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Telecom Decision CRTC 2003-69
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Ottawa, 17 October 2003
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TELUS' application for forbearance from regulation of single-line inside wire services
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Reference: 8640-T42-02/02
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In this decision, the Commission forbears, with some conditions, from regulating single-line inside wire services provided by TELUS Communications Inc. (TELUS). Customers without a jack-ended demarcation device will not be required to pay for diagnostic, maintenance or repair services to their inside wiring when reporting transmission problems. TELUS is directed to report to the Commission, within 90 days of the date of this decision, the number of subscribers that were incorrectly charged for diagnostic, maintenance or repair services, the total dollar amounts of the incorrect charges, and the date on which TELUS refunded the incorrectly charged amounts.
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1.
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The Commission received an application under Part VII of the CRTC Telecommunications Rules of Procedure, dated 16 May 2002, from TELUS Communications Inc. (TELUS), requesting that the Commission forbear, pursuant to section 34 of the Telecommunications Act (the Act), from regulating the company's single-line inside wire services (inside wire services).
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2.
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On 26 June 2002, the Telecommunications Workers Union (TWU) filed comments. TELUS filed reply comments on 15 July 2002.
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Background
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3.
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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:
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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.
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(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.
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(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.
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(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.
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4.
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The Canadian telecommunications policy objectives set out at section 7 of the Act include the following:
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(c) to enhance the efficiency and competitiveness, at the national and
international levels, of Canadian telecommunications;
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(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;
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(h) to respond to the economic and social requirements of users of
telecommunications services.
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5.
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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.
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6.
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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.
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7.
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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:
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- Télébec ltée, now known as Société en commandite Télébec (Télébec), in Telecom Order CRTC 98-856, 27 August 1998;
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- Bell Canada, in Bell Canada - Forbearance from Regulation of Single Line Inside Wiring Services, Telecom Order CRTC 99-1016, 22 October 1999;
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- Hurontario Telephones Limited, now known as Execulink Telecom Inc. (Execulink Telecom), in Forbearance for single-line inside wiring granted for Hurontario, Order CRTC 2000-881, 26 September 2000;
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- TELUS Québec Inc. (TELUS Québec), in Forbearance for single-line inside wiring granted for TELUS Québec, Order CRTC 2001-416, 25 May 2001; and
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- Saskatchewan Telecommunications, in Saskatchewan Telecommunications' application for forbearance from regulation of single-line inside wiring services, Telecom Decision CRTC 2003-38, 17 June 2003.
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The application
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8.
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In its application, TELUS 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), and sections 29 and 31 of the Act in relation to inside wire services, such as installation, maintenance, rearrangement and repair services presently offered by the company and any inside wire services the company may offer in the future.
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9.
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TELUS stated that customers in Alberta and British Columbia have had responsibility for their inside wiring:
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- since 1989 in Alberta, excepting the City of Edmonton, for all aspects of their inside wiring (Public Utilities Board of Alberta, Decision E88089, 23 December 1988);
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- since 1995 in British Columbia for the installation of new inside wiring (IN THE MATTER OF an application by BC TEL under Tariff Notice 3051 dated 9 March 1994, to transfer to customers the responsibility for installing, rearranging and moving (installing) single-line residence and business inside wire (IW) on the property owner's side of the demarcation point, Telecom Order CRTC 94-1143, 30 September 1994 (Order 94-1143);
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since 2000 in British Columbia for the repair of their inside wiring (Wording changes, Order CRTC 2000-168, 3 March 2000 (Order 2000-168); and
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since 2002 in the City of Edmonton for all aspects of their inside wiring (Transfer of inside wire in the City of Edmonton, Telecom Order CRTC 2002-21, 15 January 2002).
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10.
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TELUS indicated that there had been competition in the inside wire services market as a result of the transfer of responsibility for inside wiring to subscribers.
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11.
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TELUS submitted that inside wire services were provided by the company and by some of Alberta's and British Columbia's 3400 electricians and electrical contractors, security companies, telephone equipment suppliers, cable companies, and building materials suppliers. Customers could also perform inside wiring work themselves, and could obtain a wiring guide from TELUS.
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12.
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TELUS argued that there were no legal, regulatory, institutional, technical or financial barriers to entry into this market. TELUS submitted that rivalry in the inside wire services market is evidenced by the significant number of competitors, the ease customers have in selecting a service provider, and the volume and nature of advertisements offering inside wire services.
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13.
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TELUS stated that it did not have market power in this market and could not charge prices significantly above competitive levels. TELUS argued that it could not cross-subsidize inside wire services since, under price cap regulation, it did not have a "guaranteed" rate of return for utility services and could not therefore artificially increase utility services investments and costs to subsidize competitive services.
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14.
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TELUS stated that forbearance for inside wire services would be consistent with the Canadian telecommunications policy objectives, would not jeopardise user interests, and would not impair the continuance of a competitive market for the services in question. TELUS also stated that forbearance would be consistent with the Commission's decisions to forbear from regulation of inside wire services provided by Bell Canada, Télébec, TELUS Québec and Execulink Telecom.
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TWU's intervention
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15.
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TWU submitted that TELUS had been improperly charging subscribers in single family dwellings and in stand-alone multiple dwelling units (MDUs) for maintenance and repair services that should have been provided free of charge. Accordingly, TWU argued that the Commission should deny TELUS' application.
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16.
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TWU noted that during the proceeding that led to Order 94-1143, TELUS Communications (B.C.) Inc. (TCBC), now TELUS, had offered to maintain and repair single-line inside wiring without charge to customers. TWU stated that the Commission had only approved TCBC's charges for the installation of single-line inside wiring in Order 94-1143.
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17.
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TWU argued that TCBC had subsequently failed to draw the Commission's attention to the fact that TCBC would charge single-line inside wiring customers for maintenance and repair services when it filed Tariff Notice (TN) 4003. TWU submitted that, as a result, the Commission had inadvertently approved TCBC's charges for maintenance and repair of single-line inside wiring in Order 2000-168. TWU argued that there was no public notice or opportunity for parties to address these tariff revisions.
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18.
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TWU submitted that the tariff revisions approved in Order 2000-168 could only apply to MDUs and not to single-family dwellings since Order 2000-168 concluded a follow-up proceeding to Location of Demarcation Point for Inside Wire in Multi-Dwelling Units and Associated Issues, Telecom Decision CRTC 99-10, 6 August 1999 (Decision 99-10) which applied only to MDUs.
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19.
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TWU argued that the Commission should cancel the tariff items in question and direct TELUS to refile tariff pages that would be identical to those that were in place prior to Order 2000-168. TWU also argued that the Commission should order TELUS to refund all charges that it had imposed on customers for maintenance and repair of inside wiring other than those that had been expressly authorised in Decision 99-10.
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20.
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In addition, TWU alleged that TELUS had been charging British Columbia customers in single-family dwellings for diagnostic services without regulatory approval. TWU argued further that customers with a jack-ended demarcation device did not necessarily have the capability to determine whether transmission problems originated with the inside wiring, as the jack-ended demarcation device was often inaccessible to the customer.
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21.
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TWU also alleged that British Columbia customers in MDUs were charged for diagnostic services even though such customers might not have been permitted to access any diagnostic device in their building.
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22.
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TWU requested that TELUS be ordered to refund customers in single-family dwellings for all charges for diagnostic services and to refund all customers in MDUs who are unable to access any diagnostic device in their building.
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TELUS' reply
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23.
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TELUS noted that TWU's intervention did not address whether current market conditions for inside wire services satisfied the forbearance criteria established by the Commission in Decision 94-19. With respect to TWU's allegations that TELUS did not have properly approved tariffs for maintenance and repair of single-line inside wiring, TELUS stated that the Commission approved the tariff revisions in Order 2000-168.
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24.
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TELUS advised that it had offered to accept responsibility for maintaining all inside wiring in the proceeding that led to Order 94-1143 in response to the concern expressed by the Commission in BC TEL and Bell Canada - Transfer of inside wire to premises owners and introduction of lineguard service, Telecom Decision CRTC 94-2, 2 February 1994 (Decision 94-2)that, in a "mixed ownership" situation, premises owners would have no authority to maintain existing inside wiring that was owned by a telephone company. TELUS noted that the Commission also stated in Decision 94-2 that an alternative to free maintenance of all single-line inside wiring would be to introduce tariff revisions providing that subscribers are responsible for maintaining single-line inside wiring, including any single-line inside wiring that the telephone company may have furnished.
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25.
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With respect to the allegation that TELUS did not draw the Commission's attention to the changes in its tariffs during the proceeding leading to Order 2000-168, TELUS submitted that the proposed changes were clearly spelled out in the proposed tariff pages.
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26.
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Insofar as the allegation that the Commission must have inadvertently approved the proposed changes is concerned, TELUS submitted that such a claim was without merit, especially as TN 4003 involved a show cause process and thus would have been subject to additional scrutiny. However, TELUS added that it was prepared to clarify General Tariff CRTC 1005, items 95, 96 and 170 by including express wording that the Commission may deem necessary in order to give clear effect to its policies regarding inside wire services.
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27.
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As for the allegation that there had been no public notice or opportunity for parties to address the changes at issue, TELUS submitted that not every tariff filing gives rise to the issuance of a public notice. TELUS noted that TWU still had the opportunity to make its views known, despite the absence of a public notice. TELUS argued that the process that led to Order 2000-168 was appropriate, even though the order also dealt with matters that arose out of Decision 99-10.
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28.
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With respect to TWU's allegation that customers in single-family dwellings were prevented from having access to diagnostic devices, TELUS stated that it was not aware of customer complaints relating to the situation described by TWU. TELUS also submitted that in MDUs, end-users could identify inside wiring problems through the assistance of the building owner/landlord or their agent.
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29.
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TELUS stated that, in any event, as a result of the issues raised by TWU it had begun an investigation to determine whether any customers had been incorrectly billed for diagnostic, maintenance or repair services and, if so, TELUS would refund those customers in accordance with the Terms of Service.
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Commission analysis and determination
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Application of subsections 34(1), (2) and (3) of the Act
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30.
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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) 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.
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31.
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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 extends through the company's entire service territory in Alberta and British Columbia, as electricians and installers of security systems, in addition to TELUS, offer such services, and the required parts and supplies are available, throughout this territory.
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32.
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The Commission finds that the market for inside wire services in TELUS' service territory 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 TELUS for such customers is unlikely since, if the Commission were to refrain from regulating inside wire services, TELUS could not recoup any loss from below cost pricing by increasing the prices in the future.
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33.
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The Commission however notes that while TELUS' 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 TELUS 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 wiring, 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.
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34.
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The Commission is of the view that TWU's allegations do not relate to the state of competition in the market for inside wire services, and accordingly do not constitute a reason to deny the forbearance application. Further, the Commission notes that, on the record, TELUS has undertaken to investigate TWU's allegations, and to refund amounts charged incorrectly. The Commission will require TELUS to report to the Commission, within 90 days of the date of this decision, the number of customers that were incorrectly charged for diagnostic, maintenance or repair services, the total amount of the incorrect charges and the date on which the incorrectly charged amounts were refunded to customers, with interest.
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35.
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Accordingly, the Commission finds, pursuant to subsection34(2) of the Act, as a question of fact, that the provision, in TELUS' 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.
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36.
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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 TELUS' territory, is consistent with the Canadian telecommunications policy objectives.
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37.
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The Commission also finds, pursuant to subsection 34(3), 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.
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38.
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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.
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Section 24
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39.
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Section 24 of the Act provides:
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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.
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40.
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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 TELUS' Terms of Service, which ensure the confidentiality of customer information for regulated services, do not apply to forborne services, the Commission directsTELUS, 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 TELUS, 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.
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41.
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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 TELUS, as a condition of providing inside wire services, to specify, in future editions of the white pages of its telephone directories, that diagnosis, maintenance and repair of single-line inside wiring will be free of charge for all customers without a jack-ended demarcation device when reporting transmission problems.
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42.
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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.
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Section 25
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43.
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Section 25 of the Act provides:
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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.
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(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.
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(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.
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(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
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(a) was charged because of an error or other circumstance that warrants the ratification; or
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(b) was imposed in conformity with the laws of a province before the operations of the carrier were regulated under any Act of Parliament.
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44.
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Based on the record of this proceeding, the Commission considers it appropriate that TELUS no longer be required to file and obtain the Commission's approval of tariffs for inside wire services, except for diagnostic, maintenance and repair 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.
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Section 27
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45.
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Section 27 of the Act provides:
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27. (1) Every rate charged by a Canadian carrier for a telecommunications service shall be just and reasonable.
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(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.
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(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.
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(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.
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(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.
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(6) Notwithstanding subsections (1) and (2), a Canadian carrier may provide telecommunications services at no charge or at a reduced rate
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(a) to the carrier's directors, officers, employees or former employees; or
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(b) with the approval of the Commission, to any charitable organization or disadvantaged person or other person.
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46.
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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. Accordingly, and consistent with the Commission's conclusion that the market for inside wire services in TELUS' service territory is not sufficiently competitive to protect the interests of customers who do not have a jack-ended demarcation device, 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 diagnosis, maintenance and repair of single-line inside wiring of customers without a jack-ended demarcation device.
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47.
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Given that customers without a jack-ended demarcation device may be unable to determine the origin of a transmission problem, the Commission directs TELUS to issue revised tariff pages specifying that diagnosis, 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.
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48.
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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.
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49.
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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.
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50.
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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.
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51.
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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) relates to subsection 27(2) with respect to which the Commission is forbearing in this decision, and since subsection 27(6) does not relate per se to the charging of rates to customers without a jack-ended demarcation device.
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Section 29
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52.
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Section 29 of the Act provides:
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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
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(a) the interchange of telecommunications by means of their telecommunications facilities;
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(b) the management or operation of either or both of their facilities or any other facilities with which either or both are connected; or
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(c) the apportionment of rates or revenues between the carriers.
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53.
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The Commission considers it appropriate that TELUS 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.
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Section 31
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54.
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Section 31 of the Act provides:
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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.
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55.
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The Commission considers it appropriate that TELUS 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.
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Declaration pursuant to subsection 34(4) of the Act
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56.
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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 TELUS' inside wire services, except with respect to:
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- the conditions pursuant to section 24 of the Act set out in this decision with respect to the confidentiality of customer information;
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- 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 diagnosis, maintenance and repair of single-line inside wiring of customers without a jack-ended demarcation device when reporting transmission problems will be free of charge;
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- any future condition that the Commission may impose, pursuant to section 24 of the Act, with respect to inside wire services;
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- 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 services as they relate to customers without a jack-ended demarcation device; and
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- 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.
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Report by TELUS
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57.
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The Commission directs TELUS to report to the Commission, within 90 days of the date of this decision, the number of subscribers that were incorrectly charged for diagnostic, maintenance or repair services, the total dollar amounts of the incorrect charges, and the date on which TELUS refunded the incorrectly charged amounts, with interest.
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Tariff filings
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58.
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The Commission directs TELUS 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, maintains and repairs, without charge, the single-line inside wiring of customers without a jack-ended demarcation device when customers report transmission problems.
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Secretary General
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This document is available in alternative format and may also be examined at the following Internet site: www.crtc.gc.ca
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Date Modified: 2003-10-17