ARCHIVED - Order CRTC 2001-501

Order CRTC 2001-501

Ottawa, 29 June 2001

CRTC refrains from regulating O.N.Telcom's delivery of mobile wireless services

Reference: 8640-O4-01/00

Since 1994, the Commission has generally refrained from the regulation of cellular service providers where a competitive environment either exists or is likely to exist.

In prior forbearance decisions, the Commission has refrained, with some conditions, from regulating markets where mobile voice wireless telecommunications services are connected to the public switched telephone network (PSTN). Examples of these wireless services include cellular services, personal communications service, enhanced specialized mobile radio service, and satellite-based mobile services.

Mobile wireless voice services connected to the PSTN are the only cellular services that O.N.Telcom provides.

With this order, the Commission refrains from regulating O.N.Telcom's cellular services. However, the Commission has decided to retain some of its regulatory powers to ensure that the company will protect the confidentiality of customer information, and that it does not either discriminate unjustly against other companies or extend an undue preference to itself.

1.

On 29 November 2000, O.N.Telcom requested that the Commission refrain, pursuant to section 34 of the Telecommunications Act (the Act), from exercising its powers and performing all its duties under sections 24 (in part), 25, 29 and 31, and sections 27(1), 27(5) and 27(6) of the Act in relation to mobile wireless services provided by the company.

2.

Beginning with Telecom Decision CRTC 94-15, Regulation of wireless services, dated 12 August 1994, the Commission forbore from regulating cellular and other mobile wireless services when it found, as a matter of fact that:

· markets for mobile wireless services were or will be sufficiently competitive to protect the interests of users (section 34(2));

· forbearance would further the government telecommunications policy objective of greater reliance on market forces (section 34(1)); and

· forbearance would not endanger unduly the establishment or continuation of a competitive market (section 34(3)).

3.

The Commission outlined the criteria it would use to assess applications for forbearance from regulation in Review of regulatory framework, Telecom Decision CRTC 94-19, dated 16 September 1994.

4.

The Commission generally has forborne from regulation of mobile wireless services:

· where markets are competitive and new suppliers could enter the market;

· where there are safeguards against cross-subsidies from utility to wireless services; and

· where carriers have few incentives to cross-subsidize wireless services with revenues from utility or regulated services since, with the entry of new suppliers, carriers would be unable to recoup losses from below cost pricing.

5.

In Decision 94-15, the Commission forbore from the regulation of mobile wireless services when the services were provided at arm's length from a telephone company's utility operations by a structurally separate affiliate. In subsequent decisions, the Commission has forborne from regulating mobile wireless services provided in-house by a telephone company, if the company had implemented the split rate base or other accounting separations between the company's utility and competitive operations, and provided that markets for mobile wireless services were competitive and entry was possible. These decisions included:

· Telecom Decision CRTC 98-15, Application by Bell Canada to review and vary Telecom Decision CRTC 96-14, dated 2 September 1998;

· Telecom Decision CRTC 98-18, NBTel Inc. - Forbearance from regulating cellular and personal communications services, dated 2 October 1998;

· Telecom Decision CRTC 98-19, Forbearance from regulation of mobile wireless services provided by municipally owned telephone companies, dated 9 October 1998; and

· Telecom Order CRTC 99-991, dated 13 October 1999.

6.

In prior forbearance decisions, the Commission has forborne conditionally from mobile wireless voice services connected to the public switched telephone network. These are the only cellular services that O.N.Telcom provides.

O.N.Telcom's application

7.

O.N.Telcom submitted that Bell Mobility, NorTel Mobility, TELUS Mobility and Rogers AT&T provide mobile wireless services in O.N.Telcom's territory in areas where O.N.Telcom does not now offer such services. In addition, it stated that it is subject to competition from satellite-based carriers, such as Globalstar, and all of these carriers provide services on a forborne basis.

8.

O.N.Telcom submitted that, pursuant to prior Commission decisions, an integrated telephone company could provide mobile wireless services.

9.

O.N.Telcom also submitted that, pursuant to Telecom Decision CRTC 98-14, Regulatory framework - Ontario Northland Transportation Commission, dated 1 September 1998, the company has adopted the Phase III accounting framework. It has also split its rate base into utility and competitive segments, as described in Phase III costing, Carrier Access Tariff and split rate base procedures Manual. O.N.Telcom argued that, consistent with the Commission's views in previous forbearance decisions, costing safeguards prevent cross-subsidies between O.N.Telcom's utility services and the company's competitive mobile wireless services.

10.

Further, O.N.Telcom submitted that forbearance from regulation of its mobile wireless services would be consistent with the Canadian telecommunications policy objectives stated in section 7 of the Act, in particular, enhanced competitiveness and increased reliance on market forces.

Conclusion

11.

The Commission considers that in most of its territory O.N.Telcom's mobile wireless services would face competition from established land-based carriers (Bell Mobility, NorTel Mobility, Rogers AT&T and TELUS Mobility), as well as satellite based carriers. These carriers provide mobile wireless services on a forborne basis. The Commission considers that O.N.Telcom's presence, on a forborne basis, in this market would further increase competition.

12.

The Commission notes that in Moosonee and Moose Factory (two communities where only O.N.Telcom has wireless facilities), NorTel Mobility and Bell Mobility have entered into roaming agreements with O.N.Telcom, and they resell O.N.Telcom's mobile wireless services. The Commission is of the view that such resale provides competition for O.N.Telcom's wireless services. Further, the Commission notes that Rogers AT&T already has a licence to serve the two communities, and the possibility of entry by Rogers AT&T should discipline O.N.Telcom's provision of wireless services.

13.

Accordingly, the Commission is of the view that there would be sufficient competition to protect user interests if the Commission were to refrain from regulation of mobile wireless services provided by O.N.Telcom, and that, accordingly, it would be appropriate to forbear pursuant to section 34(2) of the Act.

14.

The Commission notes that the company obtains only a small portion of its revenues from utility services. The Commission also is of the view that O.N.Telcom's implementation of the split rate base accounting framework makes it unlikely that O.N.Telcom would cross-subsidize mobile wireless services with revenues from utility services. Based on these considerations, the Commission is of the view that refraining from regulation of O.N.Telcom's mobile wireless services would not unduly endanger the establishment or continuation of a competitive market, consistent with section 34(3) of the Act.

15.

Further, the Commission is of the view that forbearance from regulating mobile wireless services provided by O.N.Telcom would be consistent with the Canadian telecommunications policy objectives of the Act.

16.

In light of the above, in respect of public switched mobile voice services provided by O.N.Telcom, the Commission finds that:

a) pursuant to section 34(1) of the Act, it is consistent with the Canadian telecommunications policy objectives to refrain from exercising powers and performing duties under sections 24 (in part), 25, 29 and 31, and sections 27(1), 27(3) (in part), 27(5) and 27(6);

a) pursuant to section 34(2) of the Act, the provision of these services is subject to sufficient competition to protect the interests of users;

b) pursuant to section 34(3) of the Act, to refrain from exercising the powers and performing the duties to the extent set out in this order would not likely impair unduly the continuance of a competitive market for these services; and

c) it is appropriate to retain its powers and duties under section 24 (in part) and sections 27(2), 27(3) (in part) and 27(4) of the Act.

17.

The Commission will retain in part its powers under section 24 of the Act to ensure that the existing conditions regarding disclosure of confidential information to third parties will continue to apply, and to impose conditions as may be needed in the future. Accordingly, from now on, the existing conditions concerning customer confidentiality will be included, where appropriate, in all contracts or other arrangements with customers for the provision of the services forborne in this order.

18.

The Commission is of the view that, consistent with Telecom Decision CRTC 96-14, Regulation of mobile wireless telecommunications services, dated 23 December 1996, and Decision 98-18, retaining sections 27(2), 27(3) (in part) and 27(4) will, for example, ensure that O.N.Telcom does not unjustly discriminate against other service providers or customers, or confer an undue or unreasonable preference with respect to access to its network.

19.

The Commission considers it necessary to retain section 27(3) to the extent that it does not refer to compliance with any of the powers and duties forborne from in this order.

20.

The Commission therefore orders that:

a) pursuant to section 34(4) of the Act, effective from the date of this order, sections 24 (in part), 25, 29 and 31, as well as sections 27(1), 27(3) (in part), 27(5) and 27(6), to the extent that they are inconsistent with the Commission's determinations in this order, do not apply to O.N.Telcom's public switched mobile voice services; and

b) O.N.Telcom issue, within two weeks of this order, revised tariff pages reflecting the Commission's determinations in this matter.

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