Telecom Commission Letter Addressed to Sandeep Panesar (Téliphone Navigata-Westel Communications Inc.) and Stephen Schmidt (TELUS Communications Company)
Ottawa, 1 November 2016
Our references: 8662-T151-201610692 and 8680-T151-201611210
Mr. Sandeep Panesar
Chief Executive Officer
Téliphone Navigata-Westel Communications Inc.
338 Saint-Antoine Est, #101
Montréal, QC H2Y 1A3
Mr. Stephen Schmidt
Vice-President - Telecom Policy & Chief Regulatory Legal Counsel
Telecom Policy and Regulatory Affairs
TELUS Communications Company
215 Slater Street, 8th floor
Ottawa, Ontario K1P 0A6
Re: Commission Decision – Téliphone Navigata-Westel Communications – Application to Review and Vary 22 September 2016 Letter Decision Part 1 Application by Téliphone Navigata-Westel Communications Seeking Relief with respect to the Timing of Disconnection of services provided to it by TELUS Communications Company – Commission Decision
- On 30 September 2016 Téliphone Navigata-Westel Communications Inc. (TNW) filed an application that the Commission review and vary its determination in Part 1 Application by Téliphone Navigata-Westel Communications Seeking Relief with respect to the Timing of Disconnection of services provided to it by TELUS Communications Company, Letter Decision, 22 September 2016 (the letter decision) with respect to the length of time before which TELUS Communications Company (TCC) may not commence disconnection.
- The Commission received a further application from TNW, dated 21 October 2016, requesting that the Commission stay its direction, in the letter decision, that TCC not commence disconnection of services provided to TNW prior to 21 November 2016, until the Commission has reached a decision on the merits of TNW’s review and vary application.
- This letter sets out the Commission’s determinations with respect to these applications.
- As described in the letter decision, the Commission became aware of the dispute between TCC and TNW on 16 June 2016.
- On 31 August 2016, TNW filed a confidential Part 1 application requesting that the Commission give it 180 days to notify its clients of an upcoming disconnection of service by TCC, as well as an additional 90 days following this notification before disconnection may commence. The Commission issued its decision on TNW’s Part 1 application on 22 September 2016. In the letter decision, the Commission found that the only substantive issue to resolve was the length of time before disconnection could take place, noting that TNW did not dispute TCC’s right to disconnect. The Commission denied TNW’s request to delay the disconnection for 270 days, but directed TCC not to commence disconnection of services provided to TNW prior to Monday, 21 November 2016. The Commission also ordered TNW to notify affected customers of the pending disconnection and to file with the Commission, by 30 September 2016, confirmation that notice had been provided and, in confidence, a list of the customers who would be directly affected.
- By letter dated 30 September 2016, TNW stated that it was filing an application that the Commission review and vary the letter decision. It further stated that since the commercial matters between itself and TCC were as yet unsettled, it had recourse to certain court assistance and specific legal remedies that would ensure a stay of any form of disconnection by TCC until the commercial matters are resolved, and that it would be seeking court assistance in preventing any disconnection action by TCC. The company submitted that in light of this, no customers will be affected, and no notification would be required. It provided a sample disconnection notification letter and a blank list of customers. At Commission staff’s request, TNW submitted an abridged version of the letter on 6 October 2016.
- In a procedural letter dated 4 October 2016, TNW was requested to file an abridged version of its review and vary application so that the Commission could process the application. In addition, in order to complete the record of that application, TNW was requested to file with the Commission, in confidence and no later than 12 October 2016, a list of its customers whose underlying carrier is TCC.
- By letter dated 12 October 2016, TNW argued that the Commission’s request for customer details was an integral part of the letter decision in respect of which it had filed its review and vary application. TNW submitted that in light of that application, the request for information in the 4 October 2016 letter was premature, and given the feedback on the Commission’s publication of the letter decision and the associated press release, it was reluctant to provide such information ahead of the Commission’s decision on the merits of its review and vary application.
- The Commission received interventions from Saskatchewan Telecommunications (SaskTel) and TCC on 17 October 2016. On 19 October 2016, TCC submitted a reply to SaskTel’s comments. The Commission received reply comments from TNW on 20 October 2016. In a procedural letter dated 20 October 2016, TNW was given the opportunity to respond to the 19 October 2016 filing by TCC. The record of this proceeding closed on 21 October 2016 with the receipt of TNW’s final reply. A full record of the proceeding is available on the Commission’s website at www.crtc.gc.ca.
- In Telecom Information Bulletin 2011-214,Footnote 1 the Commission outlined the criteria it uses to assess review and vary applications. In order for the Commission to exercise its discretion to review and vary a decision, an applicant must demonstrate that there is substantial doubt as to the correctness of the original decision, for example due to
- an error in law or in fact;
- a fundamental change in circumstances or facts since the decision;
- a failure to consider a basic principle which had been raised in the original proceeding; or
- a new principle which has arisen as a result of the decision.
- In light of these criteria, the Commission has identified the following issues to be addressed in this decision:
- Is there substantial doubt as to the correctness of the Commission’s determination in the letter decision?
- What should be the consequences if TNW’s review and vary request is denied?
Issue 1 - Is there substantial doubt as to the correctness of the Commission’s determination in the letter decision?
- Did the Commission err by implying that TNW had missed deadlines to notify its customers or by misinterpreting the complexity of the work required?
- TNW submitted that the Commission’s statement, in the letter decision, that “TNW has been aware of TCC’s intention to disconnect services provided to TNW for several months and yet, has taken no action to alert its affected customers to date” was inaccurate because the company had not missed any notification deadlines. TNW argued that the above statement clearly indicated a misunderstanding of the situation by the Commission, which appears to have influenced the Commission’s decision on TNW’s request to delay disconnection. The company added that the statement failed to recognize that it had been working towards settling matters between the parties since TCC’s 16 June 2016 disconnection notification.
- TNW also submitted that, in the letter decision, the Commission had misinterpreted its request for a delay of 180 days to be only for the purpose of notifying its clients, rather than designing and implementing a communication plan that would effectively identify, reach, and inform all direct and indirect customers potentially affected by TCC’s actions.
- TCC argued that it had indicated, in its response to TNW’s Part 1 application, that it had clearly and consistently communicated in writing its intention to disconnect services as a result of TNW’s breaches of various service agreements. TCC submitted that business negotiations can either succeed or fail and that negotiations between the parties were not guaranteed to resolve the matter. It submitted that it had never rescinded or varied its intention to disconnect services in the event that negotiations failed, either in writing or verbally.
- TCC also submitted that the Commission understood the nature of TNW’s requested relief and denied the relief for valid reasons. It argued that if the relief had been granted, TNW would not have been required to notify its end-customers until after a minimum of 180 days, and TCC would not have been permitted to disconnect services for a total period of 270 days, regardless of how TNW would choose to use the extra time.
- In reply, TNW stated that it is acutely aware of the possibility for disconnection of services delivered by TCC, but that the potential disconnection dates were moved multiple times in the interests of continuing negotiations. TNW submitted that, in these circumstances, it was not unreasonable that it did not begin an analysis process to determine what services might be affected, let alone begin notifying its customers that disconnection was a possibility. TNW asserted that if both parties continue their dialogue, they can reach a resolution. TNW reiterated that it has not missed any notification deadlines set by the Commission.
- Finally, TNW submitted that the Commission had failed to consider the evaluation and planning required prior to notification to ensure a smooth transition if the TCC disconnections were to proceed. TNW argued that, while it provides some simple resale services for which TCC is the underlying carrier, it also provides voice and data services via a network of multiple interconnected service providers that supply last-mile and backbone services.
Commission’s analysis and determinations
- TNW stated that it was acutely aware of the possibility of disconnection but provided no evidence that it had taken any steps to notify its customers of the possibility of disconnection prior to the issuance of the letter decision. As such, the statement cited by TNW is factually accurate. Moreover, since the Commission made no finding that TNW missed any Commission-imposed notification deadlines, there can be no error in fact on that point.
- TNW’s argument appears to be that the Commission erred in its interpretation of the lack of notification as part of its rationale not to grant TNW’s requested relief in full. The company also argued that the Commission misunderstood its request by focusing solely on the act of notification rather than the complexity of the work involved in such notification. TNW argued that it would have been unreasonable to undertake any of these activities, not just the notification but also the analysis work required to determine who would be affected, when the potential disconnection date was consistently being extended upon the agreement of the parties and with the knowledge of Commission staff.
- Contrary to TNW’s submission, the Commission did consider the complexity of analysing which services would be affected and the work that would be involved to ensure a proper transition. However, the Commission balanced this consideration against the reasonableness of TNW’s decision to postpone the analysis process, concluding that it would not be in the public interest to permit TNW to delay disconnection solely by delaying its own analysis. This balancing of the various factors was a reasonable exercise of the Commission’s authority, which requires it to consider not just the particular economic interests of TNW, but also the impact of its decisions on the end-customers who will be affected and the integrity of its own processes.
- The Commission therefore considers that it did not make an error in law or in fact in its statement that TNW had taken no action to alert its affected customers to date, nor did it err in fact or in law by summarizing the notification work for which TNW needed additional time.
- Did the Commission err in not applying the RJR MacDonald criteria for interim relief?
- TNW asserted that the Commission failed to apply the RJR MacDonald criteria. It stated that it had demonstrated
- that there was a serious issue to be tried;
- that the party seeking the interim relief would incur irreparable harm if the relief were not granted; and
- that the balance of convenience, taking into account the public interest, favours granting the interim relief.
- TNW asserted that this test has been consistently applied in a manner that grants a leave of execution in cases where a person requests an extension of a deadline pending the appeal or judicial review of its case.
- TCC submitted that TNW referenced a distinguishable and irrelevant immigration law case as support for a precedent that the Commission should follow. TCC submitted that, contrary to TNW’s assertion, there is no principle of law that Canadian courts have “steadily decided that a plaintiff is entitled to a leave of execution while a decision is appealed.Footnote 2 ”
- In reply, TNW reiterated its position and noted that the letter decision did not cite any failure to meet the RJR MacDonald criteria, but since the Commission did provide partial relief, one can only conclude that TNW has met those criteria.
Commission’s analysis and determinations
- TNW is correct that the Commission did not apply the RJR MacDonald criteria. However, this does not constitute an error in fact or in law.
- While TNW framed its application as a request for interim relief and it was argued by the interveners using the RJR MacDonald criteria, the only relief requested was that the Commission extend the date by which TCC could disconnect its services in order to allow TNW to properly notify its customers. TNW was not contesting TCC's right to disconnect, and therefore there was no underlying question before the Commission upon which a decision to extend the deadline would depend. As such, TNW’s request was not of an interim or interlocutory nature.
- In fact, had the Commission applied the RJR MacDonald criteria, TNW would have failed on the first criterion (a serious issue to be tried) and its application would have been dismissed. The “issue to be tried” referred to in this test means the substantive issue pending which the interim relief is to be granted. In this case, there was no underlying issue and therefore it could not be serious.
- However, the application by TNW did raise a substantive issue over which the Commission had jurisdiction, and there was a public interest in deciding on the requested relief in an expedited manner. In addition, the interveners had argued the merits of the requested relief for a delay of the disconnection date. As such, it was reasonable for the Commission to simply consider the requested relief on its own merits.
- To this end, the Commission stated the following in the letter decision:
Having considered all representations made by the parties in this proceeding, the Commission considers that the only substantive issue for resolution is the length of time before disconnection takes place.TNW is not arguing that TCC is without right to disconnect, but rather when disconnection is to occur.
- In light of the above, the Commission considers that it did not make an error in fact or in law by failing to apply the RJR MacDonald criteria.
- Did the Commission fail to consider TNW’s offer of prepayment of TCC’s services?
- TNW submitted that the Commission failed to consider a basic principle in that TNW had proposed to prepay for TCC’s services.
- In reply to TCC’s comments regarding TNW’s Part 1 application, in which TCC claimed that granting the relief would force it to continue to provide services to TNW with no assurance of payment for either past or ongoing services, TNW submitted that it was prepared to pay $400,000 monthly, in advance, for such services delivered to it during the 270-day period.
- TCC submitted that the proposed payment is not a guarantee. TCC added that over the course of the parties’ relationship it had received dozens of promises from TNW to pay amounts owed; these promises remain unfulfilled, and the debt to TCC remains.
- TCC submitted that even if TNW were in a position to guarantee payment for services in advance, this should not compel it to continue in a business relationship with a customer that owes it money. TCC submitted that the prolonged existence of this relationship will only further prejudice TCC and will not benefit end-customers. TCC stated that it has exercised its legal right to terminate services and is prepared to respect the disconnection timeline outlined in the letter decision.
- TNW submitted that the Commission’s duty is to serve the public interest and not to evaluate whether or not a decision affects TCC’s right to do business with whom it chooses. TNW submitted that the Commission should ensure that either services are delivered to end-customers or such end-customers are given the appropriate amount of time to switch service providers before any potential disconnection were to affect them. TNW submitted that, in evaluating the benefit to the public and the most appropriate course of action to ensure that the public’s interest is served, the Commission should consider that, with TNW’s guaranteed monthly payment in advance, the public interest would be served and TCC would not suffer any prejudice.
Commission’s analysis and determinations
- This Part 1 application arose due to a commercial dispute which is before the Supreme Court of British Columbia. In the letter decision, the Commission noted that TNW did not dispute TCC’s right to disconnect. TNW had also indicated in its reply comments in the original Part 1 proceeding that it agreed with TCC that the financial matter before the courts should not be considered by the Commission. TNW and TCC continued to negotiate subsequent to the filing of the Part 1 application. Since commercial negotiations ended without a solution and TCC did not indicate that it was willing to accept TNW’s offer, the Commission issued its determinations on the matter regarding the length of time before disconnection could take place.
- In this context, the Commission did not make any determinations about the validity of the disputed amounts. In addition, the Commission did not rule that disconnection must take place, but merely that a potential disconnection could not take place before 21 November 2016, leaving open the possibility for a negotiated solution. However, in evaluating the question before it (i.e. length of the delay), the Commission did determine that TCC would be required to provide the service during this period without a guarantee of full payment. In doing so, the Commission considered the entire record, which included the offer of prepayment made by TNW, the evidence submitted by TCC regarding non-payment in the past, and the absence of agreement by TCC to accept the proposed prepayment offer. Moreover, nothing in the Commission’s decision precluded the parties from continuing to negotiate and entering into an agreement, including potentially an agreement that might have been founded on TCC agreeing to TNW’s prepayment offer. Accordingly, the Commission considers that it did not fail to consider a basic principle in this regard.
- Does the third-party financing proposal constitute a fundamental change in circumstance?
- TNW submitted that there was a fundamental change in circumstances or facts since the letter decision. TNW stated that its ownership company, Investel Capital Corporation, had secured bridge financing of its ongoing activities, including continuing to offer financial support to TNW, and had offered to ensure that TCC will be paid for services during an upcoming four-month period.
- TCC submitted that TNW’s offer is attached to several onerous conditions which it finds unreasonable and has no obligation to accept. TCC submitted that the mere tabling of a payment proposal does not constitute a fundamental change in circumstance.
- TNW submitted that the Commission should not consider the terms of the offer, but only the fact that such an offer was made.
Commission’s analysis and determinations
- The Commission considers that the existence of a new offer of payment supported by a lender, while technically a new fact, is not a fundamental change in circumstances. It simply represents another attempt at a negotiated solution, which is conditional upon TCC accepting the proposal.
- Therefore, the Commission considers that there has not been a fundamental change in circumstances or facts since the letter decision as a result of the third-party financing proposal.
- Did publication of the letter decision result in a change in circumstance?
- TNW submitted that the Commission’s action in publishing the letter decision and issuing a public alert and a press release has caused confusion in the marketplace, disrupted TNW’s customers who are not affected by the letter decision, and caused TNW direct prejudice and irreparable harm in its relationships with its customers. It stated that its direct competitors are now soliciting its customers, using the Commission’s words as validation for customers to change providers.
- TNW argued that the Commission’s actions did not give it the opportunity to notify any affected customers in advance of the public alert, did not uphold the public interest, and tipped the balance of convenience in TCC’s favour. TNW submitted that there had therefore been a fundamental change in circumstances or facts since the Commission’s letter decision.
- TCC submitted that, given that the Part 1 application process is public, it is reasonable to expect that the Commission would issue a public decision. TCC argued that the Commission’s issuance of the public consumer alert was a prudent effort to protect affected end-customers, particularly given that TNW appeared to have no intention of notifying its customers itself.
- TNW submitted that the Commission’s publications had made all its customers aware of the potential for disconnection. It argued that TCC had used the letter decision and the press release to its advantage by instructing its sales and marketing teams to solicit TNW’s direct customers in an attempt to leverage the fear and uncertainty created in the marketplace by the public alert and the press release.
Commission’s analysis and determinations
- The Commission considers that the publication of its decisions can rarely, if ever, constitute a change of circumstances within the meaning of Telecom Information Bulletin 2011-214; otherwise, the mere fact that the Commission had disposed of an application would be sufficient to demonstrate that the review and vary criteria had been met. On this ground alone, the Commission considers that TNW’s argument is flawed and should be dismissed.
- However, given the significance of the open court principle that is inherent in the Commission’s disposition of applications, the Commission considers that it is necessary to provide further guidance on this important principle.
- Section 38 of the Telecommunications Act (the Act) states that “the Commission shall make available for public inspection any information submitted to the Commission in the course of proceedings before it,” unless that information is designated confidential in accordance with section 39 of the Act. In order for information to be properly designated confidential, it must meet the criteria set out in subsection 39(1) of the Act. Even where information is properly designated confidential by a party, paragraph 39(4)(a) of the Act states: "If designated information is submitted in the course of proceedings before the Commission, the Commission may disclose or require its disclosure if it determines, after considering any representations from interested persons, that the disclosure is in the public interest."
- TNW’s Part 1 application and TCC’s responses contained information that the parties designated confidential under subsection 39(1). During the proceeding, disclosure of some of that information was requested either because it did not meet the criteria set out in subsection 39(1) or because the public interest in disclosure outweighed the direct harm that would result to TNW. TNW and TCC both had the opportunity to file arguments as to why the information should not be disclosed, and TNW did so. In disposing of the Part 1 application, the Commission ruled on the confidentiality requests and found that the specific direct harm to TNW with respect to TCC’s intention to disconnect did not outweigh the public interest in disclosure, particularly regarding TNW’s affected customers. As such, the Commission’s decision to disclose some of the information designated confidential by the parties in its letter decision was entirely consistent with its authority and duties under the Act.
- As an administrative tribunal, and in accordance with the Act, the Commission generally makes its decisions public. It is normal and expected for the Commission to publicize decisions using press releases and its website, especially when the decision has implications for the general public who may not follow the issuance of formal Commission decisions. The Commission considers that there was no specific harm created by the issuance of the press release or the public notice on the Commission’s website, as these formats merely made customers aware of a public decision.
- While TNW contends that the perceived harm that has resulted from the release of the information constitutes a fundamental change in circumstances, this position ignores the fact that the potential for this harm was expressly considered by the Commission in making its confidentiality determination, and weighed against the public interest. Moreover, even if this somehow constituted a new situation, it would not be the type of fundamental change that creates substantial doubt as to the correctness of the original decision at the time it was taken. The fact that customers are now informed of the possibility of disconnection and may be actively looking for ways to ensure that their services continue in no way supports the contention that the disconnection date must be delayed in order to ensure a proper transition. If anything, as the intervention provided by SaskTel and TNW’s reply make clear, the publication of the letter decision has required TNW to begin the analysis of which services would be affected for at least one customer, and therefore TNW does not require as long a delay as it had requested in its original application.
- For all the reasons above, the Commission considers that TNW’s claim that publication of the letter decision constitutes a change in circumstance is fundamentally flawed. Therefore, the Commission considers that its issuance of a public alert and a press release was not a fundamental change in circumstances or facts since the letter decision.
- In light of all the above, the Commission finds that there is no substantial doubt as to the correctness of its determination in the letter decision.
- Accordingly, the Commission denies TNW’s request to review and vary the 22 September 2016 letter decision.
Issue 2 – What should be the consequences if TNW’s review and vary request is denied?
- Other than TNW’s request that the Commission reverse its denial of the Part 1 application and grant the requested 270 days from the date of this decision to notify its customers, no parties proposed changes to the notification and disconnection dates.
- TCC submitted that TNW’s actions in filing the review and vary application seem intended to simply delay its obligation to notify its customers and, consequently, to further delay TCC’s disconnection of services, which it has the right to do.
- SaskTel submitted that if TNW does not pay TCC for the facilities and services provisioned on behalf of SaskTel before the 21 November 2016 disconnection date, it will have no choice but to migrate its business to other providers, which will take time and likely extend beyond 21 November 2016. It proposed that, failing a court-appointed orderly supervision of TNW’s windup, the Commission could order TCC to receive and process orders for the uninterrupted provision of the services provided to SaskTel on or after 21 November 2016. It proposed that the Commission could also order that any party desiring to ensure the continued provision of service apply to TCC for transfer, with an undertaking to pay for the service from 21 November 2016. SaskTel further indicated that it is prepared to assume direct payment to TCC, on an ongoing basis, from 21 November 2016 until such time as the affected customers are fully transitioned to SaskTel.
- In its reply to SaskTel’s comments, TCC stated that it is willing to assist SaskTel and other similarly affected customers of TNW in whatever ways it can. It submitted that it should not be forced to continue providing services beyond the scheduled disconnection date of 21 November 2016. It stated that SaskTel is a sophisticated party that is well-equipped to pursue and negotiate commercial service arrangements with TCC or an alternative wholesale service provider, and both parties must agree to terms and conditions, including payment for services.
- TNW stated that it appreciates SaskTel’s position in this matter and will support SaskTel in any way it can to migrate services off its own network if a disconnection by TCC is to be effected.
- In its 21 October 2016 reply to TCC’s additional comments on SaskTel’s request, TNW submitted that it supports SaskTel’s request for an additional delay.
- In its 19 October 2016 reply comments, TNW submitted that if TCC and TNW continue their dialogue, they can reach a resolution. The company argued that premature notification of its customers simply creates additional leverage against and pressure on it to acquiesce to certain points of negotiation with TCC which it might have otherwise considered unreasonable or prejudicial.
- In its application to amend its review and vary application to add a request to stay the disconnection date, TNW submitted that all the RJR-MacDonald criteria justify the imposition of a stay of the Commission’s orders and directions in the 22 September 2016 letter decision pending the determination on the review and vary application.
Commission’s analysis and determinations
- Due to the Commission’s finding that there is no substantial doubt as to the correctness of the letter decision i.e., that TCC cannot commence disconnection of services provided to TNW prior to 21 November 2016, and that TNW was directed to notify its customers and to file confirmation of such notification, along with a list of affected customers, with the Commission, TNW’s stay request is moot.
- As the original due date for the customer notification and filings has passed, the Commission will allow one week from the date of this decision for TNW to complete this task.
- In response to SaskTel’s submissions that TCC could be required to continue to provide service to TNW’s customers after 21 November 2016, the Commission notes TCC’s commitment to assisting TNW customers through the transition. The Commission is available to assist in resolving any disputes that may arise.
- Accordingly, the Commission:
- directs TNW to notify forthwith, and no later than 8 November 2016, its customers for whom TNW provides services using TCC facilities that they could be affected if TCC disconnects the services it provides to TNW; and
- orders TNW to provide to the Commission, no later than 8 November 2016, (i) confirmation that it has provided notice to its customers for whom it provides services using TCC facilities, and (ii) samples of such notice, along with a list of these customers, including their name, organization name if applicable, telephone number, and email address (to be filed in confidence).
- The notification is to be made, notwithstanding that there is a possibility that a negotiated settlement can be reached. The notification can indicate that the disconnection is only potential and not guaranteed.
- Should TNW fail to file proof that notifications were provided, the Commission intends to pursue enforcement activities, up to and including the imposition of administrative monetary penalties pursuant to section 72.001 of the Act and Guidelines regarding the general administrative monetary penalties regime under the Telecommunications Act, Compliance and Enforcement and Telecom Information Bulletin CRTC 2015-111, 27 March 2015.
Original signed by
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