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ARCHIVED - Telecom Decision CRTC 2004-3

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Telecom Decision CRTC 2004-3

  Ottawa, 23 January 2004
 

Forbearance from regulating additional interexchange private line services

  Reference: 8638-S1-01/98
  In this decision, the Commission forbears, with some conditions, from regulating additional high capacity interexchange private line services on routes for which competitors of several incumbent local exchange carriers now offer, or provide, services at DS-3 or greater bandwidth.

1.

In Follow-up Proceeding to Telecom Decision CRTC 97-20: Establishment of criterion and process for considering further forbearance for High Capacity/DDS interexchange private line services, Telecom Order CRTC 99-434, 12 May 1999 (Order 99-434), competitors that provide telecommunications services were directed by the Commission to file a semi-annual report identifying all interexchange private line (IXPL) routes for which they provide or offer IXPL service.

2.

Pursuant to the Commision directive in Order 99-434, O.N.Telcom, on 9 September 2003, Allstream Corp. (Allstream) and EastLink Telephone (EastLink), both on 1 October 2003, reported that they provide high capacity and digital data services (DDS) and IXPL services, at DS-3 or greater bandwidth, along additional routes. TELUS Communications (Québec) Inc., on 1 October 2003, Call-Net Enterprises Inc., on 9 October 2003 and Vidéotron Télécom ltée, on 16 October 2003, submitted that they had no new routes to report.
 

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 Telecommunications Act (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 in 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. 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.

6.

The Commission, in Stentor Resource Centre Inc. - Forbearance from regulation of interexchange private line services, Telecom Decision CRTC 97-20, 18 December 1997 (Decision 97-20), further to an analysis in accordance with the framework set out in Decision 94-19, granted forbearance pursuant to section 34 of the Act with respect to the provision of IXPL services for the routes identified in that decision. The Commission found that forbearance from regulation of the routes at issue would, under subsection 34(1) of the Act, be consistent with the Canadian telecommunications policy objectives set out in section 7 of the Act, including paragraphs 7(c) and (f). The Commission also found that it would be appropriate to forbear under subsection 34(2) of the Act on the basis that the forborne services are or will be subject to a level of competition sufficient to protect the interests of users. Finally, the Commission found, pursuant to subsection 34(3) of the Act, that to forbear would not impair unduly the establishment or continuance of a competitive market for the forborne services.

7.

In Decision 97-20, the Commission forbore from IXPL services provided by the former Stentor member companies for identified routes. These companies are now referred to as the large incumbent local exchange carriers (ILECs).

8.

The Commission, in Decision 97-20, noted that high capacity IXPL services were offered and provided on a route-specific basis and customers required these services on one or more routes. The Commission determined that each route should be considered as a separate market for purposes of forbearance analysis, and that forbearance is appropriate for routes for which rivalrous competition exists or will exist in the near future.

9.

The Commission later determined in Order 99-434, that, given that the IXPL market is route-specific, forbearance from a route is appropriate if there is at least one competitor that provides, or that is offering to provide, IXPL services, at DS-3 or greater bandwidth, on that route using facilities other than facilities obtained from the ILEC or an affiliate of the ILEC.

10.

The Commission, in Order 99-434, directed competitors to report to the Commission semi-annually their IXPL routes that meet the above-mentioned criterion. The Commission stated that ILECs may request forbearance from regulation of IXPL routes that competitors have failed to report.

11.

With respect to the scope of forbearance, the Commission, in Decision 97-20, forbore from the exercise of its powers and duties under section 25, subsections 27(1) and 27(2), and section 31 of the Act. The Commission found it appropriate to impose conditions pursuant to section 24 of the Act with respect to the protection of customer confidential information, since the ILECs' Terms of Service, which protect customer confidentiality in relation to regulated services, do not apply to forborne services. The Commission also imposed conditions preventing the bypass of Canadian telecommunications services and facilities. In addition, the Commission retained its powers pursuant to section 24 of the Act, to impose future conditions upon the forborne services provided by the ILEC, where the circumstances so warrant.

12.

The Commission, in Decision 97-20, considered that it was appropriate to retain its powers pursuant to subsection 27(3) of the Act to the extent that this subsection did not refer to compliance with powers and duties not forborne from in that decision.

13.

The Commission also found it appropriate to continue to exercise its powers under section 29 of the Act with respect to the requirement to file for Commission approval agreements or other arrangements. In that respect, the Commission considered that these agreements and arrangements, which address the settlement of jointly earned revenues, were a matter that should remain subject to the Commission's oversight. In TELUS' application for forbearance from section 29 of the Telecommunications Act with respect to forborne interexchange private line and long distance services, Telecom Decision CRTC 2003-77, 19 November 2003 (Decision 2003-77), the Commission found it appropriate to forbear from the exercise of its power and the performance of its duties under section 29 of the Act in relation to IXPL services provided by TELUS Communications Inc. (TELUS).
 

Commission analysis and determination

14.

The Commission has not forborne from regulation of IXPL services along any of the routes identified by competitors in their September and October 2003 filings. These routes are identified in Appendix 1.

15.

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 subsection 34(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.

16.

The Commission finds that, based on the reports filed by O.N.Telcom, Allstream and EastLink, pursuant to Order 99-434, the IXPL routes listed in Appendix 1 satisfy the criteria under section 34 of the Act for a forbearance determination by the Commission.
 

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

17.

The Commission finds, pursuant to subsection 34(1) of the Act, as a question of fact, that to refrain from the exercise of its powers and the performance of its duties, to the extent set out in this decision, with respect to the regulation of the IXPL services on the routes listed in Appendix 1, is consistent with the Canadian telecommunications policy objectives set out in section 7 of the Act. Appendix 1 includes the IXPL routes that were filed by O.N.Telcom, Allstream and EastLink pursuant to Order 99-434 in their September and October 2003 filings.

18.

The Commission also finds, pursuant to subsection 34(2) of the Act, as a question of fact, that it is appropriate to refrain from regulating the IXPL services on the routes listed in Appendix 1, to the extent set out in this decision, on the basis that the forborne services are subject to a level of competition sufficient to protect the interests of users of these services.

19.

Finally, the Commission finds, pursuant to subsection 34(3) of the Act, as a question of fact, that refraining from regulating the IXPL services for the routes listed in Appendix 1, to the extent set out in this decision, is unlikely to impair unduly the continuance of a competitive market for these services.

20.

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 powers or the performance of any duty under sections 24, 25, 27, 29 and 31 of the Act are set out below.
 

Section 24

21.

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.

22.

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. Accordingly, the Commission directs the ILECs whose territory includes one or more of the IXPL routes forborne from in this decision (the affected ILECs), on a going-forward basis, to incorporate, where appropriate, the existing conditions regarding disclosure of confidential customer information to third parties into all contracts and any other arrangements for the provision of the services forborne from regulation in this decision.

23.

The Commission considers that it is also appropriate to retain sufficient powers under section 24 of the Act to specify possible future conditions upon the forborne services provided by the affected ILECs, where circumstances so warrant.

24.

The Commission notes that the restrictions against the bypass of Canadian telecommunications services and facilities were terminated in Regulatory regime for the provision of international telecommunications services, Telecom Decision CRTC 98-17, 1 October 1998. Therefore, there is no need to impose a condition pursuant to section 24 of the Act as was done in Decision 97-20.
 

Section 25

25.

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.

26.

The Commission considers it appropriate that the affected ILECs no longer be required to file tariffs and obtain the Commission's approval in respect of the forborne services in this decision. 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 the forborne services in this decision.
 

Section 27

27.

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.

28.

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, 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 the services forborne from in this decision. Similarly, 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.

29.

However, 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.

30.

The Commission will also forbear from all of its powers under subsections 27(4), (5) and (6) of the Act, since these subsections relate to subsections 27(1) and (2) of the Act with respect to which the Commission is forbearing in this decision.
 

Section 29

31.

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.

32.

In view of Decision 2003-77, TELUS is not required to file agreements related to IXPL services it provides along routes that are entirely in TELUS's territory, or on routes that begin or end in TELUS's territory. However, the Commission considers it appropriate to continue to exercise its powers under section 29 of the Act to the extent discussed in Decision 97-20, in relation to IXPL services provided by ILECs other than TELUS, including the provision of IXPL services on forborne routes that begin or end in TELUS's territory.
 

Section 31

33.

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.

34.

The Commission considers it appropriate that the affected ILECs be able to limit their liability with respect to the provision of the forborne services on the routes listed in Appendix 1. Any provision limiting liability in existing contracts or arrangements will continue to remain in force until their expiry. A contract or arrangement will be deemed to terminate on the date or in the manner provided therein as of the date of this decision, notwithstanding extensions provided for therein.
 

Declaration pursuant to subsection 34(4) of the Act

35.

In light of the above, the Commission declares, pursuant to subsection 34(4) of the Act, that sections 24, 25, 27, and 31 of the Act do not apply to the affected ILECs' high capacity and DDS IXPL services on the routes identified in Appendix 1, 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;
 
  • any future condition that the Commission may impose, pursuant to section 24 of the Act; 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.

36.

The Commission notes that the scope of forbearance hereby granted is the same as that granted in Decision 97-20, except with respect to the condition related to the bypass of Canadian telecommunications services and facilities.
  Tariff filings

37.

The Commission directs the affected ILECs to issue forthwith, tariff pages, removing the tariffs for the services on the routes identified in Appendix 1, effective on the date of issuance of the tariff pages.
  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 

Appendix 1

IXPL routes reported by competitors in their September and October 2003 filings pursuant to Order 99-434

Between

Carrier Exchange Exchange
Allstream Abbotsford, BC Chilliwack, BC
  Blaine, BC Cooksville, ON
  Blaine, BC Red Deer, AB
  Blaine, BC Regina, SK
  Brockville, ON Kingston, ON
  Cooksville, ON Streetsville, ON
  Cornwall, ON Toronto, ON
  Detroit, ON Guelph, ON
  Detroit, ON Kanata, ON
  Detroit, ON London, ON
  Edmonton, AB Peace Bridge, ON
  Guelph, ON Streetsville, ON
  Montréal, QC Streetsville, ON
  Mooers Forks, QC Thornhill, ON
  Neche, MB Thunder Bay, ON
EastLink Halifax, NS Wolfville, NS
  Halifax, NS Amherst, NS
O.N.Telcom Sudbury, ON Timmins, ON

Date Modified: 2004-01-23

Date modified: