Telecom Decision CRTC 2003-47
Ottawa, 14 July 2003
See also: 2003-47-1
IMCAIP's request for mandatory resale of retail Lite Internet service
Reference: 8622-C51-03/02
In this decision, the Commission determines that the mandatory resale condition established in Application concerning access by Internet service providers to incumbent cable carriers' telecommunications facilities, Telecom Decision CRTC 99-11, 14 September 1999 (Decision 99-11) applies to Lite Internet services (IS). Accordingly, the mandated 25% discount established in Decision 99-11 applies to retail Lite IS, effective the date of this decision, until such time as access to the underlying telecommunications facilities used to provide retail Lite IS is provided pursuant to approved tariffs.
1. The Commission received an application on 12 November 2002 from the Independent Members of the Canadian Association of Internet Providers (IMCAIP) filed pursuant to the Telecommunications Act, Part VII of the CRTC Telecommunications Rules of Procedure and the Broadcasting Distribution Regulations. In its application, IMCAIP requested that the Commission issue a number of directions to Cogeco Cable Canada Inc., Rogers Communications Inc., Shaw Communications Inc., Vidéotron Inc. (collectively, the incumbent cable carriers), Bell Canada, MTS Communications Inc., Saskatchewan Telecommunications, TELUS Communications Inc., Aliant Telecom Inc. and any other incumbent telephone and cable companies providing or offering retail higher speed Internet Service (IS) or higher speed Lite IS on terms IMCAIP considered anti-competitive.
2. The Commission, in this decision, addresses IMCAIP's request that the Commission review and vary Application concerning access by Internet service providers to incumbent cable carriers' telecommunications facilities, Telecom Decision CRTC 99-11, 14 September 1999 (Decision 99-11), such that the transitional 25% discount from the lowest retail price for higher speed IS provided by incumbent cable carriers should also apply to Lite IS. The Commission's determinations with respect to the balance of IMCAIP's application will be issued separately.
3. The Commission received comments from the Canadian Cable Television Association (CCTA) and Vidéotron Inc. (Vidéotron) on 20 January 2003.
4. In support of its application to review and vary Decision 99-11, IMCAIP argued that substantial doubt as to the correctness of the terms of the Commission's decision regarding the transitional resale pricing framework for higher speed IS arose from a fundamental change in circumstances since Decision 99-11 was issued. IMCAIP submitted specifically, that since the issuance of Decision 99-11, retail Lite IS had been introduced into the marketplace.
5. In its comments, the CCTA submitted that IMCAIP had not demonstrated that the Commission erred in establishing a transitional resale pricing framework, or that modifications to that framework, including resale and access tariffs for Lite IS, were required. The CCTA submitted that resale of higher speed retail IS was mandated by the CRTC in Decision 99-11 because the Commission considered that, absent a tariff for third party access to the underlying telecommunications facilities, Internet service providers (ISPs) could not duplicate or offer higher speed IS. The CCTA submitted that this was not the case for retail Lite IS. The CCTA submitted that retail Lite IS exhibited a high degree of substitutability with dial-up IS, competing directly with that service.
6. In its comments, Vidéotron argued that IMCAIP had not substantiated its request. Vidéotron submitted that in Decision 99-11, the Commission was clear that the 25% discount was to apply only to higher speed IS. Vidéotron submitted that discounting its Lite IS by 25% would render the service non-compensatory, when sold to ISP resellers. Vidéotron further submitted that because it had not actively promoted its Lite IS, if a 25% discount were available to resellers, Vidéotron's regular higher speed IS customers would migrate to the resellers' lower priced resold Lite services.
Commission analysis and determination
7. In Decision 99-11, the Commission stated that mandated resale of higher speed retail IS was an efficient and effective response to the lack of availability to competitors of incumbent cable carriers' higher speed access facilities. The Commission accordingly required, as a condition of an incumbent cable carrier providing higher speed retail IS, that such a carrier make its higher speed retail IS available for resale at a 25% discount from the lowest retail higher speed IS rate charged by the cable carrier to a customer in the applicable serving area (the mandatory resale condition). The Commission stated that the mandatory resale condition would apply until the cable carrier provided access to the underlying telecommunications facilities used to provide retail IS.
8. In Regulation under the Telecommunications Act of certain telecommunications services offered by "broadcast carriers", Telecom Decision CRTC 98-9, 9 July 1998, the Commission defined higher speed access services as services which offer transmission at speeds above 64 Kbps. Since retail Lite IS generally provides transmission at 128 Kbps, it is a higher speed service and, the Commission therefore finds that itshould be subject to the mandatory resale condition established in Decision 99-11.
9. With respect to Vidéotron's submission that discounting its retail Lite IS by 25% would render the service non-compensatory, the Commission notes that in Decision 99-11, it stated that if an incumbent cable carrier wishes to charge an ISP a different discount rate, it may file a proposed alternative discount for approval with the Commission, supported by appropriate costing information. In such cases, the cable carrier must make its higher speed retail IS available for resale at the discount set out in Decision 99-11, until it has received approval to modify it.
10. In light of the above, the Commission considers that, effective the date of this decision, an incumbent cable carrier providing retail higher speed Lite IS is required to make its retail higher speed Lite IS available for resale, at a 25% discount from the lowest retail price for Lite IS charged by the cable carrier to a customer in the applicable serving area, until such time as access to the underlying telecommunications facilities used to provide retail Lite IS is provided pursuant to approved tariffs.
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
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