ARCHIVED - Decision CRTC 2001-572

Decision CRTC 2001-572

Ottawa, 10 September 2001

Reference: 8622-C25-07/00

To: Interested parties - Call-Net Part VII applications
Interested parties - PN 2000-124
Registered CLEC list
Netricom Communications Solutions

Subject: Direction, on an interim basis, that local exchange carriers must retain responsibility and control of their in-building wire pending the final determination in the PN 2000-124 proceeding

1. In Decision CRTC 2001-364, dated 19 June 2001, in disposing of applications filed by Call-Net Enterprises Inc., the Commission, among other things, stated its intention to re-open the proceeding launched by Public Notice CRTC 2000-124, Seeking public input on access to multi-dwelling units, in-building wiring and riser space, dated25 August 2000, and to seek comment on the following questions:

• in buildings where the transfer of responsibility and control of in-building wire has not yet taken place, should the Commission modify the demarcation points for unbundled local loops to maintain the service provider demarcation point at the customer demarcation point in the event that building owners assume responsibility and control of incumbent local exchange carrier (ILEC) owned in-building wire?

• in existing buildings where the transfer of responsibility and control has not yet taken place, should the transfer of responsibility and control of existing ILEC owned and controlled in-building wire to building owners no longer be permitted?

2. The Commission also initiated a show cause proceeding to determine whether local exchange carriers (LECs) should be directed, on an interim basis, to retain responsibility and control of their in-building wire pending the final determination in the PN 2000-124 proceeding.
   
   
3. Call-Net Communications Inc., Saskatchewan Telecommunications and TELUS Communications Inc. (TCI) were in favour of the interim directive. Call-Net noted that where responsibility and control of in-building wire has been transferred to the building owner, the competitive local exchange carrier (CLEC) is responsible for making arrangements with the building owner to connect the loop from the main terminal room to the customer suite. Call-Net submitted, among other things, that for CLECs, the added complexity and cost of having to deal with building owners to extend unbundled loops to the customer's suite is a further barrier to the development of local competition. Call-Net stated that an interim order preventing further transfer of responsibility and control of inside wire to building owners will not prejudice either LECs or building owners; if the Commission ultimately rules in favour of transfers, the only effect of the interim order would be delay, which would be a minor inconvenience. Call-Net also stated that if the Commission ultimately rules that such transfers are not in the public interest, there will likely be no practical way to undo any transfers that have occurred.
   
   
4. The Canadian Institute of Public and Private Real Estate Companies (CIPPREC) on behalf of itself and the Building Owners and Managers Association Canada (BOMA) (collectively, CIPPREC/BOMA); Bell Canada on behalf of itself, Aliant Telecom Inc., and MTS Communications Inc. (collectively, Bell Canada et al.); and Netricom Communications Solutions were opposed to an interim direction to prohibit transfers of in-building wire.
   
   
5. Bell Canada et al. submitted, among other things, that the proposed interim direction should not be issued as it would almost certainly elicit a negative reaction from building owners, and would likely make the resolution of other building access issues for Bell Canada et al. and for the CLECs considerably more difficult. Bell Canada et al. stated that such an order would only serve to exacerbate concerns expressed by building owners regarding the exercise by the Commission of power over building owners' property rights. Bell Canada et al. also stated that they would be placed at a serious disadvantage in relation to other infrastructure owners (hydro, CLECs, tenants) in approaching building owners for such things as the installation of additional facilities to meet growing customer needs. Any building owner would be reluctant to permit the installation of ILEC in-building wire. Bell Canada et al. also argued that the Commission may not have the jurisdiction to make the order. These arguments, and Call-Net's response on this point, are addressed separately below.
   
   
6. Bell Canada et al. also stated that if the Commission proceeds to issue the directive in question, the Commission should extend the directive to all LECs. If the Commission is to prohibit transfers of in-building wire, then all Canadian carriers should be subject to the same rule.
   
   
7. CIPPREC/BOMA stated, among other things, that they do not wish to create a problem for CLECs who are leasing unbundled local loops through co-location at an ILEC central office, and that they have been consistent in all proceedings that "they would not regulate wire signal, in essence permitting any LEC to sub-license signal traffic over in-building wire that the LEC owns or licenses for use from the building owner on a without consent basis". They noted that to date, they have only sought to control the physical access required by facilities-based or co-located LECs. CIPPREC/BOMA stated that it is prepared to work with LECs to develop protocols and arrangements necessary to facilitate the leasing of unbundled local loops by LECs to co-located LECs on the understanding that the building owner is protected to the same extent (as necessary) as it would be if the co-located CLEC were a facility-based CLEC. They noted that they are not aware of any cases outside of Alberta (except for new buildings) where a landlord has voluntarily chosen to acquire in-building wire. However, they stated that the acquisition of in-building wire to facilitate centralized management could have considerable merit in many types of buildings, and could result in reduced costs to LECS and improved service to customers. Accordingly, CIPPREC/BOMA submitted that the Commission should not prohibit transfers of in-building wire.
   
   
8. Netricom stated, among other things, that the decision to reopen the debate on the location of the demarcation point will create difficulty for all parties, including the LECs, telecommunications management companies (like Netricom) and the real estate community in Canada. In Netricom's view, moving the demarcation point back to the tenants' premises, even for an interim period, will cause confusion in the market and will set back the cooperation between LECs and building owners that has been developing since the Commission issued Telecom Decision CRTC 99-10, Location of demarcation point for inside wire in multi-dwelling units and associated issues, dated 6 August 1999. Netricom noted that, by allowing the transfer of responsibility and control, existing inside wiring that has been neglected in many multi-dwelling units is now undergoing long-overdue renovation and the technology available to carry signals to the subscribers is becoming more robust, reliable and advanced.
   
   
9. In response to Call-Net's comments, Bell Canada et al. stated, among other things, that Call-Net appeared to be focused solely on consideration of the narrow issue of the location of the termination point for leased local loops. Bell Canada et al. submitted that Call-Net's proposal is not consistent with the Commission's objectives for facilities-based local competition. Rather, it would serve to perpetuate a form of unhealthy reliance on the ILECs for the provision by Call-Net of service to its customers, while at the same time potentially causing substantial harm to the currently delicate relationship between facilities-based LECs and building owners as LECs seek to enter into mutually acceptable arrangements to deliver services to customers. Further, Bell Canada et al. submitted that Call-Net's characterization of an interim prohibition on the transfer of in-building wire as a "minor inconvenience" completely ignores the damage that would be done to the relationship between the LECs and the building owners if such a prohibition were imposed, even on an interim basis.
   
   
10. In its reply comments, Call-Net on behalf of itself and GT Group Telecom Services Corp. (collectively Call-Net et al.) submitted, among other things, that Bell Canada et al.'s allegation that it could take several months before a final determination is made on this matter, and that this may impair the ILECs' ability to serve end-users, as well as jeopardize the resolution of other building access issues with building owners, do not constitute valid reasons for the Commission to refrain from imposing the interim directive contemplated. Similarly, a negative reaction from building owners does not constitute a valid reason not to issue the order. Building owners, like all other parties, will not necessarily agree with every aspect of a public policy or a judicial determination. Call-Net et al. submitted that the balance of convenience favors the issuance of the proposed directive. In Decision 2001-364, the Commission noted that it may not have fully considered the operational and cost implications of changing the demarcation point for unbundled local loops used by co-located CLECs. Call-Net et al. stated that there is no evidence that an interim order or even a permanent order prohibiting transfer of in-building wire could reduce the ILECs' bargaining position or stop them from pursuing other arrangements with building owners.

Jurisdiction

11. As noted above, Bell Canada et al. argued that the Commission may not have the jurisdiction to make the order in question. Bell Canada et al. stated, among other things, that:

"the Companies do not believe that the Commission is empowered under the authority conferred by the Telecommunications Act (the Act) to issue such a directive. No provision in the Act today prohibits, requires or permits the transfer of responsibility and control over in-building wire from a Company to a building owner. Such transfer of responsibility and control does not constitute the provision of a telecommunications service defined in section 2 of the Act. Consequently, the directive contemplated in the show cause may be beyond the powers conferred upon the Commission in Part III of the Act (and notably in section 32(g), or in section 48(1) of the Act.)"

12. In addition to suggesting that the Commission may not have statutory authority, Bell Canada et al. submitted that "the order the Commission is contemplating in the show cause proceeding raises questions as to whether the Commission, by issuing such a directive, would be fettering its discretion". Bell Canada et al. stated that a prohibition should be made on an individual basis on the merits of each specific case, and that "to issue a blanket prohibition would likely amount to an unlawful fettering of the Commission's discretion".
    
    
13. Call-Net et al. argued that the Commission does have the jurisdiction to issue the order in question. Call-Net et al. submitted, among other things, that Bell Canada et al. has conveniently omitted the provisions of the Telecommunications Act (the Act) that clearly and unequivocally empowers the Commission to make the proposed order. In support of its first argument, Call-Net et al. noted that "telecommunications service" is defined in section 2 of the Act as follows:

"A service provided by means of telecommunications facilities and includes the provision in whole or in part of telecommunications facilities and any related equipment, whether by sale, lease or otherwise;

"Telecommunications facility" means any facility, apparatus or other thing that is used or is capable of being used for telecommunications or for any operation directly connected with telecommunications, and includes a transmission facility."

14. Call-Net et al. submitted that clearly, ILEC-owned in-building wire is a "telecommunications facility" within the meaning of section 2 of the Act, and the transfer of such in-building wire to a building owner constitutes "provision in whole or in part of telecommunications facilities . by sale, lease or otherwise".
    
    
15. Secondly, Call-Net et al. noted that section 24 of the Act provides that the offering and provision of any "telecommunications service" by a Canadian carrier are subject to any conditions imposed by the Commission or included in a tariff approved by the Commission. Section 47(a) of the Act specifies that in exercising its powers to make conditions under section 24 (or any other section) of the Act the Commission shall have regard to the implementation of the telecommunications objectives listed in section 7 of the Act. Those objectives include the facilitation of the orderly development of a telecommunications system in Canada and the efficiency and competitiveness of Canadian telecommunications. Call-Net et al. stated that:

"The Companies [i.e., Call-Net and Group Telecom] submit that the magnitude of the records of these proceedings and the complexities of the issues demonstrate that all parties are aware that the transfer of ILEC-owned in-building wire to building owners will significantly impact the orderly development of telecommunications infrastructure and the competitiveness of telecommunications in Canada. Therefore, the Commission clearly has the power to order ILECs to refrain from transferring their in-building wire to building owner, as a condition of their operations, whether permanently, or pending final determination of this crucial matter."

16. Call-Net et al. also noted that in several past decisions, the Commission has affirmed its powers and jurisdiction to regulate the "telecommunications facilities" of the ILECs, including co-location in central offices and optical fibre in, respectively, Telecom Decision CRTC 97-15, Co-location, dated 16 June 1997, and Telecom Decision CRTC 97-7, Tariff filings related to the installation of optical fibres, dated 23 April 1997. Call-Net et al. submitted that the same principles and rationale applied in those decisions apply to the in-building portion of the ILECs' telecommunications facilities.
    
    
17. Finally, Call-Net et al. disagreed with Bell Canada et al.'s contention that the proposed order would amount to an unlawful fettering of the Commission's discretion. Call-Net et al. submitted that the proceedings involve fundamental policy matters that will affect the entire telecommunications industry in Canada and the development of infrastructure and competition. Accordingly, Call-Net et al. stated that the determination should not be left to a case-by-case review. Secondly, Call-Net et al. noted that the directive contemplated is an interim directive, and it would still be open to the Commission to make a final determination on the matter, and thirdly, a public proceeding is about to begin on this final determination; all affected parties will have the opportunity to make submissions to the Commission on the matter. For these reasons, Call-Net et al. argued that the Commission would not be unlawfully fettering its discretion by directing that the transfer of in-building wire be disallowed on an interim basis pending conclusion of the public hearing.

Conclusion

18. The Commission considers that it has the jurisdiction to make the interim order in question to ensure LECs retain responsibility and control of in-building wire while the Commission considers the issue, and that this would not constitute an unlawful fettering of discretion.
    
    
19. The Commission has determined that, on balance, the concerns of competitive providers for access to multi-dwelling unit in-building wiring justify the issuance of the proposed directive.
    
    
20. In Decision 2001-364, the Commission noted that Decision 99-10 was intended to support the development of facilities-based competition. However, the Commission further noted that it may not have fully considered the operational and cost implications of changing the demarcation point for unbundled local loops used by co-located CLECs. The Commission noted that the relocation of the service provider demarcation under Decision 99-10 conditions (including under scenarios 2 and 3 of Call-Net's Part VII applications), could reduce end-user choice or modify the viability of services offered by co-located CLECs.
    
    
21. Call-Net et al. noted that any operational and cost disadvantages suffered by CLECs will be difficult if not impossible to redress should a final determination be made to prohibit transfer. By contrast, no significant harm arises from an interim stay of the transfer of responsibility and control of in-building wire pending final determination of the matter. Therefore, on balance, the Commission considers that the interim directive should be issued.
    
    
22. The Commission notes that all the parties who addressed the scope of an interim order either took the view that the proceeding does apply, or should apply, in respect of all LEC in-building wire.
    
    
23. In light of the above, the Commission directs that, on an interim basis, as a section 24 (of the Act) condition on the offering and provision of local telephone service, all LECs must, on a going-forward basis, retain responsibility and control of their in-building wire pending a final determination in the PN 2000-124 proceeding.

Yours sincerely,

Ursula Menke
Secretary General

cc: Mike Walker (819) 994-4716

Date Modified: 2001-09-10