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ARCHIVED - Telecom Decision CRTC 2004-44

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Telecom Decision CRTC 2004-44

  Ottawa, 7 July 2004
 

Bragg Communications Inc. carrying on business as EastLink v. Aliant Telecom Inc. - Allegation of non-compliance with bundling rules

  Reference: 8622-E17-200403650

1.

The Commission received a letter from Bragg Communications Inc. carrying on business as EastLink (EastLink), dated 15 April 2004, alleging that Aliant Telecom Inc. (Aliant Telecom) violated the Commission's bundling rules and the Commission's directives in EastLink vs. Aliant Telecom - Compliance with the bundling rules and Public Notice 2003-1-1, Telecom Decision CRTC 2004-21, 29 March 2004 (Decision 2004-21), by requiring customers subscribing to packages of services that include high-speed Internet service (the value packages), to purchase Aliant Telecom's local exchange service. EastLink requested that Aliant Telecom be directed to cease offering the value packages for existing and new customers until a tariff was filed.

2.

On 17 May 2004, the Commission advised the parties that it would adjudicate this matter pursuant to Part VII of the CRTC Telecommunications Rules of Procedure on an expedited basis, in accordance with the process established in Expedited procedure for resolving competitive issues, Telecom Circular CRTC 2004-2, 10 February 2004.

3.

The matter was heard by a panel of three Commissioners on 28 June 2004. In addition to the oral component of the proceeding and EastLink's 15 April 2004 letter, the Commission considered Aliant Telecom's answer of 22 April 2004, EastLink's reply comments of 26 April 2004, Aliant Telecom's further reply comments of 17 May 2004, the parties' summaries and responses to Commission interrogatories of 31 May 2004 and Aliant Telecom's further response to the Commission's interrogatory of 10 June 2004.
 

Regulatory framework

4.

In Review of regulatory framework, Telecom Decision CRTC 94-19, 16 September 1994, the Commission stated that the term bundling generally refers to a situation where one rate covered a number of service elements, or where separate rate elements applied to each service element but a number of service elements were aggregated for purposes of applying volume discounts, with the result that the discount available was greater than it would be were the service elements not aggregated.

5.

In GT Group Telecom Services Corp. v. Bell Canada - Non-compliance with Bundling Rules, Telecom Decision CRTC 2002-58, 20 September 2002, the Commission ruled that by making its long distance rebates contingent on a customer obtaining local service from Bell Canada, it was providing a bundled service requiring tariff approval.

6.

In Call-Net Enterprises Inc. - Request to lift restrictions on the provision of retail digital subscriber line Internet services, Telecom Decision CRTC 2003-49, 21 July 2003, the Commission found that the incumbent local exchange carriers (ILECs) were not providing a bundle when they offered digital subscriber line (DSL) services that were dependent on the customer using the ILECs' local exchange services. In arriving at this conclusion, the Commission noted that the DSL and local services were not provided under a single rate structure and there was no financial benefit to taking the two services.

7.

In Decision 2004-21, the Commission found that Aliant Telecom's value packages, as they were then offered, were bundles that consisted of tariff and forborne services with a financial benefit to the customer, and thus required prior Commission approval. The Commission noted that the advertising and promotional material filed by EastLink for Aliant Telecom's value packages offered both tariff services and forborne services in various optional bundles under a single price. The Commission considered that the evidence on the record was insufficient to support Aliant Telecom's position that the forborne services "bundle" was in fact offered or provided on a stand-alone basis. The Commission directed Aliant Telecom to immediately cease offering any bundles that included tariff services, such as its value packages, unless and until such time as the Commission may grant tariff approval.

8.

In Shaw Communications G.P. v. TELUS Communications Inc. - Violation of bundling safeguards, Telecom Decision CRTC 2004-23, 2 April 2004, the Commission considered that to constitute a bundle, there must not only be a single rate or single rate structure, but also a benefit, financial or otherwise, arising from the aggregation of the services.
 

Issue

9.

Whether Aliant Telecom's current value packages which require subscription to a local service that uses a DSL capable line violate the Commission's bundling rules.
 

Position of parties

10.

EastLink asserted that, because there is no other local exchange competitor offering DSL capable lines in Aliant Telecom's territory, customers must purchase Aliant Telecom's local exchange service in order to support Aliant Telecom's high-speed Internet service. EastLink submitted that the value packages that contain high-speed Internet service were, therefore, dependent upon obtaining Aliant Telecom's local service, thereby satisfying the Commission's definition of a bundle which must only be offered on a tariff basis.

11.

EastLink accordingly argued that Aliant Telecom continues to offer the same discounted service bundles in the same manner that the Commission found contravened the bundling rules in Decision 2004-21. EastLink submitted that, following Decision 2004-21, Aliant Telecom did no more than change its advertising so that the price for local service was not displayed with the price of the forborne services now comprising the value packages. EastLink contended that, in reality, Aliant Telecom continued to market value packages containing high-speed Internet service together with local service as a bundle. In support of this contention, EastLink provided a transcript of two taped conversations between a "customer" and an Aliant Telecom customer service representative.

12.

Aliant Telecom submitted that its value packages were not dependent on obtaining Aliant Telecom's local service irrespective of EastLink's assertion that there were no local exchange competitors offering DSL capable lines. Aliant Telecom submitted that DSL capable lines could be provided by an alternative carrier using a DSL capable unbundled local loop from Aliant Telecom. Aliant Telecom submitted that its value packages were available to customers of such alternative carriers and that some have been provided to a local reseller of telecommunications services.

13.

Aliant Telecom argued that it modified its value packages to comply with the Commission's directives in Decision 2004-21. Aliant Telecom submitted that its value packages no longer included tariff and forborne services under a single rate or rate structure. Aliant Telecom noted that the value packages were now available on a stand-alone basis. Aliant Telecom also noted that it had issued a letter to all customers subscribing to the value packages informing them that it was not necessary to purchase Aliant Telecom's bundle containing local service to obtain the forborne bundle.

14.

In response to the transcript entered into evidence by EastLink, Aliant Telecom submitted that it had conducted and would continue to conduct training and quality monitoring programs to ensure that its customer service representatives accurately conveyed the technology requirements of its high-speed Internet service.
 

Commission analysis and determination

15.

In Decision 2004-21, the Commission was of the view that a suite of services was a bundle when those services are grouped together under a single rate or a single rate structure, and there is a financial benefit inherent in the single rate or single rate structure. The Commission also noted that when such a bundle includes one or more tariff service elements, the bundle must receive prior Commission approval.

16.

The Commission notes that following Decision 2004-21, Aliant Telecom implemented a number of steps. Aliant Telecom revised the offer of its value packages to indicate that the bundles of forborne services were available on a stand-alone basis with a requirement that they must subscribe to a local service that uses a DSL capable line. Aliant Telecom also wrote to its customers subscribing to the value packages to inform them that they did not have to subscribe to Aliant Telecom's bundle containing local service to obtain the value packages.

17.

The Commission further notes Aliant Telecom's submission that other local service providers can provide DSL capable local exchange service to residential customers in Aliant Telecom's territory.

18.

The Commission considers that while Aliant Telecom's value packages which include Aliant Telecom's high-speed Internet service require a DSL capable line, they are not dependent on subscription to Aliant Telecom's local service. The Commission also considers that Aliant Telecom's value packages are available on a stand-alone basis and are not grouped together under a single rate or rate structure with Aliant Telecom's local service, as was the case in Decision 2004-21.

19.

Accordingly, the Commission finds that Aliant Telecom is not in violation of the Commission's bundling rules and denies EastLink's request that Aliant Telecom cease offering its value packages until it has filed a tariff.

20.

The Commission expects that Aliant Telecom will be diligent, through training of its customer service representatives, quality monitoring and customer communications, in ensuring that customers are informed and understand that there is no requirement to subscribe to Aliant Telecom's local service in order to take advantage of the value packages that include high-speed Internet service.
  Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca

Date Modified: 2004-07-07

Date modified: