ARCHIVED - Order CRTC 2001-3

Order CRTC 2001-3

Ottawa, 11 January 2001

Affiliate rule for competitive local exchange carriers

The Commission establishes an affiliate rule for the resale of local exchange services and facilities provided by competitive local exchange carriers. The Commission also changes the affiliate rule for incumbent local exchange carriers.

Reference: 8622-C12-09/00

In Telecom Order CRTC 99-1127, dated 8 December 1999, the Commission noted that, absent an affiliate rule, a local reseller affiliated with Microcell Connexions Inc. could in sum and substance enjoy all of the advantages of being a competitive local exchange carrier (CLEC), without having the obligation to provide equal access to end-customers. The Commission was of the view that CLECs such as Microcell should not be able to restrict consumer choice by selling their local services through an affiliate which does not offer equal access to any interexchange service provider that requests it.

Accordingly, the Commission imposed a local resale affiliate rule prohibiting Microcell, if operating as a CLEC, from reselling its local services to an affiliated company unless the affiliate itself offers equal access to any interexchange service providers at terms and conditions that would be appropriate for Microcell operating as a CLEC.

In Local resale affiliate rule for competitive local exchange carriers, Public Notice CRTC 2000-53, dated 10 April 2000, the Commission expressed the preliminary view that the local resale affiliate rule set out for Microcell in Order 99-1127 should apply to all CLECs, and sought comments on that view.

Action Réseau Consommateur, Consumers' Association of Canada and the National Anti-Poverty Organization, in a joint submission; Bell Canada, on behalf of itself and Island Telecom Inc., Maritime Tel & Tel Limited, MTS Communications Inc., NBTel Inc. and NewTel Communications Inc.; Call-Net Enterprises Inc. on behalf of itself, Vidéotron Communications Inc. and Call-Net Communications Inc.; Microcell Telecommunications Inc. and TELUS Communications (B.C.) Inc. filed comments or reply comments.

Affiliate rule for CLECs

All parties agreed that the affiliate rule, as set out in Order 99-1127 and in PN 2000-53 would be an effective way to ensure that affiliates of CLECs provide the same choice of interexchange carriers as the affiliated CLEC. Parties also submitted that the affiliate rule would ensure competitive equity.

TELUS and Microcell argued that the equal access requirement may not serve the public interest, since it would preserve the artificial distinction between local and long distance services and could distort investment decisions.

The Commission continues to be of the view that consumers should have equal access to all interexchange carriers, and considers that the affiliate rule imposed in Order 99-1127 on Microcell should apply to all CLECs.

Changes to affiliate rule for ILECs

Call-Net submitted that there is an inconsistency between the proposed affiliate rule for CLECs and the affiliate rule for incumbent local exchange carriers (ILECs), in that carrier affiliates of CLECs, but not of ILECs, would be obligated to provide equal access to the same interexchange service providers as the affiliated local exchange carrier.

Call-Net argued that a carrier affiliate of an ILEC may obtain a competitive advantage by entering into exclusive arrangements with affiliated or other interexchange carriers.

At present, the Commission relies on complaints by competitors or users to ensure that ILEC affiliates permit customers to chose their interexchange carrier. This process could entail considerable delay. The Commission considers it more effective if carrier affiliates of ILECs were also required to provide equal access to interexchange carriers.

Conclusion

In light of the foregoing, the Commission:

a) directs existing CLECs to file, within 30 days of the date of the order, for approval by the Commission, tariff pages that:

i) define the terms "affiliate", "control" and "related persons", similar to the definition of these terms in the tariffs of the ILECs; and

ii) state that any affiliate of a CLEC must provide equal access to the same interexchange service providers as the affiliated CLEC;

b) directs CLECs not to sell, for the purpose of resale, local exchange services and facilities to affiliates that do not undertake to provide the same degree of consumer choice of interexchange carriers as the affiliated CLEC;

c) directs the ILECs to ensure that their affiliates that resell their local exchange services provide equal access to the same interexchange service providers as the affiliated ILEC whose services are resold; and

d) amends the list of CLEC obligations established pursuant to Local competition, Telecom Decision CRTC 97-8, dated 1 May 1997, to reflect the CLEC obligations stated above.

Secretary General

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