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Order CRTC 2000-377
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Ottawa, 5 May 2000
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fONOROLA - Exemption from contribution on certain cross-border circuits in BC TEL territory
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Reference: 8626-F1-02/97; 8626-F1-05/97; 8626-F1-06/97; 8626-F1-07/97
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This order deals with the effective date of four applications for exemption from contribution. In Telecom Order CRTC 97-1566, dated 27 October 1997, the Commission disposed of a similar application from fONOROLA Inc. (now Call-Net Enterprises Inc.) and it made the effective date the date of installation of the circuits, rather than the later date for which BC TEL (now TELUS Communications (B.C.) Inc.) argued, namely the date of application. In that case, both BC TEL and fONOROLA contributed to the situation that led to the delay in their dispute: BC TEL had acquiesced to an informal contribution process and then abruptly cancelled it; fONOROLA was late in filing its contribution exemption applications.
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Because of the similarity of the facts in the four applications in question with the one case dealt with in Order 97-1566, the Commission finds that the effective date should be the date of installation of the circuits in question. As a result, fONOROLA will not have to pay any contribution to BC TEL for the applications in question. Furthermore, the Commission finds that no further affidavits are required to support ongoing exemption for any international traffic carried by the Class A licensee referred to below (pursuant to the new exemption regime set out in the Commission's 17 December 1999 international contribution letter).
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Background
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1.
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fONOROLA filed five related applications for contribution exemption on cross-border dedicated circuits in BC TEL territory. The applications were filed over a period of two years, 26 September 1995, 4 April 1997, 30 July 1997, 24 November 1997, and 10 December 1997. The Commission disposed of the application dated 4 April 1997 with respect to circuits leased to I*Star Internet in Order 97-1566.
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2.
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In Order 97-1566, the Commission found that both fONOROLA and BC TEL were at fault in their dispute: (a) BC TEL's staff had acquiesced to an informal contribution process and then abruptly cancelled it on 22 August 1995; then BC TEL issued invoices and retrained its staff to no longer accept attestations without supporting Commission orders; and (b) fONOROLA was late in filing its contribution exemption applications in BC TEL territory (April 1997) and admitted to being understaffed in dealing with contribution issues.
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3.
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The Commission found that while it was true that fONOROLA was significantly late in filing the application on behalf of I*Star, BC TEL's behaviour in this matter was sufficient to constitute special circumstances justifying the date of installation as the effective date. The five circuits' installation dates ranged from 3 February 1994 to 30 May 1996.
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4.
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Commission staff then requested that fONOROLA and BC TEL attempt to settle the monetary dispute in the remaining four applications, since the evidence was complex and there was a substantial amount of money at stake (at one time about $3 million).
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5.
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fONOROLA and BC TEL were successful in significantly reducing the amount under dispute. However, a complication arose when Call-Net bought the assets of fONOROLA in June 1998. Following the buyout, a number of fONOROLA staff conversant with the applications left that company.
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6.
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Commission staff subsequently requested that Call-Net and BC TEL settle the dispute, or at least further reduce the amount under dispute. In September 1999, Commission staff requested that Call-Net and BC TEL produce a joint report on the current status of two of the applications, 30 July 1997 and 10 December 1997. The parties filed the joint report on 13 October 1999. Call-Net and BC TEL indicated that, following the Commission's disposition of these two applications, they would undertake to file a second joint report with respect to the remaining two applications (26 September 1995 and 24 November 1997) taking into account the Commission's order for the first two.
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Technical audit
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7.
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The Commission notes that pursuant to Applications for contribution exemptions, Telecom Decision CRTC 93-2, dated 1 April 1993, the Commission's evidentiary requirement at the time of the applications for support of an exemption for the circuits in question was a technical audit. On 17 November 1995, BC TEL informed Commission staff by telephone that fONOROLA had engaged it to carry out the technical audit. By letter dated 9 December 1996, Commission staff requested a formal status report from the parties regarding the technical audit. By letter dated 11 December 1996, BC TEL stated that it was not currently in a position to indicate when the technical audit would be filed. BC TEL never did carry out the technical audit and subsequently fONOROLA engaged an independent engineer who completed the audit in October 1997 and filed the report on 14 November 1997.
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8.
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The auditor was satisfied that the technical audit provided sufficient evidence to conclude that the circuits in question were used to provide a dedicated voice or data service to end-customers, were administrative circuits or were unused (spare) bandwidth at the time of the audit.
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9.
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The Commission is of the view that fONOROLA has filed a satisfactory technical audit that met the Commission's evidentiary requirements at the time the audit was done.
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10.
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The Commission considers that the above facts related to the technical audit can also be regarded as "special circumstances", justifying exemption from contribution retroactive to date of installation of the circuits (as opposed to the much later date of application). In Effective date of contribution exemptions, Telecom Public Notice CRTC 95-26, dated 12 June 1995, the Commission stated that "contribution exemptions will generally be granted effective the later of the date of the application or the date of installation, absent special circumstances."
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11.
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The Commission notes the following: (a) in 1995, soon after BC TEL told fONOROLA that the latter needed to take steps in order to qualify for exemption, fONOROLA did take a step in a timely manner by engaging BC TEL to do the technical audit (on or around 17 November 1995); (b) BC TEL, consequently, knew that fONOROLA wanted exemption for such circuits at an early date; (c) this fact was present for the circuits covered by Order 97-1566, and applies as "special circumstances" for the circuits involved in the present case (as they come out of a substantially similar situation); (d) while the conclusions of the technical audit do not conclusively prove that the circuits qualified for exemption some two years earlier, they do provide considerable comfort that fONOROLA had correctly configured its network.
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12.
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The Commission considers that these additional considerations lead to the same conclusion as that reached in Order 97-1566: both fONOROLA and BC TEL contributed to the delay between the date of installation and date of application for exemption for the circuits in question and the "special circumstances" referred to in PN 95-26 applies in this case. Accordingly, it would be appropriate for it to approve the applications dated 30 July 1997 and 10 December 1997 effective the date of installation, consistent with Order 97-1566.
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Evidence for ongoing exemptions
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13.
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In the joint report filed 13 October 1999, Call-Net and BC TEL reported that additional supporting evidence was required from Call-Net for a small number of circuits, i.e., an end-user affidavit affirming that dedicated circuits do not terminate at the premises of a carrier, reseller or sharing group.
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14.
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In the Commission's letter concerning Industry Task Force on International Contribution Issues - Final Consensus Report (Commission international contribution letter) dated 17 December 1999, the Commission stated that "[it] agrees with the task force proposal and therefore: 1) removes the obligation for Class A licensees to apply for an exemption order to be relieved of the requirement to report international non-contribution eligible minutes under Condition 3 of Class A international telecommunications services licences; and 2) removes the obligation to route contribution exempt traffic over separate facilities from contribution eligible traffic as long as each type of traffic can be distinguished for the purpose of reporting and remitting contribution. However, the Commission will impose audit requirements … to ensure that the integrity of the international contribution regime is maintained."
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15.
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Accordingly, pursuant to the Commission international contribution letter, applications for contribution exemption on international traffic will no longer be required and will be replaced by internal financial audits. Accordingly, affidavits in support of such applications would not be required, either. Call-Net Technology Services Inc. is registered as a Class A licensee.
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16.
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Accordingly, the Commission is of the view that no further evidence is required to support an ongoing exemption for any international traffic carried by the Class A licensee referred to above.
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Disposition of two remaining applications
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17.
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As noted above, Call-Net and BC TEL indicated that they would undertake to file a second joint report with respect to the remaining two applications, dated 26 September 1995 and 24 November 1997. The Commission is of the view that it would be appropriate to dispose of these two applications now with the view to reducing the regulatory burden for the parties and the Commission.
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18.
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The Commission is of the view that the two applications in question raise similar issues to those dealt with in Order 97-1566, and arise from the same situation: on 22 August 1995, BC TEL determined that it would apply Commission directives more strictly, and then fONOROLA took, in one of these two cases, around a further two years (plus a few months) to file the requisite application. In the other case, fONOROLA took only a month to make the application.
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19.
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Again, after reviewing the evidence, the Commission is of the view that the findings made with respect to the applications dated 30 July 1997 and 10 December 1997 apply to the applications dated 26 September 1995 and 24 November 1997.
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Conclusion
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In light of the foregoing, the Commission: (a) approves the applications dated 26 September 1995, 30 July 1997, 24 November 1997, and 10 December 1997, effective the date of installation such that no contribution is payable; and (b) finds that no further affidavits are required to support an ongoing exemption for any international traffic carried by the Class A licensee referred to 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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