ARCHIVED - Telecom - Commission Letter - Eastlink /Norigen Part VII Applications -Access to In-building Wire

Letter

Ottawa, 5 June 2000

By Fax

Ms. Katherine Peart
Director, Regulatory Matters
Eastlink Telephone
P.O. Box 8660, Station A
5841 Billby Street
Halifax, NS B3K 5M3

Mr. Charles P. Farrugia
General Manager
Norigen Communications Inc.
180 Dundas Street West
Suite 2500
Toronto, ON M5G 1Z8

Re: Eastlink/Norigen Part VII Applications - Access to In-building Wire

Norigen Communications of Toronto (Norigen) and Eastlink Telephone (Eastlink) of Halifax want to connect to incumbent local exchange carrier (ILEC) controlled in-building wire at the main terminal room where the building owner:

has not accepted control of in-building wire;

will not allow the competitive local exchange carrier (CLEC) to install its own in-building (copper) wire; but

will permit CLEC access to the main terminal room (MTR).

Specifically, Norigen Communications (Norigen) seeks orders from the Commission:

directing Bell to establish a service provider demarcation point, in the main terminal room (MTR) of existing Multi-Dwelling Unit buildings (MDUs) where the building owner has not assumed responsibility and control for the in-building wire;

directing Bell to permit Norigen to interconnect its local loops to such in-building wire at the demarcation point in order to efficiently serve customers, located in MDUs, that want to select Norigen as their competitive local exchange carrier (CLEC); and

directing Bell to permit Norigen to locate its terminating equipment in the main terminal room of MDUs at a location near the demarcation point.

Eastlink asked that the Commission require Maritime Telephone and Telegraph (MTT) to charge rates based on the actual amount of wire used. That is, the rate per metre of wire would be calculated by dividing the rate for unbundled local loops by the average length of such circuits in the local rate group in question, and multiplying that rate/metre by the length of in-building wire utilized. As an example Eastlink stated that for in-building wire that is 30 meters long the rate should be $0.19 per month as this is 1.5% of the average loop length of 2 kilometers and the rate for the loop is $12.95 per month.

MTT and ATT Canada Corp. and AT&T Canada Telecom Services Company (collectively AT&T Canada) commented on Eastlink's application. Bell Canada, Eastlink, Call Net and BOMA/CIPREC commented on Norigen's application.

Connection Issue

In Location of Demarcation Point for Inside Wire in Multi-Dwelling Units and Associated Issues, Telecom Decision CRTC 99-10, 6 August 1999 (Decision 99-10) the Commission set out conditions under which local exchange carriers (LECs) could interconnect to the in-building wiring of MDUs to ensure that end-user customers in MDUs could connect to their LEC of choice.

Under Decision 99-10, the options available to a LEC wishing to serve an existing MDU where it does not own the in-building wiring are:

lease a loop from the LEC that owns or has access to the in-building wiring (most likely the ILEC).

with the permission of the building owner, place its own in building wiring; or

where the building owner has taken control (or ownership) of the wire, arrange with the owner for access to the in-building wire at the demarcation point. in the MTR.

A CLEC wishing to lease a loop from the ILEC already in the MDU must be co-located in the ILEC's Central Office (CO). Eastlink and Norigen, the applicants, are CLECs that do not use ILEC loops and therefore, do not co-locate in ILECs' COs. Rather, they provide facilities directly to MDUs they serve. This means that, in an MDU, if the ILEC still controls the wire, such non-colocated CLECs cannot serve customers in that MDU should the building owner not allow them to install their own in building wire.

Eastlink uses the cable plant provided by its affiliate cable companies to connect to the MDU. As the MTR is usually shared by cable and telephone companies, Eastlink has ready access to the demarcation point. Eastlink is requesting that the Commission direct MTT to file a tariff for rates for connection to in-building wire owned by MTT. This is because building owners have been reluctant to assume responsibility and control. Thus Decision 99-10 does not provide EastLink with viable alternatives for reaching end-users in MDUs. While Eastlink does use cable plant to connect to the building it is not feasible, and in some cases impossible, to use the existing in-building coax cable to provide local telephone services to MDU end-users.

Eastlink Telephone can currently connect to MTT-owned/controlled in-building wire in Nova Scotia, under a Commission interim order. It pays a rate of 25% of the loop rate. Eastlink is requesting that the Commission order MTT to file a tariff for CLEC connection to MTT in-building wire.

Norigen, at present, cannot connect to Bell Canada (Bell) owned and controlled in-building wire. It is requesting that the Commission require Bell Canada to permit Norigen to connect its local exchange network to Bell-owned and controlled in-building wiring where the building owner has not accepted control of the in-building wire but will allow Norigen access to the demarcation point in the MTR.

Building owners may adapt to the Decision 99-10 regime and accept responsibility and control for in-building wire. It is impossible to know how long this will take or the extent to which MDU owners will accept this control. Owners of larger MDUs in large urban centres may choose to exercise this option in the near term. However, owners of smaller MDUs in less urbanized areas, for example, or owners of residential MDUs, may be far less interested in taking on the inconvenience of accepting control and responsibility of in-building wire. In the short to medium term at least, the ability for non-colocated competitors to enter MDUs could be confined in great part to large commercial MDUs in the country's largest cities.

At present, ILECs own most of the in-building wire (except in Alberta, other than Edmonton, where it was turned over to building owners before AGT came under federal jurisdiction). Bell pointed out that in the proceeding initiated by Public Notice 98-35 (that led to Decision 99-10), the ILECs proposed that once a CLEC established feeder facilities to a building, the in-building wire would be transferred to the building owner and the service provider demarcation point would be moved to the MTR.

The Commission acknowledges that the ILECs' original suggestion for transfer of the wire (to the building owner) and moving of the service provider demarcation point (to the MTR) when the CLEC has brought its external cable into the MTR would have provided a result similar to what Norigen seeks. But, in the Commission's view, transferring wire responsibility to the landlord without the landlord's express consent would not be appropriate or in the public interest. As a result the Decision 99-10 regime directs that in-building wire be transferred only with a landlord's consent. As described above, however, such transfers are not occurring quickly, and possibly may never do so except in certain sectors. As a result, substantial barriers to entry still exist and are likely to remain for non-co-located CLECs unless the Commission takes further action.

CIPREC/BOMA argued that CLEC connection to ILEC-owned wire might encourage the ILECs not to transfer the wire to landlords under the Decision 99-10 conditions, i.e. on notice from the building owner. They added that such connection without the owner's consent could interfere unfairly with the owner's property rights. However, in the Commission's view, this fails to address the fact that if the owner has not assumed responsibility for the wire, and will not let a non-colocated CLEC install its own wire, the CLEC is barred from serving the end-user customer in that building who selects the CLEC. Thus, while CIPREC/BOMA may be right that ILECs would be less interested in transferring their in-building wire to owners, there appear to be many cases of owners who are not seeking such transfer. In the meantime, the Commission's policy of ensuring customers have access to the LECs of their choice is frustrated.

As for CIPREC/BOMA's concern over unbundling the ILEC wire without the building owner's consent, the Commission notes that connecting to the ILEC's wire would mean that the ILEC's relationship with the owner for in-building wire purposes would remain as it was under monopoly conditions, (i.e., the ILEC owned the wire) as there would still be a single owner/provider of in-building wire in the MDU. Further, as the applicants note, the applications assume conditions under which the MDU owner has allowed the non-co-located CLEC into the MTR.

In light of the forgoing, the Commission finds, on a final basis, that CLECs may connect to in-building wire that Bell and MTT control, in the circumstances outlined above.

Demarcation Point

Decision 99-10 provides that service provider demarcation points stay where they are until a building owner takes control of the in-building wire. At that point, they move to the MTR. Norigen, however, is requesting that Bell be directed to fix a service provider demarcation point in the MTR coincident with Bell's connection point between its entrance cable and its in-building wire. Norigen has also requested that Bell be directed to permit Norigen to locate its terminating equipment in the main terminal room of MDUs at a point near the demarcation point. It is emphasized that Norigen's application addresses circumstances in which the building owner has granted it permission to access the main terminal room for the purpose of installing its equipment and connecting to the in-building wire.

In the Commission's view the issue of whether a CLEC connection to ILEC in-building wire involves a demarcation point move is fundamental. If the Commission should choose to allow CLECs to connect to ILECs' in-building wire under the conditions described herein, it can give effect to its decision only by ensuring that a non-colocated CLEC can in fact connect to and use the in-building wire.

The Commission could require the access be provided and leave it up to parties to make arrangements as to whether the demarcation point is to be moved and, if not, to make their own alternative arrangements. At first glance, this would seem to be expedient, but it would likely result in time lost to disputes on where the demarcation point should be. In the alternative, the Commission could adopt the suggestion, initially rejected in Decision 99-10, that the building owner automatically take over responsibility and control once a second LEC, typically a CLEC, brings its facilities to a MDU. As indicated above, however, the Commission must reject thIs approach as it would involve transfer of control to the owner without consent.

In the Commission's view, its conclusion that it must mandate connection of CLEC facilities to ILEC-controlled in-building wire will be effective only if the ILEC is required to provide the same demarcation point and interconnection facilities that would be provided in the case where building owner takes control of the wire. In this proceeding, however, the issue of demarcation point location was raised with respect to Bell but not to MTT.

Accordingly, the Commission finds that where a CLEC is given access to the MTR in an MDU by the building owner and Bell continues to own the in-building wire, the service provider demarcation point must move to the main terminal room. Further, the Commission directs MTT to show cause, within 30 days, why this same finding should not apply to it where similar circumstances exist.

Pricing

Eastlink argued that the connection rate should be prorated based on the loop price on the basis of an average per metre charge times the length of the in-building wire being used. It said that an in-building wire service has not been requested nor is it required; that this type of interconnection does not require a "service". Eastlink noted that Inventories of in-building wire do not now exist, would be expensive to develop and maintain, and would be inconsequential to the operation of the telecommunications network or of any value to end-users.

Norigen and CallNet said the rate should be zero on the basis that Bell would transfer the wire at no charge to the building owner and therefore should not charge for CLEC connection. Bell said if it had to offer in-building wire to CLECs under Commission approved tariffs, even interim ones, a building owner could assume control of the in-building wire and apply similar charges to all LECs in the building. Call Net added that building owners could adopt any approved rate as a benchmark for prices they might charge. Bell said that its current tariffs for local exchange service do not reflect the additional costs for paying such rates to MDU owners. It also said that there would be costs administering the wire as a service.

Establishing the service provider demarcation point may require that the serving ILEC incur some costs that would normally be incurred by the building owner when he takes over responsibility and control and establishes the point of interconnection. No record is available on the costs that may or may not be involved.

However, the Commission will issue a public notice for a proceeding to determine the terms and conditions under which LECs will connect to in-building wire controlled by building owners or owned by other LECs, or gain access to the riser. It will be at the completion of that proceeding that the Commission will be in a position to reach conclusions on final terms and conditions for LEC in-building wire connection. In the meantime, the Commission must set an interim rate for CLEC connection to ILEC controlled in-building wire.

In its interim ruling of 12 November 1999, allowing Eastlink to connect to MTT controlled wire, the Commission settled on a charge per connection of 25% of the loop rate. The Commission has reassessed the appropriateness of the existing interim rate.

Loops typically extend from one to perhaps five kilometers between the customer location and the serving end-office. Loop costs (and, thus, prices) vary by band within an ILEC territory, based on differences in average loop length, density and terrain. They also vary by ILEC territory based on differences in ILEC costs such as labour and other factors. In-building wire, on the other hand, varies in length based on a customer's location in an MDU. Terrain does not affect in-building wire costs as it does with loop costs. Its costs do not vary by rate band. In short, there is very little relationship between loop cost variance and in-building wire costs variance.

Under the current ruling applicable to MTT, where a Band B loop is $16.00, Eastlink would be required to pay $4.00 per month per channel to connect to an MTT-owned in-building wire. If this were extended to Bell, then in Band B, Norigen would pay $4.60 per month per channel. In the Commission's view, given the tenuous relationship between loop cost variance and in-building wire costs variance, basing the wire connection rate on a fixed relationship with the loop rate is not appropriate. Further, given the very substantial differences in loop lengths compared to length of in-building wire one would expect a wire connection rate should be lower than 25% of a loop rate.

The Commission considers that maintaining a rate, even an interim rate, at a level that is excessive would not be in the public interest. Such a rate is likely to result in competitors overpaying ILECs and it could also establish an inappropriate basis for building owners to set prices.

The Commission is of the view that an appropriate interim rate for CLEC connection to Bell-controlled in-building wire is $1.00 per month per channel for each in-building wire connection. Similarly, based on the record of this proceeding, the Commission is of the view that the MTT interim rate should be revised from its current 25% of the loop rate to $1.00 per month per channel for each in-building wire connection, on an interim basis.

The Commission notes that this interim regime does not impose on the ILEC any obligations on the provision and maintenance of its in-building wire beyond what has been normally expected under monopoly conditions except that the CLEC can now connect to the ILEC owned and controlled in-building wire.

The Commission is of the view that where a CLEC connects to serve a customer it has taken from the ILEC, there is unlikely to be any in-building wire growth issue. Growth should be largely the same as it was under ILEC monopoly conditions. However, in the rare event that capacity runs out in an MDU, during this interim regime, any expansion of in-building wire that the ILEC undertakes could be treated as a shared cost by all the LECs, prorated based on the number of facilities connected to in -building wire for each LEC serving end-users in the building.

Call Net noted that if the Commission set a rate for connections to ILEC controlled in-building wire, the ILEC might seek to add that price on to the loop rate charged to a colocated CLEC. The Commission notes that the price of the unbundled loop for a co-located CLEC will continue to include the in-building wire up to the customer demarcation point (where the inside wire connects to the in-building wire) as these costs are included in the price of the unbundled loop. As such, the in-building wire connection rate will apply only when a CLEC seeks to connect its own facilities to the in building wire at the demarcation point in the MTR.

Rules in other ILEC Territories

Applications filed thus far have been specific to MTT and Bell. The Commission notes, however, that the issue is applicable in other ILEC territories as well. As a result, the Commission by copy of this letter, directs Telus Communications (for its territories in Alberta and British Columbia), MTS Netcom (for Manitoba, and the Aliant companies, other than MTT (for New Brunswick, PEI and Newfoundland) to show cause within 30 days why the same regime applicable to Bell should not apply to them. The Commission also directs all registered CLECs to show cause, by the same date, why the same regime should not apply to any CLEC that owns or controls in-building wire in an MDU.

Yours sincerely,

Ursula Menke
Secretary General

c.c. Registered CLEC List
Interested parties - PN 98-35
Interested parties - PN 96-28
Campbell Laidlaw, CRTC, (819) 997-4579