ARCHIVED - Telecom Decision CRTC 2003-1

Telecom Decision CRTC 2003-1

Ottawa, 17 January 2003

Follow-up to Telecom Decision CRTC 2002-37 - Adoption of digital subscriber line winback rules

Reference: 8638-C12-65/02

In this decision, the Commission directs Aliant Telecom Inc., MTS Communications Inc., TELUS Communications Inc., and Saskatchewan Telecommunications to apply, in their respective operating territories, the winback rules prescribed for Bell Canada in Independent Members of the Canadian Association of Internet Providers - Digital Subscriber Line Internet services by Bell Canada and Bell Nexxia, Telecom Decision CRTC 2002-37, 27 June 2002.

Background

1.

In Independent Members of the Canadian Association of Internet Providers - Digital Subscriber Line Internet services by Bell Canada and Bell Nexxia, Telecom Decision CRTC 2002-37, 27 June 2002 (Decision 2002-37), the Commission approved a request byIndependent Members of the Canadian Association of Internet Providers (IMCAIP)to impose winback rules on Bell Canada for residential Digital Subscriber Line Service (DSL) Internet services (IS). These rules were imposed in order to prevent potential abuses that may arise from access to commercially sensitive information.

2.

The winback rules that the Commission imposed on Bell Canada in Decision 2002-37 required Bell Canada not to:

· directly market to customers who, through a competitive service provider, have given notice of their intention to cancel Bell Canada's DSL IS in order to receive service from an Internet Service Provider (ISP) that uses Bell Canada's or an affiliate's wholesale DSL IS; and

· offer discounts or other inducements not generally offered to the public, to customers who personally contact Bell Canada to give notice of their intention to cancel Bell Canada's DSL IS in order to receive service from an ISP that uses Bell Canada's or an affiliate's wholesale DSL IS.

3.

The Commission required that these winback rules be in effect for the period commencing on the date of receipt of the notice to cancel the DSL IS, and ending 90 days after the date of disconnection. The Commission also directed Aliant Telecom Inc. (Aliant Telecom), MTS Communications Inc. (MTS), TELUS Communications Inc. (TCI), and Saskatchewan Telecommunications (SaskTel) to show cause, within 30 days, why they should not be subject to the winback rules for the provision of their respective residential retail DSL IS.

4.

The Commission received responses from MTS dated 4 July 2002, from SaskTel dated 23 July 2002, and from Aliant Telecom and TCI dated 29 July 2002. In a further reply, dated 9 August 2002, SaskTel clarified its initial response. Reply comments dated 19 August 2002 were received from IMCAIP.

Position of parties

5.

MTS submitted that there were no reasons why the winback rules should not apply to it.

6.

Aliant Telecom, TCI and SaskTel each argued that since there was no evidence before the Commission of abuses in their respective operating territories, the Commission should not impose winback rules on them. TCI argued that the Commission should not impose additional regulatory restrictions on all incumbent local exchange carriers (ILECs) because of the actual or alleged abuses of Bell Canada. In TCI's view, the Commission should not emphasize regulatory uniformity at all costs. Rather, the individual circumstances of carriers should be recognized. TCI stressed that the Commission should not act in the complete absence of evidence that any abuses have occurred. TCI submitted, moreover, that the Commission had the authority to impose specific conditions on TCI's retail DSL service at a later date, should circumstances warrant such action.

7.

TCI argued that existing regulatory and contractual confidentiality safeguards prevent any potential abuses related to commercially sensitive information in respect of TCI's residential DSL service. TCI pointed out that ISPs purchase TCI's DSL wholesale service through its Carrier Services Group (CSG). As a result, the information concerning the identity of customers who switch to an ISP using TCI's DSL wholesale service was not disclosed to TCI's retail Internet operations. TCI submitted that it would be ironic if the application of the winback rules, set out in Decision 2002-37, required that specific commercially sensitive information about competitive ISPs and their customers be shared between TCI's CSG and TCI's retail operations.

8.

Aliant Telecom submitted that the winback rules applied to wholesale DSL services, which Aliant Telecom did not offer. Aliant Telecom further submitted that, given it did not provide wholesale DSL services, it should be exempted from the winback rules. In its view, the winback rules were neither fitting nor necessary given the competitiveness of the IS market. Aliant Telecom also argued that if the Commission imposed new rules on Aliant Telecom, all other significant facilities-based competitors, namely EastLink Limited (EastLink), should be governed by the same rules.

9.

IMCAIP submitted that in light of the previous articulated Commission rationale for imposing the winback rules, and given that in its view, Aliant Telecom, SaskTel and TCI had not provided compelling reasons for being exempt from applying winback rules, the Commission should apply the rules to the other ILECs.

Commission analysis and determinations

10.

The Commission notes that while Aliant Telecom, TCI and SaskTel each argued that the Commission should not impose winback rules since there was no evidence of abuses in their respective operating territories, in Decision 2002-37 the Commission directed that winback rules be applied to Bell Canada in the absence of findings of actual abuse. The Commission also notes that, in Terms and rates approved for large cable carriers' higher speed access service - Follow-up to Order CRTC 2000-789, Order CRTC 2001-92, 1 February 2001 (Order 2001-92), absent any findings of abuse, the Commission established winback rules for the four largest cable carriers with respect to their provision of retail higher speed IS. The Commission considers that winback rules are necessary in the DSL IS market to prevent potential abuses that may arise because carriers with market power have the incentive and ability to engage in unfair winback activities. Accordingly, the Commission considers that it is not necessary to make a finding that abuse has occurred prior to establishing winback rules.

11.

In regard to TCI's assertion that existing regulatory and contractual safeguards currently prevent potential abuses, the Commission notes that in the proceeding leading to Decision 2002-37, Bell Canada had also argued that its wholesale customers were protected by its CSG and associated safeguards. Notwithstanding, in Decision 2002-37, the Commission imposed winback rules on Bell Canada based on Bell Canada's dominant position in the DSL IS market. The Commission considers that, in addition to the ILECs' CSGs and associated safeguards, the winback rules are an added safeguard necessary to prevent any potential abuses.

12.

The Commission notes TCI's argument that the application of the winback rules could require that specific commercially sensitive information be shared between its CSG and retail operations. The Commission considers that the information sharing that is necessary for the establishment of winback rules for DSL IS is similar to the information sharing required for the winback rules applicable in the local exchange market, as required in Call-Net Enterprises Inc. v. Bell Canada - Compliance with winback rules, Telecom Decision CRTC 2002-73, 4 December 2002, and Decision 2002-37. The Commission therefore considers it appropriate that the ILECs' CSGs share with their retail operations only that information necessary to ensure effective application of the winback rules.

13.

The Commission notes Aliant Telecom's views that the winback rules were unnecessary given the competitiveness of the IS market and that Aliant Telecom should be exempted from the winback rules because it does not provide wholesale DSL. The Commission notes that in Order 2001-92 the Commission found it appropriate to apply the winback rules despite the fact that the retail IS market is competitive. The Commission considers that the degree of competition in the IS market is not relevant to determining the appropriateness of the winback rules. The Commission also considers that winback rules are appropriate in the absence of Aliant Telecom providing a wholesale DSL service. Rather than examining the competitiveness of the IS market or whether Aliant Telecom offers wholesale DSL, the Commission considers that the appropriateness of applying the winback rules to Aliant Telecom's DSL IS service should be considered with reference to Aliant Telecom's market power in the high speed access market.

14.

In regard to Aliant Telecom's submission that EastLink be governed by the same winback rules as would be imposed on Aliant Telecom, the Commission notes that the scope of this proceeding was limited to whether winback rules should apply to other large ILECs. Accordingly, the Commission finds that Aliant Telecom's submission is outside the scope of this proceeding.

15.

The Commission is not persuaded byAliant Telecom, TCI and SaskTel's arguments that their individual circumstances are such that they should not be subject to winback rules in regard to their respective residential retail DSL IS. The Commission notes that, as set out in Decision 2002-37 and Order 2001-92, the appropriateness of applying the existing winback rules to carriers should be considered with reference to their market power in the high speed access market. The Commission considers that Aliant Telecom, TCI, MTS and SaskTel all have a dominant position and substantial market power with respect to high speed access services in their operating territories. Accordingly, the Commission considers that these carriers would have the incentive and ability to attempt to win back customers that have indicated their intention to transfer to competitive ISPs that use either their facilities or the facilities of an affiliate. Accordingly, the Commission finds that its rationale for imposing winback rules on Bell Canada and cable carriers is also relevant to the case of Aliant Telecom, TCI, MTS and SaskTel.

16.

Accordingly, the Commission directs Aliant Telecom, MTS, TCI and SaskTel to apply, in their respective operating territories, the winback rules prescribed for Bell Canada in Decision 2002-37.

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