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Order CRTC 2000-197
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Ottawa, 15 March 2000
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CRTC rejects PIAC appeal to
overturn directory assistance ruling
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Reference: 8662-P8-03/99
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By majority decision, the CRTC confirms its July 1999 decision that Bell Canada customers can be charged for directory assistance (DA) queries that may not result in a number being provided.
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The charges will move DA rates closer to costs, which supports its policy to encourage competition. The Public Interest Advocacy Centre (PIAC) applied to review and vary the original ruling, arguing that customers shouldn't have to pay for any searches that don't result in a number being furnished by the telephone company.
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Charging customers for these types of DA requests:
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will have a positive effect on the efficiency of DA service
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is consistent with existing policy to move rates closer to costs and will facilitate competition
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will reduce the subsidy paid by non-users of directory assistance
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will continue to encourage customers to supply accurate information and retain search results for future reference.
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Unsuccessful DA requests caused in error by the company should be dealt with as a quality of service issue. The Commission recently issued Decision 2000-24 to ensure that DA accuracy doesn't fall below an acceptable standard. A proceeding to put a new DA quality indicator in place is currently in progress.
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1.
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On 29 July 1999, the Commission issued Telecom Order CRTC 99-741. The order approved, among other things, the removal from Bell Canada's tariff of the exemption from directory assistance (DA) charges for listings that are not found.
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2.
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By letter dated 31 August 1999, the Public Interest Advocacy Centre (PIAC), on behalf of Action Réseau Consommateur, the Consumers' Association of Canada and the National Anti-Poverty Organization requested that the Commission review its majority decision to permit Bell to charge for unsuccessful DA requests, and vary the decision "so as not to saddle customers with the costs of reasonable but unsuccessful DA requests."
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PIAC advocates no charges
for unsuccessful DA requests
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3.
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PIAC stated that in Order 99-741, the Commission cited two reasons for permitting Bell to charge for unsuccessful DA requests:
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(a) "it is reasonable that the costs incurred with respect to unsuccessful requests should be borne by those who use the service" (para.17); and
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(b) "the removal of this exemption is an important factor in optimizing the efficiency of Bell's DA service" (para.18).
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4.
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PIAC sought to demonstrate that there is substantial doubt as to the correctness of both these rationales.
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5.
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PIAC stated that the Commission did not explain why "it is reasonable that the costs incurred with respect to unsuccessful requests should be borne by those who use the service", other than to note that "an unsuccessful DA request can occur when the requested number is either an unlisted number or does not exist or when the request is not sufficiently precise" (para.17). PIAC submitted that it appears that the Commission neglected to consider the possibility that at least some unsuccessful DA requests are caused by an error in Bell Canada's directory listings or by the operator.
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6.
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In order to evaluate the failure rate in Bell's DA service, PIAC conducted an informal survey of Bell's DA service using 100 known listed names and numbers. According to PIAC, subscriber error and unlisted numbers were thus ruled out. Of the 100 requests made, a total of 24 were unsuccessful. In nine of these cases, the operator told the caller that there was no such listing.
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7.
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PIAC submitted that, if Bell is equally reimbursed for failure and success, there is no financial incentive for it to minimize errors in the provision of DA, and therefore, its current error rate is likely to increase.
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8.
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PIAC stated that it is unreasonable to charge DA callers for a service not rendered when the failure to render service was due to error on the part of Bell Canada. PIAC contends that until Bell Canada can separate customer-caused from company-caused failure, it should not be permitted to charge for unsuccessful DA requests. It may be reasonable to impose a user fee on DA callers whose requests are inaccurate or insufficiently precise. It is not reasonable, in PIAC's view, to impose a user fee on DA callers who bear no fault, and who have already suffered the frustration of an unsuccessful request due to company error.
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9.
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PIAC submitted that searches for unlisted numbers and non-existent numbers incur a customer charge, even though neither the company nor the customer is at fault. PIAC believes that it is inappropriate to charge customers for unsuccessful DA calls unless the customer is at fault.
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10.
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PIAC submitted that it is not clear from the decision how charging in this instance would improve the efficiency of Bell's DA service. If accuracy or responsiveness have anything to do with efficiency, the decision will have the opposite effect, in PIAC's view, since Bell will have lost the financial incentive to minimize error in DA service. Charging in this instance will certainly improve the revenue/cost ratio of the service, but net profit does not equate with efficiency. Efficiency, rather, has to do with cost and productivity.
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11.
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Contrary to Bell's claim, PIAC believes there is evidence suggesting that the existing DA service does cover its costs.
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12.
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PIAC stated that in a Part VII application of 29 January 1999 regarding Bell's operator services, the Communications, Energy and Paperworkers Union of Canada (CEP) stated the following:
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19. Bell Canada has claimed for many years that its Operator Services division is not profitable and has used this claim as a basis for seeking wage and other concession (sic) from its operators. For its part, CEP has taken the position that Operator Services is not a loss centre and has resisted Bell Canada's pressure for concessions.
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20. In order to resolve this fundamental disagreement, CEP and Bell Canada undertook a joint study in 1997 of Bell Canada's Operator Services division. The study was prepared by a joint committee of CEP and Bell Canada personnel and examined all relevant costs and revenues associated with the division. Unfortunately, due to a confidentiality agreement between CEP and Bell Canada, CEP cannot provide the Commission with a copy of the report at this time. However, CEP can disclose that the conclusion of the study was that the Operator Services division is profitable, contrary to Bell Canada's earlier claims. This fact has been confirmed by Bell Canada's Chief Executive Officer, Jean Monty: "Bell Canada met de l'eau dans son vin". (Le Devoir, 19 January 1999)
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13.
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PIAC submitted that the conclusion of this report casts doubt on any claim by Bell as to net losses incurred by its DA service. If Order 99-741 was based to any extent upon such a claim, PIAC suggested that it is incumbent on Bell to produce the joint CEP/Bell study and to explain any conflicting evidence as to the profitability of its DA services.
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Bell Canada says Commission's original decision was correct
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14.
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With respect to PIAC's characterization of the reasons underlying the Commission's determination, Bell noted that PIAC fails to acknowledge that the Commission took a number of factors into consideration. For example, paragraph 13 of Order 99-741, regarding the removal of exemptions for numbers not found, notes that consideration of the company's application "involves balancing the reasons underlying an exemption against the efficiency and consumer choice benefits to be derived through the development of competitive markets in the provision of directory services."
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15.
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Bell stated that the Commission's determinations in Order 99-741 reflected a careful weighing of a number of factors. Indeed, in so doing, the Commission rejected most of the requests for removal of exemptions made by Bell.
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16.
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Bell submitted that PIAC has misunderstood the Commission's determinations in Order 99-741. Order 99-741 does not authorize Bell, nor has it ever been company policy, to charge the customer where an incorrect number has been provided. In such cases the company's practice is to refund or remove the charge. The same practice would apply if no number is provided when in fact one was available and should have been provided. In circumstances such as these, the harm PIAC apparently is suggesting will occur is already adequately addressed in the company's current business practices and is also addressed in Article 15 of Bell's Terms of Service.
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17.
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In Bell's view, it is unreasonable to contend that because the company might fail in some cases to provide a requested number through its own error, it should never be permitted to apply its DA charge to requests when a number cannot be found.
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18.
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According to Bell, it is evident from PIAC's scanty discussion of the methodology employed that PIAC's survey is of no value whatsoever. There is no indication that the sample was drawn in any scientific fashion, that the study was free of bias, or even that the numbers were verified as still matching the customer name and address given to the operator. In any event, if the error rate were anything close to what PIAC is suggesting, it should be readily apparent that a sample size of 100 would not provide meaningful results. No conclusions can be drawn on the basis of such a "survey".
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19.
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Bell stated that PIAC's assertions regarding errors are at odds with the company's own data concerning its DA operations. Bell conducts ongoing quality control over its DA services. As part of its quality control activities, the company conducts customer surveys using methodologies for the measurement and analysis of data which are designed to yield statistically valid results. These surveys are conducted on a monthly basis as part of Bell's business management and it therefore has every incentive to ensure that the methodology is valid and that results are accurate. These surveys consistently indicate that DA accuracy is above 90%.
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20.
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Bell submitted that, in response to the allegations contained in PIAC's application, and despite the obvious methodological and interpretive shortcomings of PIAC's survey, the company conducted its own informal survey following receipt of the application. The outcome was consistent with a DA accuracy of over 90% as measured by Bell's own ongoing quality control surveys.
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21.
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Bell did not claim that its own informal survey yields statistically correct data. However, Bell submitted that the fact that another informal survey yields considerably different results shows that PIAC's own survey cannot be relied upon. The company further submitted that PIAC's claims regarding the accuracy of the company's DA services are clearly without foundation. PIAC's application, in Bell's view, provides no basis for the Commission to vary a determination arrived at in Order 99-741 after a full public proceeding and many months of deliberation.
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22.
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Bell noted that PIAC referred to the Part VII application filed by the CEP which claimed, among other things, that a joint study performed by the CEP and the company indicated that the "Operator Services Division is profitable." PIAC alleged that this study casts doubt on the company's claims, put forward in the proceeding leading to Order 99-741, that DA revenues do not cover costs. In response, Bell noted that the statement quoted by PIAC did not refer to DA services, but to a much broader range of operator services. More importantly, as the company stated in its answer to CEP's Part VII application, the CEP statement quoted is incorrect in a number of respects. Bell noted it did not endorse the methodology proposed by the CEP in the study and did not take part in its preparation. The company also did not endorse the study's conclusions.
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23.
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Bell noted that it provided substantial detailed DA cost and revenue data to the Commission in the course of the proceeding leading to Order 99-741. In particular, section 2.2.2 of the economic study filed in support specifically identifies the costs associated with DA and Automatic Directory Assistance Call Completion. Accordingly, the company submitted that there is no doubt or discrepancy raised by its proposal to charge for "not found" DA requests and the resulting economic impact of these changes on the company's DA costs and revenues.
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PIAC believes DA error rate too high
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24.
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PIAC submitted that a 10% error rate in directory assistance is unacceptably high from a service quality perspective. This is particularly true if customers are made to pay for such errors.
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25.
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PIAC stated that the issue is not whether Bell should ever be permitted to apply its DA charge when the number cannot be found. Rather, it is whether Bell, as a matter of course, should be permitted to apply the charge to all requests when the number requested cannot be found. PIAC submitted that until Bell can separate customer-caused from company-caused failure, it should not be permitted to charge for unsuccessful DA calls.
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26.
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PIAC submitted that Bell has misunderstood or misrepresented PIAC's arguments, has confused the issue of "not found" numbers with that of other service errors and has failed to provide convincing evidence to rebut the findings of PIAC that there is a significant company error rate resulting in "not found" numbers.
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Commission concludes to deny application to review and vary
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The Commission finds that PIAC has failed to demonstrate there is substantial doubt regarding the correctness of Order 99-741.
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28.
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PIAC submitted that Order 99-741 should be varied because it claims the Commission neglected to consider the possibility that at least some unsuccessful DA requests are caused by an error on the part of Bell (in the directory listing or by the operator).
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29.
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The Commission was aware when it made its decision that some unsuccessful DA requests result from errors made by the company, but considers that concerns in that regard are best dealt with as a quality of service issue.
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30.
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In Decision CRTC 2000-24, Final standards for quality of service indicators for use in telephone company regulation and other related matters, dated 20 January 2000, the Commission set the final standards for directory accuracy at 93.8%. The decision stated its preliminary view that a quality of service indicator should also apply to DA speed and accuracy and established a process to determine a standard for DA. These quality of service indicators are intended to ensure that company accuracy does not fall below an acceptable level.
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31.
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The informal surveys conducted by PIAC and Bell in relation to this proceeding were not based on reliable methodologies, and do not provide reliable estimates of the DA error rate.
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32.
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In its decision with respect to DA service, the Commission has consistently taken the view that moving DA rates closer to costs and reducing the subsidy paid by non-users will facilitate competition and improve efficiency.
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33.
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In the Commission's view, the benefits of charging for unsuccessful DA requests outweigh the fact that infrequently, some users of DA may be charged when the not-found listing is due to an error by Bell. The Commission reiterates that Bell is and will be required to comply with quality of service indicators for directory accuracy, and for operator services accuracy, when this indicator is implemented.
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34.
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PIAC alleged that a study referred to by CEP in another proceeding supports the notion that DA revenues cover their costs. The Commission notes that the study referred to a much broader range of services than directory assistance. Further, the Commission also notes that Bell filed detailed DA cost and revenue data with the Commission in the course of the proceeding leading to Order 99-741 which demonstrated that DA revenues do not cover the associated costs.
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35.
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PIAC also submitted that there is substantial doubt as to the correctness of the rationale expressed in Order 99-741 that "the removal of this exemption is an important factor in optimizing the efficiency of Bell's DA service."
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36.
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The Commission believes that charging for listings not found will have a positive effect on the efficiency of DA service encouraging customers to supply accurate information when making DA requests. Customers will also tend to note the information provided for future reference.
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37.
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As PIAC has not demonstrated substantial doubt regarding the correctness of Order 99-741, its application to review and vary that order is denied by majority decision.
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Secretary General
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This document is available in alternative format upon request, and may also be viewed at the following Internet site: http://www.crtc.gc.ca
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Dissenting Opinion of Commissioner Stuart Langford
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I disagree with the majority in this matter and would have granted the application for a review and variance. I make no comment on the merits of the applicant's position having dealt with that aspect of this matter in a dissent attached to Telecom Order CRTC 99-741 (Order 99-741).
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This application, asking the Commission to reconsider the majority decision in Order 99-741, was made under section 62 of the Telecommunications Act (the Act). In paragraph 11 of Telecom Public Notice CRTC 98-6, the Commission established the following approach to weighing the merits of review and variance applications:
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"¼ in order for the Commission to exercise its discretion pursuant to section 62 of the Act, applicants must demonstrate that there is substantial doubt as to the correctness of the original decision, for example due to:
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an error of law or in fact;
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a fundamental change in circumstances or facts since the decision;
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a failure to consider a basic principle which had been raised in the original proceeding; or
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a new principle which has arisen as a result of the decision."
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There is nothing in section 62 to suggest that the criteria quoted above are anything more than examples. The four point list is not exhaustive, though even if it were, there is no doubt, in my opinion, that the applicant has met the review and variance test of "substantial doubt" on the strength of at least one of them.
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The record clearly demonstrates that there has been, to re-quote criterion (ii) "a substantial change in circumstances or facts since the decision." Since Order 99-741 was made, the Commission has been notified (in this review and variance application) that Bell Canada (Bell) has in its possession the results of a study indicating that its directory assistance (DA) operation may indeed be profitable.
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Bell initiated the process resulting in Order 99-741 on the grounds that its DA operation was a money-losing proposition and, accordingly, that means had to be put in place by which some of the losses could be recovered. If it had reason to believe that this proposition was inaccurate, it had a duty to inform the Commission accordingly. Not to have done so raises a very negative presumption, one which would provide more than sufficient grounds for the Commission to exercise its discretion under section 62 of the Act.
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According to the applicants in this matter, in 1997 Bell together with the union representing its operators, the Communications, Energy and Paperworkers Union of Canada (CEP) undertook a joint study of Bell's Operator Services division. Though CEP was forbidden by a confidentiality agreement from disclosing the results of the study, it was able to reveal that the study did find that the Operator Services division was profitable. This contention appeared to be confirmed by Bell's Chief Executive Officer, Jean Monty, in an article entitled Bell Canada met de l'eau dans son vin in the newspaper Le Devoir, January 19, 1999.
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In this article, Mr. Monty provided Bell's justification for a recently announced restructuring of his company's operator assistance division. The article begins by suggesting that Bell may have decided to restructure in order to exploit a loophole in federal and provincial labour codes and then continues:
[Translation]
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" 'That is not the reason why we decided to make the transfer,' Mr. Monty stressed instead, the decision was based on two broad principles: reducing the number of operator assistance offices from 55 to five or ten, described by Mr. Monty as a 'technology platform'; and reducing salaries to a 'competitive' level. He added "We want to build a business that we can be proud of" and which will be profitable. Currently, Bell's operator assistance service is profitable but 'marginal', according to Mr. Monty."
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It may be that Mr. Monty's words were somehow misconstrued by Le Devoir. Equally feasible is the explanation that Mr. Monty's reference to the operator assistance division was to something significantly different to the division at issue in this application and the procedure resulting in Order 99-741 from which this application arose. Equally, it may be that the applicant's characterization of the Bell/CEP joint study is incorrect or that somehow the study itself is irrelevant to this matter. All of these explanations may apply but what is key to this review and variance application is that we have no way of knowing whether they do or not.
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We do not know because Bell has not provided us with sufficient information on the record to make a determination. Though Bell had an opportunity to reply to the applicant's allegations in this matter and though it did reply to many of them, it chose not to place either the Bell/CEP study or its explanation of Mr. Monty's statement on profitability as reported in Le Devoir on the record of this proceeding so that the Commission could weigh the significance of both pieces of evidence. What are we to make of this silence?
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Some reference to other situations in which the withholding of evidence can be pertinent is instructive. In The Law of Evidence in Civil Cases1 the authors make the following observations about the effect of a failure to produce evidence:
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"In Blatch v. Archer2, Lord Mansfield stated:
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1 The Law of Evidence in Civil Cases, John Sopinka & Sidney N. Lederman, Butterworths, Toronto, 1974.
2 (1974), / Cowp. 63, p.65.
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'It is certainly a maxim that all evidence is to be weighed according to the proof which was in the power of one side to have produced, and in the power of the other to have contradicted.'
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The application of this maxim has led to a well-recognized rule that the failure of a party or witness to give evidence, which it was in the power of the party or witness to give and by which the facts might have been elucidated, justifies the court in drawing the inference that the evidence of the party or witness would have been unfavourable to the party to whom the failure was attributed."3
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Sopinka and Lederman, in bringing this maxim into a modern context, refer to a number of judicial precedents in support of the proposition they make, namely, that a negative inference can be drawn from the failure of a party to produce evidence in its possession. One reference, from the Supreme Court of Canada in Levesque v. Comeau4 is sufficient to clarify the rule. In this case a woman sought to recover damages for deafness which, she alleged, had been caused by injuries sustained in a traffic accident.
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Writing for the majority, Pigeon J. said this about the failure of the plaintiff/appellant to produce evidence in her possession: "She alone could bring before the Court the evidence of those facts and she failed to do it. In my opinion, the rule to be applied in such circumstances is that a Court must presume that such evidence would adversely affect her case." (emphasis added)
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3 The Law of Evidence in Civil Cases, supra pp. 535-536.
4 (1971), 16 D.L.R. (3rd) 425, p. 432.
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Applying that rule to this application for a review and variance, it seems to me that the Commission "must" take the position that if Bell failed to produce the study regarding profitability it did so because "such evidence would adversely affect" its case. Bell could, and in my view, should have produced the Bell/CEP study when it made the original application resulting in Order 99-741. Profitability was central to that matter. It should have produced the study in response to the applicant's direct reference to it on the record of this proceeding. Again, Bell failed to do so.
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That failure is only highlighted and exacerbated by Mr. Monty's statement on profitability as reported in Le Devoir. It was not enough, as Bell did in its reply to the applicant's case (Bell Answer, paragraph 25), to deny the accuracy of the study, cast doubts upon the methodology used and attempt to distance itself from the study's conclusions. Bell should have produced the study and allowed the Commission to evaluate it. By not doing so, it virtually forces the Commission to presume that the study would have had a negative impact on Bell's case and, thereby, raises a substantial doubt as to the correctness of Order 99-741.
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For these reasons, I dissent from the majority. This Commission may not be bound by the same strict rules of evidence as Canada's courts of law but those rules are instructive and, in cases such as this, helpful. It is unreasonable, given the facts of this application, not to take advantage of wisdom garnered from the centuries of problem solving out of which judicial rules of evidence have evolved. It sends entirely the wrong signal to future parties before this Commission, a message that there is perhaps something to be gained and certainly nothing to be lost by being selective in presenting evidence for consideration in any application before the CRTC. It is not a message to which I care to append my signature.
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Dissenting Opinion of Commissioner Barbara Cram
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In the original decision of the Commission, I agreed in large part with the decision. In retrospect, it appears to me that the entire decision was predicated upon two premises: that the directory assistance service was reasonably accurate and that directory assistance was unprofitable to Bell. It now appears both of those premises are seriously in doubt. As such there are grounds for a variation of the previous decision.
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As to the issue of accuracy, PIAC conducted a survey, albeit statistically invalid, but nonetheless showing that out of 100 inquiries to Bell Directory Assistance far less than 90% of the responses were correct. Bell conducted a similar survey with better results but still less than 90% accuracy. In stating this, I acknowledge that Bell's version of the survey was greater than 90% accuracy, however, this was after the company further analysed the data essentially to ascertain the cause of the error. If the cause of the error was not the fault of the operator, it was not deemed an error. From my perspective, the consumer, the person paying for the service, is getting erroneous information more than 10% of the time. The cause of the error is irrelevant as the perspective must be that of the consumer.
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Bell states that they conduct regular surveys on accuracy and that these studies show a 92% accuracy. Bell did not file any such survey and this combined with the manner in which the company analysed its mini survey above leads me to question this assertion by Bell. As the methodology of these surveys is unknown as well as the basis for discerning accuracy is likewise unknown, this assertion likewise is irrelevant.
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We are then left with less than 90% accuracy for Directory Assistance. This is not reasonably accurate.
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Secondly, Bell states that these particular directory assistance services are losing money. When PIAC raised the public statements of Mr. Monty in Le Devoir, Bell's reply was that Mr. Monty was referring to the operator services as a whole and not these particular services. Bell also stated that it did not agree with the methodology of the cost study and, as it was not involved, the company disagreed with it entirely.
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What was not denied by Bell was that Bell had provided all the relevant and necessary financial data for the cost study to be undertaken. Secondly, notwithstanding any disagreement with the study itself, it is admitted publicly that operator services were making a profit, albeit a minimal profit.
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If this is so then there must be another part or parts of operator services that are doing very well to subsidize the particular services being the subject of this application. This is particularly so given the size of the increase requested and granted. In the absence of a concommitant application to lower the rates for the profitable service, Bell's operator services will now be making a healthy profit. This is not just and reasonable ratemaking.
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Further, the same article in Le Devoir referred to Bell lowering operators' salaries over time thus increasing the profitability yet again.
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Bell chose not to file the cost study undertaken by the union with which it disagreed but appeared to cooperate in same and has publicly agreed with the finding of profitability. Lacking the particulars of this study it is impossible to have corroborating data to ascertain if the cost study in question would show that the particular operator services in this application are in fact losing money.
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In sum, there is substantial doubt in my mind as to the correctness of the original decision in the underpinnings asserted, that of reasonable accuracy and of financial necessity. I would reverse our initial decision.
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Respectfully submitted.
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Barbara Cram
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Dissenting Opinion of Commissioner Andrew Cardozo
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I respectfully dissent from the majority in this decision, as I believe we should have granted the review and vary application by the Public Interest Advocacy Centre (PIAC) on behalf of Action Réseau Consommateur, the Consumers' Association of Canada and the National Anti-poverty Organization. (This relates to Telecom Order CRTC 99-741.)
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I am in agreement with the dissenting opinions of Commissioners Stuart Langford and Barbara Cram which in large part, captures my reasons for agreeing with the appeal by PIAC.
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I would add further, that it was my opinion at the time of the Order 99-741 decision, from which I dissented and wrote a dissenting opinion, that there was not an adequate case presented for granting the tariff for directory information in instances where the information was not provided to the caller. I do not see that there has been convincing evidence presented that this service cannot bereasonably absorbed within the bounds of the 'costs of doing business', especially when it appears that the directory assistance service may well be profitable.
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This review and vary appeal brought to our attention the existence of further information which, in my view, could have been crucial to making a decision. Without the report prepared by Bell Canada and the Communications, Energy and Paperworkers Union of Canada (mentioned in the majority decision, paragraphs 12 and 13), one has to conclude that we have substantial doubt as to the correctness of the decision. Bell Canada has not dissuaded me of this, in the course of this appeal.
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The majority, in paragraph 31, indicate their view that the informal surveys by PIAC and Bell in relation to this proceeding are not reliable. While I understand their point, I do believe that the PIAC survey gave us cause for concern. In paragraph 34, they note that they are of the view that the information provided by Bell Canada in the proceeding leading to Order 99-741 (directory assistance costs and revenue data) was sufficient. They note that the Bell-CEP study "referred to a much broader range of services than directory assistance". Since the information in this report could have challenged this cost and revenue data, I am still left with the unanswered question as to whether the study dealt with directory assistance in a substantive or conclusive manner.
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For these reasons, I am unable to agree with the majority and must register my dissent.
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Dissenting Opinion of Commissioners David McKendry and Martha Wilson
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We would grant the application by the Public Interest Advocacy Centre on behalf of Action Réseau Consommateur, the Consumers' Association of Canada and the National Anti-Poverty Organization to review and vary Telecom Order CRTC 99-741. We would grant the application for the same reasons stated by Commissioner Stuart Langford in his dissenting opinion.
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