ARCHIVED - Order CRTC 2001-118

Order CRTC 2001-118

Ottawa, 6 February 2001

Reference: 8640-S22-01/00

Forbearance granted to wide area networking services provided by SaskTel

Reference: 8640-S22-01/00

On 1 September 2000, pursuant to Part VII of the CRTC Telecommunications Rules of Procedure, Saskatchewan Telecommunications requested forbearance from sections 24 (in part), 25, 29 and 31, and subsections 27(1), 27(5) and 27(6) of the Telecommunications Act (the Act) in relation to the company's current and future wide area networking (WAN) services.

Background

The Commission stated in Forbearance granted for telcos' wide area network services, Order CRTC 2000-553, dated 16 June 2000, that the WAN services market is sufficiently competitive to protect the interests of users. In the territories of the telephone companies affected by Order 2000-553, there are numerous competitive suppliers, low barriers to entry, aggressive pricing and knowledgeable customers that can readily switch WAN service providers. Further, in such areas, competitive WAN service providers may obtain the essential underlying access and transport services from alternate facilities-based access service providers, or from the incumbent telephone companies at tariff rates and non-discriminatory terms where there is no alternate source of supply.

Accordingly, in Order 2000-553, the Commission forbore from its powers under sections 24 (in part), 25, 29 and 31, and subsections 27(1), 27(5) and 27(6) of the Act with respect to the provision of WAN services by the major incumbent local exchange carriers (ILECs). The Commission retained part of its powers under section 24 to ensure the confidentiality of customer information, and to impose conditions as may be needed in the future. The Commission also retained its powers under subsections 27(2), 27(3) and 27(4) to ensure that the major ILECs do not unjustly discriminate against other service providers or customers, or confer an undue preference with respect to the provision of WAN services.

SaskTel's application

SaskTel stated that in its territory WAN services are used primarily by medium and large businesses, municipal and provincial governments, health service and educational organizations. According to SaskTel, WAN services consist of data services where the customer's on premises network or equipment is connected to a service offered by SaskTel through an Ethernet, token ring, or asynchronous transfer mode (ATM) interface, and the intra-city and/or inter-city exchange of information between and among multiple customer networks or access points.

SaskTel submitted that in relation to the WAN market in Saskatchewan:

• there are no significant entry barriers;

• customers can obtain WAN services from alternate service providers, for example carriers such as Call-Net Enterprises Inc., AT&T Canada Corp. and Group Telecom Services Corp., or cable companies;

• customers may also supply their own WAN services, and several are doing so;

• regulatory safeguards such as the price cap regime for utility services, and the split rate base prevent predatory pricing by the company;

• predatory pricing would not be a viable strategy, because some competitors are large national companies, and there are large capacity fibre routes through the province; and

• SaskTel's has at most a 65 per cent share of the market for WAN services in Saskatchewan.

SaskTel stated that it sent copies of its application to several competitors in the market for WAN services. The Commission received no interventions commenting on or questioning SaskTel's evidence.

Conclusion

Based on the evidence submitted by SaskTel, the Commission finds that the market for WAN services is sufficiently competitive to protect the interests of WAN service users.

Further, the Commission considers that a strategy of predatory below cost pricing would not be profitable for SaskTel, since the company could not prevent entry of new competitors when it attempted to recoup losses from below cost pricing.

In view of these considerations, consistent with Order 2000-553, the Commission finds it appropriate to forbear, pursuant to section 34 of the Act, from sections 24 (in part), 25, 29 and 31, and subsections 27(1), 27(5) and 27(6) of the Act in relation to the provision of current and future WAN services by SaskTel.

The Commission will retain sufficient powers to ensure non-discriminatory access and transport

The Commission will retain its powers under section 24 of the Act to ensure that the existing conditions regarding disclosure of confidential customer information to third parties continue to apply, and to impose conditions as may be needed in the future.

Further, in view of the pervasive position of the applicant in markets for access and transport in Saskatchewan, the Commission will also retain its powers under subsections 27(2), 27(3) and 27(4) of the Act in order to ensure that SaskTel does not unjustly discriminate against other service providers or customers, or confer an undue or unreasonable preference with respect to the provision of WAN services.

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