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Telecom Notice of Consultation CRTC 2020-89

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Reference: 2020-89-1

Ottawa, 6 March 2020

Public record: 1011-NOC2020-0089

Show cause proceeding and call for comments

Telecommunications service providers that have failed to become participants in the Commission for Complaints for Telecom-television Services Inc.

Deadline for submission of interventions: 20 April 2020

[Submit an intervention or view related documents]

The Commission requires all telecommunications service providers (TSPs) that offer services within the scope of the Commission for Complaints for Telecom-television Services Inc.’s (CCTS) mandate to be participants in the CCTS (the CCTS participation requirement). As of the date of this notice, it appears that the following two TSPs have not become participants as required: Rafiki Technologies Inc. and SkyNet Data Networks Inc./SkyNet Wireless Networks Inc./SkyNet Canada Inc.

The Commission therefore initiates a proceeding in which it requires

Further, in the case of any TSP found to have committed a violation,

The CCTS provides a valuable service to Canadians, helping consumers resolve disputes with their TSPs and television service providers. Given the important role played by the CCTS, the Commission considers non-compliance with the CCTS participation requirement to be a serious matter. In the event that TSP violations of the CCTS participation requirement are found, the Commission intends to pursue compliance with the CCTS participation requirement by all available means, including registering any AMP-related debts and Mandatory Orders in the Federal Court and initiating proceedings to enforce them. Should other measures prove ineffective, the Commission may take steps to disconnect the telecommunications services of non-compliant resellers of telecommunications services.

Background

  1. The Commission exercises its powers and duties under the Telecommunications Act (the Act) on behalf of Canadians, with a view to implementing the Canadian telecommunications policy objectives set out by Parliament in section 7 of the Act. As a result, the Commission takes non-compliance with the regulatory obligations it imposes on telecommunications service providers (TSPs) seriously and promotes compliance using the measures at its disposal that are most appropriate in the circumstances.
  2. The Commission for Complaints for Telecom-television Services Inc. (CCTS)Footnote 1 is an independent body that assists Canadians who have been unable to resolve disputes regarding forborne telecommunications services with their service providers. The CCTS is an integral component of a deregulated telecommunications market and provides a valuable service to Canadian consumersFootnote 2.
  3. To ensure that Canadian consumers have recourse when they are unable to resolve complaints with their TSP, since 2011 the Commission has required all TSPs that provide services within the scope of the CCTS’s mandateFootnote 3 to be participants in the CCTS subject to a trigger mechanism (the CCTS participation requirement).
  4. In Broadcasting and Telecom Regulatory Policy 2016-102, the Commission reiterated the CCTS participation requirement. The Commission required, pursuant to sections 24 (regarding carriers) and 24.1 (regarding non-carriers) of the Act, that as a condition of offering or providing telecommunications services, every person who is not a participant in the CCTS as of 17 March 2016, and continues to offer services within the scope of the CCTS’s mandate, must become a participant in the CCTS commencing 30 calendar days after the date on which the CCTS informs the person that it has received a complaint related to telecommunications services provided by that person which fall within the scope of the CCTS’s mandate.
  5. To become a participant in the CCTS, a TSP must sign the CCTS Participation Agreement, a contract in which the participant agrees, among other things, to abide by the Participation Agreement and the CCTS’s By-laws, to be bound by and observe the CCTS’s Procedural Code, to submit to and honour remedies levied by the CCTS, and to co-operate in good faith with any investigation conducted by the CCTS.

Administrative monetary penalties regime

  1. Since 2014, the Act has included a general administrative monetary penalties (AMPs) regime,Footnote 4 under which the Commission is empowered to impose AMPs on persons who contravene the Act or a regulation or decision made by the Commission under the Act. The purpose of a penalty imposed under this regime is to promote compliance with the Act and with such regulations and decisions, not to punish.
  2. The Commission has set out its approach under the general AMPs regime in Compliance and Enforcement and Telecom Information Bulletin 2015-111.

Show cause proceeding

  1. Between March 2017 and August 2018, the CCTS referred to the Commission the names of various TSPs (all of which are non-carrier resellers of telecommunications services) that had failed to become participants in the CCTS after being notified of an in-scope complaint. As of the date of this notice, two of those TSPs are still not participants: Rafiki Technologies Inc. and SkyNet Data Networks Inc./SkyNet Wireless Networks Inc./SkyNet Canada Inc. (the two TSPs).
  2. The Commission hereby launches a show cause proceeding to determine whether the two TSPs have committed violations of the Act and, if so, to determine the appropriate enforcement measures in the circumstances.
  3. The CCTS has provided the Commission with documentary evidence detailing its attempts to notify the two TSPs of their obligations and to secure their participation. In that evidence, the CCTS identified the directors of the two TSPs (the Directors), as listed in Appendix 1 to this notice, and detailed its efforts to communicate with them. Upon the CCTS’s referral, Commission staff undertook further activities to verify and promote compliance with the CCTS participation requirement. These activities included searching publicly accessible databases, such as federal and provincial corporate records databases, for information regarding the corporations that operate the TSPs and their directors and officers. Further, these activities included communicating with the two TSPs and the Directors to explain their obligations.
  4. The Commission will take steps to serve the evidence upon which it intends to rely in making its determinations on the matters set out in this notice, including the evidence received from the CCTS and the evidence collected by Commission staff, on the two TSPs and the Directors. The two TSPs and the Directors are to file any evidence that supports their respective positions with regard to the issues discussed below, which will also be considered by the Commission in making its determinations. A summary of the evidence already in the Commission’s possession is provided in Appendix 2 to this notice.
  5. The public record of the proceeding can be found on the Commission’s website at www.crtc.gc.ca or by using the public record number provided above. Where the CCTS has designated information as confidential, an abridged version of the document containing the confidential information has been added to the public record of the file.

Has a violation been committed?

  1. It appears that the CCTS received one or more in-scope complaints regarding each of the two TSPs, and that the CCTS subsequently notified the two TSPs and the Directors of the complaints. As shown in Appendix 2, the time frame within which the two TSPs were required to join the CCTS has expired. It appears that by failing to join the CCTS within 30 days of receiving notification of an in-scope complaint from the CCTS, each of the two TSPs has been in non-compliance with the CCTS participation requirement from that date to the date of the present notice (the relevant time period).
  2. Further, it appears that the two TSPs continue to offer telecommunications services within the scope of the CCTS’s mandate; there is no evidence presently before the Commission that demonstrates otherwise. As of today’s date, their respective websites promote in-scope telecommunications services.
  3. In light of the above, the Commission directs each of the two TSPs to show cause why the Commission should not find that it committed a violation under section 72.001 of the ActFootnote 5 during the relevant time period by contravening the CCTS participation requirement. If no such information is filed, the Commission may draw the appropriate adverse inferences in the circumstances.

If a violation is found to have been committed, should the Directors be held liable?

  1. Section 72.008 of the Act provides that an officer or director of a corporation that commits a violation is liable for the violation if they directed, authorized, assented to, acquiesced in, or participated in the commission of the violation.
  2. Information obtained from corporate records searches, including from publicly accessible databases, appears to demonstrate that both of the TSPs are companies with a single director.
  3. Both the CCTS and Commission staff communicated by phone and in writing with the Directors to explain the CCTS participation requirement and the potential consequences of non-participation in the CCTS.
  4. Accordingly, there is evidence that the Directors are aware of the CCTS participation requirement and have failed to ensure the compliance of the corporations they direct. Further, despite the correspondence between the CCTS and the Directors and, later, between Commission staff and the Directors, there is no indication that the Directors would be unable, in their capacity as directors, to ensure the compliance of their corporations with the CCTS participation requirement.
  5. In light of the above, the Commission directs each of the individuals listed in Appendix 1 to show cause why they should not be liable for any violation found to have been committed by the company that they direct.If no such information is filed, the Commission may draw the appropriate adverse inferences in the circumstances.

If a violation is found to have been committed, what are the appropriate enforcement measures?

Imposition of AMPs
  1. Given the value of the CCTS to consumers, the importance of TSPs’ participation in the CCTS, and the necessity of ensuring that consumers receive the recourse to which they are entitled, an AMP may be an appropriate enforcement measure in this case if a violation of the Act is found to have been committed.
  2. Section 72.002 of the Act sets out the factors that the Commission must take into account in determining the appropriate amount of an AMP:
    • the nature and scope of the violation;
    • the person’s history of compliance;
    • any benefit the person obtained from the commission of the violation;
    • the person’s ability to pay;
    • factors established by any regulations; and
    • any other relevant factor.
  3. In the present case, the Commission considers that an AMP in the amount of $50,000 for each TSP found to have committed a violation by contravening the CCTS participation requirement would properly reflect the purpose of the penalty and the factors set out in the Act.Footnote 6
  4. Further, the Commission considers that an AMP in the amount of $15,000 for each of the Directors found to be liable for a violation committed by the corporation they direct would also properly reflect the purpose of the penalty and the factors set out in the Act.
  5. These proposed AMPs are based on an analysis of the above-noted factors, taking into account the information already on the record of the proceeding.
  6. The two TSPs and the Directors have the opportunity to demonstrate why the analysis that follows may not be appropriate in the circumstances and to file any evidence that supports their positions. In particular, the Commission directs
    • each of the two TSPs to show cause why, if it is found to have committed a violation of the Act related to the CCTS participation requirement, the Commission should not impose an AMP against it in the amount of $50,000; and
    • each of the individuals listed in Appendix 1 to show cause why, if they are found liable for a violation of the Act related to the CCTS committed by the company they direct, the Commission should not impose an AMP against that individual in the amount of $15,000.
Nature and scope of the apparent violations
  1. The two TSPs do not appear to be participants in the CCTS, despite the fact that they and the Directors have been (i) informed of the CCTS participation requirement, and (ii) given instructions regarding how to respect it. As a result, their customers are being deprived of a Commission-sanctioned, binding complaint resolution process. As noted above, the requirement to be a participant in the CCTS reflects the importance of the CCTS and its value to consumers.
  2. In terms of the scope of the apparent violation, the length of time a company has been in apparent non-compliance may be a relevant consideration. The time that has elapsed since the two TSPs apparently became subject to the CCTS participation requirement is approximately 17 months in the case of SkyNet Data Networks Inc./SkyNet Wireless Networks Inc./SkyNet Canada Inc., and 15 months in the case of Rafiki Technologies Inc..
  3. Another consideration that may be relevant to the scope of the apparent violation is the number of subscribers who do not have access to the CCTS as a result of the two TSPs’ failure to join the CCTS.
  4. Accordingly, the Commission encourages each of the two TSPs, as well as the Directors, to submit information in this regard. They may designate certain information as confidential in accordance with the Act and with the Canadian Radio‑television and Telecommunications Commission Rules of Practice and Procedure (the Rules of Procedure).Footnote 7
  5. On the basis of the evidence on the record at this time, it appears that there is a serious and ongoing violation. While each of the two TSPs has been in apparent non-compliance with the CCTS participation requirement for a different length of time, the Commission considers that significant AMPs may nonetheless be appropriate in both cases.
History of compliance
  1. There is no evidence that either of the two TSPs, or the Directors, have committed any previous violations of the Act or of regulations or Commission decisions made under the Act.
Benefit obtained from the violation
  1. If the two TSPs have improperly shielded themselves from the dispute resolution mechanisms of the CCTS, which can require TSPs to, for example, pay monetary compensation to customers, they may have received a benefit as a result of their apparent non-compliance. This factor suggests that significant AMPs may be appropriate. Given that both TSPs are companies with a single director, it may be reasonable to conclude that the named Directors in Appendix 1 have indirectly benefitted as well.
Ability to pay
  1. The Commission does not have any current information about the two TSPs’ or the Directors’ ability to pay.
  2. Accordingly, the Commission encourages the two TSPs to file financial information. They may designate that financial information as confidential in accordance with the Act and with the Rules of Procedure.
  3. In addition, pursuant to section 241 of the Income Tax Act,Footnote 8 the Commission intends to request financial information from the Canada Revenue Agency related to the two TSPs’ ability to pay. The Commission intends to use any such information to supplement or corroborate the information filed by the two TSPs in this regard.
  4. The Directors also have the opportunity to file information relating to their personal ability to pay. If they seek to demonstrate that they do not have the ability to pay the proposed AMP amount, they are to file supporting evidence. This information may be submitted to the Commission in confidence as set out in paragraph 30.
Factors established by any regulations
  1. At this time, no such factors have been established.
Other relevant factors
  1. The two TSPs and the Directors have demonstrated a lack of co-operation by failing to respond to letters from Commission staff, including the Chief Consumer OfficerFootnote 9, or to requests for information, which were sent to each of the two TSPs on 18 October and 12 December 2018. Commission staff also spoke to, or left voice messages for, the Directors via telephone. Nonetheless, it still appears that none of the companies have become participants in the CCTS.
  2. The Commission considers that to take into account the lack of cooperation with the CCTS and Commission staff would be consistent with the purpose of a penalty under the general AMPs regime, which is to promote compliance with the Act and with regulations and Commission decisions made under the Act. The apparent contraventions of the CCTS participation requirement could negatively impact the reputation and perceived effectiveness of the CCTS in helping resolve consumer complaints. Accordingly, this consideration suggests that significant AMPs may be appropriate.
  3. The Commission also considers that general deterrence should be taken into account in determining the proposed AMP amount. The apparent contraventions in this case could encourage non-compliance with the CCTS participation requirement more generally. The Commission considers that if a contravention is found, any AMP levied should be sufficient to act as a deterrent without being unduly punitive.
  4. The Commission is of the view that a consideration of all the prescribed factors on the basis of the evidence currently on the record indicates that the proposed AMPs would promote compliance with the Act.
Mandatory Order
  1. The imposition of AMPs represents only one enforcement measure that the Commission may take to promote compliance with the Act. Given the serious and longstanding nature of the apparent violations in the present circumstances, the Commission considers that if it were to find that a violation has been committed, it would be necessary to consider whether additional enforcement measures would help to ensure that the two TSPs achieve compliance.
  2. Accordingly, the Commission directs each of the two TSPs to show cause why, if they are found to have committed the violations, the Commission should not impose Mandatory Orders requiring each of them to take all steps necessary to participate in the CCTS within 60 days of the date of the respective order.
  3. Further, the Commission directs each of the individuals listed in Appendix 1 to show cause why, if they are found liable for any violations committed by either of the two TSPs, they should not be named in the Mandatory Orders, which would hold them further accountable for ensuring that the companies they direct take the necessary steps to participate in the CCTS.
  4. If Mandatory Orders are imposed, failure to abide by their terms could form the basis for finding subsequent violations of the Act to have been committed.
Other potential enforcement measures
  1. The Commission intends to pursue compliance with the CCTS participation requirement by all available means. In general, this could include registering any AMP-related debts and Mandatory Orders in the Federal Court and initiating proceedings to enforce such orders. Should other measures prove ineffective, these means may also include taking steps to disconnect the telecommunications services of non-compliant resellers.

Procedure

  1. The Rules of Procedure apply to this proceeding. The Rules of Procedure set out, among other things, the rules for the content, format, filing, and service of interventions, answers, replies, and requests for information; the procedure for filing confidential information and requesting its disclosure; and the conduct of public hearings. Accordingly, the procedure set out below must be read in conjunction with the Rules of Procedure and related documents, which can be found on the Commission’s website at www.crtc.gc.ca, under “Statutes and regulations.” The guidelines set out in Broadcasting and Telecom Information Bulletin 2010-959 provide information to help interested persons and parties understand the Rules of Procedure so that they can more effectively participate in Commission proceedings.
  2. The two TSPs and each of the individuals listed in Appendix 1 are made parties to this proceeding. They are to file their submissions with the Commission by 20 April 2020.
  3. Interested persons may also file interventions on these matters. Interested persons who wish to become parties to this proceeding must file an intervention with the Commission regarding the above-noted issues by 20 April 2020. The intervention must be filed in accordance with section 26 of the Rules of Procedure.
  4. Parties are permitted to coordinate, organize, and file, in a single submission, interventions by other interested persons who share their position. Information on how to file this type of submission, known as a joint supporting intervention, as well as a template for the accompanying cover letter to be filed by parties, can be found in Telecom Information Bulletin 2011-693.
  5. All parties may file replies to interventions with the Commission by 5 May 2020.Parties can consult the Commission’s website to determine who has filed interventions for the purpose of exercising their right of reply.
  6. The Commission encourages interested persons and parties to monitor the record of this proceeding, available on the Commission’s website at www.crtc.gc.ca, for additional information that they may find useful when preparing their submissions.
  7. Submissions longer than five pages should include a summary. Each paragraph of all submissions should be numbered, and the line ***End of document*** should follow the last paragraph. This will help the Commission verify that the document has not been damaged during electronic transmission.
  8. Pursuant to Broadcasting and Telecom Information Bulletin 2015-242, the Commission expects incorporated entities and associations, and encourages all Canadians, to file submissions for Commission proceedings in accessible formats (for example, text-based file formats that enable text to be enlarged or modified, or read by screen readers). To provide assistance in this regard, the Commission has posted on its website guidelines for preparing documents in accessible formats.
  9. Submissions must be filed by sending them to the Secretary General of the Commission using only one of the following means:


    by completing the
    [Intervention/comment/answer form]
    or
    by mail to
    CRTC, Ottawa, Ontario  K1A 0N2
    or
    by fax to
    819-994-0218

  10. Parties who send documents electronically must ensure that they will be able to prove, upon Commission request, that filing of a particular document was completed. Accordingly, parties must keep proof of the sending and receipt of each document for 180 days after the date on which the document is filed. The Commission advises parties who file documents by electronic means to exercise caution when using email for the service of documents, as it may be difficult to establish that service has occurred.
  11. In accordance with the Rules of Procedure, a document must be received by the Commission and all relevant parties by 5 p.m. Vancouver time (8 p.m. Ottawa time) on the date it is due. Parties are responsible for ensuring the timely delivery of their submissions and will not be notified if their submissions are received after the deadline. Late submissions, including those due to postal delays, will not be considered by the Commission and will not be made part of the public record.
  12. The Commission will not formally acknowledge submissions. It will, however, fully consider all submissions, which will form part of the public record of the proceeding, provided that the procedure for filing set out above has been followed.

Important notice

  1. All information that parties provide as part of this public process, except information designated confidential, whether sent by postal mail, fax, email, or through the Commission’s website at www.crtc.gc.ca, becomes part of a publicly accessible file and will be posted on the Commission’s website. This includes all personal information, such as full names, email addresses, postal/street addresses, and telephone and fax numbers.
  2. The personal information that parties provide will be used and may be disclosed for the purpose for which the information was obtained or compiled by the Commission, or for a use consistent with that purpose.
  3. Documents received electronically or otherwise will be posted on the Commission’s website in their entirety exactly as received, including any personal information contained therein, in the official language and format in which they are received. Documents not received electronically will be available in PDF format.
  4. The information that parties provide to the Commission as part of this public process is entered into an unsearchable database dedicated to this specific public process. This database is accessible only from the web page of this particular public process. As a result, a general search of the Commission’s website with the help of either its search engine or a third-party search engine will not provide access to the information that was provided as part of this public process.

Availability of documents

  1. Electronic versions of the interventions and other documents referred to in this notice are available on the Commission’s website at www.crtc.gc.ca by using the public record number provided at the beginning of this notice or by visiting the “Consultations and hearings – Have your say!” section, then selecting “our applications and processes that are open for comment.” Documents can then be accessed by clicking on the links in the “Subject” and “Related Documents” columns associated with this particular notice.

  2. Documents are also available at the following address, upon request, during normal business hours:

    Les Terrasses de la Chaudière
    Central Building
    1 Promenade du Portage
    Gatineau, Quebec  J8X 4B1
    Tel.: 819-997-2429
    Fax: 819-994-0218

    Toll-free telephone: 1-877-249-2782
    Toll-free TDD: 1-877-909-2782

Secretary General

Related documents

Appendix 1 to Telecom Notice of Consultation CRTC 2020-89

Directors made party to this proceedingFootnote 10

Appendix 2 to Telecom Notice of Consultation CRTC 2020-89

Summary of the evidence filed by the CCTS

Before referring a non-participating TSP to the Commission, the CCTS makes multiple attempts to sign up the TSP, including sending a Participation Package at least twice, which includes, among other things, a cover letter that sets out the date by which the company is to become a participant.

If the TSP has not become a participant in the CCTS within the time frame specified in the second package, the CCTS sends a letter to the Commission’s Chief of Consumer, Research and CommunicationsFootnote 11 to inform him or her that the TSP has failed to become a participant in the CCTS as required

The letter includes the relevant dates, the name of the individual within the TSP that the CCTS attempted to contact, evidence that the CCTS sent the Participation Package to the TSP on two occasions, the steps that the CCTS took to reach the TSP, and a copy of the complaint that triggered the requirement. The referral documentation has been placed on the record of this proceeding. Below is the timeline of the events involving each of the two TSPs with regard to the CCTS participation requirement, as submitted by the CCTS.

Company name Date of complaint Date of first notice from CCTS Date required to become a participant Date of second notice from CCTS Referral date to Commission
SkyNet Data Networks Inc.

SkyNet Wireless Networks Inc./

SkyNet Canada Inc.		 22-May-2018 11-Jun-2018

12-Jul-2018 		11-Jul-2018

31-Jul-2018 		08-Aug-2018 23-Aug-2018
Rafiki Technologies Inc. 19-Jul-2017 16-Aug-2018 16-Sep-2018 19-Sep-2018 03-Oct-2018

Timelines of Commission staff interactions with the two TSPs

Commission staff used, among other things, corporate records searches to validate the legal names of the two TSPs and the Directors. That information has been placed on the record of this proceeding.

The following table sets out the timelines of Commission staff interactions with the each of the two TSPs.


Company name		 Commission staff email and registered letter Second Commission staff email and registered letter Commission staff phone call with director
SkyNet Data Networks Inc./SkyNet Wireless Networks Inc./SkyNet Canada Inc. 18-Oct-2018 12-Dec-2018 Spoke with Christopher Wassilu
Rafiki Technologies Inc. 18-Oct-2018 12-Dec-2018 Left voicemails for Naheed Shivji
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