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Order CRTC 2000-250
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Ottawa, 30 March 2000
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Optel Communications Corporation vs. Bell Canada – CRTC clarifies contract requirements for local link service
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Reference: 8622-020-01/99
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Optel Communications Corporationwants Bell Canada to obtain proof of a customer's acceptance of the minimum contract period for its local link service (LLS) before it levies termination charges against the customer.
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Bell is directed to obtain prior customer authorization through methods set out in this order.
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Optel requests proof of customer acceptance
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1.
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LLS is essentially a Centrex-based package which can substitute for Bell's multiple or single business line services. The two rate options include a monthly rate of $41.95 or the 12-month minimum contract period (MCP) rate of $39.95 per month. The MCP is automatically renewed at the end of the 12-month period unless the customer notifies Bell of its intention to terminate the service within 30 days of the end of the MCP. If the customer chooses to terminate the service before the end of the 12-month period, Bell assesses termination charges. Bell received final approval of Tariff Notices 6307 and 6307A to offer LLS in Telecom Order CRTC 99-511 dated 7 June 1999.
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2.
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In Order 99-511, the Commission made no specific reference to Bell's proposal not to have customers sign contracts. However, the Commission indicated that "the proposed automatic renewal feature of this proposal does not constitute a negative option service subscription. In this case, business customers specifically subscribe to a service and sign an agreement (emphasis added) that outlines the automatic renewal feature".
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3.
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Optel filed a Part VII application on 3 November 1999 3 November 1999, alleging that Bell engages in anti-competitive practices by not obtaining a customer's acceptance of the MCP stipulated in General Tariff Item 680 (the Local Link Tariff), before insisting that the customer is liable for termination charges.
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4.
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Optel sought an order requiring Bell, when enrolling customers for more than one month, to obtain proof of a customer's acceptance of the MCP for its LLS, before insisting on that customer's liability for termination charges. Optel proposed that the Commission make this requirement a condition of Bell's provision of the service pursuant to section 24 of the Telecommunications Act. With respect to those customers who Bell claims are currently enrolled on a 12-month MCP, Optel asked that Bell be directed to provide customer confirmation, within 20 days of the Commission's decision. If Bell is unable to obtain this confirmation, the customer should be considered to be on a monthly term.
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5.
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Call-Net Enterprises Inc. Call-Net Enterprises Inc., on behalf of Call-Net Communications Inc., Call-Net Technology Services Inc. and Sprint Canada Inc. (Call-Net), 3362426 Canada Inc. carrying on business as Primus Canada and Quinte Long Distance Corp. supported Optel's application. Primus argued that the imposition of a condition pursuant to section 24 of the Act is not required as the Commission, in paragraph 23 of Order 99-511, already imposed on Bell the requirement to obtain a signed agreement.
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Awareness of termination charges and contract periods
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6.
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Optel submitted that Bell is migrating its small business customers to its LLS, based on annual rates associated with a 12-month MCP, without the customer's explicit consent and knowledge of termination charges. Optel stated that, in a number of cases, customers learned of their 12-month commitment only after they sought to transfer their LLS to Optel. In these circumstances, these customers would place on hold or cancel their new contracts with Optel in order to avoid the payment of termination charges to Bell. In support, Optel enclosed numerous letters signed by customers attesting to the fact that they had never signed or agreed verbally to a contract.
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7.
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Call-Net stated that given the customer complaints submitted by Optel, also experienced by Primus and Call-Net, it is obvious that these customers are unaware of the fact that Bell has signed them to a 12-month MCP with its potential liabilities.
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8.
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Bell provided a checklist that its customer representatives follow indicating that they provide all necessary information to prospective LLS customers verbally before the sale is closed. According to the checklist, customer representatives inform customers about the features of the service, particularly the 12-month MCP and applicable termination charges. After subscription, customers are sent packages that outline the terms and conditions of the service and clearly set out the applicable charges in the event of termination.
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9.
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Bell noted that the customer contacts are quality controlled and routinely monitored to ensure that its customers are obtaining correct information and its practices are adhered to by the customer representatives. Bell also stated that these customers receive monthly bills which set out the $39.95 charge of the 12-month MCP option and a revised equipment record.
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10.
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Bell submitted that in light of its practices, the nature of the service and the number of subscribers for the monthly option (provided in confidence), there can be little doubt that its 12-month MCP LLS customers are fully aware of and provide valid consent to the annual term and the incidental termination charges.
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11.
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In the Commission's view, Bell's practice of providing written terms and conditions after subscription takes place does not sufficiently ensure that customers are making an informed choice, or that they are aware of termination charges and the renewal feature prior to entering into the contract. In the Commission's view, the plain wording of Order 99-511 contemplates signed agreements for the 12-month contracts, or at the very least, prior customer authorization.
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12.
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Having reviewed the parties' submission and the customer representative checklist provided by Bell, the Commission is not convinced that 12-month MCP LLS customers are made fully aware of the monthly contract alternative.
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Customer authorization is required
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13.
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Call-Net noted that the Commission and the telecommunications industry have developed various rules that achieve formal equality, including the procedures for customer transfers between local exchange carriers (LECs). For example, all LECs, pursuant to the Master Agreement for Interconnection between LECs, are required to obtain end-customer consent and confirmation of the customer's request to transfer. Call-Net submitted that even though formal equality with respect to customer transfer procedures exists, Bell's present actions in transferring customers among its own products demonstrates that, in practice, real equality does not exist.
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14.
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The telecommunications industry adapted for use in the local service market, the PIC/CARE Access Handbook, which was established to protect end-customers from unauthorized transfer of their primary interexchange carrier (slamming). The Business Process Sub-Working Group of the CRTC Interconnection Steering Committee established the resultant customer transfer procedures (Schedule H of the Master Agreement for Interconnection between LECs). The transfer procedures are:
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a) accepting a signed document as end-customer confirmation;
b) oral confirmation verified by an independent third party;
c) electronic confirmation through the use of a toll-free number; and
d) electronic confirmation via the Internet.
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15.
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The Commission acknowledges that tariffs constitute valid agreements between consenting parties. The tariff, in this case, offers customers the option of a monthly or 12-month contract period. In the Commission's view, however, Bell has not provided sufficient evidence that its customers are aware of the available options prior to selecting the 12-month MCP. The Commission considers that, in these circumstances, the tariff should be interpreted such that customers have consented to month-to-month agreements.
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16.
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The Commission considers that signed contracts would be the best evidence that customers are fully aware of and consent to the MCP. The Commission notes, however, that written contracts can be very costly to administer and implement. The Commission considers that any one of the four methods described above, that obtain end-customer authorization prior to a change in service, are acceptable methods of demonstrating customer consent.
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Request for retroactive billing is denied
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17.
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Primus requested that in accordance with Bell's Terms of Service, Item 10, Article 18(a) of the General Tariff, Bell be obliged to bill, on a retroactive basis, its LLS customers the difference between the month-to-month rate per local and the rate that Bell billed the customer prior to the customer signing an agreement with Bell for the 12-month contract option.
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18.
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Bell submitted that this would prejudice the vast majority of 12-month MCP LLS customers who have not contested the validity of their agreement with Bell. Furthermore, customers who believe that the company made an error in the provision of their service can contact Bell and dispute charges in accordance with the company's well-established procedures.
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19.
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Primus's request that Bell be obliged to retroactively bill its customers is denied. The Commission notes that in the event that customers currently enrolled in the 12-month MCP do not confirm that they consented to this option, Bell would be entitled to recover the underbilled month-to-month rate amount pursuant to Article 18.1 of its Terms of Service, provided that the correction is made within one year from the date incurred.
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Conclusion
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20.
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Bell is to issue revised tariff pages forthwith incorporating the methods described in paragraph 14 above for obtaining prior authorization from those customers enrolling in the 12-month MCP.
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21.
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Customers enrolled in the 12-month MCP LLS as of the date of this order will be presumed to be on a monthly contract, with no termination charges, unless Bell confirms the customer's consent to the 12-month MCP by one of the customer authorization methods stipulated above.
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Secretary General
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This document is available in alternate format upon request and may also be viewed at the following Internet site: http://www.crtc.gc.ca
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