ARCHIVED - Telecom Decision CRTC 2002-17

Telecom Decision CRTC 2002-17

Ottawa, 8 April 2002

Mercuryspeed.com - Internet interconnection service pricing complaint

Reference: 8622-M47-01/01

Summary

The Commission denies an application by Mercuryspeed.com (Mercuryspeed) seeking an order from the Commission, pursuant to section 35(1) of the Telecommunications Act, effectively directing TELUS Communications Inc. to provide Mercuryspeed with Internet interconnection service at a lower rate than the rate quoted to Mercuryspeed.

The application

1.

In a letter to the Commission, dated 20 September 2001, Mercuryspeed.com (Mercuryspeed) sought relief regarding its attempt to obtain interconnection services from what the applicant characterized as "Telus" in order to allow Mercuryspeed to provide dial-up and cable Internet access services from Barrière, British Columbia. Barrière is approximately 35 miles north of Kamloops, British Columbia.

2.

Mercuryspeed stated that it had obtained a quote from "Telus Advanced Communications" with respect to service between Barrière and Kamloops, and alleged that the rate quoted was unjust, unreasonable and unjustly discriminatory, contrary to sections 27(1) and 27(2) of the Telecommunications Act (the Act).

3.

In support of its allegation that the rate quoted was neither just nor reasonable and therefore, contrary to section 27(1) of the Act, Mercuryspeed stated that the price quoted for service to Barrière was $5,612 per month, while the rate for what the applicant characterized as "this same service", when provided in Kamloops, would be $1,400 per month.

4.

With respect to the allegation of unjust discrimination, Mercuryspeed stated that, because toll-free calling is available from Kamloops to Barrière, a service provider in Kamloops would not be required to pay $5,612 per month in order to provide Internet service to customers in Barrière. In Mercuryspeed's view, this rate disparity seriously disadvantages and discriminates against Internet service providers (ISPs) that wish to establish operations in rural communities such as Barrière. Mercuryspeed further submitted that "Telus' discriminatory pricing of this service effectively precludes any local competition for Internet service in Barrière" and favours TELUS.net, and Kamloops-based service providers, contrary to section 27(2) of the Act.

5.

By way of relief, Mercuryspeed sought an order from the Commission that "Telus" be required to provide service to Mercuryspeed in Barrière at just and reasonable rates, pursuant to section 35(1) of the Act.

Reply comments

6.

TELUS Communications Inc. (TCI) responded to Mercuryspeed's allegations in a letter to the Commission dated 18 October 2001. TCI is a Canadian carrier within the meaning of the Act and provides services at tariffed rates, unless the services have been forborne. TCI stated that, among other things, the quoted rate at issue was provided by TELUS Advanced Communications (BC) Inc. (TELUS AC) and that TELUS AC was a division of TELUS Services Inc. (TSI). In addition, TCI noted that TSI is a registered reseller and an affiliate of TCI.

7.

TCI stated that the service offering at issue in the present case was TSI's Internet Gateway Service, which consisted of two components:

8.

TCI stated that the T1 extension component is acquired by TSI from TCI under rates, terms and conditions set out in a tariff approved by the Commission. In the present situation, TSI would resell the T1 extension component to Mercuryspeed.

9.

TCI submitted that:

Mercuryspeed's reply

10.

In its 7 November 2001 reply, Mercuryspeed generally reiterated the arguments it made in its application. Among other things, Mercuryspeed submitted that while it could accept that service to Barrière would cost more than service in Kamloops, the significant cost difference quoted by TSI is neither fair nor reasonable. With regard to the distinction made by TCI between the Business Internet Copper and T1 extension components, Mercuryspeed stated that "[t]here is nothing inherently different about these two lines other than the regulation."

Commission's reasons and findings

11.

Section 35(1) of the Act states that:

Where the Commission determines as a question of fact that a telecommunications service or class of services provided by an affiliate of a Canadian carrier is not subject to a degree of competition that is sufficient to ensure just and reasonable rates and prevent unjust discrimination and undue or unreasonable preference or disadvantage, the Commission may require the Canadian carrier to provide the service or class of services in any manner, to any extent and subject to any conditions determined by the Commission, if it is satisfied that it would be an effective and practical means of achieving the purposes of section 27 [of the Act] with respect to the service or class.

12.

Before it may order relief pursuant to section 35(1) of the Act, the Commission must be satisfied that a telecommunications service or class of services provided by an affiliate of a Canadian carrier is not subject to a degree of competition sufficient to (a) ensure just and reasonable rates, and (b) prevent unjust discrimination and undue or unreasonable preference or disadvantage. In addition, the Commission must be satisfied that requiring the Canadian carrier to provide the service or class of services would be an effective and practical means of achieving the purposes of section 27 of the Act.

13.

The Commission agrees with TCI that the Internet Gateway Service at issue is a bundled service consisting of two component services: (a) the Business Internet Copper component and (b) the T1 extension component.

14.

Therefore, the Commission finds that it must apply the tests set out in section 35(1) of the Act to each of the two components.

Business Internet Copper component

15.

The Commission notes TCI's submission that other telecommunications companies, cable companies and independent service providers offer services similar to, and in competition with, TSI's Business Internet Copper component in areas where TSI offers this component. The Commission also notes TCI's statement that TSI charges the same rate wherever it provides the Business Internet Copper component. Mercuryspeed did not dispute these facts. Further, the Commission notes that it would be open to Mercuryspeed to obtain directly from TCI, at tariffed rates, the underlying facilities used in the provision of the Business Internet Copper component. In light of these facts, the Commission is not persuaded that it would be appropriate to exercise its powers under section 35(1) of the Act with respect to the Business Internet Copper component.

T1 extension component

16.

With respect to the second component of the Internet Gateway Service, namely the T1 extension component, the Commission notes TCI's statement that TSI would obtain this component from TCI at a Commission-approved rate and resell it to Mercuryspeed at a rate that closely reflects TCI's tariffed rate. The Commission further notes that Mercuryspeed would have the option to obtain the T1 extension component directly from TCI, at tariffed rates, which the Commission approved as just and reasonable. Given, among other things, that this service is already available from TCI at tariffed rates, the Commission considers that it would not be appropriate to exercise its powers under section 35(1) of the Act with respect to the T1 extension component.

Commission determination

Secretary General

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