ARCHIVED - Telecom Decision CRTC 2004-1

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	Telecom Decision CRTC 2004-1
	Ottawa, 8 January 2004
	People's Telephone Company of Forest Inc.'s application for forbearance from regulation of single-line inside wiring services
	Reference: 8640-P1-01/02
	In this decision, the Commission forbears, with some conditions, from regulating single-line inside wire services provided by People's Telephone Company of Forest Inc. Customers without a jack-ended demarcation device will not be required to pay for diagnostic, repair or maintenance services to their inside wiring when reporting transmission problems.
1.	The Commission received an application under Part VII of the CRTC Telecommunications Rules of Procedure, dated 14 November 2002, from People's Telephone Company of Forest Inc. (People's) 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).
2.	The Commission received no comments with respect to this application.
	Background
3.	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:
	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.
	(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.
	(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.
	(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.
4.	The Canadian telecommunications policy objectives set out at section 7 of the Act include the following:
	...
	(c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;
	(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;
	(h) to respond to the economic and social requirements of users of telecommunications services.
5.	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.
6.	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.
7.	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:
	Télébec ltée, now known as Société en commandite Télébec, in Telecom Order CRTC 98-856, 27 August 1998;
	Bell Canada, in Bell Canada - Forbearance from Regulation of Single Line Inside Wiring Services, Telecom Order CRTC 99-1016, 22 October 1999 (Order 99-1016);
	Hurontario Telephones Limited, now known as Execulink Telecom Inc. (Execulink), in Forbearance for single-line inside wiring granted for Hurontario, Order CRTC 2000-881, 26 September 2000 (Order 2000-881);
	TELUS Communications (Québec) Inc., in Forbearance for single-line inside wiring granted for TELUS Québec, Order CRTC 2001-416, 25 May 2001;
	Saskatchewan Telecommunications, in Saskatchewan Telecommunications' application for forbearance from regulation of single-line inside wiring services, Telecom Decision CRTC 2003-38, 17 June 2003; and
	TELUS Communications Inc., in TELUS' application for forbearance from regulation of single-line inside wire services, Telecom Decision CRTC 2003-69, 17 October 2003.
	The application
8.	In its application, People's requested that the Commission refrain in whole and unconditionally from exercising its powers or performing its duties under sections 24, 25, 27, 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. People's described the inside wire market in its territory as consisting of business and residential installation, movement, rearrangement and repair of single line inside wiring and jacks on the customer side of a demarcation point installed on the customer's premises.
9.	People's indicated that the inside wire services for which forbearance was requested did not include inside wiring and jacks associated with hard-wired services until such time as a demarcation point is installed on the premises by People's. In Tariff Notice 43, filed 23 August 2003, People's proposed to maintain the inside wiring of customers without a jack-ended demarcation device free of charge, and stated that such customers would not be assessed a diagnostic maintenance charge if a reported trouble is determined to be associated with the inside wiring.
10.	People's submitted that its application was consistent with subsection 34(1) of the Act and the Canadian telecommunications policy objectives set out in subsections 7(c) and (f) of the Act. People's also submitted that forbearance for its inside wire services would be consistent with subsection 34(2) of the Act as the inside wire services market in its territory was subject to sufficient competition to provide ample protection to the interests of users. Finally, in relation to subsection 34(3) of the Act, People's submitted that forbearance would not impair the continuance of a competitive market for inside wire services within its territory.
11.	People's submitted that its market share of the inside wire services market has been decreasing in the past few years. People's noted that its territory borders the territories of Execulink and Bell Canada and is served by many of the same competitors. People's noted further that, in Order 99-1016 with respect to Bell Canada and in Order 2000-881 with respect to Execulink, the Commission found that the inside wire services markets within each of these bordering territories was sufficiently competitive to warrant forbearance.
12.	People's submitted that customers can easily locate inside wire service competitors, including electrical contractors, telecommunications consultants and companies providing burglar alarm systems, cable installation and splicing services, security systems, telephone equipment systems and services, and telephone installation and repair services. People's noted that customers may equally choose to perform the work themselves as the materials and equipment required to do so are readily available and the technical knowledge needed is minimal.
13.	People's submitted that there are no significant regulatory, technological or financial barriers to entry in the market for the provision of inside wire services.
14.	People's argued that there is rivalrous behaviour in the inside wire service market within its territory, as evidenced by the increased number of competitors, competitive pricing and increased advertisement and promotion of inside wire services. People's indicated that competitors are offering bundled services, such as electrical and telecommunications wiring, at a reduced rate.
15.	With respect to the potential for cross-subsidization of inside wire services with revenues from utility services, People's noted that it uses more than the minimum accounts that are required under the Uniform System of Accounts, thereby allowing for adequate tracking of all revenues and expenses associated with the provision of inside wire services. People's stated that inside wire services accounts would be allocated to the "Competitive Terminal" broad service category under Phase III, so that there would be no cross-subsidization of either local rates or toll contribution.
	Commission analysis and determination
	Application of subsections 34(1), (2) and (3) of the Act
16.	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) of the Act 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.
17.	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, as electricians and installers of security systems, in addition to People's, offer such services, and the required parts and supplies are available, throughout this territory.
18.	The Commission finds that the market for inside wire services in the service territory of People's 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 People's for such customers is unlikely since, if the Commission were to refrain from regulating inside wire services, People's could not recoup any loss from below cost pricing by increasing the prices in the future.
19.	Accordingly, the Commission finds, pursuant to subsection34(2) of the Act, as a question of fact, that the provision, in People's 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.
20.	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 People's territory, is consistent with the Canadian telecommunications policy objectives.
21.	The Commission also finds, pursuant to subsection 34(3) of the Act, 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.
22.	The Commission, however, notes that People's has not installed a jack-ended demarcation device at all customer premises, and that People's has not requested forbearance in relation to inside wire services provided to customers without a jack-ended demarcation device. 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, pursuant to Telecom Order CRTC 2004-9, 8 January 2004 (Order 2004-9), 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.
23.	The Commission determinations on 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 are set out below.
	Section 24
24.	Section 24 of the Act provides:
	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.
25.	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 People's Terms of Service, which ensure the confidentiality of customer information for regulated services, do not apply to forborne services, the Commission directs People's, as a condition of providing inside wire services, to abide 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 People's, 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.
26.	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 People's, 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.
27.	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.
	Section 25
28.	Section 25 of the Act provides:
	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.
	(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.
	(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.
	(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
	(a) was charged because of an error or other circumstance that warrants the ratification; or
	(b) was imposed in conformity with the laws of a province before the operations of the carrier were regulated under any Act of Parliament.
29.	Based on the record of this proceeding, the Commission considers it appropriate that People's no longer be required to file and obtain the Commission's approval of tariffs for inside wire services, except for diagnostic, repair and maintenance 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.
	Section 27
30.	Section 27 of the Act provides:
	27. (1) Every rate charged by a Canadian carrier for a telecommunications service shall be just and reasonable.
	(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.
	(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.
	(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.
	(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.
	(6) Notwithstanding subsections (1) and (2), a Canadian carrier may provide telecommunications services at no charge or at a reduced rate
	(a) to the carrier's directors, officers, employees or former employees; or
	(b) with the approval of the Commission, to any charitable organization or disadvantaged person or other person.
31.	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 service in People's 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.
32.	Given that customers without a jack-ended demarcation device may be unable to determine the origin of a transmission problem, the Commission considers that diagnosis, repair and maintenance of single-line inside wiring should be provided free of charge to customers without a jack-ended demarcation device when reporting transmission problems. The Commission notes that People's has proposed tariff revisions to that effect in Tariff Notice 43, and that in Order 2004-9, issued today, it has approved People's application.
33.	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.
34.	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.
35.	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.
36.	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) of the Act does not relate per se to the charging of rates to customers without a jack-ended demarcation device.
	Section 29
37.	Section 29 of the Act provides:
	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
	(a) the interchange of telecommunications by means of their telecommunications facilities;
	(b) the management or operation of either or both of their facilities or any other facilities with which either or both are connected; or
	(c) the apportionment of rates or revenues between the carriers.
38.	The Commission considers it appropriate that People's 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.
	Section 31
39.	Section 31 of the Act provides:
	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.
40.	The Commission considers it appropriate that People's 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.
	Declaration pursuant to subsection 34(4) of the Act
41.	In light of the above, the Commission declares, pursuant to subsection 34(4) of the Act, that effective six months from the date of this decision, sections 24, 25, 27, 29 and 31 of the Act do not apply to the inside wire services of People's except with respect to:
	the conditions pursuant to section 24 of the Act set out in this decision with respect to the confidentiality of customer information;
	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 will be free of charge;
	any future condition that the Commission may impose, pursuant to section 24 of the Act, with respect to inside wire services;
	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 as they relate to customers without a jack-ended demarcation device; and
	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.
	Secretary General
	This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca

Date Modified: 2004-01-08

Date modified:: 2004-01-08

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ARCHIVED - Telecom Decision CRTC 2004-1

This page has been archived on the Web

Telecom Decision CRTC 2004-1

People's Telephone Company of Forest Inc.'s application for forbearance from regulation of single-line inside wiring services

Background

The application

Commission analysis and determination

Application of subsections 34(1), (2) and (3) of the Act

Section 24

Section 25

Section 27

Section 29

Section 31

Declaration pursuant to subsection 34(4) of the Act