ARCHIVED - Telecom Decision CRTC 2004-30

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Telecom Decision CRTC 2004-30

  Ottawa, 7 May 2004

Raftview Communications Ltd. vs. TELUS Communications Inc. - Dial-up Internet service

  Reference: 8622-R23-200400482

The application


In a letter dated 27 August 2003, Raftview Communications Ltd. (Raftview), an Internet service provider (ISP) operating in Clearwater and in several other communities in central British Columbia, alleged that TELUS Communications Inc. (TCI) was conferring an undue preference upon itself by routing its dial-up Internet calls toll-free from Clearwater to Vancouver, in contravention of subsection 27(2) of the Telecommunications Act.


Raftview requested that the Commission direct TCI to cease and desist from offering toll-free dial-up Internet service to local exchanges where it does not locate its servers and technical Internet staff.

TCI's comments


TCI denied that it was conferring an undue preference upon itself with respect to its internal use of "free long distance" to provide its dial-up Internet service in Clearwater. TCI noted that it located modem pools in each local exchange where it offered dial-up Internet service. Customers in those communities could dial a local number to get access to these modem pools. TCI submitted that the links between each community's modem pool and its servers located in Vancouver were interexchange data circuits, the cost of which were reflected in the retail rates charged by TCI for its Internet access service.


TCI submitted that the economies associated with its network configuration make the provision of TCI's dial-up Internet service economically viable in smaller communities. TCI was of the view that the fact that these costs might be lower than those encountered by smaller ISPs is not evidence of an undue preference, but rather reflects the general benefits of aggregation and economies of scale and scope.


TCI also noted that the interexchange data circuits used by TCI for the provision of its retail Internet service are available on a tariffed basis from TCI and on a forborne basis from other Canadian carriers and ISPs. TCI further submitted that Raftview provided no evidence to suggest that there has been a reduction in the availability or supply of the underlying facilities needed by ISPs to provide Internet access service or that Raftview has been denied access to such facilities by TCI or other carriers.


TCI noted, in addition, that the facts in Raftview's complaint are identical to those addressed and dismissed by the Commission in ShockWare application for relief from TELUS denied, Order CRTC 2000-398, 12 May 2000 (Order 2000-398).


TCI submitted that accordingly, there was no merit to Raftview's claim that TCI was conferring an undue preference upon itself by providing customers in Clearwater toll-free dial-up access to its Internet service.

Raftview's reply


Raftview argued, in reply, that the notion that any independent ISP could offer a dial-up service at competitive rates to TCI's by assembling interexchange data circuits at tariffed rates, keeping in mind that ISPs use a large number of phone lines, was absurd. Raftview submitted that data interexchange circuits and incoming telephone lines were available to TCI for free and available at great cost to others. Raftview further submitted that TCI had become a dominant player in the ISP business, and had achieved that position by predatory pricing.

Commission analysis and determination


The Commission notes that the issues raised by Raftview in its application are identical to issues dealt with by the Commission in Order 2000-398.


In that order, the Commission found that ShockWare Inc. (ShockWare), an ISP operating in Alberta, had not provided evidence to justify its assertion that TCI had granted an undue preference to its Internet service by not charging long distance costs incurred in the provision of Internet services throughout Alberta. The Commission supported its decision by noting that: (a) TCI can more readily absorb long distance costs because it benefits from economies of scale and scope; and (b) ISPs, such as ShockWare, could lease facilities to optimize their traffic flows and minimize any long distance charges their customers incur.


In Order 2000-398, in relation to a request by ShockWare for an inquiry into the costs and how TCI recovered these costs through rates for Internet service throughout Alberta, the Commission found that this was not necessary. The Commission notes that it has forborne from regulating TCI's Internet service based on a finding that the Internet service market was competitive and price cap regulation ensured that Internet service provided by TCI was not subsidized by rates charged by TCI for regulated services.


The Commission finds that Raftview has not described a situation that is materially different from the one that led to the findings that the Commission made in Order 2000-398, nor has it provided any evidence that would lead the Commission to conclude that any of the circumstances noted above have changed.


Accordingly, the Commission denies Raftview's application.
  Secretary General
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Date Modified: 2004-05-07

Date modified: