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Telecom Public Notice CRTC 2003-1-1
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Ottawa, 13 March 2003
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Review of promotions
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Reference: 8622-C12-2003-0020-3 and 8740-B2-6711/02
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Background
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1.
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In Review of winback promotions, Telecom Public Notice CRTC 2003-1, 15 January 2003 (Public Notice 2003-1), the Commission noted that, in Report to the Governor in Council: Status of Competition in Canadian Telecommunications Markets - Deployment/Accessibility of Advanced Telecommunications Infrastructure and Services, issued 20 December 2002, it had found that, in 2001, incumbent local exchange carriers (ILECs) provided 96% of local telephone lines and received 97% of local service revenues. The Commission also noted that in 2001, competitors' share of local business lines remained unchanged from 2000 at 8%, and their share of local residential lines remained extremely low at 0.6%. Competitors captured only 4.7% of business local revenues and 0.4% of residential local revenues.
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2.
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Given the state of competition in the local wireline market, the Commission invited parties to comment:
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· on the appropriateness of continuing to approve ILEC winback promotions and other ILEC promotions that have the effect of targeting customers of competitors in the local wireline market, whether or not these promotions meet the imputation test; and
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· on any other aspect of the current regulatory framework for ILEC promotions in the local wireline market, such as whether it is appropriate to change the existing approach to determining whether or not a promotion is of limited duration.
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3.
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The Commission added that it would suspend consideration of applications for winback promotions and other promotions that had the effect of targeting customers of competitors in the local wireline market until a decision was issued on the matters raised in the public notice.
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4.
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Since the issuance of Public Notice 2003-1, the Commission has received a number of applications from ILECs proposing promotions explicitly restricted to targeting the ILECs' existing customers. The Commission has received comments in response to many of these applications from Call-Net Enterprises Inc. (Call-Net) as well as reply comments from the ILECs.
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Call-Net's request to suspend all local wireline promotions pending a determination of Public Notice 2003-1
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5.
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In its responses to a number of the ILEC applications, Call-Net argued that promotions targeted at existing ILEC customers raised the same concerns that had led to Public Notice 2003-1, and that allowing such promotions would defeat the intent of the public notice. Call-Net argued that, given the level of ILEC dominance of the local wireline market, a promotion directed at existing ILEC customers was in fact a promotion directed at virtually all customers. Call-Net submitted that the only reasonable way competition would develop in the local wireline market would be for new entrants to attract ILEC customers. Call-Net submitted that promotions targeted at existing ILEC customers were just as damaging to competitors as promotions designed to win back customers from competitors, if not more so. Call-Net argued that there was not enough competition in the local market for the suspension of all local promotions to be a business risk for the ILECs. Call-Net submitted that all promotions impaired competitive entry and that on balance, the public interest supported the suspension of all promotions whether targeted at customers of competitors or at existing ILEC customers.
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6.
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Among the reply comments received from the ILECs, Bell Canada submitted that the use of promotions had been a standard company business practice for many years and a method used to increase service penetration in certain areas. TELUS Communications Inc. stated that promotions had been used to encourage existing customers to try additional features. MTS Communications Inc. submitted that it would be premature for the Commission to use additional criteria, beyond those identified in Public Notice 2003-1, to suspend consideration of current applications by ILECs for promotions.
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Commission analysis and determination
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7.
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In the Commission's view, many of the same factors that led to its decision, as set out in Public Notice 2003-1, to review winback promotions and other promotions that have the effect of targeting competitors' customers, also apply to ILEC promotions targeted at existing ILEC customers. In particular, local wireline competitors have a very low market share by any measure, competitors in the local wireline market continue to face substantial barriers to entry, and access issues currently before the Commission or the courts continue to remain unresolved.
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8.
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The Commission considers that promotions targeted at the ILECs existing customers may have a similar effect on competition as targeting existing customers of the competitors, in that any such promotions target the addressable market of competitors.
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9.
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Accordingly, the Commission finds it appropriate to supplement the record of Public Notice 2003-1, to permit it to review all ILEC promotions, including to existing ILEC customers. Since many of the submissions filed to date have focussed only on issues relating to winback promotions and promotions that have the effect of targeting customers of competitors, the Commission considers it appropriate to permit all parties to have an opportunity to file additional comments in this proceeding.
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10.
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Consistent with the above determination, the Commission considers that a suspension of all ILEC promotions involving local wireline service is appropriate until a decision is issued on the matters raised in Public Notice 2003-1. Accordingly, paragraph 17 of Public Notice 2003-1 is amended as follows:
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In light of the above, the Commission will suspend consideration of applications for ILEC promotions in the local wireline market until a decision is issued on the matters raised in this Public Notice.
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Modified procedure
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11.
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Parties to Public Notice 2003-1 may file modifications to their original submissions or file new submissions with the Commission, on the issues raised in this Public Notice, serving copies on all parties, by 28 March 2003.
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12.
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Parties may file modifications to their reply comments or file new reply comments with the Commission, in order to reply to any new submissions as detailed above, serving copies on all parties, by 14 April 2003.
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13.
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Where a document is to be filed or served by a specific date, the document must be actually received, not merely sent by that date.
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14.
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Parties can file their submissions electronically or on paper. Submissions longer than five pages should include a summary.
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15.
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Where a submission is filed by electronic means, the line ***End of document*** should be entered following the last paragraph of the document, as an indication that the document has not been damaged during electronic transmission.
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16.
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Please note that only those submissions filed electronically will be available on the Commission's web site and only in the official language and format in which they are submitted.
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17.
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Each paragraph of your submission should be numbered.
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18.
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The Commission also encourages parties to monitor the public record of this proceeding (and/or the Commission's web site) for additional information that they may find useful when preparing their submissions.
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Location of CRTC offices
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19.
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Submissions may be examined or will be made available promptly upon request at the Commission offices during normal business hours:
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Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage, Room G-5
Hull, Quebec K1A 0N2
Tel: (819) 997-2429 - TDD: 994-0423
Fax: (819) 994-0218
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Metropolitan Place
99 Wyse Road, Suite 1410
Dartmouth, Nova Scotia B3A 4S5
Tel: (902) 426-7997 - TDD: 426-6997
Fax: (902) 426-2721
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405 de Maisonneuve Blvd. East
2nd Floor, Suite B2300
Montréal, Quebec H2L 4J5
Tel: (514) 283-6607 - TDD: 283-8316
Fax: (514) 283-3689
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55 St. Clair Avenue East, Suite 624
Toronto, Ontario M4T 1M2
Tel: (416) 952-9096
Fax: (416) 954-6343
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Kensington Building
275 Portage Avenue, Suite 1810
Winnipeg, Manitoba R3B 2B3
Tel: (204) 983-6306 - TDD: 983-8274
Fax: (204) 983-6317
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Cornwall Professional Building
2125 - 11th Avenue, Room 103
Regina, Saskatchewan S4P 3X3
Tel: (306) 780-3422
Fax: (306) 780-3319
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10405 Jasper Avenue, Suite 520
Edmonton, Alberta T5J 3N4
Tel: (780) 495-3224
Fax: (780) 495-3214
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530-580 Hornby Street
Vancouver, British Columbia V6C 3B6
Tel: (604) 666-2111 - TDD: 666-0778
Fax: (604) 666-8322
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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: http://www.crtc.gc.ca
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Date Modified: 2003-03-13