ARCHIVED - Letter

Ottawa, January 29, 2009

File No.: 8661-C122-200815889

By email

Mr. Marcel Mercia
Chief Operating Officer
Cybersurf Corp.
300 West Tower, 1144-29th Ave. NE
Calgary, Alberta
T2E 7P1
Email:  marcel.mercia@cia.com

Ms. Monica Song
Fraser Milner Casgrain LLP
99 Bank Street, Suite 1420
Ottawa, Ontario
K1P 1H4
Email: monica.song@fmc-law.com

Mr. Bill Abbott
Bell Canada, Regulatory Department
160 Elgin Street, Floor 19
Ottawa, Ontario
K2P 2C4
Email:  bill.abbott@bell.ca

Dear Mr. Mercia, Mr. Abbott, and Ms. Song:

Re: Cybersurf application for relief against Bell Canada regarding certain billing practices and disconnection – Request for interim relief

A. Application

On 26 November 2008, Cybersurf Corp. (Cybersurf) made an application, pursuant to Part VII of the CRTC Telecommunications Rules of Procedure, requesting that the Commission make a number of orders with respect to Bell Canada’s (Bell) billing practices and alleged arrears incurred by Cybersurf as a result of those practices. 

In its application, Cybersurf also requested interim relief on an expedited basis, which  would suspend the disconnection notice issued by Bell on 29 October 2008 (29 October disconnection notice) until such time as the Commission makes its final determination on Cybersurf’s application (interim relief). 

B. Process

On 1 December 2008, Commission staff issued a letter providing parties an opportunity to file comments and reply comments on Cybersurf’s request for interim relief.  In that letter, Commission staff noted that Bell had agreed not to disconnect Cybersurf’s services pursuant to its 29 October disconnection notice until the Commission made a determination on Cybersurf’s request for interim relief.

The record of the process to address Cybersurf’s request for interim relief initially closed with the receipt of reply comments from Cybersurf on 10 December 2008.  The public record of this proceeding is available on the Commission's website at www.crtc.gc.ca.

C. Preliminary matter

On 9 January 2009, Bell filed supplemental information.  On 14 January 2009, Cybersurf submitted that Bell’s filing was out of process and should be struck from the record. 

The Commission notes that elements of Bell’s supplemental information raise new and relevant evidence and that Cybersurf was provided with an opportunity to respond fully.    The Commission therefore determines that Bell’s 9 January 2009 submission and Cybersurf’s 14 January 2009 submission will form part of the record. 

D.  Cybersurf’s application for interim relief

Background and nature of the interim relief requested

Cybersurf and Bell have been engaged in billing disputes regarding tariffed and non-tariffed services for several years.  During this period, Bell has issued monthly bills to Cybersurf and Cybersurf has routinely challenged Bell on the accuracy of its billing.  The parties have attempted to resolve their disputes, with limited success.

In an attempt to resolve these ongoing disputes, Cybersurf and Bell signed an agreement on 10 September 2008 (the Interim Letter Agreement) wherein both parties agreed to various conditions with respect to payments by Cybersurf on a going-forward basis. One condition was that Cybersurf would make a monthly payment of $320,000 to Bell until the billing dispute is resolved.  To date, Cybersurf has complied with this condition. 

Following the Interim Letter Agreement, Bell issued the 29 October disconnection notice to Cybersurf, indicating that, on 2 December 2008, it would disconnect services provided  if Cybersurf did not pay a deposit of $960,000 and an outstanding balance, which Bell stated was $5,087,205.  Bell had previously requested these amounts by letter to Cybersurf dated 17 October 2008.

As noted previously, Cybersurf has requested that the Commission suspend, on an interim basis, Bell’s 29 October disconnection notice until such time as the Commission makes its final determination on Cybersurf’s application.

As part of its response to Cybersurf’s application for interim relief, Bell submitted that if the Commission suspends the 29 October disconnection notice, it should specify a number of conditions, including that Cybersurf pay Bell a deposit of $368,000 and pay $368,000 per month to Bell, instead of $320,000, on the 10th of each month until the matter is finally determined.  

Commission determinations

1. The 29 October disconnection notice

The Commission considers that since the Interim Letter Agreement stipulates that Bell continues to have the ability to issue a disconnection notice in accordance with its Terms of Service, it preserves Bell’s ability to issue a disconnection notice to Cybersurf.

The Commission notes, however, that any disconnection notice issued by Bell must comply with its Terms of Service.  In this respect, Article 7 (Deposits and Alternatives), Article 17 (Payment Time Limit), and Article 22 (Bell Initiated Suspension or Termination of Service) of those Terms are relevant to the current application.

Bell justifies the disconnection notice on two grounds.  First, Bell refers to the fact that Cybersurf has a $5,087,205 outstanding account.  Second, Bell points to Cybersurf’s refusal to provide a $960,000 deposit. 

The Commission notes that, pursuant to Article 22.1(d) of Bell’s Terms of Service, Bell cannot terminate service where there is a dispute regarding the basis of the proposed suspension or termination, provided payment is being made for undisputed outstanding amounts and Bell does not have reasonable grounds for believing that the purpose of that dispute is to evade or delay payment.  The Commission’s preliminary assessment of the record to date is that Cybersurf has grounds to dispute amounts billed.  In addition, the Commission notes that Cybersurf has paid the undisputed outstanding amounts to Bell.  The Commission therefore considers that Cybersurf is not disputing the amounts in question in order to evade or delay payment.  As such, the Commission finds that Bell cannot justify its disconnection on the basis that Cybersurf has a $5,087,205 outstanding account.

However, the Commission also notes that, pursuant to Article 22.1(b) of Bell’s Terms of Service, failure to provide a deposit constitutes grounds to disconnect service if the Terms require the customer to provide a deposit. 

2. Deposit

While Bell initially requested a deposit of $960,000 in the 29 October disconnection notice, it has since indicated that it would accept a $368,000 deposit.  The Commission notes that a request for a deposit must comply with Article 7.1 of Bell’s Terms of Service, which provides that a deposit can be required where the customer (a) has no credit history with Bell and will not provide satisfactory credit information; (b) has an unsatisfactory credit rating with Bell due to payment practices in the previous two years regarding Bell services; or (c) clearly presents an abnormal risk of loss.

The record shows that Bell based its request for a deposit on two grounds:  (i) Cybersurf has an unsatisfactory credit rating with Bell due to payment practices and (ii) Cybersurf clearly presents an abnormal risk of loss. 

The Commission notes that Cybersurf’s unsatisfactory credit rating with Bell due to payment practices appears to be the result of the disputed billing amounts that are being reviewed in this proceeding.  The Commission therefore finds that Bell cannot justify its request for a deposit on the ground that Cybersurf has an unsatisfactory credit rating with Bell due to payment practices.

However, the Commission considers that Bell has demonstrated that Cybersurf clearly presents an abnormal risk of loss.  In this regard, the Commission takes note that Cybersurf did not dispute the figure cited in the accounting opinion provided by Bell regarding Cybersurf’s approximately $4 million working capital deficiency.  In addition, Cybersurf claims that of this working capital deficiency, $2.4 million is related to the dispute between itself and Bell.  In the Commission’s view, this leaves a significant amount of working capital deficiency that is unrelated to the dispute currently before the Commission.  Moreover, the Commission notes that Cybersurf has failed to produce its most recent financial statements in a timely manner as required by provincial securities legislation.  Finally, the Commission takes note of Cybersurf’s comments set out in paragraph 33 and footnote 15 of its 10 December 2008 reply filed in confidence.  Having considered these factors, the Commission is of the view that Cybersurf clearly presents an abnormal risk of loss to Bell.  As a result, the Commission finds that Bell is entitled to request a deposit from Cybersurf.

The Commission notes that Article 7.4 of Bell’s Terms of Service indicate that at no time may the total amount of all deposits and alternatives provided by or for an applicant or customer exceed three months' charges for all services.  In the Commission’s view, Bell’s requested $368,000 deposit falls below the maximum amount allowed under Bell’s Terms of Service.  The Commission notes, however, Cybersurf’s submission that if it is required to make a substantial deposit, there is a risk this requirement would compromise its ability to meet its current obligations and potentially force it into default. In light of the above, the Commission considers that under the circumstances, it is appropriate that Cybersurf provide a $350,000 deposit and that it be allowed to remit the deposit in monthly instalments of $50,000, payable on the 10th of each month beginning 10 March 2009 until such time as the $350,000 deposit request is fully satisfied. 

The Commission reminds Bell that Article 7.7 of its Terms of Service requires Bell to review the continued appropriateness of deposits and alternative arrangements at six month intervals, when service is terminated or when the conditions which originally justified them are no longer present.

3. Bell’s request that Cybersurf pay $368,000 per month

The Commission notes that the Interim Letter Agreement stipulates that Cybersurf is to make monthly payments to Bell in the order of $320,000, pending the resolution of the dispute.  Moreover, the record of the proceeding shows that these monthly payments reflect, on average, the value of the services provided by Bell.  The Commission will therefore direct Cybersurf to continue making monthly payments of $320,000.

4. Commission order

In light of all the above, the Commission directs that:

a) Bell is to withdraw its 29 October disconnection notice to Cybersurf;

b) Cybersurf is to pay $320,000 per month to Bell on the 10th of each month until the matters raised in its application are determined on a final basis;[1]

c)  Cybersurf is to provide a $350,000 deposit to Bell, to be made in monthly instalments of $50,000 beginning on 10 March 2009 until such time as the deposit request is satisfied;

d) Bell is to continue to process new orders from Cybersurf for existing services, pursuant to the normal business provisioning intervals;

e) subject to f) below, Bell is not to disconnect Cybersurf pending a final Commission determination; and

f) if either party does not comply with any of conditions (a) to (e) above, the other party may seek relief either in accordance with Bell’s Terms of Service or before the Commission.

F. Further process 

The Commission is mindful of the history of this dispute and the significance of the disputed amounts. It is the Commission’s intention to deal with this dispute in the most expeditious manner possible in order to give both parties the resolution they require.

The Commission sets out the following process.

1) Within 10 days of the date of this Decision,

a.Cybersurf and Bell are each to provide, with supporting rationale, its view of the month and year in which the current billing dispute began; 

b. using the Microsoft Excel spreadsheet provided in Table 1 of the Attachment to this decision, Cybersurf and Bell are to file the information requested in that table with the Commission, with a copy to the other party;

c. for each of October 2003, October 2004, October 2007 and October 2008 Cybersurf is to provide all calculations used to determine the amounts shown in the column of Table 1, Section B titled “Cybersurf’s view of the correct amount owing $”.

2) Within 20 days of the date of this decision, Cybersurf is to file with the Commission, with a copy to Bell, its disputed billing amounts for the month of October in each of the years 2003, 2004, 2007 and 2008.  At a minimum, and to the extent the information requested is available, for each of these four months and for each disputed amount, Cybersurf is to complete the Microsoft Excel spreadsheet in Sections A and B of Table 2 of the Attachment to this decision. Cybersurf’s submission should include all supporting documentation. 

3) Within 10 days of receiving the Microsoft Excel spreadsheets completed by Cybersurf in response to 2) above, Bell is to file its response to Cybersurf’s submissions with the Commission, with a copy to Cybersurf.  At a minimum, and to the extent the information requested is available, Bell is to complete Section C of the Microsoft Excel spreadsheet of Table 2 provided by Cybersurf for the month of October in each of the years 2003, 2004, 2007, and 2008.  Bell’s submission should include all supporting documentation. 

4) After reviewing the information provided, the Commission will make a decision on the need for further information and will determine further process.

Documents to be filed and served in accordance with the above process are to be received, not merely sent, by the dates indicated. Copies of the documents should also be sent to the following email addresses: rachelle.frenette@crtc.gc.ca and nat.natraj@crtc.gc.ca.

Yours sincerely,

Original signed by

Robert A. Morin
Secretary General

c.c: R. Frenette, CRTC (819) 994-0245, rachelle.frenette@crtc.gc.ca
      B. Natraj (Nat Natraj), CRTC (819) 953-5081, nat.natraj@crtc.gc.ca

Encl.

[1] The Commission notes that a monthly payment of $320,000 by Cybersurf to Bell does not necessarily reflect the value of the services Bell provided to Cybersurf during that month.

Date modified:

2009-01-29