|
|
Telecom Decision CRTC 2003-38
|
|
|
Ottawa, 17 June 2003
|
|
|
Saskatchewan Telecommunications' application for forbearance from regulation of single-line inside wiring services
|
|
|
Reference: 8640-S22-02/02
|
|
|
In this decision, the Commission forbears, with some conditions, from regulating single-line inside wiring services provided by Saskatchewan Telecommunications. Customers without a jack-ended demarcation device will not be required to pay for diagnostic, repair or maintenance services to their inside wiring when reporting transmission problems.
|
|
1.
|
The Commission received an application under Part VII of the CRTC Telecommunications Rules of Procedure (the Rules), dated 8 February 2002, from Saskatchewan Telecommunications (SaskTel) requesting that the Commission forbear, pursuant to section 34 of the Telecommunications Act (the Act), from regulating the company's single-line inside wiring services (inside wire services).
|
|
2.
|
The Commission received no comments with respect to this application.
|
|
|
Background
|
|
3.
|
The Commission's power to forbear from regulating a telecommunications service or class of services provided by a Canadian carrier originates from section 34 of the Act, which reads as follows:
|
|
|
34. (1) The Commission may make a determination to refrain, in whole or in part and conditionally or unconditionally, from the exercise of any power or the performance of any duty under sections 24, 25, 27, 29 and 31 in relation to a telecommunications service or class of services provided by a Canadian carrier, where the Commission finds as a question of fact that to refrain would be consistent with the Canadian telecommunications policy objectives.
|
|
|
(2) Where the Commission finds as a question of fact that a telecommunications service or class of services provided by a Canadian carrier is or will be subject to competition sufficient to protect the interests of users, the Commission shall make a determination to refrain, to the extent that it considers appropriate, conditionally or unconditionally, from the exercise of any power or the performance of any duty under sections 24, 25, 27, 29 and 31 in relation to the service or class of services.
|
|
|
(3) The Commission shall not make a determination to refrain under this section in relation to a telecommunications service or class of services if the Commission finds as a question of fact that to refrain would be likely to impair unduly the establishment or continuance of a competitive market for that service or class of services.
|
|
|
(4) The Commission shall declare that sections 24, 25, 27, 29 and 31 do not apply to a Canadian carrier to the extent that those sections are inconsistent with a determination of the Commission under this section.
|
|
4.
|
The Canadian telecommunications policy objectives set out at section 7 of the Act include the following:
|
|
|
..
|
|
|
(c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;
|
|
|
(f) to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective;
|
|
|
(h) to respond to the economic and social requirements of users of telecommunications services; and
|
|
5.
|
The Commission established a framework for considering whether or not to forbear in Review of regulatory framework, Telecom Decision CRTC 94-19, 16 September 1994 (Decision 94-19). In that decision, the Commission noted that the first step in assessing whether it is appropriate to forbear involves defining the relevant market. The relevant market is essentially the smallest group of products and geographic area in which a firm with market power can profitably impose a sustainable price increase.
|
|
6.
|
In Decision 94-19, the Commission established a number of criteria to be examined when determining whether a market was competitive. These criteria include the market shares of the dominant and competing firms, demand and supply conditions, the likelihood of entry into the market, barriers to entry into the market and evidence of rivalrous behaviour.
|
|
7.
|
The Commission found, in the following decisions, that the market for inside wire services in various geographic territories was sufficiently competitive and, accordingly, forbore from regulating the inside wire services provided by the following telephone companies:
|
|
|
· Télébec ltée, now known as Société en commandite Télébec, in Telecom Order CRTC 98-856, 27 August 1998;
|
|
|
· Bell Canada, in Bell Canada - Forbearance from Regulation of Single Line Inside Wiring Services, Telecom Order CRTC 99-1016, 22 October 1999;
|
|
|
· Hurontario Telephone Inc., now known as Huron Telecommunications Co-operative Ltd., previously also known as Execulink Communications Inc., in Forbearance for single-line inside wiring granted for Hurontario, Order CRTC 2000-881, 26 September 2000; and
|
|
|
· TELUS Québec Inc., in Forbearance for single-line inside wiring granted for TELUS Québec, Order CRTC 2001-416, 25 May 2001.
|
|
|
The application
|
|
8.
|
In its application, SaskTel requested that the Commission refrain from exercising its powers and performing its duties under sections 24 (in part) and 25, subsections 27(1), 27(2), 27(3) (in part), 27(4), 27(5) and 27(6), sections 29 and 31 of the Act in relation to inside wire services. SaskTel described the inside wire market in Saskatchewan as consisting of all existing and future customers who require installation, moves, maintenance and/or repair of single-line wiring used for telecommunications purposes.
|
|
9.
|
SaskTel submitted that its application was consistent with the Canadian telecommunications policy objectives set out in section 7 of the Act. SaskTel also submitted that the inside wire services market in Saskatchewan is and will be subject to competition sufficient to protect the interests of users. Finally, SaskTel submitted that forbearance would not impair the continuance of a competitive market for inside wire services.
|
|
10.
|
SaskTel argued that the market for inside wire services in Saskatchewan was well established, with supply from electricians, electrical contractors, security companies, telephone equipment companies and cable companies. SaskTel noted that customers could also self-supply, since the materials and wiring guides were widely available from SaskTel and stores such as Home Depot.
|
|
11.
|
SaskTel submitted that it was not a dominant supplier of inside wire services in Saskatchewan. In this respect, SaskTel indicated that the majority of new houses were pre-wired by electricians and general contractors, rather than by SaskTel. The company also indicated that a small number of customers subscribed to its inside wire insurance plan and the remainder of customers would generally hire another supplier or SaskTel to remedy a problem, or would do the work themselves.
|
|
12.
|
SaskTel submitted that there were no regulatory or legislative entry barriers, as only SaskTel was subject to regulatory constraints by the Commission. SaskTel argued that there were no financial or technical barriers to entry and little technical training was needed to perform the installation, maintenance and repair of inside wire and jacks.
|
|
13.
|
SaskTel submitted that the company was moving to a price cap environment where its utility service prices are regulated through pre-established parameters, leaving no opportunity for SaskTel to support predatory pricing through income from Utility services. SaskTel also submitted that predatory pricing was not a viable strategy for the company as the market characteristics discussed above would render it extremely unlikely that SaskTel would be able to drive out competitors by predatory pricing. Furthermore, SaskTel stated that the nature of the inside wire services market was such that even if some competitors chose to exit the market as a result of price competition, the lack of barriers to entry would prevent SaskTel from recouping losses by later raising prices, as any increase in the market prices would result in immediate re-entry.
|
|
|
Commission analysis and determination
|
|
|
Application of subsections 34(1), (2) and (3) of the Act
|
|
14.
|
The Commission notes that while subsection 34(1) of the Act provides that the Commission may refrain from regulating a service or class of services when it finds that such forbearance is consistent with the Canadian telecommunications policy objectives, subsection 34(2) of the Act requires it to forbear where it finds that the market for the service in question is, or will be, subject to sufficient competition to protect the interests of users. The Commission also notes, however, that subsection34(3) of the Act provides that the Commission shall not forbear if it finds that to do so would be likely to impair unduly the establishment or continuance of a competitive market for that service.
|
|
15.
|
The Commission considers it appropriate, for the purpose of this application, to define the market for inside wire services to include the installation, moves, maintenance and repair of single-line inside wiring, used for telecommunications purposes.Further, the Commission considers that the market for inside wire services in Saskatchewan is province-wide, as electricians and installers of security systems, in addition to SaskTel, offer such services, and the required parts and supplies are available, throughout the province.
|
|
16.
|
The Commission finds that the market for inside wire services in Saskatchewan is competitive, with many existing and potential suppliers and no barriers to entry. The Commission also finds that the potential exists for customers with a jack-ended demarcation device to perform inside wiring work themselves. Since the market for inside wire services is competitive, with no barriers to entry, the Commission finds that below cost pricing of inside wire services by SaskTel for such customers is unlikely since, if the Commission were to refrain from regulating inside wire services, SaskTel could not recoup any loss from below cost pricing by increasing the prices in the future.
|
|
17.
|
The Commission, however notes that while SaskTel's policy is to install a jack-ended demarcation device at no cost when a customer without such a device reports a transmission problem, there is no evidence that SaskTel has installed a jack-ended demarcation device at all customer premises. The Commission further notes that customers without such a device may be unable to determine whether any transmission problems originate on the inside wire, for which they would be responsible, or on the company's network, for which they would not be responsible. Therefore, the Commission is of the view that the market is not sufficiently competitive to protect the interests of customers who do not have a jack-ended demarcation device in all circumstances.
|
|
18.
|
Accordingly, the Commission finds, pursuant to subsection34(2) of the Act, as a question of fact, that the provision, in SaskTel territory, of inside wire services is sufficiently competitive to protect the interests of users so as to warrant forbearance to the extent set out in this decision.
|
|
19.
|
The Commission finds, pursuant to subsection 34(1) of the Act, as a question of fact, that refraining from the exercise of its powers and the performance of its duties, to the extent set out in this decision, with respect to inside wire services in SaskTel territory, is consistent with the Canadian telecommunications policy objectives.
|
|
20.
|
The Commission also finds, pursuant to subsection 34(3) of the Act, as a question of fact, that refraining from regulating inside wire services to the extent set out in this decision is unlikely to impair unduly the continuance of a competitive market for that class of services.
|
|
21.
|
In light of these findings, the Commission must determine the extent to which it is appropriate to refrain, in whole or in part, and conditionally or unconditionally, from the exercise of any power or the performance of any duty under sections 24, 25, 27, 29 and 31 of the Act.
|
|
|
Section 24
|
|
22.
|
Section 24 of the Act provides:
|
|
|
24. 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.
|
|
23.
|
The Commission considers that it is appropriate to retain its powers pursuant to section 24 of the Act to ensure that the confidentiality of customer information continues to be protected. Because SaskTel's Terms of Service, which ensure the confidentiality of customer information for regulated services, do not apply to forborne services, the Commission directs SaskTel, as a condition of providing inside wire services, toabide by the existing conditions regarding disclosure of confidential customer information to third parties with respect to the services forborne from regulation in this decision. The Commission also directs SaskTel, on a going forward basis, as a condition of providing inside wire services, to incorporate, where appropriate, the existing conditions regarding disclosure of confidential customer information to third parties into all contracts and any other arrangements for services forborne from regulation in this decision.
|
|
24.
|
In addition, in light of the conclusions reached in this decision with respect to customers who do not have a jack-ended demarcation device at the time of reporting transmission problems, the Commission directs SaskTel, as a condition of providing inside wire services, to specify, in future editions of the white pages of its telephone directories, that diagnostic, repair and maintenance of single-line inside wiring will be free of charge for all customers without a jack-ended demarcation device.
|
|
25.
|
Finally, the Commission considers that it is also appropriate to retain sufficient powers under section 24 of the Act to specify possible future conditions for offering and providing inside wire services. Future conditions could, for example, include the requirement to provide competitors with access to inside wiring.
|
|
|
Section 25
|
|
26.
|
Section 25 of the Act provides:
|
|
|
25. (1) No Canadian carrier shall provide a telecommunications service except in accordance with a tariff filed with and approved by the Commission that specifies the rate or the maximum or minimum rate, or both, to be charged for the service.
|
|
|
(2) A joint tariff agreed on by two or more Canadian carriers may be filed by any of the carriers with an attestation of the agreement of the other carriers.
|
|
|
(3) A tariff shall be filed and published or otherwise made available for public inspection by a Canadian carrier in the form and manner specified by the Commission and shall include any information required by the Commission to be included.
|
|
|
(4) Notwithstanding subsection (1), the Commission may ratify the charging of a rate by a Canadian carrier otherwise than in accordance with a tariff approved by the Commission if the Commission is satisfied that the rate:
|
|
|
(a) was charged because of an error or other circumstance that warrants the ratification; or
|
|
|
(b) was imposed in conformity with the laws of a province before the operations of the carrier were regulated under any Act of Parliament.
|
|
27.
|
Based on the record of this proceeding, the Commission considers it appropriate that SaskTel no longer be required to file and obtain the Commission's approval of tariffs for inside wire services, except for diagnostic, repair and maintenance services for customers without a jack-ended demarcation device. Accordingly, the Commission will refrain from the exercise of all of its powers and the performance of all of its duties under section 25 of the Act with respect to inside wire services, except for diagnostic, maintenance and repair services for customers without a jack-ended demarcation device.
|
|
|
Section 27
|
|
28.
|
Section 27 of the Act provides:
|
|
|
27. (1) Every rate charged by a Canadian carrier for a telecommunications service shall be just and reasonable.
|
|
|
(2) No Canadian carrier shall, in relation to the provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage.
|
|
|
(3) The Commission may determine in any case, as a question of fact, whether a Canadian carrier has complied with section 25, this section or section 29, or with any decision made under section 24, 25, 29, 34 or 40.
|
|
|
(4) The burden of establishing before the Commission that any discrimination is not unjust or that any preference or disadvantage is not undue or unreasonable is on the Canadian carrier that discriminates, gives the preference or subjects the person to the disadvantage.
|
|
|
(5) In determining whether a rate is just and reasonable, the Commission may adopt any method or technique that it considers appropriate, whether based on a carrier's return on its rate base or otherwise.
|
|
|
(6) Notwithstanding subsections (1) and (2), a Canadian carrier may provide telecommunications services at no charge or at a reduced rate
|
|
|
(a) to the carrier's directors, officers, employees or former employees; or
|
|
|
(b) with the approval of the Commission, to any charitable organization or disadvantaged person or other person.
|
|
29.
|
The Commission considers that there is no need to apply the regulatory standards for "just and reasonable" rates to rates that are set in a competitive market, except with respect to diagnostic, maintenance and repair of single-line wiring of customers without a jack-ended demarcation device. Accordingly, the Commission will refrain from the exercise of all of its powers and the performance of all of its duties under subsection 27(1) of the Act with respect to inside wire services, except with respect to the diagnostic, maintenance and repair of single-line inside wiring of customers without a jack-ended demarcation device.
|
|
30.
|
Given that customers without a jack-ended demarcation device may be unable to determine the origin of a transmission problem, the Commission directs SaskTel to issue revised tariff pages specifying that diagnostic, repair and maintenance of single-line inside wiring will be free of charge to customers without a jack-ended demarcation device when reporting transmission problems.
|
|
31.
|
The Commission will refrain from the exercise of all of its powers and the performance of all of its duties under subsection 27(2) of the Act with respect to inside wire services.
|
|
32.
|
The Commission considers it necessary to retain its powers under subsection 27(3) of the Act with respect to compliance with powers and duties not forborne from in this decision.
|
|
33.
|
The Commission will refrain from the exercise of its powers under subsection 27(5) of the Act with respect to inside wire services provided to customers with a jack-ended demarcation device as that subsection relates to subsections 27(1) and (2) of the Act with respect to which the Commission is forbearing insofar as such customers are concerned, in this decision. The Commission however considers it necessary, with respect to customers without a jack-ended demarcation device, to retain its powers under subsection 27(5) of the Act, since it relates to subsection 27(1) of the Act for which the Commission is retaining its powers insofar as such customers are concerned.
|
|
34.
|
The Commission will also forbear from all of its powers under subsections 27(4) and (6) of the Act with respect to inside wire services, since subsection 27(4) of the Act relates to subsection 27(2) of the Act with respect to which the Commission is forbearing in this decision, and since subsection 27(6) of the Act does not relate per se to the charging of rates to customers without a jack-ended demarcation device.
|
|
|
Section 29
|
|
35.
|
Section 29 of the Act provides:
|
|
|
29. No Canadian carrier shall, without the prior approval of the Commission, give effect to any agreement or arrangement, whether oral or written, with another telecommunications common carrier respecting:
|
|
|
(a) the interchange of telecommunications by means of their telecommunications facilities;
|
|
|
(b) the management or operation of either or both of their facilities or any other facilities with which either or both are connected; or
|
|
|
(c) the apportionment of rates or revenues between the carriers.
|
|
36.
|
The Commission considers it appropriate that SaskTel no longer be required to obtain the Commission's approval to enter into agreements with other telecommunications common carriers regarding inside wire services. Accordingly, the Commission will refrain from the exercise of all of its powers and the performance of all of its duties under section 29 of the Act with respect to inside wire services.
|
|
|
Section 31
|
|
37.
|
Section 31 of the Act provides:
|
|
|
31. No limitation of a Canadian carrier's liability in respect of a telecommunications service is effective unless it has been authorized or prescribed by the Commission.
|
|
38.
|
The Commission considers it appropriate that SaskTel be able to limit its liability in respect of inside wire services in the same way as may an unregulated service provider. Accordingly, the Commission will refrain from the exercise of all of its powers and the performance of all of its duties under section 31 of the Act with respect to inside wire services.
|
|
|
Declaration pursuant to subsection 34(4) of the Act
|
|
39.
|
In light of the above, the Commission declares, pursuant to subsection 34(4) of the Act, that effective two weeks from the date of this decision, sections 24, 25, 27, 29 and 31 of the Act do not apply to SaskTel's inside wire services, except with respect to:
|
|
|
· the conditions pursuant to section 24 of the Act set out in this decision with respect to the confidentiality of customer information;
|
|
|
· the condition pursuant to section 24 of the Act set out in this decision with respect to the publication in the white pages of the telephone directories of a statement that diagnostic, maintenance and repair of inside wire of customers without a jack-ended demarcation device will be free of charge;
|
|
|
· any future condition that the Commission may impose, pursuant to section 24 of the Act, with respect to inside wire services;
|
|
|
· the Commission's powers under subsections 25(1) and 27(1) and (5) of the Act with respect to the filing and approval of tariffs and just and reasonable rates for inside wire as they relate to customers without a jack-ended demarcation device; and
|
|
|
· the Commission's powers under subsection 27(3) of the Act with respect to compliance with powers and duties not forborne from in this decision.
|
|
|
Tariff filings
|
|
40.
|
The Commission directs SaskTel to issue forthwith, revised tariff pages, effective two weeks from the date of this decision, deleting the existing tariff provisions relating to inside wire services and including provisions stating that the company diagnoses, without charge, the source of transmission problems reported by customers without a jack-ended demarcation device and maintains and repairs, without charge, the single-line inside wiring of customers without a jack-ended demarcation device.
|
|
|
Secretary General
|
|
|
This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca
|
Date Modified: 2003-06-17