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Telecom Decision CRTC 2003-60
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Ottawa, 29 August 2003
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Part VII application by Call-Net Enterprises Inc. with respect to the Interim Competitor Digital Network Access service
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Reference: 8661-C25-200304858
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The Commission finds that an end-customer access circuit and associated link are eligible for the interim competitor digital network access (CDNA) service tariff, notwithstanding that the access circuit between the incumbent local exchange carrier's (ILEC's) serving wire centre and the competitor's switch may be located in a different serving wire centre area or that the end-customer access is part of an end-to-end connection that terminates on a competitor's switch, that the end-to-end connection may pass through a competitor's point of presence before it terminates on the competitor's switch.
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The Commission directs all ILECs to adopt the pro-rated approach to determine the charges used to migrate an existing CDNA-eligible circuit and associated link from the Digital Network Access service tariff to the interim CDNA service tariff. The Commission further finds that, where a new CDNA-eligible facility is required, the circuit must be installed in a segregated fashion.
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The application
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1.
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The Commission received an application from Call-Net Enterprises Inc. on 11 April 2003 filed pursuant to Part VII of the CRTC Telecommunications Rules of Procedure (Part VII application), on behalf of itself and its wholly owned affiliates including Sprint Canada Inc. and Call-Net Communications Inc. (Call-Net) related to the interim Competitor Digital Network Access (CDNA) service provided by Aliant Telecom Inc. (Aliant Telecom), Bell Canada, MTS Communications Inc. (MTS), Saskatchewan Telecommunications (SaskTel) (collectively, Bell Canada et al.) and TELUS Communications Inc. (TELUS) (collectively, the incumbent local exchange carriers or ILECs).
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2.
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Call-Net requested that the Commission determine that:
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a) the end-customer premises to which an access circuit is connected
(end-customer access circuit) and associated link are eligible for the interim
CDNA service tariff when the end-customer's premises and the competitor's
switch are located in different wire centre areas "location of competitor
switch" or in a different ILEC serving territory;
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b) an end-customer access circuit and associated link are eligible for the
interim CDNA service tariff when the circuit connects through a competitor
point of presence (POP) to a competitor switch;
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c) the interim CDNA service tariff applies to bundled ILEC service offerings;
and
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d) the ILECs are to charge for access circuits that carry both CDNA-eligible
and non-CDNA eligible circuits on a pro-rated basis during the period of the
interim CDNA service regime (interim period).
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3.
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Call-Net further requested that the Commission include, in the decision in which it approves rates for the CDNA service on a final basis, an interest charge on any amounts that ILECs are required to refund to competitors retroactive to 1 June 2002.
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4.
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The Commission received comments from Bell Canada et al. on 12 May 2003 and 16 May 2003, from TELUS on 12 May 2003 and from AT&T Canada Corp., now Allstream Inc. (Allstream) on 9 May 2003. Call-Net submitted reply comments on 22 May 2003.
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5.
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In its reply comments, Call-Net withdrew its request that the Commission determine on an interim basis that an end-customer access circuit and associated link are eligible for the interim CDNA service tariff when the end-customer's premises and the competitor switch are located in different ILEC serving territories. Call-Net also withdrew its request that the Commission determine that the interim CDNA service applies to bundled ILEC service offerings. Call-Net requested that the Commission address these requests in its decision in the proceeding initiated by Competitor Digital Network Access service proceeding, Telecom Public Notice CRTC 2002-4, 9 August 2002 (Public Notice 2002-4).
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Background
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6.
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The ILECs' tariffs for Digital Network Access (DNA) service provide customers, including competitors, with digital transmission of information from the customer's premises to another premises within the local exchange at 1.544 Mbps (DS-1), or 44.736 Mbps (DS-3), or from the customer's premises to the rate centre in the local exchange to connect with other network services at transmission speeds of DS-0 (64 Kbps), DS-1 or DS-3. In addition, certain ILECs offer a service that provides transmission at 155 Mbps (OC-3) and 622 Mbps (OC-12) that is available between two points in the same local exchange or to connect a customer's location to a network service at a wire centre.
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7.
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In Regulatory framework for second price cap period, Telecom Decision
CRTC 2002-34, 30 May 2002 (Decision 2002-34), the Commission concluded
that the ILECs should develop a DNA service for competitor use.
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8.
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In Decision 2002-34, the Commission directed the ILECs to introduce and make CDNA service available to competitors to provide access between an end-customer premise and a competitor's switch, within the same ILEC serving wire centre area or to the ILEC serving wire centre, in which case it must terminate on the competitor's co-located equipment (CDNA-eligible circuit). In order to implement the CDNA service as expeditiously as possible, the Commission in Decision 2002-34, specified the rates, terms and conditions and directed each ILEC to issue an interim CDNA service tariff no later than 14 June 2002. In Decision 2002-34, the Commission considered that the channelizing feature of the DNA service should not be included in the CDNA service.
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9.
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In Public Notice 2002-4, the Commission initiated the CDNA proceeding and determined that the channelizing feature of the DNA service should be considered for inclusion in the CDNA service. The Commission further determined that competitors' use of the ILECs' digital inter-exchange transport services and associated links should be considered in the CDNA proceeding.
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10.
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In Interim Competitor Digital Network Access service, Telecom Decision
CRTC 2002-78, 23 December 2002 (Decision 2002-78), the Commission granted interim approval to reduced rates for the access and link components of the CDNA service, effective 1 June 2002. These rates were based on cost studies the ILECs filed on 13 September 2002 pursuant to the Commission directives in Decision 2002-34. The Commission also confirmed in Decision 2002-78 that competitors may use components of the CDNA service in conjunction with other ILEC services or service components at current tariff rates, with any service that they self-supply, or with any service acquired from a third party. The Commission also stated in Decision 2002-78 that the CDNA proceeding is the appropriate forum to address proposals to amend the interim CDNA service tariffs to include competitors' POPs.
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Location of the competitor's switch
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Positions of parties
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11.
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Call-Net argued that the Commission's confirmation in Decision 2002-78 that competitors may use CDNA service components in conjunction with other ILEC services or service components and with any self-supplied or third-party-supplied service made the CDNA service applicable to a significant proportion of a competitor's access circuits. Call-Net argued that, for the Commission's statement to be meaningful, the customer premises to which the access circuit connects and the competitor's switch would be located in different ILEC serving wire centre areas.
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12.
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Call-Net submitted that the ILECs have adopted different interpretations of the Commission's determinations in Decision 2002-34 and Decision 2002-78 and considered that its interpretation and Bell Canada's interpretation were the same in most respects. Call-Net argued that the interpretations adopted by TELUS, Aliant Telecom and SaskTel have frustrated the Commission's determination that competitors may use components of the CDNA service in conjunction with other ILEC services or service components at current tariff rates or with any self-supplied or third-party-supplied service.
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13.
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Bell Canada et al. submitted that the interim CDNA service tariffs of Aliant Telecom, Bell Canada, MTS and SaskTel provide that the CDNA service can be used in conjunction with the ILECs' intra-exchange and inter-exchange channel services.
Bell Canada et al. stated that they considered this approach was consistent with the Commission's objective in Decision 2002-34 of promoting facilities-based competition.
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14.
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TELUS stated that it implemented its CDNA service in accordance with the Commission's directions in Decision 2002-34, as supplemented by Public Notice 2002-4 and Decision 2002-78. TELUS submitted that these decisions should not be ignored, notwithstanding that other ILECs may have departed from the Commission's strict language and intentions when establishing their CDNA services. TELUS submitted that the Commission did not negate the terms and conditions established in Decision 2002-34 when it confirmed in Decision 2002-78 that competitors could use the CDNA service in conjunction with other ILEC services or with self-supplied or third-party supplied service. TELUS further submitted that Call-Net's requests should be considered in the context of the CDNA proceeding.
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15.
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TELUS further submitted that Call-Net's requests, when taken together, would render meaningless the terms and conditions that Decision 2002-34 established for the CDNA service and would have a negative impact on the development of facilities-based competition.
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16.
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Allstream supported Call-Net's application and submitted that Bell Canada had generally implemented the CDNA service in a manner that was, for the most part, consistent with Decision 2002-78 and with the relief Call-Net had requested. Allstream submitted that the approaches MTS and TELUS had adopted were not consistent with the Commission's determinations. Allstream also submitted that MTS incorrectly concluded that end-customer access circuits were eligible for the CDNA service tariff only if they terminated on a voice switch.
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Commission analysis and determination
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17.
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The Commission notes that the Service Description in TELUS's interim CDNA service tariff states the CDNA service provides a DNA facility at specified transmission speeds from the competitor's end-customer premises to the competitor's switch within the same TELUS serving central office area (serving wire centre area). The Service Descriptions in the interim CDNA service tariffs of Aliant Telecom, Bell Canada, MTS and SaskTel do not restrict the availability of the CDNA service to facilities that terminate in the same ILEC serving wire centre area.
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18.
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In paragraph 25 of Decision 2002-78, the Commission stated that competitors may use components of the CDNA service in conjunction with other ILEC services or service components at current tariff rates, with any service that they self-supply, or with any service acquired from a third party. The Commission considers that this determination allowed for the two ends of the end-to-end connection between the end-customer's premises and the competitor's switch to be located in different serving wire centre areas within the ILEC's serving territory.
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19.
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The Commission finds that an access circuit between the end-customer premises and the ILEC's serving wire centre (end-customer access circuit) and associated link that are eligible for the interim CDNA service tariff remain eligible for that tariff notwithstanding that the competitor may also use a second ILEC access circuit located in a different serving wire centre area between the ILEC's serving wire centre and the competitor's switch.
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20.
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The Commission directs TELUS to amend its interim CDNA service tariff accordingly and to issue revised tariff pages forthwith. The Commission expects that Aliant Telecom, Bell Canada, MTS and SaskTel will apply their interim CDNA service tariffs in the manner described in the preceding paragraph.
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21.
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With regard to Allstream's submission that an end-customer access circuit that terminates on a non-voice switch is eligible for the CDNA service tariff, the Commission notes that in Decision 2002-34 it did not restrict or limit the type of switch on which the circuit must terminate. Accordingly, the Commission confirms that end-customer access circuits remain eligible for the CDNA service tariff whether they terminate on voice or data switches.
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Competitors' points of presence
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Positions of parties
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22.
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Call-Net argued that the Commission's confirmation in Decision 2002-78 that competitors may use the CDNA service in conjunction with self-supplied facilities can only have significant meaning if a CDNA-eligible circuit may terminate at a competitor's POP.
Call-Net submitted that this is where a connection between a CDNA-eligible circuit and self-supplied facilities would normally be made and that self-supplied facilities typically provide transport between a competitor's POP and its switch. Call-Net further submitted that the "customer access channel" carried on the CDNA-eligible circuit and the self-supplied facility would terminate on the competitor's switch, as the Commission required in Decision 2002-34.
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23.
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Bell Canada et al. and TELUS argued that Call-Net's request was an attempt to re-define the CDNA service. They argued further that the Commission determined in Decision 2002-78 that the CDNA proceeding was the appropriate forum in which to consider whether the interim CDNA service tariff should be amended to replace the reference to competitor "switch" with "POP".
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24.
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Bell Canada et al. submitted that Call-Net appeared to use the Commission's statement with regard to the use of self-supplied facilities in conjunction with the CDNA service as an argument to suggest that a CDNA-eligible circuit may terminate at a competitor's POP. Bell Canada et al. argued that the interim CDNA service tariff did not include provisions for CDNA-eligible circuits to terminate at competitor POPs, unless the competitor had deployed a switch in the POP and the circuit terminated on the switch. Bell Canada et al. argued further that the mere presence of a switch at a given location was not sufficient to render an access circuit eligible for the interim CDNA service tariff. TELUS argued that not all POPs contained switching facilities and submitted that Call-Net's request raised the question of whether the arrangement requested by Call-Net with respect to POPs would constitute simple resale, which the Commission prohibited in Decision 2002-34.
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25.
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Allstream agreed with Call-Net's submission that Bell Canada had generally implemented the CDNA service in a manner that was, for the most part, consistent with Decision
2002-78. Allstream submitted that Aliant Telecom, Bell Canada and SaskTel had implemented the interim CDNA service tariff so that end-customer access circuits and associated links that connect through a competitor's central office or POP before connecting to a competitor's switch were eligible for the CDNA service tariff.
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Commission analysis and determination
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26.
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The Commission notes that an end-customer access circuit obtained by a competitor under the interim CDNA service tariff will form part of an end-to-end connection between that customer's premises and the competitor's switch or co-location site. The Commission also notes that this end-to-end connection may pass through a competitor's POP before it terminates on the competitor's switch. The Commission acknowledges that, in this circumstance, the ILEC-provided portion of this end-to-end connection may terminate, from the ILEC's perspective, at the competitor's POP. The Commission considers it appropriate, given that one end of the connection originates at the end-customer's premises and the other end terminates at the competitor's switch, that the end-customer access circuit remain eligible for the interim CDNA service tariff.
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27.
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Accordingly, for the purpose of implementing the interim CDNA service tariff, the Commission finds that an end-customer access circuit remains eligible for the interim CDNA service tariff notwithstanding that the end-to-end connection of which it is a part passes through a competitor's POP to terminate on a competitor's switch and notwithstanding that the end-to-end connection may include ILEC intra-exchange or
inter-exchange circuits. The Commission notes, however, that in this circumstance other access circuits and associated links that may form part of the end-to-end connection are not eligible for the interim CDNA service tariff. In the Commission's view, the CDNA proceeding remains the appropriate forum in which to address whether access,
intra-exchange or inter-exchange circuits that connect with a competitor's POP may be eligible for inclusion in the CDNA service.
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Pro-rated charges for channelized circuits
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Positions of parties
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28.
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Call-Net submitted that an access circuit between an ILEC wire centre and a competitor's switch or POP is usually of a bandwidth higher than a DS-0 or DS-1 circuit (typically a DS-3 circuit) and that this access circuit is associated with a variety of uses, including
end-customer access and toll connection. Call-Net submitted that not all circuits channelized on these higher bandwidth facilities "channelized circuits" would necessarily be eligible for the CDNA service tariff. Call-Net argued that competitors would lose network efficiencies if the CDNA service tariff were restricted to facilities that carry only
CDNA-eligible circuits because competitors would be required to reconfigure their channelized circuits.
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29.
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Call-Net argued that the interim CDNA service tariff should apply to CDNA-eligible circuits on a channelized circuit and that a proportionate approach should be adopted with respect to rates such that the ILEC would pro-rate its charges for the channelized circuit based on the proportion of the circuit that carries CDNA-eligible circuits. Call-Net provided as an example an access circuit between a competitor's POP and an ILEC serving wire centre. Call-Net submitted that its requested approach would reflect the competitors' use of CDNA-eligible circuits in conjunction with other ILEC serving offerings and specifically the channelizing feature of the DNA service. Call-Net submitted further that, if the Commission adopted this approach at least until final approval was granted to the ILECs' CDNA service tariffs, competitors would receive the benefits
Call-Net considered the Commission intended in Decision 2002-34 and
Decision 2002-78.
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30.
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Allstream supported Call-Net's request and stated that SaskTel had refused to apply its CDNA service tariff to a number of Allstream's channelized DS-3 circuits that contained both CDNA-eligible and non-eligible circuits.
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31.
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Bell Canada et al. and TELUS argued that the Commission should reject Call-Net's request. Bell Canada et al. submitted that Call-Net's request was an attempt to extend the scope of CDNA service pricing to situations beyond what the Commission had determined as being eligible. Bell Canada also submitted that, to simplify implementation of the CDNA service, it had applied a pro-rated approach to migrate competitors' existing circuits from their DNA to CDNA service. Bell Canada et al. argued, however, that
Call-Net's proposed approach was not appropriate for new installations because it would be operationally burdensome, require substantial resources to administer and was not warranted where there were far fewer circuits, as in the case of Aliant Telecom, MTS and SaskTel. TELUS argued that Call-Net's proposal raised complex administrative, billing, tariff, policy and enforcement questions and submitted that the matter should be considered in the CDNA proceeding.
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32.
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Bell Canada et al. argued further that access facilities between the ILEC's channelization equipment and the competitor's switch or co-location site should be eligible for the CDNA service tariff only if all circuits between the competitors' end-customer's premises and the ILEC's channelization equipment qualified for the CDNA service.
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33.
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In reply, Call-Net disagreed with Bell Canada et al. that Call-Net's proposed approach should not apply in ILEC territories where relatively fewer circuits may be involved.
Call-Net argued that, in such circumstances, its proposed approach would be easier to administer.
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34.
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Call-Net argued further that it would be time consuming and expensive to require competitors to reconfigure channelized circuits on an interim basis. Call-Net submitted that its proposal to have the charges for channelized circuits set equivalent to what would have been charged had they been reconfigured would ensure that the appropriate charges would be assessed while avoiding the costs of reconfiguration. Call-Net argued that any requirement to segregate channelized circuits for competitors should be imposed only once the CDNA service definition had been finalized.
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Commission analysis and determination
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35.
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The Commission determined in Decision 2002-34 that an end-customer access circuit is eligible for the interim CDNA service tariff in certain circumstances. The Commission notes that competitors also use ILEC access circuits to connect the ILEC serving wire centre and the competitor's switch or POP. The Commission further notes that the access circuit that connects to the competitor's switch may be located in the same serving wire centre area as the end-customer access circuit (configuration number one) or located in a different serving wire centre area. Finally, the Commission notes that the access circuit that connects to the competitor's POP may be located in the same serving wire centre area as the end-customer access circuit or located in a different serving wire centre area. Access circuits that are connected to the competitor's switch or POPs for the above four access configurations are typically channelized circuits with DS-3 or higher bandwidth.
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36.
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The Commission has considered Call-Net's submission that it would not be appropriate to require competitors to reconfigure channelized access circuits during the interim period. The Commission also considered the ILECs' submission that there are operational difficulties associated with administering Call-Net's request to pro-rate charges for these access circuits. In particular, the Commission notes the position of Bell Canada that the pro-rated approach it applied to migrate DNA access circuits and associated links from the DNA tariff to the interim CDNA service tariff should not be applied to new installations of access circuits.
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37.
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The Commission considers that the complexity and costs associated with reconfiguring existing channelized access circuits is not warranted for the interim CDNA service tariff. Accordingly, the Commission directs all ILECs to adopt the pro-rated approach to determining charges that Bell Canada used to migrate existing CDNA-eligible circuits and associated links from the DNA service tariff to the interim CDNA service tariff. The Commission further finds that for the remainder of the interim period where new
CDNA-eligible facilities are required for an end-customer or for configuration number one, the access circuit(s) must be installed in a segregated fashion.
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Request for interest on rebates
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Positions of parties
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38.
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Call-Net requested that the Commission's decision to establish rates for the CDNA service components on a final basis include an interest charge on the amounts that ILECs are required to refund to competitors. Call-Net argued that the rate of interest in question should be commensurate with the rate competitors pay to borrow these funds. Call-Net further requested that, at a minimum the ILECs should be ordered to satisfy the requirements contained in Article 19.3 of the Terms of Service that provides that a customer credited with an amount that was over-billed must also be credited with interest on that amount at the rate payable for interest on deposits that applied during the period in question. Call-Net submitted, however, that in the context of the present case, it would be more appropriate to remedy the unjust enrichment by imposing an interest charge on ILECs commensurate with the competitor's cost of debt.
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39.
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Bell Canada et al. and TELUS argued that the Commission should reject Call-Net's request with respect to the payment of interest by the ILECs. Bell Canada et al. and TELUS disagreed with Call-Net's description of the payments as refunds and denied that competitors were being over-billed. TELUS argued that the fact that the rates being charged were authorized by the Commission defeated Call-Net's claim of unjust enrichment. TELUS further argued that if Call-Net's proposal were adopted in other proceedings, it would produce irrational outcomes.
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40.
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In its reply comments, Call-Net submitted that, while it considered the rates it was paying for DNA components to be inflated relative to the cost of providing service, it was not suggesting that the charging of these rates gave rise to unjust enrichment. Call-Net submitted that the ILECs should not be enriched by the interest they were effectively earning on the amounts that it anticipated would be refunded to the competitors.
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41.
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Call-Net argued that the relief it requested was appropriate in the context of the CDNA service having regard to both its expectation that the CDNA rebates would be large and to the delay in finalizing rates. Call-Net submitted that it did not propose its approach for proceedings involving smaller amounts of money or shorter delays.
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Commission analysis and determination
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42.
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The Commission considers that it would be premature to make a determination with respect to Call-Net's request at this time and notes that Call-Net's request is associated directly with issues under consideration in the CDNA proceeding.
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43.
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Accordingly, the Commission finds that Call-Net's request that the ILECs should pay interest on monies that may be refunded to competitors as a result of the Commission's determinations in the CDNA proceeding will be addressed in that proceeding.
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Other matters
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Conditions on resale of the CDNA service
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Positions of parties
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44.
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Bell Canada et al. noted that, in Public Notice 2002-4, the Commission confirmed that resellers were eligible for the CDNA service and expressed their concern that the CDNA service should not be used other than as an access facility to competitors' switching equipment. Bell Canada et al. submitted that, at a minimum, the Commission should limit the CDNA service to resellers with switches that would potentially use connections to end-customers, such as toll service providers establishing Direct Access Lines.
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Commission analysis and determination
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45.
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The Commission notes that issues relating to the resale of the CDNA service are being considered in the CDNA proceeding. The Commission further notes that parties to this proceeding have not had the opportunity to comment on Bell Canada et al.'s submission. Accordingly, the Commission finds that the submission of Bell Canada et al. will be addressed in the CDNA proceeding.
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Restriction on use of the CDNA service
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Positions of parties
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46.
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Allstream submitted that Aliant Telecom, Bell Canada and SaskTel had indicated that the access and link were not eligible for the CDNA service when the competitor was serving an end-customer premise as an agent for a service provider that the ILEC had deemed eligible for the CDNA service. Allstream argued that to restrict the eligibility of an access circuit for the CDNA service tariff in this way would be tantamount to allowing these ILECs to dictate the nature of competitors' relationships with wholesale customers, with negative consequences for the wholesale market.
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47.
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In reply, Call-Net supported Allstream's submission and proposed that this issue be included in the CDNA proceeding.
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Commission analysis and determination
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48.
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The Commission notes that parties to this proceeding did not have the opportunity to comment on the submission of Allstream. The Commission considers that Allstream's submission should be addressed in the context of other conditions associated with the final CDNA service. Accordingly, the Commission finds that the submission of Allstream will be addressed in the CDNA proceeding.
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Secretary General
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This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca
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Date Modified: 2003-08-29