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ARCHIVED - Order CRTC 2000-503

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Order CRTC 2000-503

Ottawa, 1 June 2000
Cable Atlantic vs. NewTel Communications Inc. – Digital Exchange Access service
Reference: 8622-C26-02/98
The Commission denies Cable Atlantic's application seeking an order directing NewTel Communications Inc. to provide it with digital exchange access service on an unbundled basis, from its co-location space in NewTel's central offices.

1.

Cable Atlantic filed its application on 17 September 1998, pursuant to Part VII of the CRTC Telecommunications Rules of Procedure. Cable Atlantic wants to supply its own local digital loop from its customers' premises to its equipment in NewTel's central office (CO) and from there, obtain access to NewTel's local and interexchange services by leasing certain digital exchange access (DEA) elements.

2.

Cable Atlantic submitted that DEA is a service eligible for competitor connection from a co-location space for the following reasons:
a) DEA is tariffed as an unbundled service;
b) past Commission decisions and policy support its view that DEA is available in its tariffed component elements, i.e., competing carriers may lease some or all of these elements; and
c) NewTel would be granting itself undue preference contrary to subsection 27(2) of the Telecommunications Act if it reserved to itself the right to provide the access portion of DEA.

3.

NewTel refuses to provide DEA in its unbundled components for the following reasons: a) the tariff clearly indicates that the service is bundled; b) what Cable Atlantic is asking for is equivalent to access to unbundled switching; and c) the service Cable Atlantic would offer would be indistinguishable from that provided by Competitive Local Exchange Carriers (CLEC).

4.

According to Cable Atlantic, the DEA tariff unbundles DEA into three separate components:
a) Access facility (jack-ended digital local loop from the customer's premises or other service point to the customer's serving wire centre);
b) PSTN termination (provides the connection between the access facility and the public switched telephone network); and
c) PSTN connectivity (enables the customer to access the local PSTN).

5.

NewTel said that DEA is described in its tariff as consisting of two separately rated components: a) Access (composed of the access facility and the PSTN termination sub-components); and b) PSTN connectivity. NewTel noted that its DEA tariff does not permit a customer to order only the PSTN termination sub-component or the PSTN connectivity component, as demanded by Cable Atlantic. NewTel submitted that the access facility, PSTN termination and PSTN connectivity are all integral to its DEA service.

6.

According to NewTel, Cable Atlantic's request for access to DEA from its co-located area amounts to a request to obtain unbundled switching. NewTel stated that in Local competition, Telecom Decision CRTC 97-8, 1 May 1997, the Commission ruled that switching was not an essential service and consequently was not part of any mandated unbundling directives set out in that decision.

7.

According to Cable Atlantic, past comments made by the Commission on the issue of co-location and unbundling support its interpretation of the DEA tariff. In particular, Cable Atlantic referred to Review of regulatory framework, Telecom Decision CRTC 94-19, 19 September 1994, wherein the Commission indicated that with the advent of competition, all network services subject to dominant supply by the telephone companies should be unbundled to the greatest extent possible. Cable Atlantic argued that NewTel is dominant in the supply of DEA as it is the only local exchange service carrier in Newfoundland. Cable Atlantic also argued that the DEA tariff was approved nearly two years after the issuance of Decision 94-19. According to Cable Atlantic, the structure of the tariff and the Commission's comments in Decision 94-19 support its view that DEA is already unbundled.

8.

NewTel stated that the framework established in Decision 94-19 was further examined and refined in Co-location, Telecom Decision CRTC 97-15 and Decision 97-8. NewTel noted that in Decision97-8, the Commission set out the criteria upon which it based its unbundling directives to the then Stentor Operating Companies and, applying these principles, mandated the unbundling of those services deemed essential. NewTel submitted that if it were mandated to permit access to all other service components, and, in this particular case, unbundled switching, this would result in the mandated unbundling of additional services, which goes far beyond anything contemplated by the Commission in decisions 97-8 and 97-15.

9.

Cable Atlantic submitted that the Commission did not unbundle DEA in Decision 97-8 because a) DEA was already tariffed as an unbundled service; and b) in that decision, the Commission's concern was to identify those unbundled service components that a CLEC would need to compete in the local exchange market. Cable Atlantic noted that it does not intend to offer local exchange service as a CLEC using DEA and submits that it simply wants to act as a competitive access provider by providing the local digital loops in competition with NewTel. It added that the fact that the Commission did not address this possibility in Decision 97-8 does not say anything about Cable Atlantic's right to compete with NewTel in this manner.

10.

NewTel submitted that its position on DEA does not confer an undue advantage upon itself since its end-customers are required to pay for the three DEA elements whenever the service is ordered.

11.

The Commission is of the view that Cable Atlantic wishes to use its own facilities (local loop and co-located equipment) in conjunction with the PSTN termination and PSTN connectivity components of DEA in order to compete with NewTel in the local exchange market. The Commission disagrees with Cable Atlantic's comment that it would only be competing with NewTel on the digital local loop level. The Commission considers that, in fact, the service being rendered would be for all intents and purposes, switched local exchange service, which is what is offered by CLECs. The Commission is of the view that if Cable Atlantic wants to compete in the local exchange market, it must do so as a CLEC. In that respect, the Commission notes that Cable Atlantic is now offering service as a CLEC in NewTel's territory.

12.

In Decision 97-8, the Commission mandated the unbundling of certain Incumbent Local Exchange Carrier-provided (ILEC-provided) service and facility components that CLECs would require in order to compete, but would not generally be able to provide themselves. The Commission considered that this approach would ensure that CLECs are provided with an appropriate level of access, without requiring ILECs to supply facilities that CLECs should more appropriately provide themselves. The Commission did not require ILECs to unbundle switching. In Decision 97-8, the Commission determined that CLECs could provide their own switching and, accordingly, not mandate its unbundling.

13.

Decision 97-15 set out the objectives and limits of co-location. The primary purpose of co-location is to enable a competing Canadian carrier to interconnect its network with an incumbent's facilities at the latter's CO, to let the competitor reach its customers. Consistent with this, Decision 97-15 is clear that competitors are not to use co-located COs as switching locations. In fact, the decision specifically prohibits switching by competitors in co-located COs.

14.

Cable Atlantic's approach would have it collecting its customers' traffic on its own loops and then distributing the traffic through the co-located CO and out to all points on NewTel's local networks and beyond. If this were permitted, Cable Atlantic could engage in local exchange competition without ever installing its own switches and network facilities. Effectively, by installing its own loops to co-located New Tel COs, Cable Atlantic would be reselling NewTel's local exchange service to its (Cable Atlantic's) customers in perpetuity. Futher, requiring NewTel to allow Cable Atlantic to lease only certain elements of DEA such as PSTN connectivity would effectively be the same as requiring NewTel to unbundle its switching for resale by Cable Atlantic, contrary to the Commission's Decision 97-8 findings. Thus, finding in favour of Cable Atlantic's application would directly contravene the Commission's intention in its Decision 97-8 facilities-based local competition framework. Further, it would contravene the Commission's rules set out in Decision 97-15.

15.

In view of the above considerations, the Commission considers that Cable Atlantic's section 27(2) of the Telecommunications Act arguments fail; there is no undue preference to NewTel in prohibiting Cable Atlantic's connection to DEA "elements" at the CO.

16.

For the foregoing reasons, the Commission denies Cable Atlantic's request.
Secretary General

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