricing and endanger competition because, with the transfer of Single Line Inside Wire services to the Competitive segment of the split rate base, Bell's Single Line Inside Wire services would escape Commission supervision.

15.PIAC also expressed concern for network safety and system integrity, and submitted that "it is unclear who is responsible for enforcing the Canadian Electrical Code with respect to work done by non-utilities in communications wiring". PIAC requested "some direction from the Commission with respect to matters associated with safety and system integrity".

16.In response to PIAC, Bell submitted that the evidence clearly showed that there are numerous alternative providers of inside wiring services, and that, given the low entry barriers, the inside wiring market will remain competitive following a forbearance determination. Bell also argued that competition in local services will further stimulate competition in the market for inside wiring services.

17.Bell also stated that the concerns raised by PIAC regarding enforcement of the Canadian Electrical Code, safety and network integrity are not relevant to the company's application.

Conclusions

18.Based on the evidence provided by Bell, including the decline in Bell's service order activity per NAS, and the entry of numerous competitors providing Single Line Inside Wire services in Bell's territory in a relatively short period of time, the Commission is of the view that the market for inside wiring services in Bell's territory is sufficiently competitive to protect the interests of users. Further, the Commission concludes that the market is easy to enter, since there are no regulatory, institutional, technological or financial barriers to entry into the provision and maintenance of inside wiring. Customers also may install their own inside wiring, and, as the Commission noted in Order 98-856, the required parts and materials are widely available.

19.The Commission is also of the view that the proposed accounting procedures for expenses and revenues related to Bell's Single Line Inside Wire services would appropriately protect against anti-competitive cross-subsidies if Single Line Inside Wire services were provided on a forborne basis, and are consistent with Order 98-856.

20.Further, the Commission considers that below cost pricing of Single Line Inside Wire services by Bell is unlikely, since, as there are no barriers to entry, Bell could not recoup losses from below cost pricing by future price increases. Thus the Commission concludes that forbearance would not impair unduly the continuation of a competitive market for inside wiring services, so that forbearance is not precluded in the circumstances by subsection 34(3) of the Act.

21.With respect to PIAC's concerns over enforcement of the Canadian Electrical Code, the Commission notes that this is not a Commission responsibility, and that, in any event, there has been no evidence to date of problems with the safety or network integrity related to inside wiring work.

22.Accordingly, with respect to Bell's Single Line Inside Wire services, the Commission finds that it would be appropriate to forbear from exercising its powers and duties under sections 24 (in part), 25, 29 and 31, and subsections 27(1), 27(2), 27(3) (in part), 27(4), 27(5) and 27(6) of the Act.

23.The Commission finds that it would not be appropriate to refrain from exercising all its powers and duties under section 24 and subsection 27(3) of the Act.

24.The Commission will retain sufficient powers under section 24 of the Act to specify possible future conditions on the offering and provision of inside wiring installation, maintenance and repair services, including possible conditions of access by competitors to inside wiring owned by Bell. The Commission will also retain its powers under section 24 to ensure that existing conditions regarding the confidentiality of customer information continue to apply. Accordingly, on a going forward basis, the existing conditions concerning customer confidentiality are to be included, where appropriate, in all contracts or other arrangements with customers for the provision of services forborne in this decision.

25.The Commission also considers it necessary to retain subsections 27(3) of the Act to ensure compliance with powers and duties not forborne from in this Order.

26.The Commission is of the view that hard-wired customers without jacks should not be charged for diagnostics or inside wiring work performed by the company. Accordingly, the Commission will continue to exercise its powers and perform its duties under the Act with respect to Bell's diagnostic service and conversion of hard-wired installation to jacks.

27.The Commission also notes that customers without a jack-ended demarcation device may be unable to sectionalize wiring troubles. Accordingly, the Commission is of the view that such customers should not incur a charge for diagnostic services.

28.Pursuant to subsection 34(1) of the Act, the Commission finds as a question of fact, that to refrain from exercising its powers and duties under sections 25, 29 and 31, and subsections 27(1), 27(2), 27(4), 27(5) and 27(6) and under section 24 and subsection 27(3) of the Act, to the extent set out in this Order, with respect to Bell's installation, maintenance and repair of Single Line Inside Wiring would be consistent with the Canadian telecommunications policy objectives.

29.Pursuant to subsection 34(2) of the Act, the Commission finds as a question of fact that the provision of these services is subject to sufficient competition to protect the interests of users.

30.Pursuant to subsection 34(3) of the Act, the Commission finds that to refrain from exercising the powers and performing the duties to the extent set out in this Order would not likely impair the continuance of a competitive market for these services.

31.In light of the foregoing, the Commission orders that:

(a) Pursuant to subsection 34(4) of the Act, effective two weeks from the date of this Order, sections 24 (in part), 25, 29 and 31, as well as subsections 27(1), 27(2), 27(3) (in part), 27(4), 27(5) and 27(6) of the Act do not apply, to the extent that they are inconsistent with the Commission's deliberations herein, to Bell's installation, maintenance, and repair of Single Line inside wiring for customers with jacks;

(b) The tariff revisions proposed by Bell are approved effective two weeks from the date of this Order, with the following modifications:

The tariff must also provide that:

(i) there is no charge for inside wire work for customers without jacks;

(ii) customers without a jack-ended demarcation device when reporting inside wiring trouble do not incur a diagnostic charge; and

(iii) Bell will install the first jack at no cost to hard-wired customers.

(c) Bell is directed to issue, within two weeks of the date of this Order, revised tariff pages that are consistent with this Order.

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