ARCHIVED - Order CRTC 2000-983

Order CRTC 2000-983

Ottawa, 27 October 2000

Digital subscriber line service providers' access approved for unbundled loops and co-location

Reference: Bell Canada TNs 6475/6475A and  8622-C85-01/00

This order provides the rationale behind the recent CRTC decision to give digital subscriber line (DSL) service providers the same interconnection benefits as competitive local exchange carriers (CLECs).

Applications from a potential DSL service provider, Covad Canada Communications Inc., and Bell Canada resulted in the CRTC letter decision on 21 September 2000. It directed that telephone companies must give DSL service providers access to unbundled, unloaded loops and co-location at the same rates, terms and conditions already approved for CLECs.

Saskatchewan Telecommunications (SaskTel) identified possible network architecture variations from other telephone companies and is invited to respond.

Terms used in this order

Digital subscriber line (DSL) service provides high-speed access to digital networks via the same copper telephone lines that are used for common voice telephone services.

DSL service providers in this order are non-facilities-based resellers.

Unloaded copper loops are used exclusively for digital data communications and have none of the noise-filtering equipment required for analog voice-grade lines. Noise filters tend to limit the digital frequencies, absorb the pulses, and kill the signal.

Digital subscriber line access multiplexer (DSLAM): In a telephone company's central office, DSL customers' telephone lines are connected to a DSLAM instead of a traditional telephone switch. Companies that compete with the telephone companies are allowed to co-locate their own DSLAM at the central office to ensure customers have a choice of service providers.

Bell Canada files DSL tariff

On 27 April 2000, Bell Canada filed Tariff Notice (TN) 6475, amended by TN 6475A dated 5 May 2000. It proposed a tariffed service to provide DSL service providers with the capability to lease unbundled and unloaded copper loops and associated connecting links for interconnection with the DSL service providers' equipment.

Covad Canada's Part VII application

Covad Canada filed an application on 5 May 2000 asking the Commission to direct the incumbent local exchange carriers (ILECs) to modify their General Tariffs to offerDSL service providers the same rates, terms and conditions applicable to both unbundled local network components and co-location arrangements as those currently available to CLECs and Canadian carriers.

Access to unbundled loops and co-location

Only CLECs and certain other Canadian carriers (e.g. interexchange carriers) are given mandated access to unbundled loops and General Tariff co-location. Therefore, DSL service providers cannot access unbundled loops and co-location through the General Tariff. Rather, they must provide DSL:

a) on a line-shared basis, through a customer's primary exchange service;

b) through use of ILEC tariffed local copper channels designed for low-speed data; or

c) through use of unbundled copper loops obtained by CLEC arrangements.

Covad Canada maintains these limits are a significant competitive disadvantage for DSL service providers relative to CLECs, ILECs and other Canadian carriers.

In Covad Canada's view, there are currently no tariffs in effect which allow a DSL service provider to obtain co-location from any ILEC on a General Tariff basis and on the same terms and conditions as those available to CLECs. Although virtual co-location can be obtained on a Special Facilities Tariff (SFT) basis, the ILECs have placed additional conditions in the SFT arrangements, such as the requirement for the DSL service provider to purchase General Tariff transport to the DSL access multiplexer from the incumbents.

Most reseller companies offering similar DSL services supported Bell Canada's application, while CLECs tended to oppose it.

Comments on Covad Canada's application were received from resellers, CLECs, potential CLECs, Internet service providers (ISPs) and ILECs. Several ISPs including BCNET Networking Society, British Columbia Internet Association, Western Internet Portal Services Inc. and Primus Telecommunications Canada Inc. supported Covad Canada's application. However, TELUS Corporation argued, among other things, that Covad Canada's application was a request to review and vary Telecom Decisions CRTC 97-8, Local competition, dated 1 May 1997 and 97-15, Co-location, dated 16 June 1997, and that Covad Canada had failed to meet the Commission's review and vary criteria. Moreover, TELUS believes the Commission should not consider approving any part of the application without first canvassing wider industry and public opinion in a broader proceeding.

In the Commission's view, Covad Canada's application does not constitute a request to review and vary Decisions 97-8 and 97-15 because it doesn't take issue with the original correctness of those decisions. Moreover, as noted by Covad Canada, both decisions dealt specifically with the switched local voice market, while Covad Canada's application is with respect to the local data access market.

Bell Canada Tariff Notices 6475/6475A

The basis for Bell Canada's rationale for its tariff filings is as follows:

· DSL service providers need "unloaded" copper transmission facilities access to provide their services;

· Bell Canada's proposed tariff would stop DSL service providers from having to use other tariffed services such as local low-speed data channels for unloaded copper that were not designed for DSL.

CLECs Call-Net Enterprises Inc. and Optel Communications Corporation (now AXXENT Corp.) argued, among other things, that Bell Canada's tariff filings raise a number of significant policy concerns which should be addressed before the Commission disposes of the application.

Call-Net submitted that approval of TNs 6475/6475A would lead to a significant increase in demand for co-location space that in many cases is not available. Call-Net said that currently, co-location is being used almost exclusively for the provision of local voice services. Any limitation on its availability would curtail the expansion of competitive local voice services.

AXXENT submitted that permitting DSL service provider access to unbundled loops at mandated rates without the requirement to be a Canadian carrier or a CLEC would create an uneven playing field. If DSL service providers were not subject to Canadian CLEC ownership and control rules, they would potentially have greater access to more foreign capital than CLECs, and would be free to compete in the most attractive and fastest growing segment of the local access market.

AXXENT submitted that DSL technologies are employed to provide both voice and data services. Call-Net indicated that nothing could restrict DSL service providers from providing local voice traffic.

ISPs and resellers generally submitted that the development of DSL competition is not meeting consumer demand and that delaying approval of Bell Canada's tariff filings would further hinder meaningful competition.

Riptide Networks Inc. supported Bell Canada's tariff filings and added that local network interconnection and component unbundling should be restricted to interconnecting carriers. However, long distance reseller Primus Canada disagreed, arguing that if TNs 6475/6475A were restricted to interconnecting carriers, the proposed tariff would be futile.

Covad Canada's Part VII application

Covad Canada sought two forms of relief:

· access by DSL service providers to unbundled loops at mandated rates and rights of co-location identical to those of Canadian carriers; and

· a special regime for DSL service providers to be established that doesn't impose ownership restrictions or require these entities to become CLECs.

Covad Canada also argued that Canada is required to give DSL service providers mandated access to unbundled loops due to commitments from the Fourth Protocol to the General Agreement on Trade in Services (GATS), otherwise Canada would be vulnerable to a World Trade Organization challenge. Covad Canada also submitted the extension of such rights to DSL service providers would stimulate competition in this sector, resulting in lower prices and increased customer choice. Covad Canada also believes that approval of its application would facilitate the federal government's Connectedness Agenda.

Covad Canada submitted that DSL service providers cannot get unbundled loops at all, let alone at the same rates as CLECs, and thus are unable to offer an economically competitive service. Also, CLECs compete against DSL service providers in the same market, so there is no incentive for CLECs to resell the unbundled loops that they obtain from ILECs.

Covad Canada submitted that the DSL market in Canada has been artificially constrained. This, in turn, has contributed to a slower roll-out of DSL services and lower rates of adoption.

TELUS and Bell Canada argued that Covad Canada's portrayal of the Canadian high-speed Internet access service marketplace as competitively deficient and underserved is incorrect and misleading.

Covad Canada countered by noting that while it is true there is a competitive alternative to DSL services via coaxial cable Internet access service, DSL supply is confined to the retail and wholesale DSL services of the ILECs.

In a joint submission AXXENT, AT&T Canada Corp., Call-Net and GT Group Telecom Services Corp., (all of which are CLECs) requested a further, broader public proceeding to deal with both applications and to examine broader issues. Otherwise, these parties believe Covad Canada's application and Bell Canada's TNs 6475/6475A should be denied. Reseller NorthPoint Canada made similar submissions.

Commission approves mandated access and co-location for DSL service providers

Current conditions cause interference with other customers 

Under current conditions, DSL service providers have little choice but to use tariffed ILEC services to provide their own services. These tariffed services are low-speed unloaded copper non-switched local channel offerings originally designed for low-speed data applications. The Commission notes Covad Canada's and Bell Canada's common concern that, when these low-speed services are underlying high-speed DSL offerings and are in cable bundles that also contain facilities for other data customers, they cause interference with these other customers' data transmissions.

Bell Canada noted that DSL service providers' use of unbundled loops in lieu of their current use of low speed data facilities will eliminate the interference problem. As well, the Commission notes that Bell Canada's application is the result of Commission-encouraged negotiations between Bell Canada and the Canadian Association of Internet Providers.

In light of the above, the Commission considers that if the applications are approved, the issue of interference with other users noted above would be eliminated.

Voice over DSL

CLECs such as Call-Net and AXXENT said that once DSL service providers had access to the loop tariff, nothing would restrict them from providing local voice access on their DSL services. The Commission notes, however, that local exchange competition rules apply to the switched local voice market. To provide such services, a DSL service provider would have to be given connections to the switched local telephone network that is controlled by the LEC providing the loops. The current rules require LECs to be Canadian carriers. The Commission is satisfied, therefore, that prohibiting LECs from providing DSL service providers with local switched telephone network connections will ensure that DSL service providers will be unable to provide switched local voice.

CLEC obligations still apply

The CLECs argued, among other things, that approving DSL service providers' access to the loop tariff and co-location would be unfair to CLECs who would continue to have to meet Decision 97-8 obligations as a condition of using local loops, but DSL service providers would not.

The Commission disagrees. As Covad Canada suggests, data access transmission - either high or low speed - was not an issue in the Decision 97-8 and Decision 97-15 proceedings. The Commission also notes Covad Canada's reference to Telecom Decision CRTC 98-12 in which the Commission prohibited resellers, which would include DSL service providers, from entering the switched local voice market for reasons that remain valid. The Commission notes that approval of the two current applications would maintain the prohibition against resellers being CLECs.

This is based on the fact that resellers providing DSL services are not offering switched local voice. Rather, they would provide broadband data and other digital access services via the unbundled loops and connecting links, as well as co-location, to give users access to networks such as the Internet and local area networks. There would be no issue of enforcing consumer safeguards for basic telephone service. The Commission's rule would continue to apply that only LECs may provide switched local voice services and therefore, related consumer safeguards would continue to be directly enforced on these carriers by the Commission.

Competition in Internet access

The Commission notes that facilities to provide broadband Internet and other data access are not particularly widespread. ILEC tariffs are in place to allow DSL service providers to provide asymmetric digital subscriber line (ADSL), but this is only a small subset of other DSL services that customers want. Under the current rules, CLECs have the option to resell loops and connecting links they have leased from ILECs to DSL service providers. This has not occurred to any great degree and itis unlikely to happen in the near term as CLECs have not seen this as being in their interest so far.

Broadband Internet access services are available for cable companies for resale, but the take rate has been limited. As yet, resellers cannot interconnect to cable company networks to obtain underlying broadband facilities for provision of broadband data access. In short, supply of facilities needed for provision of broadband data access continues to be limited.

Price and access inequity quashed

As noted earlier, Bell Canada has proposed to offer unbundled loops and connecting links to DSL service providers but not necessarily at the same rates, terms and conditions that it applies to CLECs. The loops and connecting links that they would use are exactly the same as those that CLECs use. DSL service providers would use them to provide broadband data access services and CLECs can use them to provide local switched voice as well as broadband data access services. In these circumstances, the Commission is of the view that DSL service providers should be subject to the same rates, terms and conditions as CLECs as they would receive the same services from Bell Canada.

In the Commission's view, conditions have changed significantly since Decision 97-15 was issued. The decision was directed at promoting competition in voice telecommunications markets. It permitted competing carriers to interconnect with ILEC facilities by using their own facilities up to the ILEC's central office, where they would co-locate their terminating equipment for interconnection.

If DSL service providers are not able to co-locate, they would not be able to seek the best price from competing carriers for the facilities they need to connect their points of presence to the central office. They would be captives of the ILECs for these facilities, as Bell Canada has effectively proposed in its application. The Commission believes this would reduce potential for efficient competitive entry with obvious disadvantages to consumers. In addition, it would disadvantage competing carriers supplying such facilities. In the Commission's view, therefore, mandating the expansion of co-location for reseller DSL service providers is warranted under these conditions.

Access to foreign capital

AXXENT objects that reseller DSL service providers could access foreign capital which is unavailable to CLECs because they must be Canadian owned and controlled. While this may be correct, the Commission notes that any reseller has, and always has had, access to foreign capital. The Commission has never found this to be a good regulatory reason to block reseller access to markets or facilities.

As noted above, demand for broadband data access services is growing and supply is concentrated in relatively few hands. The Commission's view is that encouraging competitive entry may help diversify supply. Therefore, the fact that DSL service providers may be able to obtain foreign capital should not be a reason to disallow their access to the unbundled loop and co-location tariffs.

Competitive long distance carriers and resellers are permitted to use unbundled loops for the purposes of providing direct access lines. A number of ISPs have co-location now through SFTs at rates that match those in the General Tariff. Thus, there is a precedent for allowing resellers to use co-location services.

The Commission has received and continues to receive disputes from competitive entrants seeking access to co-location space and copper loops. By establishing a tariffed access to these facilities for non-Canadian carriers such as DSL service providers, the procedural objections from ILECs to such access will be eliminated, but the physical facilities limitations and disputes will remain. In some central offices, the ILECs are arguing that physical space and facilities are not available for co-location. The issues related to co-location are being addressed in other proceedings as well as through the Co-location (dispute resolution) Group.

Based on the record, the Commission considers that approval of Bell Canada's TN with amendments and Covad Canada's application will serve the public interest, is consistent with the objectives of the Telecommunications Act and will help consumers to obtain affordable, innovative and high quality telecommunications services. Further, in the Commission's view, these approvals will help in reducing the problem of number exhaust. Exclusive reservations of central office codes by DSL service providers who do not need them (but must reserve them to qualify as CLECs in order to access the loops and co-location tariffs) will no longer be necessary.

CRTC's determinations

As noted previously, the Commission has already issued its disposition of Covad Canada's application, and Bell Canada's tariff filings. Specifically, the Commission:

a) approved Bell Canada's application TNs 6475/6475A with the modification that Bell Canada provide the services proposed in those notices to DSL service providers at the same rates, terms and conditions as the CLECs;

b) granted Covad Canada's application for relief, with respect to the modification of the ILECs' General Tariffs. Specifically, DSL service providers may lease unbundled loops and connecting links on the same basis as CLECs in the ILECs territories. Further, DSL service providers may lease from the ILECs, all services related to co-location under the same General Tariff rates, terms and conditions and central office licensing agreements currently available to CLECs and other Canadian carriers;

c) directed Bell Canada to issue within 30 days tariff pages and an amended central office licensing agreement reflecting the determinations made in a) and b) above;

d) directed the other ILECs to issue within 30 days tariff pages and amended central office licensing agreements reflecting the determination made in b) above; and

e) gave SaskTel and parties an opportunity to provide comments on the appropriateness of applying the directions in d) above to SaskTel. It and other parties could file submissions, serving copies on other parties, on or before 6 October 2000.

The Commission also noted that DSL service providers that are not CLECs having access to tariffs for unbundled loops and connecting links and for co-location may not use these services to provide switched local voice services. The Commission directed all ILECs, and any CLECs providing such services to DSL service providers, to ensure that DSL service providers do not use them for the provision of switched local voice services.

Registration requirements

DSL service providers are required to register with the Commission and provide the name of the carrier supplying unbundled loops and co-location.

Further process possible for SaskTel

In a letter dated 6 October 2000, SaskTel provided its views concerning the appropriateness of applying the directions in d) above to SaskTel. On a preliminary basis, SaskTel is of the view that it would appear to be as appropriate to offer unbundled loops, connecting links and co-location to DSL service providers in its territory as it is within the territories of the other ILECs. However, SaskTel requested the right to supplement its preliminary comments following release of the Commission's reasons. SaskTel indicated its concern about certain implementation issues that may arise due to its network architecture. For example, SaskTel does not guarantee that a copper loop will terminate in a central office. Due to a utilization of a large proportion of digital concentrators and integrated digital loop carriers (IDLCs), copper loops that appear at concentrators or IDLCs are not available at a central office where a DSL service provider may co-locate.

Covad Canada submitted that it would be appropriate to apply the 21 September 2000 determinations to SaskTel:

a) as a benefit to ensuring uniformity;

b) in view of SaskTel's commitment to align with federal telecommunications policies with those applied to other ILECs; and

c) in the public interest of meeting demand for high-speed Internet access services across Canada.

Directive for SaskTel tariff filing

SaskTel may supplement its preliminary comments and comments on any implementation problems it anticipates, within 10 days from the date of this order, serving copies on parties who commented on Bell Canada's and Covad Canada's applications.

Parties may file submissions on SaskTel's comments with the Commission, serving copies on all other parties, within five days.

Secretary General

This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca 

Appendix 1

Reference documents:

Telecom Decision CRTC 97-8, Local competition, dated 1 May 1997

Telecom Decision CRTC 97-15, Co-location, dated 16 June 1997

Telecom Decision CRTC 98-12, ACC TelEnterprises Ltd. - Application dated 26 September 1997 to review and vary Telecom Decision CRTC 97-8, Local competition, 1 May 1997, dated 7 August 1998

Public Notice 2000-17, CRTC Industry Steering Committee (CISC) administrative guidelines and new interested party list, dated31 January 2000

Appendix 2

List of parties

· AXXENT Corp. on behalf of itself, AT&T Canada Corp., Call-Net Enterprises Inc., and GT Group Telecom Services Corp.

· British Columbia Internet Association

· BCNET Networking Society

· Bell Canada on behalf of Island Telecom Inc., MTS Communications Inc., Maritime Tel & Tel Limited, NBTel Inc., and NewTel Communications Inc.

· Call-Net Enterprises Inc.

· Canadian Association of Internet Providers

· Covad Canada Communications Inc.

· NorthPoint Canada

· Primus Telecommunications Canada Inc.

· PSINet Limited

· Riptide Communications Inc.

· TELUS Corporation

· Western Internet Portal Services Inc.