ARCHIVED - Telecom Decision CRTC 2003-22

Telecom Decision CRTC 2003-22

Ottawa, 7 April 2003

TELUS Communications Inc.

Reference: 8340-T42-0883/00

Use of inter-exchange dark fibre in Alberta

In this decision, the Commission approves, on a final basis, tariff item 447, Use of TCI Inter-exchange Dark Fibre (Alberta only) - Specific Customer only, of TELUS Communications Inc.'s Special Facilities Tariff.

Background

1.

In TELUS Communications Inc. - Fibre Use and Management Agreement, Telecom Decision CRTC 2003-4, 31 January 2003 (Decision 2003-4), the Commission approved on an interim basis a fibre use and management agreement (the Agreement) between TELUS Communications Inc. (TELUS) and Axia SuperNet Ltd. (Axia) as a special facilities arrangement pursuant to section 25 of the Telecommunications Act. The Agreement stated that TELUS was to provide to Axia, by way of indefeasible rights of use, inter-exchange dark fibre for use in the Alberta SuperNet project.

2.

In Decision 2003-4, the Commission noted that the economic study filed by TELUS indicated that the proposed rates were compensatory. The Commission stated that it considered on a prima facie basis that the service satisfied the imputation test. The Commission directed TELUS to issue tariff pages for the service and provide, on the public record, a further abridged version of the Agreement disclosing the rates, including one-time charges, and a meaningful description of the specific service to which each rate relates.

3.

In Decision 2003-4, the Commission also initiated a proceeding to consider whether it would be appropriate for TELUS to provide inter-exchange fibre pursuant to a General Tariff (the General Tariff proceeding). The Commission will make a determination in the General Tariff proceeding at a later date.

4.

On 5 February 2003, TELUS issued tariff pages for the service under tariff item 447, Use of TCI Inter-exchange Dark Fibre (Alberta only) - Specific Customer only, of its Special Facilities Tariff (tariff item 447). The tariff incorporated by reference the terms and conditions set out in the Agreement. TELUS also filed a further abridged version of the Agreement.

Process

5.

By letter dated 12 February 2003, a process was established for the receipt of comments and replies with regard to tariff item 447.

6.

Comments were filed by Columbia Mountain Open Network (CMON) dated 3 March 2003, attaching letters of support from the Town of Golden and the Golden and Area Community Economic Development Office, Bell Canada dated 4 March 2003 and Tom Pearce (on behalf of Stan Boychuk and the Clayoquot Sound Mamook Broadband Project steering committee) (Clayoquot) dated 5 March 2003. The District of Sparwood filed comments dated 4 March 2003 endorsing CMON's submission.

7.

TELUS filed reply comments dated 7 March 2003.

8.

Comments were received from Mr. François Ménard (Mr. Ménard) dated 18 March 2003 and 19 March 2003 and AT&T Canada Corp. on behalf of itself and AT&T Canada Telecom Services Company (collectively, AT&T Canada) dated 19 March 2003. Further comments were received from CMON dated 19 March 2003 and Clayoquot dated 23 March 2003.

9.

TELUS filed further reply comments dated 25 March 2003.

Parties' submissions

10.

Bell Canada requested that the Commission grant final approval to the arrangement. Bell Canada submitted that final approval of the special facilities arrangement should not be contingent upon the Commission's determinations in the General Tariff proceeding. Bell Canada further submitted that regulatory uncertainty as to the final rates in this arrangement would jeopardize the timely completion of the SuperNet project.

11.

AT&T Canada submitted that allowing the special facilities arrangement without a similarly economically priced General Tariff offering would be discriminatory. AT&T Canada requested that final approval of the special facilities arrangement be deferred until TELUS files a General Tariff that incorporated the terms and conditions of the special facilities arrangement.

12.

Mr. Ménard submitted that the special facilities arrangement does not meet all the requirements for a type 1 customer specific arrangement (CSA) and, hence, a General Tariff should be developed upon which the special arrangement would be based.

13.

In its further comments, CMON stated that the special facilities arrangement would bring the benefits of advanced communications to rural communities while fairly compensating the owner of the unused fibre. In its further comments, Clayoquot indicated that it fully supported CMON's submission.

14.

In its further reply comments, TELUS submitted that deferring final approval, as requested by AT&T Canada, would prejudge the Commission's review in the General Tariff proceeding and could result in Axia withdrawing its interest in tariff item 447. TELUS indicated that if Axia were to withdraw its interest in the arrangement, both the General Tariff proceeding and the special facilities arrangement would be rendered moot as TELUS would not be providing inter-exchange fibre.

15.

TELUS submitted, in response to Mr. Ménard, that the arrangement does comply with type 1 CSA requirements. TELUS submitted that: (a) the imputation test was met, (b) an assessment of whether sufficient demand exists to justify a General Tariff should only be undertaken with a view to the demand for the same arrangement, (c) the arrangement would be available to other customers at the rates, terms and conditions of the CSA, and (d) tariff item 447 contains no prohibitions respecting resale.

16.

The Commission notes that Mr. Ménard argued that the special facilities arrangement does not meet the type 1 CSA requirements and that the arrangement should be based on a General Tariff for dark fibre. CSAs fall under the type 1 category when they involve elements that are not available from the General Tariff.

17.

In Review of regulatory framework, Telecom Decision CRTC 94-19, 16 September 1994, the Commission established the following safeguards for type 1 CSAs:

a) the provision of a study demonstrating that the imputation test is met;

b) the telephone company demonstrating in its tariff application that there is not sufficient demand to offer the service through the General Tariff;

c) in order that there be no unjust discrimination or undue preference, the service package and the associated rates, terms and conditions provided under the CSA being generally available to other customers; and

d) resale being permitted.

18.

With respect to the first safeguard, the Commission considers that TELUS has demonstrated that the imputation test has been met for the service. Accordingly, the first safeguard is satisfied.

19.

With respect to the second safeguard, the Commission notes TELUS' submission that an assessment of whether sufficient demand exists to justify a General Tariff should be focused on the demand for the particular CSA for which a telephone company is requesting approval, in this case the particular arrangement that is to be provided to Axia. The Commission considers, however, that in order to satisfy the second safeguard, a telephone company seeking approval of a CSA must demonstrate that there is not sufficient demand to offer the service that is to be provided under the CSA, in this case, inter-exchange fibre, under a General Tariff. The Commission notes that TELUS cannot satisfy this requirement at this time because the Commission, of its own motion, has initiated a separate proceeding to determine whether a General Tariff for inter-exchange fibre would be appropriate.

20.

With respect to the third safeguard, the Commission considers that the rates, terms and conditions provided under the special facilities arrangement would be available to other customers. Accordingly, the third safeguard is satisfied.

21.

With respect to the fourth safeguard, the Commission notes that the tariff does not prohibit resale. Accordingly, the fourth safeguard, that resale be permitted, is satisfied.

22.

The Commission notes that the special facilities arrangement is a crucial component of the Alberta SuperNet project. The Government of Alberta has described the SuperNet project as an "unprecedented initiative to make affordable IP broadband connectivity available to all schools, hospitals, libraries, government buildings and municipalities throughout the province." The arrangement with Axia will provide inter-exchange fibre between 88 pairs of communities, predominantly in rural or remote areas, for use in supporting the Alberta SuperNet project.

23.

The Commission considers that the special facilities arrangement is unique in both scale and scope. In view of the unique nature of the arrangement, the Commission considers that granting final approval at this time would not be unjustly discriminatory.

24.

In light of the above, the Commission grants final approval to tariff item 447, which incorporates by reference the terms and conditions of the Agreement, as amended below.

25.

The Commission directs TELUS to issue forthwith revised tariff pages for tariff item 447:

a) deleting the words "Specific Customer only" from the title; and

b) amending tariff item 447.3, which provides that the Agreement overrides the tariff in the event of inconsistency between them, so as to state that: "In the event of any conflict or inconsistency between this item 447 tariff and the Axia/TCI Executed Agreements, the tariff shall prevail."

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