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ARCHIVED - Order CRTC 2000-395

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Order CRTC 2000-395

Ottawa, 12 May 2000
Providing trunk-side access and common channel signalling #7 to wireless service providers
Reference: BC TEL [ now TELUS Communications (B.C.) Inc.] Tariff Notices (TNs) 3778, 3858, 3935 and 3977; Bell Canada TNs 6218/A and 6348; Island Telecom Inc. TN 531; MTS Communications Inc. TN 364; Maritime Tel & Tel Limited TNs 746 and 766; NBTel Inc. TN 800; NewTel Communications Inc. TN 613; and TELUS Communications Inc. TN 81
This order approves, with some changes, the final terms and conditions for trunk-side wireless interconnection with common channel signalling #7 (CCS7). CCS7 is a separate data network that connects telephone switches and carries calling features such as calling party display. The main changes disallow proposed separate trunk groups and rates for local transiting traffic and recognizes the establishment of Sciences Application International Corporation (SAIC) as the neutral CO (central office) code administrator in Canada. In addition, the Commission denies two related tariff notices filed by BC TEL.
Wireless service providers interconnection rates and conditions

1.

The existing interconnection of wireless service providers (WSPs) with the public switched telephone network (PSTN) was established in Radio common carrier interconnection with federally regulated telephone companies, Telecom Decision CRTC 84-10, dated 22 March 1984, and Cellular radio service, Telecom Decision CRTC 84-29, dated 19 December 1984. The main principles established in these Decisions were that the WSPs are customers of the telephone companies and that all incremental costs incurred by the telephone companies to connect them to the PSTN should be borne by the WSPs and not the general body of subscribers.

2.

The telephone companies established tariffs that set up a line-side interconnection regime in which the cost of traffic originating from the WSPs was recovered in the rates for the interconnection circuits and the cost of terminating traffic to the WSP networks was factored into the rates for the telephone numbers. Under the existing interim regime for trunk-side interconnection, the WSPs pay a monthly rate for all working telephone numbers.

3.

In 1996, with the introduction of digital cellular service, commonly referred to as personal communications service (PCS), the WSPs required CCS7 to implement calling features. CCS7 requires trunk-side interconnection and the assignment of CO codes to the WSP switch. This type of interconnection is the same as that used with local exchange carriers (LECs). This requirement raised issues similar to local competition which was also being considered by the Commission at that time. In June 1996, the Commission established an interim regime for trunk-side wireless interconnection with CCS7, pending resolution of the local competition proceeding.
Setting final terms and conditions

4.

The current proceeding is intended to set the final terms and conditions for trunk-side wireless interconnection with CCS7. On 27 April 1998 Bell Canada filed TN 6218, outlining its proposal for the final trunk-side wireless interconnection regime. In Final terms and conditions for provision of trunk-side access and common channel signalling # 7 to wireless service providers, Telecom Public Notice CRTC 98-15, dated 9 July 1998, the Commission expanded the proceeding to include the major incumbent telephone companies who had trunk-side WSP interconnection tariffs in place.

5.

Clearnet Communications Inc. and Rogers Cantel Inc. commented on the tariff notices filed in this proceeding. Bell Canada replied on behalf of itself, Island Telecom Inc., Maritime Tel & Tel Limited, MTS Communications Inc., NBTel Inc. and NewTel Communications Inc. (collectively Bell). BCT.TELUS Communications Inc. responded on behalf of BC TEL and TELUS Communications Inc. (collectively TELUS).
Relationship between WSPs and LECs

6.

In its final argument, Clearnet submitted that the relationship between WSPs and LECs should be altered to become based on the principle of reciprocal compensation. Clearnet stated that WSPs can be characterized as carriers as defined in the Telecommunications Act (the Act). Clearnet added that the existing approach is no longer appropriate in today's competitive telecommunications environment.

7.

Bell replied that the existing relationship between the WSPs and the LECs was established by the Commission in Decision 84-10 and reinforced in Decision 84-29. In these decisions, the Commission determined that it would not be in the public interest for the general body of subscribers to assume the costs associated with such access arrangements. Bell submitted that Clearnet's argument that WSPs are characterized as carriers, as defined by the Act, is irrelevant. What is relevant is the type of service provided by the WSPs. Since the service is complementary to those offered by the telephone companies, the existing regulatory regime applies. If a WSP wishes to offer service in competition with the companies, then the WSP may choose to become a competitive local exchange carrier (CLEC) in accordance with the regime established in Local competition, Telecom Decision CRTC 97-8, dated 1 May 1997.

8.

TELUS submitted that the consideration of alternative interconnection regimes for WSPs was outside the scope of this proceeding. It further stated that the companies' tariff notices have been established on the premise that a WSP continues to be treated as a customer of the LEC.

9.

The Commission considers that a change in the relationship between the incumbent local exchange carriers (ILECs) and the WSPs would result in a fundamental change in the regulatory regime. The Commission notes that, as with CLECs, interconnection rates would be based on mutual compensation (such as bill and keep). However, other elements of a new regime would also need to be determined. This proceeding has not developed a sufficient record to consider such a change. Furthermore, the Commission finds that Clearnet's argument in support of such a change is not persuasive. The Commission therefore denies Clearnet's proposal to implement mutual compensation principles for interconnection of WSPs with LECs. The Commission notes that it is open for a WSP to register as a CLEC which will provide it with an interconnection regime similar to that sought by Clearnet.
Proposed rate levels challenged

10.

Both interveners challenged the level of the proposed rates. Following are the three main arguments:
a) Proposed rates are higher than existing interim rates.

i) Both Cantel and Clearnet conducted detailed comparisons between the proposed rates and those currently in effect through the existing interim arrangements. Clearnet's conclusion is that the rates as proposed by Bell would result in approximately a 10% increase in the aggregate interconnection charges currently paid by WSPs. Cantel's comparison depicted an increase of 80% to 215% over the existing trunk-side access charges.

ii) Bell and TELUS submitted that Cantel's analysis is seriously flawed. Any comparison of the proposed new rate element intended to provide full functionality to one of the old rate elements that is only intended to provide a portion of the total functionality, will not be correct. Cantel's conclusions with regard to any perceived increases are inaccurate and misleading.

iii) Bell also submitted comparisons of its proposed rates with the existing interim rates and concluded that the proposed rates result in lower access costs for the WSPs.

iv) Both Bell and TELUS reiterated that the current rates were established on an interim basis and on the basis of a proxy, which had no relationship whatsoever with the costs the companies incur to provide trunk-side interconnection.

v) The Commission notes that under the existing regime the interconnecting trunk charge is made up of separate elements for network access, interconnection trunk termination and CCS7 usage elements. The proposed rate structure features an aggregated rate for the access trunks that combines the three elements of the existing structure into a single rate. The Commission considers Cantel's rate comparisons are flawed because they compare the proposed, aggregated trunk rate with only the network access rate element from the existing interconnection regime.

vi) With respect to Clearnet's rate comparison, the Commission considers that the company did not take sufficient account of the savings available due to the proposed elimination of the monthly rate for telephone numbers when full CO codes are used by the WSP.

vii) The Commission further notes that the proposed rates are based on cost studies, while the existing regime was mandated by the Commission and was based on using the pre-existing line-side rates as a proxy for the trunk-side rates on an interim basis.
b) Proposed rates do not reflect non-coincidence of busy hours.

i) Both Cantel and Clearnet stated that the calculation of the proposed interconnect trunk rates should reflect the WSPs' particular traffic conditions, in particular it should incorporate a reduction to reflect the non-coincidence of the trunk group busy hour with the LEC's network busy hour. The interveners submitted that the ILEC incurs incremental costs only if traffic is added at its busy hour and that interconnection rates should be reduced accordingly since the WSPs' busy hours are different from the ILEC's.

ii) In reply, Bell submitted that the companies do not necessarily experience a consistent network busy hour, but instead a "moving" busy hour. With the rapid growth in new services such as voice mail and Internet traffic, the companies' network traffic loads do not peak consistently at the same hour each day during a week or over a busy season. Instead, the companies' network busy hours range generally over the same morning until evening interval depending on the mix of customers. It is the companies' experience with regard to traffic exchanged with WSPs, that interconnecting trunk group busy hours actually vary over a wide range of hours from morning to evening. Further, the companies expect that, with the new service packages and plans that have been introduced by WSPs into the wireless marketplace, the wireless network traffic patterns will also be changing from what has been experienced in the past.

iii) The Commission notes that the economic assessments conducted by the telephone companies in support of the rates proposed for CLECs used resource cost studies which entail the study of a company's prospective incremental costs associated with a typical provisioning unit of demand. The resulting cost/trunk reflects a company's incremental costs that would be incurred when calls are routed on interconnecting trunks, independent of the type of interconnecting carrier or particular traffic characteristics.

iv) The Commission considers that the traffic studies used by the telephone companies are appropriate for the development of rates for WSP interconnection.
c) CLEC extended area service (EAS) access rates should not be used as a proxy for WSP interconnection.

i) Both interveners commented on the applicability of the telephone companies' EAS transport charges as they relate to CLECs. Firstly, they submitted that it is not appropriate that rates developed for CLEC interconnection be applied to WSP interconnection because of differences in traffic patterns. Secondly, they stated that the EAS-only rates are inappropriate because significant portions of their traffic terminate within the exchange and lower combined exchange/EAS rates should reflect this mix. Thirdly, they stated that, if two-way trunks are used by CLECs, then only one-half of the trunk termination charges associated with EAS transport apply to the CLECs. The interveners then concluded that, because the telephone companies have proposed that these same rates be adopted for WSP interconnection and because WSPs predominately provision two-way trunk groups, the proposed rates should be reduced by half.

ii) In reply, Bell stated that the functionality of CLEC EAS trunking is the same as that required for WSP interconnection and therefore the same costs apply.

iii) With respect to the interveners' contention that the proposed trunk rates should be reduced by half, Bell submitted that the arrangements regarding CLEC interconnection recognize that interconnection between LECs is to be established, in general terms, on a cost sharing basis. In the case of WSPs, the access arrangements have not been proposed by the companies on the basis of a cost sharing arrangement, but rather on the basis of the WSPs compensating the companies for their costs incurred. Consequently, a reduction in charges as suggested by the parties is not appropriate or warranted. Further, under the existing interim arrangement, the cost of routing traffic from the wireline to the wireless carrier is recovered in the rate for telephone numbers. In the proposed tariff, the WSPs will obtain their telephone numbers for trunk-side operation directly from the number administrator and will therefore no longer pay the monthly rate that included the recovery of routing costs. Therefore, these routing costs are now proposed to be recovered directly through the rate for interconnecting trunks.

iv) TELUS submitted that, from a company network perspective, the network infrastructure necessary to support calls received from WSPs is the same as that necessary to support calls received from CLECs. As such, any configurations used in the companies' network modelling in determining rates applicable for CLECs are also applicable for calls originated by WSPs. TELUS also noted that in supporting EAS transport for CLECs, any call delivered to a company switch that is to be routed for termination to a company end-user, either in the local calling area or the exchange in which the switch is located, will be routed and terminated. TELUS proposed that the same functionality be provided to the WSPs.

v) The Commission notes that the functionality of the CLEC EAS access service is the same as the WSP access service. With respect to the EAS-only termination versus combined EAS/exchange termination, the telephone companies could have developed prorated rates reflecting estimates of intra-exchange traffic and EAS-only traffic. However, for all the telephone companies, the average unit cost for EAS-only termination is lower than the average unit cost for exchange-only termination. Therefore, if a combined access rate for any ratio of intra-exchange and EAS traffic was developed, the resulting rates would be higher than the proposed rates. Accordingly, the Commission considers that the WSPs will not be disadvantaged by the use of the EAS-only rates as proposed by the telephone companies.

vi) The Commission notes that Bell Canada filed access rates which are higher than those approved in Telecom Order CRTC 98-1190, dated 30 November 1998.

vii) Considering the findings in a), b), and c) above, the Commission approves the proposed rates for the interconnecting trunks as filed with the exception of Bell Canada which is directed to issue revised tariff pages that reflect the interconnection rates which were approved in Order 98-1190.
Separate access trunks for local transit

11.

The interveners questioned the need for the separate local transit arrangements proposed by the Bell group of companies. They noted that under the existing trunk-side and line-side arrangements, the local transit function is included in the basic access arrangement and therefore concluded that the proposal to separate the local transit function is not required for technical reasons. The interveners submitted that the proposed arrangement is inefficient and should be disallowed by the Commission.

12.

Bell replied that the current arrangements are irrelevant because they were developed in circumstances prior to local competition. Further, Bell noted that the inclusion of local transit as a separate and distinct tariff element is appropriate in order to provide WSPs with an option to use local transit functionality only in locations where they wish to, and as such, create an incentive to pay for the functionality only when it is used. In addition, it would also allow the companies to recover the costs they incur in providing local transit functionality through the application of specific charges. Bell also stated that the companies would have to recalculate the basic access rates if the separate, higher rate for local transiting were denied.

13.

The Commission notes that BC TEL and TELUS Communications Inc. (TCI) have not proposed a separate tariff item for local transit, and further, that Bell is proposing to charge a rate equal to the basic access trunks for local transit access, rather than the higher per-trunk rates approved for this service offered to CLECs.

14.

The Commission considers that, as customers of the telephone companies, the WSPs should not be required to pay extra for the local transit function. Accordingly, the Commission denies the proposed separate tariffs for the local transit function.
Canadian number administrator
now in place for CO code distribution

15.

The Commission notes that at the time the tariff notices were filed, the telephone companies still performed the role of CO code administrator in their respective territories and this is reflected in their proposed tariffs. Further, the proposed terms and conditions for WSPs to obtain full 10,000 number CO codes were identical to those under which CLECs obtain these blocks of telephone numbers and were not an issue in this proceeding. The Canadian number administrator is now in place and, according to procedures developed by the CRTC Industry Steering Committee, CO codes are now obtained from the new CO code administrator.

16.

The Commission considers that for CO code administration, the WSPs should continue to be treated the same as the CLECs. It directs the telephone companies to issue forthwith, revised tariff pages that reflect the changes with regard to the administration of CO codes in Canada.

17.

The Commission notes that the WSPs may need to receive certain information from the telephone companies, such as homing arrangements, to complete network notification forms associated with the application for a CO code assignment. The provision of this information should be addressed in the service agreements between the WSPs and the LECs.
Bell Canada and MTT rates
for 100 block routing

18.

In TN 6348 Bell Canada filed rates for 1,000 block routing that include a monthly rate for the feature. In TN 6218A, filed 28 April 1999, Bell Canada amended this proposal to offer 100 block routing at the same rate as 1,000 block routing and also reduced the proposed monthly rate from $62.90 per 1,000 block to $20.80 per either 100 or 1,000 block. Coincident with TN 6285A, Bell Canada filed TN 6348 to make 1,000 and 100 block routing available on the same basis in the current tariffs. The Commission approved TN 6348 on an interim basis in Telecom Order CRTC 99-454 dated 26 May 1999. Bell Canada filed a cost study supporting the proposed rates in the proceeding under TN 6348.

19.

Cantel and Clearnet submitted that there is no justification for charging an ongoing monthly rate for this service. Cantel in particular objected to what it calls an exorbitant rate of $0.208 per telephone number in the case of 100 block routing. Cantel also submitted that it is important that the 100 block routing option be available to the WSPs particularly in small locations where it would be wasteful of telephone numbers to require WSPs to obtain full CO codes.

20.

Bell Canada replied that its costs are based on the company's experience in dealing with 1000 block routing in the existing interim tariff and its cost study justifies the proposed rates.

21.

The Commission notes that MTT filed TN 766 dated 20 October 1999 proposing to implement 100 and 1,000 block routing at rates similar to those proposed by Bell Canada, and the Commission has approved the proposal on an interim basis in Telecom Order CRTC 99-1154, dated 14 December 1999. The MTT proposal was also supported by a cost study. Cantel filed a similar intervention to MTT TN 766 as it did to Bell Canada TN 6348.

22.

The Commission notes that the proposed rates for 100 block routing represent an increase over the existing interim rate for telephone numbers. However, the small locations where WSPs require less than 100 numbers represent a small minority of the WSPs' total telephone number requirement.

23.

The Commission notes that currently the telephone numbers for some WSPs are not in contiguous blocks of 10,000 or even 1,000 numbers and a WSP will therefore need to consolidate these numbers in order to take full advantage of the proposed lower rates.

24.

The Commission notes that both Bell Canada and MTT have filed cost studies in support of their proposals. The Commission has reviewed these studies as well as the interrogatory responses from Bell Canada and finds the costs to be reasonable. Accordingly the Commission approves Bell Canada's proposed rates for 100/1,000 block routing in TN 6218A and approves, on a final basis, Bell Canada TN 6348 and MTT TN 766.
Toll traffic termination

25.

This service has been available in the BC TEL and TCI tariffs since the introduction of the interim trunk-side interconnection regime in these companies and is proposed to continue to be part of the final regime. The service provides direct trunks from the telephone company's toll switch to deliver toll traffic to the WSP.

26.

Clearnet assumed that this is a mandatory separation of the toll traffic and objected to this requirement.

27.

The Commission notes that Clearnet's assumption is incorrect. This is an optional arrangement that the WSPs may use at their discretion and accordingly the Commission approves this item on a final basis.
Local tandem capability

28.

Clearnet submitted that TCI's local tandem network conversion charge should be discontinued, and moreover, the charge should be reimbursed to any WSP which paid it in the past. Clearnet contested the premise that TCI's network is somehow unique in requiring this explicit surcharge.

29.

TELUS submitted that the local tandem network conversion charge is not a new proposal in this proceeding, the item was given interim approval in Telecom Order CRTC 97-879, dated 23 June 1997, after due process in that proceeding and should, therefore, not be part of this proceeding. TELUS further noted that the rate only applies if a WSP's request requires converting a switch to local tandem functionality.

30.

The local tandem network conversion charge is a one-time, cost-based charge that applies if the WSP requests tandem functionality in a particular location where it is not available at that time. As such, the charge compensates the telephone company for costs it incurs to meet a specific request by the WSP. The Commission considers that this one-time charge continues to be appropriate and approves it on a final basis.
Service/interconnection agreements

31.

BC TEL and TCI each filed virtually identical draft service agreements with their tariff notices "for the Commission's information".

32.

Both Cantel and Clearnet objected to item 6(b) of the agreement, which purports to make WSPs liable for charges for collect and bill-to-third-party (C/BTT) calls associated with WSP numbers. These parties argued, among other things, that WSPs should not be held liable for such charges when the WSP has paid the tariffed service charge to the ILEC to include telephone number blocks in the billed number screening (BNS) database for the purposes of blocking toll calls charged to WSP numbers.

33.

BC TEL and TCI acknowledged that fraud opportunities exist through the use of C/BTT capabilities, but submitted that deletion of section 6(b) would exacerbate the problem by making legitimate charges uncollectible. BC TEL and TCI further argued that WSP numbers would become known as unbillable numbers and would be targeted by fraud perpetrators.

34.

The Commission notes that section 6(b) is not inconsistent with billing provisions contained in interconnection agreements between ILECs and WSPs previously approved by the Commission.

35.

Further, the Commission notes that these interconnection agreements, once executed, are subject to the Commission's approval under section 29 of the Act and directs the telephone companies to file forthwith for approval any interconnection agreements they may have with WSPs.
National tariffs

36.

Both Clearnet and Cantel submitted that homogeneous, national WSP interconnection tariffs would be in the best interests of wireless customers. Clearnet asserted that the lack of a homogeneous WSP interconnection regime can create confusion among wireless customers, especially as they roam.

37.

TELUS responded that the creation of such a homogeneous environment has always proved difficult, especially where local networks are involved, due to the independent evolutionary paths that the ILECs' networks, systems, services and tariffs have taken. As a result, national homogeneity is not currently available even to wireline subscribers, because the costs of achieving seamless service on such a scale often outweigh the benefits. The proposed tariffs specify cost-based rates for the services provided to WSPs by each company.

38.

The Commission notes that the interveners presented no evidence that uniform national tariffs for interconnection between WSPs and the LECs would result in uniform national tariffs for the customers of the WSPs. The Commission further notes that it approved interconnection rates with CLECs that differ by telephone company based on cost studies submitted by each telephone company. The Commission finds it appropriate that a similar approach be applied to WSP interconnection.
BC TEL tariff notices denied

39.

BC TEL filed TN 3778, dated 9 March 1998, proposing to clarify its WSP access tariff in relation to a single point of connection for service to the total EAS calling area. The proposed revision limits this single point of connection to instances where the WSP utilizes a full NXX code.

40.

Cantel intervened submitting that the proposed clarification restricts tandem traffic contrary to the Commission's direction in Telecom Order CRTC 97-946, dated 10 July 1997. BC TEL replied that the restriction only applied to traffic exiting BC TEL's network and therefore did not contravene the Commission's directive.

41.

Telecom Order CRTC 97-77, dated 10 July 1997, gave interim approval to BC TEL's proposal for trunk-side interconnection with the WSPs. It directed the company to file a tariff that would allow for local tandem trunk-side connection as well as transiting traffic, such that one point of connection will allow for connection to the total local calling area.

42.

The Commission considers that the proposed clarification would limit this tandem capability to instances where full CO codes are utilized and would thus contravene its directive. Accordingly the Commission denies TN 3778.

43.

BC TEL filed TN 3858, dated 25 September 1998, proposing to charge for the billing telephone numbers associated with line-side connections required to route services which, for technical reasons, cannot be accommodated on trunk-side connections.

44.

Cantel and Clearnet objected to this proposal stating that since they do not specifically order these numbers they should not be required to pay for them.

45.

BC TEL replied that there is a cost associated in using such numbers and the proposed tariff is supported by a cost study that demonstrates the cost.

46.

The Commission notes that the billing number is an operational requirement whose cost should be recovered in the basic rate for the access channel, not as a separate rate element. Accordingly TN 3858 is denied.

47.

The Commission directs the telephone companies to issue revised tariff pages immediately to reflect this order. The revised tariffs are effective the date of this order.

 

Secretary General

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