Telecom Commission Letter Addressed to Philippe Gauvin (Bell Canada)

Ottawa, 22 December 2016

Our reference:  8662-B2-201612391

BY-EMAIL

Mr. Philippe Gauvin
Senior Legal Counsel
Bell Canada
160 Elgin Street, 19th Floor
Ottawa, Ontario K2P 2C4
bell.regulatory@bell.ca

RE:  Part 1 Application to Review and Vary and Stay Certain Determinations in Telecom Decision CRTC 2016-379, Follow-up to Telecom Regulatory Policy CRTC 2015-326 – Implementation of a disaggregated wholesale high-speed access service, including over FTTP access facilities - Disposition of request for stay

Dear Sir:

This letter disposes of a request by Bell Canada to stay the requirement for the company to implement the meet-me-point service, including the need to file proposed tariffs and a Phase II cost study as outlined in Telecom Decision 2016-379, as modified by the Commission’s letter dated 1 November 2016 (the Stay Request). This Stay Request was filed as part of its Part 1 application to review and vary and stay certain determinations in Telecom Decision CRTC 2016-379, filed on 2 December 2016 (the R&V Application).

The Commission received comments on the Stay Request from the Canadian Network Operators Consortium Inc. (CNOC), the Public Interest Advocacy Centre (PIAC), Vaxination Informatique (Vaxination), and Zayo Canada.

The criteria applied by the Commission to assess applications for interim relief are those set out by the Supreme Court of Canada (SCC) in RJR-MacDonald Inc. v. Canada (Attorney General) [1994] 1 S.C.R. 311 (RJR-MacDonald). These criteria (the RJR-MacDonald criteria) are that: a) there is a serious issue to be determined; b) the party seeking the interim relief will incur irreparable harm if the relief is not granted; and c) the balance of convenience, taking into account the public interest, favours granting the interim relief. To be granted interim relief, an applicant must demonstrate that its application meets all three criteria.

Positions of parties

Is there a serious issue to be determined?

Bell Canada submitted that the key issue is whether the Commission should examine the company’s contention that existing co-location is an adequate, non-cost prohibitive method of interconnection and that therefore meet-me points should not be mandated as part of Telecom Decision 2016-379. Bell Canada submitted that there are potential errors, both in fact and law, that raise substantial doubts about the correctness in Telecom Decision 2016-379 about the meet-me point.  The requirement to add an alternative to ILEC co-location is a serious issue that generated substantial debate on the record leading to Decision 2016-379. Revisiting the appropriateness of the Commission's Decision on this issue is neither vexatious nor frivolous.

CNOC argued that the R&V Application could be considered frivolous or vexatious as Bell Canada could have adduced its evidence as to the relative costs of such a service in the original proceeding and that the Application could be seen as intended to delay the implementation of the service. Vaxination submitted that the Stay Request does not raise a serious issue, because, even if Bell Canada’s arguments in the R&V Application are accepted they will still be required to provide meet-me points in some locations, meaning that they will have to file tariff pages and cost studies in any event.

Bell Canada submitted that CNOC’s submissions should be rejected because the company is entitled to file facts and arguments to correct the record.

Bell Canada submitted that Vaxination’s arguments should be dismissed as they rely on an incorrect factual basis. In Telecom Decision 2016-379, the Commission directed the company to provide external meet-me points at central offices where disaggregated wholesale high-speed access service will be available. As the R&V Application applies to all such central offices the company will not be required to implement any meet-me points should the R&V Application be granted.

Will the party seeking the interim relief incur irreparable harm if the relief is not granted?

Bell Canada submitted that if the Stay Request were not granted it would have to invest in creating the meet-me point solution (including the internal efforts to identify how to provide it, as well as the regulatory resources devoted to the tariff and costing processes). If the R&V Application were successful such that the meet-me point service is not launched, there would be no revenues generated and no ability to recoup any of these costs. This would cause the company significant harm that could not be cured.

PIAC submitted that in the current phase of the implementation, Bell Canada is only being required to devote resources to tariff and costing processes. It is not being asked to actually deploy the outside meet-me points. PIAC does not believe the expenses at issue rise to the level of irreparable harm on the part of Bell Canada. The fact that these expenses may, in Bell Canada’s view, be potentially unnecessary hinges upon the R&V Application being granted.

PIAC submitted that when characterizing what constitutes irreparable harm, the SCC in RJR-Macdonald cited examples such as where one party would be put out of business absent the granting of a stay; where one party would suffer permanent market loss or irrevocable damage to its business reputation; or where a permanent loss of natural resources would be the result when a challenged activity is not enjoined. PIAC submitted that the nature of the irreparable harm Bell Canada alleges is nowhere close to the Court’s examples in RJR MacDonald of situations of irreparable harm.

CNOC submitted that the requirement to incur costs that may become unnecessary due to regulatory changes does not constitute irreparable harm. CNOC submitted that Bell Canada’s “harm” can be quantified and the company would not be put out of business or incur permanent market loss or damage to its reputation if it is required to incur these costs and the R&V Application is successful.

CNOC submitted that in a Federal Court of Appeal (FCA) decision (Bell Mobility Inc. vs Klass, 2015 FCA 79 (Bell Mobility)), the FCA rejected Bell Mobility’s argument that expenses incurred to comply with regulatory rulings under appeal constitute irreparable harm. CNOC submitted that the situation in that case was the same as the present situation, and that the Commission should follow the precedent set in that case and reject Bell Canada’s claims that it would suffer irreparable harm if it is not granted a stay.

Vaxination submitted that as regulatory proceedings are a normal part of Bell Canada’s day to day operations, it was not clear what harm could arise from Bell Canada’s regulatory department performing its normal duties.

In reply, Bell Canada submitted that the SCC has clearly stated that it is the nature of harm, not the magnitude that is to be considered in assessment of irreparable harm. Bell Canada submitted that the harm it would suffer meets the definition for one type of irreparable harm contemplated by the SCC in RJR-MacDonald, as the company’s costs represent monetary amounts that cannot be cured or collected.

In response to CNOC’s submission, Bell Canada submitted that the Commission should not consider Bell Mobility as an instructive precedent in evaluating the present stay request, as this case is likely not legally sound because it runs counter to established legal principles set by the SCC. The Commission should continue to follow the prevailing principles set out in RJR-MacDonald.

Balance of convenience

Bell Canada submitted that if the R&V Application is successful but there is no stay, the company would have to incur significant unnecessary time and expenses, to create a new and unnecessary form of interconnection. On the other hand, if a stay is granted but the R&V Application is denied, neither Internet service providers (ISPs) nor consumers will suffer harm from a slight delay in the introduction of the meet-me point option given that there are other widely-used interconnection options available at just and reasonable prices. Therefore, while the Commission considers the R&V Application, the balance of convenience, taking into account the public interest, favours granting the stay.

PIAC submitted that the presence of other interconnection options should not tilt the balance of convenience in favour of Bell Canada. Just like Bell Canada wishes to avoid investing in a deployment model which it is seeking to terminate with the R&V Application, ISPs will wish to avoid seeking alternative interconnection arrangements when the option mandated by Telecom Decision 2016-379 is, on its face, to be made available to them. Therefore the balance of convenience favours the status quo, and the public interest is best served by requiring Bell Canada to comply with the Commission’s regulatory policy and follow-up decision until such time as Bell Canada has persuaded the Commission to vary its decision. Otherwise the effect of Bell Canada’s stay will be to delay an already lengthy implementation process.

CNOC argued that where a decision maker is making a decision in the public interest, courts should generally assume that harm would result to the public interest if the decision is stayedFootnote1 . CNOC submitted that the Commission intended to advance the public interest when it issued Telecom Decision 2016-379 and that irreparable harm would result from restraint of the implementation of the Decision.

Vaxination submitted that the public interest would not be favoured by an additional delay in the implementation of fibre-to-the-home access. The stay would effectively grant Bell Canada a seven to eight month delay.

Bell Canada submitted that granting the requested stay will not delay the implementation of Telecom Decision 2016-379 in the event that the R&V Application is ultimately not successful.

Bell Canada submitted that although it agreed with the principle noted by CNOC regarding the presumption of public interest for a decision made by a public authority whose duty is to promote public interest, it would not be appropriate to follow the presumption in the present case. In light of the errors in Telecom Decision 2016-379 that have been described in the R&V Application, Bell Canada submitted that it did not believe that the determinations it is seeking to stay serve the public interest. Further, as demonstrated in the R&V Application, Telecom Decision 2016-379 does not promote the objectives set out in the Policy Direction and therefore does not serve the public interest.

Analysis and Determinations

To be granted a stay, an applicant is required to meet all three limbs of the RJR-MacDonald test. Having reviewed the arguments made by all parties, the Commission considers that Bell Canada has failed to do so and that, therefore, the stay request is denied.

The Commission is prepared to find that Bell Canada meets the first limb of the test given that there is a very low bar for establishing a serious issue to be tried.

With respect to the second limb of the test, the Commission does not consider that Bell Canada would suffer irreparable harm absent the granting of a stay. Any costs that Bell Canada incurs in finalizing and filing their proposed tariffs and associated cost study are simply a normal cost of doing business given the company’s status as a regulated entity.

With respect to the third limb of the test, the Commission finds that the balance of convenience clearly favours the denial of the stay request. Until the Commission considers the substantive arguments put forward by Bell Canada in the R&V Application as to why its decision should be reviewed or varied, the presumption is that the public interest is served in implementing its decisions in a timely manner. Moreover, to the extent that the applicant argues that the Commission misunderstood the cost of implementing the meet-me-point service, the completion of the cost studies and the filing of the proposed rates for the service would serve the public interest in that it would assist in the evaluation of the R&V Application itself. Further, Bell Canada failed to quantify the quantum of the costs to be incurred.

In light of the above, the Commission denies the request by Bell Canada for a stay of the requirement for it to implement meet-me-points, including the need to file proposed tariffs and a Phase II cost study, as outlined in Telecom Decision 2016-379, as modified by Commission letter dated 1 November 2016.  The proposed tariff pages and supporting Phase II cost studies must be filed on or before by 31 January 2017

Sincerely,

Original signed by Veronique Lehoux for

Danielle May-Cuconato
Secretary General

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