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Telecom Decision CRTC 2003-78

  Ottawa, 20 November 2003

Modifications to the procedures for Telecom Public Notice CRTC 2003-8, Review of price floor safeguards for retail tariffed services and related issues

  Reference: 8663-C12-200314600 and 8622‑R4-200308115.
  In this Decision, the Commission consolidates the interim and final procedures established in Telecom Public Notice CRTC 2003-8, Review of price floor safeguards for retail tariffed services and related issues.


In Telecom Public Notice CRTC 2003-8, Review of price floor safeguards for retail tariffed services and related issues, 23 October 2003 (Public Notice 2003-8 or the Public Notice), the Commission invited comments on proposed interim modifications to the imputation test and the service bundle pricing rules, as well as the introduction of a new interim pricing safeguard for volume and term contracts for retail tariffed services.

The Application


The Commission received an application dated 3 November 2003 filed jointly by Aliant Telecom Inc., Bell Canada, MTS Communications Inc., Saskatchewan Telecommunications, TELUS Communications Inc., TELUS Communications (Québec) Inc. and Société en commandite Télébec (the "Companies"). The Companies requested that the process for interim determinations set out in paragraphs 45 and 46 of Public Notice 2003-8 be amended and supplemented. Paragraph 45 of Public Notice 2003-8 indicates that parties may file comments on the proposed interim modifications by 24 November 2003, and paragraph 46 indicates that parties may file reply comments by 2 December 2003.


In its application, the Companies requested that the process for the interim determinations be consolidated with the process for final determinations and that this final process be accelerated to provide for the filing of submissions earlier in 2004 than is provided for in paragraph 47 of Public Notice 2003-8, with the further steps in the process to be adjusted accordingly. In the alternative, the Companies requested that the Commission modify the interim process and give parties until 16 January 2004 to file evidence in the interim process.


In all events, the Companies also requested that the Commission disclose on the record of the proceeding the briefing papers and other evidence relied upon by the Commission to reach its preliminary views and extend the date for other parties to intervene from 3 November to 17 November 2003.


Allstream Corp. together with Call-Net Enterprises Inc. (collectively "the Competitors"), Axia SuperNet Ltd. ("Axia"), the Canadian Cable Television Association ("CCTA"), LondonConnect Inc. ("LondonConnect"), and the Public Interest Advocacy Centre ("PIAC") filed comments dated 7 November 2003. The Canadian Bankers Association ("CBA"), Insurance Bureau of Canada ("IBC"), Investment Dealers Association of Canada (IDAC) and the Toronto Board of Trade ("TBT") filed comments dated 4 November 2003. The Canadian Manufacturers & Exporters (CME) filed comments dated 10 November 2003.


The Companies filed reply comments dated 10 November 2003.


In arriving at its conclusions set out below, the Commission carefully reviewed the Companies' Application, all of the submissions received in response to the Application and the Companies' reply submission. A brief summary of the parties' positions is set out below.

Position of the Applicants


The Companies submitted that they cannot meaningfully participate in the interim determinations if they are required to file either "comments" or "submissions" by 24 November 2003. Based on the magnitude and complexity of the issues, the Companies argued that evidence instead of comments are necessary for the Commission to be appropriately informed of the issues to be considered in making interim determinations. If the Companies cannot test the evidence of others through interrogatories, they will not have been given a fair opportunity to rebut the case against them.


The Companies argued that Public Notice 2003-8 places them in the untenable position of having to speculate on the evidence and interpretive analysis that led to the Commission's preliminary views in order to try to meet the case against them. They argued that if the full extent of the Commission's competitive market analysis was provided, there might be sufficient information to address the Commission's analysis. The Companies submitted that fairness requires that the briefing papers and other evidence relied upon by the Commission to reach its preliminary views be made available.


The Companies submitted that the Commission did not apply the test set out in its own Practice Note, dated 28 February 1997, for interim relief. Public Notice 2003-8 does not show a serious or even arguable case that the interim determinations must be made. They argued that there is no evidence upon which it could be reasonably concluded that there might be irreparable harm or an emergency arising if the extraordinary step of proposing interim relief is not taken. Further, the Companies submitted that there is no statement or, apparently, consideration given to the balance of convenience. They argued that on any reasoned weighing of relative harm, in the event that the interim relief is granted, it must be accepted that it is more likely that the Companies will suffer irreparable harm in the form of market share loss and other potential consequences which cannot be reversed by any subsequent final determination. In contrast, maintaining the status quo will not change the current business plans and operations of competitors.


The Companies submitted that even though the proposed rules are to be put into place on an interim basis pending the outcome of a fuller proceeding, the reality is that as soon as the Commission adopts the rules, even on an interim basis, the rules will be final for a significant period.


In the Companies' view, the Commission's use of an interim order in this case is not like the use of an interim rate order that can be corrected in response to better evidence through the retroactive adjustment of accounts. Any changes to the interim rules can only be made on a prospective basis from the date of a final order. Any harm arising from the Commission's proposed rules during the interim period could not be readily measured or likely compensated.


The Companies argued that the potential effects of the proposed interim rules are very serious, both for the Companies as well as for consumers and will have an irreparable impact.

Comments filed in response to the Application


The Competitors argued that the Companies' arguments are without merit and that the Companies' application should be denied.


The Competitors argued that the Commission has unfettered discretion to make interim decisions under section 61(2) of the Telecommunications Act (the Act). The Competitors argued that the courts have found that the standards of natural justice are much lower (or may not even apply) in interim proceedings. Based on the case law, the process set out in Public Notice 2003-8 in relation to the proposed interim rules is more than what is required and is more than adequate.


The Competitors argued that it is the Commission's statutory responsibility to ensure that the Incumbent Local Exchange Carriers' (ILECs) market power is not abused in contravention of the Act. The potential harm suffered by the ILECs as a result of an interim order is small in comparison to the harm being done to their competitors as a result of continued abuse of market power if no interim order is issued. In the Competitors' view, any delay in the public process will assist the ILECs in achieving their goal of buying time to consolidate their stronghold on the telecommunications market and will further undermine the already weak competitive market. If the Commission determines that there are violations of the Act, it has a statutory duty to act to prevent ongoing infractions.


The CCTA argued that there is clearly an urgent need for the Commission to deal with anti-competitive conduct. The CCTA argued that by granting the requested delay, the Companies would be permitted to continue to price and bundle their tariffed services in a manner that the Commission has found to be anti-competitive.


The CCTA argued that the proposed safeguards for the local residential markets are not sufficient to protect against anti-competitive pricing and bundling by the ILECs. Barring amendments to strengthen the proposed safeguards for all local services, the Commission should retain the process for making interim determinations only in respect of business services for the enterprise market and accelerate the process for making final determinations with respect to safeguards in respect of all local exchange services.


In addition, the CCTA requested that the Commission impose an immediate moratorium on all ILEC bundling of residential primary exchange service so as to address the deleterious effects of anti-competitive conduct by the ILECs as expeditiously as possible.


The CCTA argued that the Commission has broad powers to make interim decisions. In the CCTA's view, the process provided for in Public Notice 2003-8 in relation to the proposed interim rules is more generous than is required by law.


With respect to the Companies' argument for disclosure of staff briefing materials, the CCTA argued that the Commission is entitled, based on information available to it through prior proceedings and its ongoing monitoring activities, to make prima facie determinations about the state of competition in a market.


LondonConnect stated that regardless of the process for the interim determinations, the timeframes for the process leading to a final decision should be modified to shorten the timeframe for filing submissions and to allow for more time to prepare interrogatories and to files responses to interrogatories.


Axia, CME, the IBC, the CBA, the TBT and the IDAC supported the Companies' request for more time for filing comments and CME, the IBC, the CBA and the TBT supported the request for disclosure of information.


PIAC submitted that there is no need for interim relief and supported the Companies' request to consolidate the interim and final procedures.

The Companies' Reply


The Companies submitted that interested parties in all of the stakeholder groups have supported the Companies' request for additional time to file comments.


The Companies argued that once it is recognized and acknowledged that the "interim" pricing rules are not like interim rates; that they have a final, irreversible character for the period in which they are in effect; that they have serious consequences for the parties affected; and that the issues involved are complex, it follows that any "interim" process must provide for a full and fair opportunity for parties to participate and the Commission's reasoning must be transparent in order to be fair.


The Companies argued that it is extremely important for the Commission to recognize that none of the parties have denied the final nature of the "interim rules", not even the Competitors and the CCTA. The fact of the finality of the interim rules cannot be disputed and the procedural consequences at law that flow from that fact are equally incontrovertible. Furthermore, Public Notice 2003-8 is not about enforcing compliance with established pricing rules, as suggested by the Competitors, it is about making new pricing rules.


In addition, the Companies argued it is not reasonable to rush ahead with an interim decision when there is no evidence that an immediate catastrophe is at hand and when the Commission itself has recognized that a full public process is needed to ultimately determine whether new rules are needed and what they might be.


In the Companies' submission, 60 days or more, rather than 30 days, is a normal period of time for parties to develop evidence on marketing and pricing rules. The Companies referred to other proceedings involving joint marketing and bundling rules where 60 days were provided for initial comment.


The Companies submitted that most parties are in favour of further disclosure of the briefing papers. In their view, there seems to be no hardship in making the briefing papers available. The Companies cited several cases in support of their view that there is a trend in Canadian administrative law in support of greater disclosure by decision-making bodies. In any event, the Companies stated that they are asking for nothing more than the Commission would be required to disclose in response to a request under the Access to Information Act.


The Companies reiterated their requests for relief set out in their Application.

The Commission's determinations


The Companies have requested that the Commission consolidate the procedures set out in Public Notice 2003-8 for consideration of the proposed interim rules and for the final determinations. In the alternative, the Companies have requested that the Commission extend the deadline for filing submissions from 24 November 2003 to 16 January 2004. The Companies have also made a request for disclosure of staff briefing documents and other documents and analysis relied on by the Commission in reaching its preliminary views.


The Commission notes that consolidating the interim and final procedures will allow for an accelerated process leading to final determinations on the issues set out in Public Notice 2003-8. The Commission considers that it would be in the public interest to issue its final determinations in this proceeding as soon as possible.


The Commission has therefore decided not to proceed with the call for comments regarding its proposals for an interim decision and will accelerate the process leading to final determinations on the issues set out in Public Notice 2003-8. Accordingly, parties may file and serve their initial submissions by 30 January 2004. A revised Public Notice will be issued shortly to set out the amended process.


With regard to the request by the Companies for disclosure of staff briefing documents and other documents and analysis relied on by the Commission in reaching its preliminary views, the Commission notes that the basis for the Commission's initial concerns and preliminary views are set out fully in the Public Notice. The Commission's decision regarding its proposals will be based on the record of the proceeding. The Companies, and all other parties who participate, will have a meaningful opportunity to put their position on the record for consideration by the Commission and to challenge the positions put forth by other parties. In addition, the Commission notes that, contrary to the suggestion of the companies, it is not the practice of the Commission to disclose staff analysis and recommendations. This material is consistently retained in confidence.


In light of the foregoing, the Commission denies the request for disclosure of Commission staff briefing documents and other documents.


The Commission notes that in response to a request by the Companies, by letter dated 4 November 2003, interested parties were given until 12 November 2003 to register with the Commission. Given the determinations above, the Commission will, in the revised Public Notice, further extend the date.
  Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site:

Date Modified: 2003-11-20

Date modified: