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Expedited procedure for resolving competitive issues /

Procédure accélérée de règlement des questions de concurrence

HELD AT: TENUE À:

Salon Réal Therrien Salon Réal Therrien

7th floor, Central Building 7^e étage, l'édifice central

Les Terrasses de la Chaudière Les Terrasses de la Chaudière

1 Promenade du Portage 1, promenade du Portage

Gatineau, Quebec Gatineua (Québec)

June 28, 2004 Le 28 juin 2004

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès-verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

BEFORE / DEVANT:

David Colville Vice-Chairman,

Telecommunications /

Vice-président des

télécommunications

Jean-Marc Demers Commissioner / Conseiller

Stuart Langford Commissioner / Conseiller

ALSO PRESENT / AUSSI PRÉSENTS:

Stephen Millington Legal Counsel

Lynne Fancy Telecom Staff Team Leader

Shirley Soehn Executive Director, Telecom

Scott Hutton Acting Director General,

Competition, Costing and

Tariffs

Paul Godin Director, Competition,

Implementation and Technology

HELD AT: TENUE À:

Salon Réal Therrien Salon Réal Therrien

7th floor, Central Building 7^e étage, l'édifice central

Les Terrasses de la Chaudière Les Terrasses de la Chaudière

1 Promenade du Portage 1, promenade du Portage

Gatineau, Quebec Gatineua (Québec)

June 28, 2004 Le 28 juin 2004

PAGE / PARA NO.

Opening Remarks by the Chairperson / 1 / 1

Remarques d'ouverture par le président

HEARING #1 / AUDIENCE n^o 1:

Applicant: Bragg Communications Inc.,

operating as EastLink Telephone

Respondent: Aliant Telecom Inc.

Regarding: Aliant Telecom Inc.'s bundled services

safeguards

File No.: 8622-E17-200403650

OPENING REMARKS BY / REMARQUES D'OUVERTURE PAR

EastLink Telephone 6 / 25

Aliant Telecom 12 / 50

QUESTIONS BY / INTERROGATOIRE PAR

The Commission 23 / 107

CLOSING REMARKS BY / REMARQUES DE FERMETURE PAR

EastLink Telephone 91 / 566

Aliant Telecom 96 / 594

Gatineau Quebec / Gatineau (Québec)

--- Upon commencing on Monday, June 28, 2004

at 0855 / L'audience débute le lundi

28 juin 2004 à 0855

OPENING REMARKS BY THE CHAIRPERSON /

REMARQUES D'OUVERTURE PAR LE PRÉSIDENT

1 THE CHAIRPERSON: Good morning, ladies and gentlemen. I think we will get started.

2 My name is David Colville and I am the Vice-Chairman for Telecommunications of the CRTC and the Commissioner for the Atlantic Region. I will be chairing this public hearing. With me today are Commissioner Jean-Marc Demers and Commissioner Stuart Langford.

3 Over the course of this hearing we will be assisted by a number of Commission staff including, among others, our legal counsel Steve Millington, Lynne Fancy, Telecom Staff Team Leader Shirley Soehn, Executive Director Telecom; Scott Hutton, Acting Director General, Competition, Costing and Tariffs; and Paul Godin, Director, Competition Implementation and Technology.

4 Please don't hesitate to contact Steve Millington if you have any procedural questions with respect to the conduct of the hearing.

5 The purpose of this oral public hearing is to adjudicate one Part VII.

6 I might note for the record and for those perhaps listening in on our Webcast, that we had scheduled three disputes for today's proceeding. As you may know, this is the second of what we have characterized as our expedite proceedings and two of the disputes were resolved at the doors of the courthouse, so to speak, late on Friday.

7 Just for the record, I might note that we had a rather complimentary note from Mr. John LaCalamita, Vice-President, General Counsel for MCI in his letter to us acknowledging the resolution of their dispute with Bell Canada. In his letter he says:

"MCI Canada nonetheless wishes to thank the Commission for the speed with which it has dealt with its dispute with Bell Canada and commends both the Commission and its staff on their use of the procedure set out in Expedited procedure for resolving competitive issues, Telecom Circular CRTC 2004-2, as a means of expeditiously resolving competitive disputes." (As read)

8 I would just want to thank them for that commendation and note from our perspective that whether the dispute gets resolved around this table and subsequent decision or at the doors of the courthouse so to speak, we consider that to be a success of the process.

9 So far, this being the second one, it would appear that it has been achieving the objective that we set out for it.

10 The one dispute we have remaining, then, is Aliant Telecom Inc.'s bundled services. The applicant, Bragg Communications carrying on business as EastLink Telephone, Respondent, Aliant Telecom Inc. In this hearing the Commission will adjudicate whether Aliant Telecom's value packages comply with the Commission's bundling rules.

11 In order to provide expedited decisions on certain competitive issues, as noted the Commission has established an expedited process. This process was announced in Telecom Decision 2004-2. It will include a series of brief oral hearings to deal with such issues on an accelerated basis.

12 As I noted, today is the second of these hearings and we will today consider the Part VII application just mentioned.

13 We intend to issue a brief written decision by the latest a week from Friday. The last time we got the decision out within a week but, as you know, Thursday is a holiday this week and a number of people are taking Friday off. Given we only have the one dispute, we may have it out earlier, but we will certainly commit to have it out no later than next Friday.

14 Before we begin, I will say a few words about the administration of the hearing.

15 There is a verbatim transcript of this hearing being taken by the court reporter. In order to ensure that the court reporter is able to produce an accurate transcript, make sure your microphone is on when speaking. If you have any questions on how to obtain all or parts of the transcript, please approach the court reporter at the end of the hearing.

16 Please ensure that all cell phones and pagers are turned off at all times while you are in the hearing room.

17 As indicated in the Commission's organization and conduct letter of June 22nd, we plan to consider this application from 9:00 to 11:00. Due to the expedited nature of the hearings, intervenors and the general public will not participate in the oral phase of the proceeding. The entire record, including intervenor's written submissions, will be carefully considered by the Commission in making its determination.

18 This hearing is less formal than traditional telecom hearings and much narrower in scope. The parties will be asked to introduce the members of their respective team. The applicant, followed by the respondent, will have 10 minutes each for opening remarks. Following these remarks, the parties will be questioned on matters related to the application, first by the Commission, followed by the applicant, then the respondent, and ending with Commission's final questions.

19 The Commission will not entertain written final argument, rather parties will have 10 minutes at the end of the hearing of their item to make final oral submissions. We count on the cooperation of all parties for the efficient running of our hearing today.

20 The Notice of Public Hearing letter indicated that the parties must file all documents with the Commission and serve on the other parties prior to the hearing. We are not inclined to accept any additional documents at this hearing.

21 We will now begin with the application by EastLink Telephone alleging a breach of the Commission's bundling rules by Aliant Telecom.

22 We will begin with opening remarks by the applicant who will have 10 minutes to make the representation.

23 My notes say, before beginning the remarks I would ask the applicant to introduce the members of their team, but I guess -- actually, Commissioner Langford has just handed me a note that if parties have copies of opening statements the translators would like to have them, if you have an extra copy.

24 Ms MacDonald, the floor is yours for 10 minutes.

HEARING #1 / AUDIENCE N^O 1

OPENING REMARKS BY EASTLINK TELEPHONE / REMARQUES D'OUVERTURE PAR EASTLINK TELEPHONE

25 MS N. MacDONALD: Thank you, Mr. Chairman. I am Natalie MacDonald, Director of Regulatory Matters for EastLink.

26 We are here today to deal with one issue, and that is: Is Aliant in breach of the bundling rules. Particularly I am referring to Decision 2004-21, wherein the Commission held that the value packages that Aliant was offering up to that point were bundled because there was a financial benefit to be gained from the bundled services that was greater than if those services were offered individually. The evidence indicated that in order to obtain those bundled packages, customers were required to obtain or purchase Aliant's local exchanged service.

27 As a result of that decision, Aliant was directed to file a tariff for the value packages if it planned to continue offering them. Aliant's response was to change its advertisements so the bundled price did not include the price for the local service.

28 Our position is that changing the ads does not change the fact that Aliant's customers cannot take the value packages, which include a combination of long distance, cellular and high-speed Internet service, unless they also take Aliant's local exchange service.

29 The focus of this proceeding should not simply be on the advertisements themselves or even on what Aliant's customer care representatives advise their customers. The real question to be answered is this: Can a customer purchase Aliant's value packages if they do not take any Aliant local exchange service?

30 It is useless to state that a customer has the choice of taking local service from another DSL-capable provider if there are no such DSL-capable providers offering a local residential service in Aliant's territory.

31 If there are not such other local exchange service providers in that territory, the fact is that customers must take Aliant's local exchange service in order to get the value package bundle.

32 Our position is simple: If customers have no choice but to purchase Aliant's local service, then this is a bundle that requires a tariffed service and therefore a tariff should be filed.

33 Aliant argued that many CLECs and resellers offer local service, including DSL-capable lines in Aliant's territory. We reviewed the list that was provided by Aliant and the CLECs include only CLECs offering business services and, other than GT offering in some portion of Saint John, the only exchange listed was the Halifax exchange. So we have CLECs who are offering business services in one exchange in Nova Scotia and it is our understanding that is limited to certain wire centres in that exchange.

34 Furthermore, one of the CLECs listed, C-1, is no longer in business.

35 Of the resellers that are offering service, we reviewed the list and there is no clear indication from our review as to what those resellers are actually offering in Aliant's territory.

36 One reseller, for instance, is offering pharmacy dispensing systems. There are a number of resellers that are offering telecom equipment, telephones, Centrex systems, cabling. If anything, those resellers that are offering some type of service are directed towards the business customers.

37 There were numerous resellers that were listed that offer reconnect services. While it is not clear from our review of those reseller's Websites as to exactly where they are offering or if they have active customers in Aliant's territory, the fact is that we would say a reconnect service is offered only after a person cannot pay their local bill and their service has been disconnected.

38 No matter what theoretical possibilities exist for an alternative residential DSL phone provider, the fact that is that the only real option when taking an Aliant value package is to take Aliant's local service.

39 We are here to determine if customers really have the option to say: I will take the Aliant value package, but I will not take your local service. If that option does not in fact exist, then we say the situation has not changed since Decision 2004-21 and Aliant's value packages include local service.

40 Aliant filed a response to the Commission interrogatory providing the number of its customers who take the value packages that do not take their local service. EastLink does not know what this number is as it was permitted to be filed confidentially and it makes it difficult to understand and properly test this number, if a number has been presented.

41 In EastLink's view, the Commission must pay particular attention to that number. How is this number arrived at? Does it only cover a couple of buildings in one exchange? Is it a number that represents customers throughout all of Aliant's territory? Does it merely reflect dial-up customers?

42 We really need to consider that number and what it really means. Does it mean that the general population of Aliant's customers still don't have any option but to take Aliant's local service with the value package?

43 We have our doubts that this number could represent that type of availability to Aliant's general customer base. Aliant claims that it is not a bundle if there is a technological tie that requires the customer to take local service.

44 We say that the Commission's rules set out what a bundle is. When you state what a bundle is, it includes the services that Aliant is offering when there is a reduced price for those services and you cannot get those services unless you take up Aliant's local service.

45 We hope the Commission's attention will be focused on the real facts underlying everything that has been said in the submissions and what has been filed and what takes place today at the hearing. Thank you.

46 THE CHAIRPERSON: Thank you, Ms MacDonald.

47 Mr. Campbell, you are going to be speaking for Aliant?

48 MR. CAMPBELL: Yes; thank you, Mr. Chairman.

49 THE CHAIRPERSON: Would you like to introduce your colleagues.

OPENING REMARKS BY ALIANT TELECOM INC. /

REMARQUES D'OUVERTURE PAR ALIANT TELECOM INC.

50 MR. CAMPBELL: The Commission has thoughtfully provided place cards.

51 With me is Ms Heather Tulk, who is Vice-President, Broadband and Marketing; Mr. Martin Canning, who is Director of Sales and Service and Customer Service Operations, in essence the Call Centre and Customer Service Representative.

52 Assisting them is Todd Price, who is Product Manager in Broadband and Marketing. Tracy McAdam is also Product Manager in that department. And Heather McDonald, who is a training specialist with the Customer Service Centre.

53 Mr. Chairman, you will note that we have taken note of your fashion comments and are wearing light-coloured suits, and we don't look like we are in the principal's office. We notice, of course, that you are looking suitably sombre in your role as principal.

54 THE CHAIRPERSON: I was even more sombre in the middle of yesterday afternoon when I had to head to the airport.

55 MR. CAMPBELL: Mr. Chairman, EastLink's complaint can be looked at in two ways. On its face, it is simply a complaint that Aliant has not complied with your previous decision by applying for tariff approval of bundles, including high-speed Internet service.

56 The answer to that complaint is straightforward. Aliant's services comply with the bundling rules and with Decision 2004-21. The value packages that the Commission was addressing in that decision were jointly marketed bundles; a single advertised price that included an approved tariff bundle and a bundle of forborne services. There was no incremental saving from taking both, but because of the way they were advertised and marketed the Commission considered that they constituted a new bundle. The Commission ordered Aliant to either cease offering such bundles or submit them for tariff approval.

57 Aliant no longer sells bundles in that way. It has modified the way it presents its services to make it very clear that it is not selling any such combined bundles which would require tariff approval. Aliant has complied with your ruling.

58 However, EastLink goes well beyond your findings in 2004-21 to argue that bundling of tariff and forborne services occurs because to achieve the savings in Aliant's high-speed Internet value packages you have to have an underlying voice service.

59 There are three answers to that proposition.

60 First, this argument was raised by EastLink in the original proceeding and was not accepted by you in that proceeding.

61 Second, EastLink's logic is flawed. The saving, which is the difference between the price for the stand-alone forborne service, the stand-alone DSL, and the bundled price -- that is what the saving is. But both sides of the comparison require the underlying local service.

62 So it is logically flawed to try and attribute the savings they are applying to the underlying local service. It just doesn't work.

63 Therefore, the argument amounts to an assertion that any provision of DSL is a bundle when you have already rejected that proposition.

64 Finally, the underlying service can be provided by an alternative carrier using a DSL capable loop. EastLink's argument can, and should be, readily dismissed.

65 Those responses would not require the presence of the group that you see before you today, but we are very concerned that EastLink's submission seemed to go sideways into a challenge to forbearance of Internet service. This is a matter which is of very great concern to Aliant.

66 Our understanding is that policy issues of this sort, of this magnitude, are outside the scope of these expedited proceedings. If such a fundamental change of policy were going to be made, it should be made only after consultation with all interested parties. We urge you not to reconsider Decision 2003-49 in this expedited proceeding.

67 EastLink persists in claiming that Aliant's high-speed Internet services are bundled with local services because of the requirement for an underlying capable loop. The current state of technology is that DSL high-speed Internet service can be provided only on an operating copper voice line. Aliant would be delighted to be able to offer its high-speed service to customers without its local service, particularly its wireless-only customers, but so far its trials don't deliver acceptable quality of service. Hence the requirement.

68 EastLink implies that this requirement makes any such combination of services a bundle. That question was considered by you in the proceeding leading to Decision 2003-49 and was rejected.

69 In that decision you ruled that the requirement did not constitute a bundling of services as long as there was no financial benefit to the customer in taking both.

70 You also ruled that an ILEC's requirement that the underlying voice service must be provided by the ILEC itself was preferential and discriminatory where the lack of access to the ILEC's DSL puts the competing local carrier at a disadvantage.

71 However, as long as the underlying service could be provided by a reseller or by a CLEC using unbundled loops, the stipulation was not preferential or discriminatory. There was a policy basis for that decision.

72 The applicants in that case were residence local service providers and subsequently business local service providers who used ILEC unbundled loops which were perfectly DSL capable, and they were at a competitive disadvantage with respect to their local services because their customers couldn't get high-speed Internet. You addressed that policy problem.

73 It doesn't exist here. We assume a reconsideration of the fundamental ruling to be beyond the scope of this proceeding, and acceptance of EastLink's apparent position -- and I say apparent, because it is never actually stated -- would amount to termination of forbearance for high-speed Internet and would destroy competition in this important market segment.

74 Aliant fully complies with Decision 2003-49. It offers unbundled loops which are DSL capable. It will provide its high-speed Internet service, stand-alone or in bundles, to anyone with a service including such a DSL capable loop, whether it is provided by Aliant, by a reseller, by a CLEC.

75 There are a number of CLECs that obtain such loops from Aliant. There are a number of resellers who obtain DSL capable services from Aliant, and Aliant understands that some of them are reselling Aliant's high-speed Internet service over those facilities.

76 Even if there were no CLECs or resellers using Aliant's lines, Aliant would still be in compliance with its obligation. Aliant's compliance doesn't depend on what its competitors do, what its competitors choose not to do. Aliant has met all the rules that you have stipulated to create a competitive market.

77 This is an important point.

78 EastLink appears to claim -- as a matter of fact, they claim directly now -- that Aliant is not in compliance because the resellers and CLECs in Nova Scotia do not market actively to the residence market or because EastLink itself chooses not to use Aliant local loops.

79 That was not the basis for your decision in 2003-49. You didn't say that ILEC Internet service was permissible because there were competitive carriers using unbundled loops or that forbearance of Internet service was based on the number of local carriers providing unbundled loops.

80 Competition in local services has evolved somewhat differently in Nova Scotia and Prince Edward Island than in the markets here in central Canada. Competition is very strong, the strongest in Canada, for telephone service, residential and business, for high-speed Internet service. But it has not been based on the resale of unbundled loops.

81 In our territory the principal alternate supplier, EastLink, has chosen a different technology and uses its own broadband network. There is no issue of them needing access to Aliant's high-speed Internet service in order to be competitive in the local service market, as there was for Call-Net and FCI Broadband.

82 That is why we say this complaint is completely disingenuous. It is a regulatory gain without any underlying policy merit.

83 Expedited proceedings are intended to deal with cases involving factual issues, but the facts in this case don't appear to be in substantial dispute at all. Let me review them.

84 First, Aliant's bundles, which include tariff services, the prime packs and the enhanced local service packages, have all received tariff approval.

85 Second, Aliant's bundles of forborne service do not include any tariff services. They consist of long distance, Internet service and cellular service.

86 Third, it is quite permissible for Aliant to sell both types of bundles to the same customer, provided that they are not bundled together. You made this quite clear in your Shaw versus TELUS decision 2004-23.

87 Fourth, since Decision 2004-21, Aliant has modified its presentation of its product and now makes it very clear that the bundles are available separately without any loss of savings.

88 Fifth, Aliant's DSL-based high-speed Internet service does require that the customer have an underlying local service, including a DSL capable line. This can be an Aliant service, a resold service or a CLEC service incorporating unbundled loop.

89 The various resellers and CLECs do obtain these lines and loops from Aliant and provide them to their customers. Aliant doesn't know who their customers are, whether they are residence or business, but we acknowledge that none of these competitors, other than EastLink itself, appear to be marketing to residence customers to any extent.

90 However, any of them is entitled to do so, and this is changing as other carriers announce their entry into the market.

91 Finally, while customers of these resellers and CLECs are able to acquire Aliant high-speed Internet service or bundles including it, EastLink customers are not because EastLink's standard service is not DSL capable. EastLink customers can, if they wish, get Aliant's dial-up packages, dial-up value packages. EastLink could, if it wished, provision its service on unbundled loops if it really wanted to give its customers access to Aliant's DSL services.

92 Of course, EastLink doesn't want to give its customers access to Aliant's DSL services. That is their primary product line.

93 There are other statements that EastLink would probably quibble with, but they are factual nevertheless.

94 First, the market for high-speed Internet service in Nova Scotia and PEI is very competitive, and EastLink has the largest market share.

95 Second, the market for residential telephone service in Nova Scotia and PEI is very competitive. EastLink has a large share, increasing share, and has a majority share in some key market segments, such as new MDUs.

96 For each of these services there is aggressive deployment, marketing innovation, rivalry, price and service competition, exactly the sort of market behaviour that the Canadian telecom policy seeks.

97 Respectfully, there is no need for Commission involvement, and may I respectfully say interference, in this very competitive market to protect the interests of customers or to preserve competition.

98 EastLink has made the traditional allegations of competitive harm in its submissions but has provided no explanations let alone evidence.

99 So there you have it, Mr. Chairman. Aliant has the right to sell its bundles of tariff and forborne services provided they are not bundled together. That is the way these products are structured. There is no contractual linkage and no incremental saving.

100 However, if the Commission feels it is necessary to review advertisements or the fine print of our brochures, we have the people here who can speak to that.

101 EastLink professes to be very concerned about the mystery shopper calls, but this really has nothing to do with the complaint about compliance with Decision 2004-21. If the Commission is concerned, we have people here who can deal with those questions as well.

102 We presume that you are not going to revisit the substance of Decision 2003-49, but if you want to explore compliance with it, we also have people who can speak to that.

103 Thank you, Mr. Chairman.

104 THE CHAIRPERSON: Thank you, Mr. Campbell.

105 We made the comment last time about the parties bringing -- and we have encouraged them to do that -- to bring the appropriate people to be able to respond. They did last time and you have this time, and we appreciate that.

106 I will turn the questioning over to Commission counsel.

QUESTIONS BY THE COMMISSION /

INTERROGATOIRE PAR LE COMMISSION

107 MR. MILLINGTON: Thank you, Mr. Chairman.

108 Ms MacDonald, in your submissions on May 31, 2004, on page 4, in paragraph 11, you note that in all of Aliant's value packages Internet service is a component.

109 When I reviewed the value packages, they include both the dial-up Internet and the high-speed Internet. I think Mr. Campbell said in his submissions here this morning that EastLink customers can use Aliant's dial-up service over -- if I am understanding this correctly -- EastLink's local service.

110 Is that correct? Do you agree with that?

111 MS N. MacDONALD: I think the focus of the value packages are those where Aliant is claiming they require a local service be provisioned over DSL capable lines. That would be particularly with regard to Aliant's high-speed Internet value packages.

112 MR. MILLINGTON: Can EastLink's local service customers use Aliant's dial-up Internet service if they so chose?

113 MS N. MacDONALD: We are not aware that they can.

114 MR. MILLINGTON: I will come back to that with Mr. Campbell.

115 You are not sure whether they can or they can't.

116 MS N. MacDONALD: That's right. We are not aware that our customers can take Aliant's dial-up Internet service.

117 MR. MILLINGTON: I think there is no discussion or dispute about the DSL. It is just the dial-up that I am interested in.

118 So you just don't know the answer to that question.

119 MS N. MacDONALD: It is our understanding that the dial-up Internet service component is not a concern because the dial-up component would be providing a dial-up access to the home, a GSO local line to the home, through the dial-up Internet component.

120 Therefore, it is possible that EastLink customer could get a dial-up Internet package from Aliant.

121 MR. MILLINGTON: It is possible ? What we are really talking about then, if I am understanding this, is just the DSL service, because I think the EastLink local service customer could user Aliant dial-up Internet service, if they so chose ?

122 MS N. MacDONALD: Yes. Our understanding is that the problem is with the high-speed Internet service packages.

123 MR. MILLINGTON: Okay. Great.

124 You have said it this morning and you have said it in your submission that essentially it is a question of whether there is an alternative source of DSL-capable line available in the serving territory that would really determine whether there is really competition in fact, right?

125 So your position, I think, was that Aliant should not be allowed, without filing a tariff, to offer bundles for forborne services that include high-speed Internet over DSL-capable lines unless there is another source of DSL-enabled lines from someone other than Aliant.

126 MS N. MacDONALD: One could say yes to that answer, but the real focus is not so much "Is there competition or is there another source?"

127 The point that I and then that EastLink is making is that there is a rule that establishes in this situation that a tariff must be filed.

128 That situation is one where, in order to get a preferred-priced package of services, it is dependent on the take-up of another service.

129 The question then is "Is it a requirement that an Aliant customer who wants an Aliant value package, is it a requirement that they need to take Aliant local service?"

130 Whether there is sufficient competition is not the question. It could be a situation where a customer is saying "I do not want any local service" or a situation where a customer is saying "I want a cellular service", "So I want this cellular bundle, but I do not want to take Aliant's local service".

131 The difference here is that in those scenarios, if a company was capable of offering a local a local exchange, sorry, if a company was capable of separating the local exchange service from its DSL, then that customer would have an option of selecting wireless. They would have an option of selecting those services and not paying in the value packages.

132 The fact that Aliant is referencing a technical tie, in our view, does not change the fact that the real situation is the customer must acquire that local service in order to get that package.

133 We would say that notwithstanding the technical tie that is the definition of a bundle that has to be tariffed.

134 MR. MILLINGTON: Well, the definition of a bundle requires a couple of things.

135 It requires a tariff service. It requires forborne services and there has to be some sort of savings from tying the two together.

136 It is Aliant's position that they have a package of forborne services and there is a discount with respect with those forborne services being bundled together.

137 Their position is that the tariff service, the local service, is not part of the bundle and, in fact, that any discount associated with that bundle is not dependent on taking local service.

138 So the tariff element, the local service, is separate.

A - There is a separation in terms of whether they are required to be taken together; and

B - The financial benefit that derives from bundling the services is not tied to the presence of the tariffed service, the local service.

139 So unless you can make the link, it seems to me you have not supported one of the key elements of the bundle.

140 I am still trying to figure out, when you say that it is not just the case that there is not an alternative supply of DSL-capable line in fact -- you know, in fact, as opposed to in theory -- where the off-side bundle, the one that would need to be tariffed, really arises.

141 MS N. MacDONALD: EastLink's position on that goes back to why are the rules in place to file a tariff.

142 First of all, to touch on the other comment that was mentioned, which is Aliant's position that there is no financial incentive or benefits to be gained by taking that local service, our view -- and we have referenced it in our May 31^st submission -- is that there are Commission decisions that do state that if that package of services has a financial benefit -- and we would say that the value packages are offered at substantial savings -- but the acquisition of that package cannot occur because it is dependent on the acquisition of a tariffed service, it does not matter if Aliant's position is that that tariffed service is not offered at an additional discount.

143 The financial benefit to be gained is only to be gained if you take the tariffed service.

144 MR. MILLINGTON: But what I think you are saying -- and I think where you end up on this -- is that if there is no other alternate supplier of DSL-capable lines it means that Aliant cannot offer a bundle of forborne services which include high-speed Internet that requires DSL-capable lines.

145 If that is true, does that not make it the case that every ILEC in the rest of the country can therefore not offer packages, bundles, of forborne services unless, in that operating territory, there is an alternate supplier of DSL-capable lines.

146 MS N. MacDONALD: I would say no. I would say those companies can offer those bundles of forborne services with the proviso that they file a tariff.

147 So the issue is this: if the bundling rules were created to address a risk that there is a potential for a company to tie in a tariffed service, then that company say "okay, we can price all of these forborne services as we wish because we know we are going to get that tariffed revenue". That is the fact.

148 So when you are establishing a price point for forborne services knowing that in 99.9 per cent of the cases you are going to get that local revenue, that is the issue that we would say the Commission was trying to protect against in establishing the bundling rules.

149 So we are not saying "No, Aliant cannot offer theses bundles."

150 We have said all along "File a tariff because the way we see it your price point always has the assurance of getting that local service."

151 So the reason that those were set out requiring that a tariff be filed exist, and that is this, the reality is there is no other practical alternative for a customer who wants Aliant's value packages unless they get their local service.

152 What does that mean? That means that you can be assured that with every sale of a substantially-discounted value package you are going to get the residential revenue.

153 What does that mean? That means that there is a potential for the type of activity that we would say the Commission was trying to avoid in saying "Wait now, when this is happening, we really want to see the costing. We want to be satisfied that the price-point you have established are not below the cost that we have deemed as part of the invitation task."

154 So that is really where our position lies.

155 There have been comments that say "Well, EastLink is trying to stop Aliant from offering Internet at all because it is tied."

156 We are not saying that. Offer Internet. It is tied to local. That is an issue of tied selling. That is a separate issue.

157 The issue is when there is a discount associated with the Internet and the forborne packages.

158 That is really what we are getting at.

159 So it really goes back to why is there a bundling rule and is Aliant now in a position where it can take advantage of its situation to do exactly what those bundling rules were intended to prevent?

160 So that is really where our position is on the issue.

161 MR. MILLINGTON: Okay.

162 So let us assume that we made the decision that all the ILECs would have to file tariffs for bundles of forborne services where there was no competitor operating in their territory that could offer an alternative source of DSL-enabled lines, because I think that is where we are, and this is a tariff for all forborne services.

163 At what point -- and I do not know whether you have any submissions on this -- but at what point would you say that the level of competition in that territory would be sufficient so as to relieve the ILECs from the obligation of filing a tariff?

164 MS N. MacDONALD: I guess my response to that is... certainly I do not want to get into any of the question about what point the level of competition is appropriate for any type of decision like that.

165 To me, that is a separate issue and that is an issue that goes to the actual bundling decision in the rules.

166 As far as our position goes, today there is a rule that says "This how we define a bundle. This is what a bundle includes."

167 Is Aliant filing a bundle? Yes.

168 So the question that is being asked really goes to, in my view, a question of "Are those rules appropriate?", which is the subject of a separate proceeding which would be a review and vary of the bundling rules or even going down to the line of Aliant's forbearance application.

169 So we do not see that as relevant to this particular issue today because today there is a rule and that rule does require that a tariff be filed.

170 MR. MILLINGTON: Okay. Thank you.

171 Those were my questions.

172 I have some questions for Aliant.

173 I would like to start with the same question that I asked Ms. MacDonald and that is whether EastLink's local service customer can use Aliant's dial-up Internet service?

174 MR. CAMPBELL: Yes.

175 MR. MILLINGTON: Okay.

176 So there is no technical impediment to the same extent that there is with the DSL.

177 MS TULK: No. EastLink local customers can have access to our dial-up service, either stand-alone or inside a dial-up Internet value package on exactly the same terms and conditions as any other customer.

178 MR. MILLINGTON: So, as far as you are concerned, the only issue with respect to the Internet is the high speed?

179 MS TULK: It certainly is. We are concerned that there is not an issue about it yet.

180 I guess the application will be limited to that.

181 MR. MILLINGTON: In response to our interrogatory, your response -- which was originally dated May 17 and then revised on June 14 in response to our question, I guess it was the first question,

B - Indicate whether any local service provided other than Aliant Telecom currently provides DSL-capable local service lines in Aliant's serving territory. If so, provide the name of those local service providers and indicate in which exchanges they provide the service. (as heard)

182 You provided, in response to that interrogatorial list of CLECs -- which are set out on page 4 of your response -- and a number of resellers.

183 MS. MacDONALD took us through those companies in her opening remarks and, essentially, she is not certain whether any of these companies offer local residential service and in what exchanges that they offer.

184 She mentioned the fact that some of these are reconnect companies, some of them are interconnect companies and some of them are simply offering business services.

185 Can you tell us this morning what you know about any of these companies with respect to their offering residential local service that would support DSL-capable lines?

186 MS TULK: So with respect to that list there are, of course, these customers purchase through our wholesale group and purchase lines, unbundled local loops, and are not required, nor if they do discuss with our wholesale group who the end customers are, that certainly does not flow through to the marketing department.

187 So I can only answer that question with respect to what we know to be happening in our market place and I will take you thought that.

188 So all streams, to our understanding, up to this point has been primarily focused on the resalable loops in the business market.

189 However they have recently established a partnership with another company, another national company, and established a Halifax serving area to provide local loops in the residential market in the Halifax area.

190 So whether they have to date connected any of those residential customers, we do not know. This is something that has happened within the last month.

191 But certainly it would be our expectation that a number of those will end up connected and sold to residential customers and will be available for DSL.

192 We also know a number of the reconnecters do operate in the residential markets. And resellers.

193 In the dispute, I guess, one of the points that was brought up earlier -- in fact, these customers, although they start as reconnecters and do focus on customers who have been disconnected in fact do, as a fact, sell to new customers as well, customers who had not been with Aliant in the past and had not been shut off by Aliant.

194 In fact I am aware of the -- we have got an inquiry from such customers inquiring about our services, and we have made a decision to go with, in particular, Canada Reconnect as a new customer and have not, not because they have been cut off by Aliant.

195 So they certainly are available. With respect to wide-spread marketing, it is in fact factual, that the major competitor in the Nova Scotia and PEI market is EastLink.

196 And EastLink, although they do have the ability and do purchase some bundled local loops in some circumstances, to our knowledge, do not use that for their residential customers in any great proportion.

197 The vast majority of their customers would be provisioned with lines that are not DSL-capable as far as we understand.

198 We do have some EastLink customers who have the availability to receive our high-speed service over non-DSL lines. That is a small number and is a new undertaking in the MDU market where we are provisioning high-speed Internet over fibre.

199 MR. MILLINGTON: Would it be fair to say then that there is not a great number of companies or a great number of customers that are being provisioned at the residential level in your operating territory on DSL-capable lines other than what you provide?

200 Would you say that is a fair characterization?

201 MS TULK: I would say at this time it is a fair characterization, with the exception of the company that has recently announced that it is launching -- but obviously because it is just launched in the market, they would not have a substantial number of customers at this point.

202 MR. MILLINGTON: Thank you.

203 Those are my questions.

204 THE CHAIRPERSON: Just as a point of clarification, Ms Tulk, the company that you are referring to that partnered with All Stream is a company other than MTS, is it?

205 MS HULK: That is correct.

206 THE CHAIRPERSON: Commissioner Demers?

207 COMMISSIONER DEMERS: Just one question to Ms MacDonald.

208 I think I understood where you are, but could we go farther in the analysis of the situation, of the fact, and could we... or do you have an evaluation of whether that situation that you described prevents competition?

209 MS N. MacDONALD: I do not have such an evaluation. I did not even intended to state that.

210 It does not prevent competition either.

211 I think that we can all agree that the discount offered in the value packages are at a substantial level. I mean in some cases, you know, the value packages alone without adding any enhanced consumer access services are in the 40 per cent range. So they are substantial.

212 The issue that we need to be concerned about is whether under the current rules those prices are actually being offered below the cost as established by the Commission in imputation task and what that potentially does mean for other competitors including EastLink and any other competitors who choose to try to continue in Aliant's serving area.

213 COMMISSIONER DEMERS: The only other question I have: Should we be concerned by the fact that the customers where it does apply would have a better price for the services they are purchasing? Should this be an important factor in the analysis?

214 MS N. MacDONALD: I'm sorry. I'm not clear on the question.

215 Are you asking if there is a concern that the customers will have a better price than -- I'm not entirely sure what the comparison is to?

216 COMMISSIONER DEMERS: The value package that we are talking about, certainly as you have indicated also, is a discounted price for services, but we are in an area where there are no competitors, at least from what I gather up to now, and the company is offering discounts. Therefore, customers are paying less for services than they would if they were not discounted in a sense.

217 But the service, the charge that the customer has to pay, should this not be part of our evaluation of whether your submission or your interpretation of our decision should be held as applicable here?

218 MS N. MacDONALD: We would say that the interpretation of the decision should be applicable, especially where there are no other -- aside from EastLink services there are no other real competitors, because if the purpose of the rules is to prevent anti-competitive pricing which is below cost pricing and the way to ensure that is not happening is filing a tariff that means a company can benefit by having no other competitors present and say: Well, we don't need to file a tariff and our prices are good for consumers.

219 But does that open up the doors for other competitors who want to enter into the market knowing that they have to start out competing with companies that are offering services at prices that are questionably below cost, or at least haven't been proven by the rules that are in place to ensure that doesn't happen.

220 COMMISSIONER DEMERS: Thank you. Thank you, Mr. Chairman.

221 THE CHAIRPERSON: Thank you, Commissioner Demers.

222 Commissioner Langford.

223 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.

224 I have no questions for you, Ms MacDonald, but I do have some questions for the Aliant team.

225 Mr. Campbell, you began by saying that you acknowledged 2004-21 and then said "We are now complying with it. If I have written down correctly what you have said, and it was fairly early in your opening statement, you said: Aliant has modified the way it presents services. I think those were your words. They are pretty close anyway.

226 I wonder if really that is all you have done. As I sit here listening to you this morning, it seems to me that it is arguable that in fact that statement is accurate. You have modified the way you have presented it, but in reality what we tried to stop -- what the Commission tried to stop in 2004-21 -- is still going on.

227 The advertising has changed, the footnote has become a footnote rather than a featured marketing tool, but in fact what Ms MacDonald seems to be telling us here, both in her written submissions and in her oral submissions today, is that all that may have happened here is that some clever marketer took a look at 2004-21 and said: You know what, all we have to do is stop saying "Take them both", because they have to take them both anyway.

228 So is modifying the way Aliant presents its services really enough in this case to correct the harm, the mischief that the Commission attempted to stop in its 2004-21 decision?

229 MR. CAMPBELL: When we sat down to review the 2004-21 decision we had to identify what the mischief was that the Commission perceived. We looked at the services that were actually being sold. The tariff local bundle, the bundle of forborne services, which had an aggregate price in the advertising and marketing presentation. Those packages of services were pretty much like the services that are sold by Bell and Telus, which you blessed on the same day.

230 So it wasn't anything that was fundamental in the product offerings that Aliant was putting forward that the Commission found improper.

231 What the decision frowned on was the way they were bundled together through this aggregate price, I guess, characterizing that as a single pricing formula.

232 So that is no longer done. There are no aggregate prices any more. The piece parts are there. We go out of our way to make clear to customers that they can take either or both, that there is no additional savings by taking both, and there are no savings lost if you want to drop one of them.

233 So there really is no bundle there any more, if there was before.

234 COMMISSIONER LANGFORD: That is certainly what the marketing may say, but what is the reality here? How can you take the high-speed bundle unless you take the local service. If that can't be done, then what has changed except, to quote you again, the way it is presented?

235 MR. CAMPBELL: The fact that you can only get the high-speed bundle with an underlying local service -- and as we pointed out that can be from other carriers, resellers or CLECs who could provide it. We acknowledge that there is nobody down there aggressively providing it, but the rules that you have established we comply with.

236 The fact that you are looking at the savings, that is the logical flaw that I tried to point out in my opening statement.

237 COMMISSIONER LANGFORD: I didn't get it when you tried to point it out so I'm glad you are coming back to it. That was No. 3, wasn't it, point 3 in the logical flaws. I got 1 and I got 2, but I sure didn't get 3 so I'm delighted you are coming back to that one.

238 MR. CAMPBELL: Okay. The bundling theory is that there has to be a financial advantage through the aggregation of services, but in this case the discount, so-called, is compared to the stand-alone price and the bundled price. But both the stand-alone and the bundle require the underlying service. So you cannot attribute the saving to the underlying service. It doesn't come from taking the underlying service, it comes from taking the additional forborne service, and there is no regulatory issue with that.

239 COMMISSIONER LANGFORD: It seems to me like you have just hanged yourself, but I may be just misunderstanding you. That is the way it sounded the first time you said it.

240 Am I hearing you say that you have to have the two of them? Is that what you are saying?

241 MR. CAMPBELL: No, I'm not saying that.

242 COMMISSIONER LANGFORD: You have separated them in a marketing thing, but you do have to have the two of them?

243 MR. CAMPBELL: Maybe I'm having trouble with the question.

244 We do know that for the DSL-based high-speed Internet you do have to have an underlying voice service.

245 COMMISSIONER LANGFORD: So they are bundled?

246 MR. CAMPBELL: Well, that is not what this Commission said in Decision 2003-49. This Commission said specifically that they are not bundled in those circumstances.

247 COMMISSIONER LANGFORD: In 2003-49 there was no financial benefit to taking the two --

248 MR. CAMPBELL: That's right. And there is no --

249 COMMISSIONER LANGFORD: In this one there is.

250 MR. CAMPBELL: -- financial benefit to taking the two here, because the financial benefit they are taking other services, they are taking other forborne services, but there is no financial benefit to --

251 MS TULK: I think what Mr. Campbell --

252 COMMISSIONER LANGFORD: Excuse me. I'm sorry. I rarely interrupt but I want to keep this in my head.

253 Don't snicker, Mr. Chairman, it makes me look bad.

254 THE CHAIRPERSON: You always interrupt.

255 COMMISSIONER LANGFORD: I know, but I always say "I rarely interrupt". That is my way of being police.

256 THE CHAIRPERSON: When you rarely interrupt.

--- Laughter / Rires

257 COMMISSIONER LANGFORD: The whole point of interrupting was not to lose the train of thought.

258 The financial benefit here it seems to me lies in the bundle, in the group of forborne services in these offerings. We are only looking at high-speed here. I think we are all agreed with that. Jump in, Ms MacDonald, if you think I'm incorrect.

259 So we are looking at the high-speed offering.

260 The benefit lies not in taking local service, but in taking the high-speed offerings, the bundles that include the high-speed offerings. Is that correct?

261 That is where the financial benefit is.

262 MR. CAMPBELL: The financial benefit arises when you take additional forborne services and with your high-speed Internet you take long distance and cellular.

263 COMMISSIONER LANGFORD: So if you take what you call a value package, the value package that includes high-speed and other forborne services you get a financial benefit. Correct?

264 MR. CAMPBELL: Yes.

265 COMMISSIONER LANGFORD: But you can't take -- and this is a question. I would submit -- and please correct me if I'm wrong -- that you cannot have that bundle, you cannot enjoy those financial savings unless you take the local service with the DSL-capable copper.

266 Am I correct?

267 MR. CAMPBELL: Well, there are two problems with that position.

268 First is that you can get it from somebody else, although we acknowledge that the market is weak. The competitor in our market has chosen not to provide DSL-capable underlying service. If any competitor wants to, the service is there for them.

269 COMMISSIONER LANGFORD: That is in theory, but I am talking about reality now.

270 MR. CAMPBELL: Well, if you want to talk about forbearance for these --

271 COMMISSIONER LANGFORD: No, I don't want to talk about forbearance.

272 MR. CAMPBELL: We are confusing the ideas of forbearance and bundling and that is the scary part of his.

273 COMMISSIONER LANGFORD: No, I don't think I am confusing it all so I'm going to ask the question again, because to me this is a very key question.

274 You have a bundle of forborne services which you call, among other bundles, but let's just call this one the value package. One element of this value package is high-speed Internet. That is the bundle we are looking at. That is the value package we are looking at.

275 If people buy that package, cellular, high-speed, whatever the other one is, you get a financial savings.

276 Is that correct?

277 MR. CAMPBELL: No. Savings compared to what?

278 COMMISSIONER LANGFORD: Compared to buying them all separately.

279 MR. CAMPBELL: Well, if you had bought the high-speed Internet you would have had to have the service in any case, so you wouldn't get a saving by taking the package.

280 MS TULK: I think the other --

281 COMMISSIONER LANGFORD: What is the value package then? Let's start at the beginning.

282 The value package at issue here which includes high-speed Internet service, are you telling me now that there is absolutely no financial benefit to a customer who takes that package?

283 MR. CAMPBELL: I'm saying when you ask the question you have to define what you mean by "financial benefit".

284 COMMISSIONER LANGFORD: Saving money.

285 MR. CAMPBELL: As compared to what? As compared to taking the service without the other forborne services?

286 COMMISSIONER LANGFORD: As compared to buying the services separately.

287 MR. CAMPBELL: As compared to buying the -- but you can't buy the services separately without the underlying service either so there is no saving attributed to combining the local service with the forborne service.

288 COMMISSIONER LANGFORD: I'm not talking about that right now. I'm going to put -- this is a very basic question here.

289 Are there savings to customers in buying the value package which includes the high-speed Internet?

290 MR. CAMPBELL: If you buy the value package for the high-speed Internet you will save money over what you would pay if you bought the same services unbundled.

291 COMMISSIONER LANGFORD: Thank you.

292 Now, that is number one. So that is where the saving lies.

293 Can customers in your serving area enjoy those savings if they do not also subscribe to a DSL or high-speed capable copper local service?

294 MR. CAMPBELL: No. But that copper local service can be provided by Aliant or others.

295 MS TULK: I think the other interesting point is, customers in our territory as the market is currently developed, can't pay more either. The customer cannot pay the full price without an underlying DSL-capable line.

296 COMMISSIONER LANGFORD: I don't think that would save it, with respect.

297 If you were the only game in town for DSL-capable copper and you offered this value package that we have now defined where the savings lie, and there was no other way to get it but to hook into your DSL-capable copper, do you accept that you would then fall within the mischief that we were trying to prevent in 2004-21?

298 MR. CAMPBELL: No. As we understand 2004-21, it was a reiteration of the bundling position that the Commission had established over several decisions over several years, including 2003-49, which clearly acknowledged that the provision of DSL was not a bundle merely because there was a requirement for an underlying loop.

299 COMMISSIONER LANGFORD: Yes, but there is a financial benefit here.

300 MR. CAMPBELL: There is a financial benefit only with respect to something that you already have. You already have the underlying loop. There is no financial benefit from aggregating the underlying loop with the forborne bundle.

301 COMMISSIONER LANGFORD: You have just told me that the financial benefit lies in the value package which includes DSL. You then told me that in order to get that financial benefit you have to have the type of local service that Aliant provides. Note I am not saying "Aliant's", I'm just saying the type of local service that Aliant provides.

302 Are you now telling me that doesn't constitute a bundle under our rules?

303 MR. CAMPBELL: No, sir, it does not, because the saving doesn't derive from the aggregation that you have talked about.

304 COMMISSIONER LANGFORD: But you can't take advantage of the saving unless you have the aggregation.

305 MR. CAMPBELL: But the word "saving" is meaningless unless you compare the before and after.

306 MS TULK: You can't have the before.

307 MR. CAMPBELL: You can't have the before without the underlying service either.

308 COMMISSIONER LANGFORD: I don't understand the before and after.

309 MS TULK: It is a savings of the value package versus the stand-alone pricing of purchasing those products separately. You can't purchase those products separately without the underlying DSL-capable line. So you are not in a position to save because you are not in a position to buy because of the technical requirement of the DSL-capable line and that is --

310 So if there were to be an issue here, it is the very issue that you dealt with in 2003-49, which is: Is the stand-alone service a bundle? You dealt with that in 2003-49.

311 Because the requirements relates to the stand-alone service. Once you have the stand-alone service, that is where the requirement lies. The requirement doesn't lie -- there is no new requirement in taking the value pack. There is nothing new. It is exactly as it is if you want to come and purchase just high-speed Internet from us and nothing else, your provider of local service needs to have provided you with a DSL-capable line.

312 In fact, EastLink could choose to do that. If EastLink really had a number of customers saying "We prefer DSL service over cable high-speed Internet, then EastLink could choose to provision that customer over a DSL-capable line and then we would happily sell them that high-speed Internet either stand-alone or in a value package.

313 But that gate, the gate of the underlying service is the gate to buy the stand-alone service. It is not the gate to get the incremental savings.

314 COMMISSIONER LANGFORD: But you can't get the incremental savings if you don't have DSL-capable local service.

315 MS TULK: If you don't have DSL-capable --

316 COMMISSIONER LANGFORD: So that means you have to put the two pieces together. It doesn't matter how you present it in your ad, the fact of the matter is that in order to enjoy the savings in the bundle of forborne services you must have DSL-capable copper.

317 MS TULK: So we have, on a stand-alone basis outside of value pack currently in our market -- and our competitors have even more aggressive ones -- but we have an offering that says: Three months purchase high-speed Internet, and the first three months are $12.95 instead of $44.95, sometimes $14.95, sometimes $19.95, depending on what is happening in that very competitive market.

318 A customer cannot avail of that saving either without a DSL capable line. That is the exact issue that we explored in 2003-49. Any savings at any time available on a DSL Internet service are linked to having an underlying DSL capable loop.

319 So the issue is with the stand-alone service which de facto then has to carry into anything you do with that stand-alone service, whether it is a bundle, whether it is an introductory offer, whether it is a contract price, whether it is a discount on the modem, whether it is a free MP3 player.

320 COMMISSIONER LANGFORD: Customers could enjoy it, but you would have to file a tariff so they could enjoy it. Isn't that the problem here?

321 MS TULK: What you are saying then is that we would have to retariff high-speed Internet pricing.

322 COMMISSIONER LANGFORD: No. You would have to tariff groups of services which include high-speed Internet. You don't have to retariff.

323 MS TULK: What would be the difference between the financial benefit of the groups of services and the financial benefit of an introductory pricing offer?

324 COMMISSIONER LANGFORD: The differences really are not the problem here. The problem is competitiveness, I would argue.

325 Anyway, I am going to ask questions rather than make points.

326 It seems to me that that is where you are going off the rails, if I may suggest.

327 Let's turn to your footnote on your Aliant value packages: You add, we subtract. In the footnote -- and you provide it in your submissions and EastLink provided it in theirs.

328 In the footnote -- and I guess these questions are to you, Ms Tulk, but of course your team can divide them up as they see fit.

329 In line 2:

"Customers subscribing to Aliant high speed must subscribe to local service that uses a DSL capable line." (As read)

330 Is that still accurate?

331 MS TULK: It is accurate with the exception of the one MDU that we have provisioned with fibre technology recently.

332 COMMISSIONER LANGFORD: It is certainly accurate apropos this complaint.

333 MS TULK: Yes.

334 COMMISSIONER LANGFORD: Then I go to EastLink's submissions and the transcriptions of their tapes between EastLink "customer" and Aliant's CSR, customer service representative, recorded April 15, 2004.

335 It seems to me, if we go to page -- my pages are not numbered, but it is page 3 of the transcription, about six lines or so from the bottom. The CRS says:

"The only difference I think what you heard about as far as us not offering packages, we can't offer our local service in with our value packages. So local service is separate."

(As read)

336 And they say that's right. Then we go along three more pages and we have part of the conversation which has been underlined by the applicant. The CSR says:

"Right. Did you say high speed?

CUSTOMER: Yeah.

CSR: Yeah. You need to have our landline in order to have our high speed.

CUSTOMER: I do have to?

CSR: Yes.

CUSTOMER: Go with Aliant?

CSR: Yes.

CUSTOMER: Okay. So I'd have to switch back from EastLink.

CSR: Yes." (As read)

337 What are we to make of this? Nowhere, first of all, did the CSR say you can have the bundle alone; you can take it off to one of these other providers that you have mentioned, or resellers or reconnectors.

338 What are we as a Panel to make of this conversation when we link it, bundle it, as it were, with the footnote in your own advertisement?

339 MS TULK: I guess there are a couple of points to that, Commissioner.

340 First of all, clearly to the previous discussion, the CSR was speaking about the high-speed service in generality at that point in the discussion, not specifically to the value pack. So it is a criteria of our high-speed service that it requires a DSL capable line.

341 I believe, although we don't know who that specific CSR is -- and if we did, she is on strike right now, so we wouldn't be able to have a discussion with her.

342 In reading the transcript, it would be my assumption that she would have in good faith believed she was talking to a real customer of EastLink who was interested in our product offerings. Certainly her knowledge of the marketplace would be such that EastLink does not choose to provision services on DSL capable lines, although they are certainly free to do so at any time.

343 I think in good faith, in understanding that that customer was in very high probability, in fact in all likelihood, not on a DSL capable line, I would assume that she is answering within that context.

344 However, since reviewing the transcript, we certainly would have liked for it to be handled more clearly. We take that very seriously.

345 So since receiving the transcript we have updated and modified our CSR training and provided direct scripting of how to answer that specific question in the appropriate way. The appropriate answer would be that high speed uses an Internet technology called DSL, and that you need to have a DSL capable line in order to get the high speed service from us.

346 You should check with your provider to see if they can provision you on a DSL capable line. If you are on a DSL capable line or your provider can provision you on a DSL capable line, then we would be able to provide you with the services.

347 We have sent that out to all of our front line people in all of our front line channels. We have held pre-shifts and we have done training. Once we are back to a regular work environment, we will be including it in our regular quality monitoring.

348 We monitor our reps eight to ten times per rep per month in various formats, and we will be including it in that.

349 COMMISSIONER LANGFORD: In essence -- and I appreciate the completeness of your answer.

350 In essence, am I right in suggesting that what your answer comes down to -- and I am genuinely pleased to have all that information about the training and whatnot.

351 Does it not come down to the fact that you have instructed your reps -- and when they come back from being on strike, you will instruct even more of them -- to basically read the footnote back to people; to stick with the wording of the footnote.

352 That is what it comes down to, isn't it? In other words, the line that was crossed here is that this rep took the footnote to be you have to stick with Aliant, and what he or she should have said was you have to stick with someone who provides the same sort of line as Aliant.

353 Am I right in that?

354 MS TULK: Yes. I think the clarification will be for the rep to be able to accurately convey the technological requirement of our high-speed service. In any high-speed sale interaction, whether it is stand-alone or as part of a value pack to a new service, the same way in fact other things -- obviously not within the context.

355 If that customer in that transcript had gone on to say I do have a DSL capable line, or whatever, as part of our high-speed our reps are also instructed to talk about other technical limitations of the service, such as the type of computer that you must have. Are you in our high-speed footprint, a number of other technologies which are also in the footprint where technology permits and that there are conditions.

356 As part of our sales process our reps are trained, as they did in those transcripts, to try and discover what the underlying needs of the customer are and present the best offerings that we have that meet that underlying need while being factual and accurate on what the requirements are for our services.

357 COMMISSIONER LANGFORD: Assuming today that all the reps were back and they were all trained, and that they had been disabused of the mistake that was made in this transcript, and I phone up, or someone, and ask the same questions and the rep says: Well, you have to have someone who can provide a DSL capable line, and I ask you who can do that in town, then what is the next answer?

358 MS TULK: In fact, the answer would be the same as it is if they asked us who are the cellular providers in town. Our representatives are trained to say that they are there to provide answers on Aliant's services and that they don't supply information.

359 But certainly they would probably, I would think -- because most of our reps tend to be very helpful where they can, they would probably say you can search the Internet, or whatever. Our reps are not trained for any of our products to provide alternate carriers. So if someone said "who else can I compare this LD price package to", they would say "I'm here to provide you with information on our product".

360 COMMISSIONER LANGFORD: Let's stop playing let's pretend, and let's do it for real.

361 I was not clear, in listening to your responses to counsel, on exactly who is out there. I have your list of CLECs and resellers, but what I didn't get was a clear answer of who is in the market. Who, to use Mr. Campbell's words, is presenting these services -- i.e., DSL capable copper local service -- in your market? Who is doing that right now?

362 In other words, where would I find this information? If I searched the Internet, if I searched advertisements in the Yellow Pages, if I searched the local newspaper, The Chronical Herald, who would I find?

363 MS TULK: Right now?

364 COMMISSIONER LANGFORD: Yes.

365 MS TULK: I believe you would find Primus is. The reason they are not listed on our list is because our understanding is they have a deal to buy from All Stream. So I believe some of the local loops sold to All Stream. In fact, there are advertisements running in our papers now. There was one this past weekend.

366 COMMISSIONER LANGFORD: Did you bring it with you?

367 MS TULK: No, I didn't, unfortunately. Canada Reconnect, as well as a number of the other reconnectors. But I know Canada Reconnect for a fact is providing those in the marketplace.

368 And all the ones that are reconnectors are providing to the residential market, and certainly the other CLECs will all be providing in the small business market.

369 COMMISSIONER LANGFORD: And they are reselling your services.

370 MS TULK: The local loops.

371 COMMISSIONER LANGFORD: These reconnectors.

372 MS TULK: They are selling local loops. Some of them are selling our DSL service and certain purchase a wholesale group, as far as I understand. I understand there may be some of them who are actually providing their own or purchasing it from someone else.

373 COMMISSIONER LANGFORD: Let' leave them aside. You understand there are some reconnects and there was an ad in the paper.

374 Going back to the CLECs --

375 MS TULK: So All Stream I guess would be the answer.

376 COMMISSIONER LANGFORD: All Stream may be starting now or soon.

377 MS TULK: They are not directly marketing, but they are selling to a company that we understand is marketing to the residential market.

378 COMMISSIONER LANGFORD: So All Stream is selling to Primus. Is that what we are to assume?

379 MS TULK: That is the information we have from the press releases that they have released, yes.

380 COMMISSIONER LANGFORD: You don't have any information, real hard information, about them out there marketing this product at this point.

381 MS TULK: Well, the advertisements that have started to appear and on their Website they would list Halifax as one of their serving areas.

382 COMMISSIONER LANGFORD: And that's it. That is all we have.

383 It is just that in other parts where you have listed customers -- and I know that is confidential and I won't give specific numbers. You listed different customers that have local value package and how many had dial-up and how many had Internet package high-speed. You talked about other customers having Aliant's dial-up Internet service outside of the value package. You have numbers of customers, some your own and some that have gone elsewhere.

384 Do you have any numbers on those who have gone to any of these others, the Primus or any of these reconnectors? Or are these just beliefs you have because some have purchased some of your local loops?

385 MS TULK: We have from time to time provisioned directly high-speed to customers who are not purchasing their local service directly from us. From that perspective, we would have information that that exists.

386 With respect to the end customers of resellers, when you say fact based, we would not have fact based corporate information on that because I wouldn't have access to that. They are not required to tell me when they purchase -- in fact, your rules are very clear that when they purchase a local loop from us, I am not allowed to know. We don't ask and neither do they tell us.

387 COMMISSIONER LANGFORD: That is why I didn't ask you for names. I asked you for numbers or whether you had a sense --

388 MS TULK: We certainly in that interrog disclosed to you the number of high-speed connections that are being sold to them. But we would not have information on who the end customers of those high-speed connections are. And we would not ask them that.

389 COMMISSIONER LANGFORD: Those are my questions. I will leave it to you, Mr. Chairman. I will try not to smirk if you interrupt.

390 THE CHAIRPERSON: Thank you, Commissioner Langford.

391 Actually, I just had two quick questions and then we will turn it over to the parties.

392 Mr. Campbell, Commissioner Langford said he understood your first two points that you raised in your opening comments, but I must confess as you were reading through it wasn't clear to me the second point that you made. I think it was the second point where you used the phrase "the argument flawed".

393 I was just wondering if you could go over that, go through your text perhaps again.

394 MR. CAMPBELL: That is the point that I was making.

395 THE CHAIRPERSON: Yes, I thought it was.

396 MR. CAMPBELL: The second point is in fact this flawed idea that there is a savings bundled with the local service.

397 THE CHAIRPERSON: That is what I thought it was. You referred to it as the third point, but I thought it was the second one.

398 MR. CAMPBELL: It was.

399 THE CHAIRPERSON: So that was the one.

400 If I linked that then to the point that you later on mentioned about -- I think you used the term "going sideways" on Decision 2003-49, which is the Call-Net one where we said this is not a bundle because there is no price saving, I guess, was the point there.

401 So your point -- there is no price saving attributable to taking a service with a local service.

402 The price saving arises in the bundle of forborne services because both the unbundled and bundled package required the underlying service.

403 So there is no saving from that aggregation. It is merely a technical requirement.

404 As we say that bundle could be provided by someone else. We acknowledge that there is nobody aggressively selling them in this market.

405 The market has gone differently in Nova Scotia.

406 MS TULK: Well, there is now, but up until a month ago there was not anyone aggressively assigned to the right financial market.

407 MR. CAMPBELL: Our principal competitor has chosen to provide a DSL non-compatible service.

408 THE CHAIRPERSON: Could I have the attention of our own people here, please?

409 When you use the term "until recently, no one was aggressively selling", does that mean "really, but, as far as we know, no one was selling at all"?

410 MR. CAMPBELL: No one seems to be marketing to the residents' market.

411 We believe that there may be some sort of jointly arising for business sales, but we acknowledge that nobody is marketing to residents' market.

412 MS TULK: Well, with the exception of the reconnectors.

413 MR. CAMPBELL: Yes. Yes. Resellers.

414 THE CHAIRPERSON: So you believe that reconnectors were in fact selling?

415 MS TULK: They are selling DSL-capable loops is our understanding.

416 THE CHAIRPERSON: Okay.

417 MS TULK: Yes.

418 THE CHAIRPERSON: And have been for some time?

419 MS TULK: Have been.

420 THE CHAIRPERSON: Okay.

421 All right. Well, we will go to the next phase of our proceeding then and -- Ms. MacDonald, you had 20 minutes to ask questions of Aliant and will have 20 minutes, and then we will follow up with any remaining questions we have.

422 MS N. MacDONALD: My questions will be really kept to a minimum. I think a lot of the missing -- was answered in the questions here.

423 Just to clear then, the list CLECs and resellers that you provided, other than your reference to Canada Reconnect as one that you are aware of where services are offered -- are you aware of any of those companies on that list that are offering and providing your value-package customers with local service?

424 MS TULK: Providing our value-package customers with local service?

425 As well, I guess, procedurally then that would get into the answers we filed in confidence in the interrog --

426 THE CHAIRPERSON: Well, if she is not answering it for the number, are there any answers to the question?

427 MR. CAMPBELL: We can tell you, I believe, that a very small number are served by you.

428 MS TULK: We have value-package customers who are taking their local service from each one at this time.

429 MS N. MacDONALD: Are you including your business customers in those lists.

430 MS TULK: No.

431 MS N. MacDONALD: In your reference about that there is an MDU where you are also now starting local service, sorry, the Internet service without a requirement to take local...

432 MS TULK: That is right.

433 MS N. MacDONALD: That is restricted to one building in the Halifax exchange?

434 MS TULK: At this time.

435 MS N. MacDONALD: You reference the fact that All Stream is offering DSL-capable lines.

436 Is correct to say that All Stream's service is limited to a couple of wire centres in the Halifax exchange?

437 MS TULK: I would not have that information. They can purchase unbundled local loops from us anywhere that they wish.

438 MS N. MacDONALD: And you are only offering businesses at this point in time?

439 MS TULK: Well, as I mentioned, it has recently been announced that they are a provider to a residential provider who is operating now in the Halifax area and has announced service.

440 MS N. MacDONALD: And, I know that was referenced and that there was also a reference to Primus, so are you referring to the Primus offering?

441 MS TULK: Well, there are two Primus offerings, not the broadband, but the one that was announced I think two weeks ago. It was announced during the Telecom Summit.

442 So that would be the residential service offering that Primus announced last week, some time in the last week.

443 MS N. MacDONALD: I think it was not in the last week, but in the last month.

444 Are you aware that the Primus residential offering, at least according to what they have on their website, does not appear to indicate that you can keep a DSL connection if you switch to Primus for home phone service?

445 MS TULK: Well, it certainly would not preclude that.

446 I think that in their offering we will certain look to try and make it available if they do not prevent it.

447 We will willing sell to those customers over the DSL-capable line. We would set up a fictitious account and do that.

448 MS N. MacDONALD: I know that there are two offerings.

449 One is the broadband offering that Primus is referring to. We did a little check on their website. They do have a broadband offering, which is their IP-based phone, voice over IP, service.

450 The other one that was recently announced appears to be a residential service offering.

451 But, when you go on their website, there is a facts section that says:

"Will my IP Internet connection (DSL) affected by switching to Prime at home phone service?" (as read)

452 And the answer provided is:

"Yes, unfortunately at this time home phone service customers will no be able to maintain their DSL service. Please note that Prime at home phone service does not impact cable Internet users." (as read)

453 So, when I read that, the question that comes to mind is "Does that really mean that is an alternative, when a customer seeking a value package from Aliant that includes high-speed Internet, can a customer really take this other service offering?"

454 MS TULK: We are certainly against their new -- working to make sure that that is the case.

455 I think that perhaps, if anything, evidence of a competitor trying to make choices to make us less competitive on our forborne services and stifling the competition in the forborne market place.

456 So, if anything, the harm is in the reverse order.

457 MS N. MacDONALD: The other question I have is with regards to your reference to reconnect services.

458 So, just to be clear on Aliant's position, then is your position that because there are other companies that may have the capacity to offer these services then Aliant is not requiring its customers to take its local service because it is high-speed Internet?

459 MS TULK: My position is that the technical requirement that we are discussing relates to the stand-alone high-speed service -- and therefore applies -- and secondly to any other offering that relate to the high-speed service, one of which is the value package and that the technical requirement is real -- it has been documented in proceedings and dealt with in proceedings -- and that there is no new requirement for the value package related to the high-speed service.

460 That the requirement is for the stand-alone service. So in order to pay the full price you have that requirement. In order to get the discounted price you have that requirement.

461 So there is no new requirement there to get the discounted price.

462 So the new price in the value package and the benefit of the forborne value package does not have any new additional requirement for the high-speed service. That is our position.

463 In fact, it is not only our position, it is the facts.

464 MS N. MacDONALD: Well, we might dispute that a little bit.

465 I guess the only other point I want to make is with these reconnect services.

466 So what you are saying in that is these customers have a reasonable opportunity to take-up a reconnect service which typically would you not agree that, when you review the reconnect services, the cost of those services is substantial compared to a residential service offering by a regular phone company? In some cases, over twice the price of a residential service.

467 So are you suggesting then that this is a real alternative offering to a customer who is looking to take Aliant's high-speed Internet value packages?

468 MS TULK: I do not really know where -- I am not aware and in Decision 2003-49 I was not aware where it was incumbent on Aliant to make options available, that it is incumbent on Aliant to make sure our services are available when those options are provided by our competitors.

469 So certainly, in our market place, any competitor can enter at any time and choose to provide DSL-capable loops. When they do, and there are circumstances where they do at what ever price they choose to provide that -- I do not set the prices for reconnectors in the residential market.

470 So, at whatever price they choose to provide that local service, if it is over DSL-capable loops, we will make every effort to provision our DSL service.

471 In fact, we continue to work, and through separate proceedings we have filed information. We continue to work very hard to remove that technical requirement.

472 That technical requirement does harm to Aliant. I can absolutely assure you that no one will be happier than me the day I can provide my value packages to your local service customers. I very much want to see that happen.

473 We work very hard on that, the same way we work very hard for customers with wireless substitution.

474 The technical requirement that is very real for the DSL service is in fact harmful to Aliant and we would like to see it removed.

475 Unfortunately, at this time, it is real. We tried providing DSL over a dry loop without the requirement for the capable loop.

476 It does not work in our market place. We have very poor trial results.

477 MS N. MacDONALD: Okay. Ms Tulk, I am just going to add another final question.

478 So, really, the clarification that you also made today is that Aliant does not provide its customers when they call for the high-speed Internet value packages with any information as to what other options are available for local service providers?

479 MS TULK: Aliant does not provide other -- Aliant does not train our reps, and Martin I am not sure if there is any case, but to my knowledge, we do not train our reps to present the offering of other providers in the case of any of our products.

480 So, cellular long distance, Internet, we do not do that.

481 MS N. MacDONALD: Thank you.

482 THE CHAIRPERSON: Those are all your questions, Ms MacDonald?

483 MS N. MacDONALD: Yes, they are.

484 Thank you.

485 THE CHAIRPERSON: Okay. Mr. Campbell?

486 MR. CAMPBELL: No, thank you, Mr. Chairman. No question.

487 MR. MILLINGTON: I have no question.

488 THE CHAIRPERSON: Your turn again, Commissioner Langford.

489 COMMISSIONER LANGFORD: Well, you know, I might as well be elucidly clear on this. Funny how time expands or questions expand to fill a vacuum.

490 I guess the worst thing that has happened to you, folks, this morning is the other two applicants have cancelled out. So we can do this all day.

491 We just have to give you three hours to vote. We are not sitting here all day.

--- Laughter / rires

492 Well, he has implied that I am rude. He implied that I cannot count. And they keep me here all day.

--- Laughter / rires

493 I just am trying to understand, once more, what I now take to be the second point you made, which I thought was third.

494 But I am coming back to it and I simply want to understand precisely why you see salvation in a sense for your offerings here in the fact that the saving is in forborne services rather than local services when the forborne services are not being obtained by anybody who does not get your local service.

495 There may be a reconnector out there, there may be someone who is so, so on the fringe that they think they have to pay double or whatever because they have been bad somewhere in their payment history, but I do not think there are many people who are watching their pennies who would willingly go to a reconnector if they did not have to.

496 I think that is a fairly fair statement.

497 These are people who are really not doing well as consumers.

498 So taking the average customer who is shopping around for a deal, who is attracted by your value package with high speed, it just seems to me that in order -- (and this is where I am disconnecting from both you, Mr. Campbell, and both you, Ms Tulk.)

499 The problem probably is me. I seem to be outnumbered. But I want to get it clear in my mind.

500 How else, what else do we call this, but a bundle, if the only way to get the savings in the forborne services, including high speed, is to take local DSL-capable and you are the only folks in town who on a regular basis offer this stuff?

501 What else are we to see this as? Just an unfortunate coincidence?

502 MR. CAMPBELL: There are so many issues. I would like to respond to that, Commissioner.

503 First, the idea that you have to take ours. We have discussed that. We have complied with the rules requiring us to provide unbundled loops.

504 Any competitor who wants to provide it is free to provide it.

505 COMMISSIONER LANGFORD: But there are no competitors.

506 MR. CAMPBELL: That is the choice the principal competitor in our market that they choose not to provide a DSL-capable service.

507 COMMISSIONER LANGFORD: Maybe, if you do not mind, I will interrupt again since I am prone to doing that.

508 Are you stating then that as long as someone, some service, could come into the market you are covered, even if there is none there?

509 MR. CAMPBELL: I am saying that you have got to look at what the rules are for.

510 The rule about providing the service on unbundled loops was there for the benefit of competitors who were at a competitive disadvantage because their customers did not have access.

511 There is no suggestion that any competitor here is at a competitive disadvantage because their customers do not have access to our DSL service.

512 We keep slipping sideways into discussions that sound that whether we should be forbearing Internet service, whether there really are alternate suppliers.

513 The fact is we are the minority provider of high-speed Internet service. The majority provider is EastLink using its broadband network.

514 So we should not be focusing on how many alternate suppliers are here. This is a very, very competitive market.

515 What you are talking about apparently would be to impose regulation on the minority service provider in the competitive market.

516 The real fundamental problem now is that to look at a saving you have to look at a comparison of with and without.

517 But, in this case, you cannot look at a comparison of DSL high-speed Internet without an underlying service.

518 Now whether it is ours or anybody else's, as I keep saying, we have got to put that aside.

519 But you have to have it for either the bundled or the unbundled. Therefore no saving is achieved by bundling, by having those services at the same time.

520 The savings come from bundling with the other forborne services.

521 COMMISSIONER LANGFORD: Let us get to that in a moment.

522 But the start where you begin with the whole point of our bundling rules, does it not strike you as somewhat inequitable in a competitive market place that your local subs could remain your local subscribers but subscribe to EastLink's high speed, but EastLink's local subscribers could not remain EastLink's local subscribers and subscribe to your high speed?

523 Does it not strike you as a tad inequitable if what we are trying to protect here is a true competitive market place?

524 MR. CAMPBELL: I agree. It is inequitable to EastLink's customers.

525 But we live in hope that someday this Commission will adopt symmetrical regulation that will provide these captive customers of the unregulated cable monopoly with access to competitive service.

526 Right now, it is EastLink's choice that prevents that.

527 MS HULK: Yes. When you look at equity, I mean when you look at the bundles that are available, so when we talk about the market place and the forborne services in our market, all of, you know, the bundles that EastLink makes available, which pricing in many cases is more aggressive than our bundles, require their customers to take multiple services from them as well.

528 So customers of EastLink cannot get the discount on their high-speed service without either their telephone or their cable service.

529 And so this is.

530 So in our fully competitive market for these services, you know, we say "Is it inequitable?" I think I would argue that it is not inequitable because, from that perspective, the inequity is in the fact that we cannot put as many things into our bundles as our competitor can freely and we have to keep separate bundles specifically to be compliant with the bundling rules, which we are very, very committed to.

531 This issue of the local service and the local underlying loop is a technical requirement of our high-speed service and if it forces a bundle in the case of value packages then it forces a bundle in the case of the underlying stand-alone service, which gets us right back to 2003-49.

532 Like, either high-speed Internet -- the requirement is for high-speed Internet and it is not a new requirement for the forborne bundles. It exists with the stand-alone service.

533 COMMISSIONER LANGFORD: But the basic requirement really, and we have said in this Commission before the technical arguments are not going to cut a great deal of ice with us alone, the basic requirement is that, if by bundling a forborne and a non-forborne, a savings is achieved then either there must be competitive -- there must be competitive marketing of those products or there must be a tariff.

534 MS TULK: Right, but I guess it gets --

535 COMMISSIONER LANGFORD: It seems to me that neither one of those two exists at this point. There is no tariff and for the service you are offering.

536 I take Mr. Campbell's point on the joys of symmetry, but for the services you are providing they are: One, the bundled, there is no tariff; and two, there is no competition, with the exception of something that might be coming from Primus and a phantom reconnector or two.

537 MS TULK: On those specific services in the bundle there is quite a bit of competition. They are all available elsewhere.

538 COMMISSIONER LANGFORD: I'm not talking about the specific services. I'm talking about putting them together.

539 MS TULK: But I guess the point we are trying to make is that requirement de facto applies to any pricing changes on our high-speed service.

540 COMMISSIONER LANGFORD: Maybe. Maybe.

541 MS TULK: That certainly wasn't our assumption that that would be the point of this proceeding, was to deal with 2003-49.

542 COMMISSIONER LANGFORD: It is not the point of this proceeding. But the fact that the situation may be worse than the applicant thinks, it certainly doesn't do anything to correct the situation complained off if in fact it is offside. It would be no defence to come in here and say "Well, we are doing much worse than that. If you think this is bad, you should see what else we are doing. Everything we are doing with high-speed is wrong."

543 Certainly we are focused today on one complaint by one applicant. You are quite right, if we were going to look at the whole world of marketing and bundling that would be a different thing.

544 MS TULK: Certainly that is not what we are trying to say.

545 I think what we are trying to say is that we are compliant with 2003-49 and 2004-21 and the facts of both of those decision and we have worked extremely hard to make sure we are compliant and we are very focused on remaining compliant.

546 COMMISSIONER LANGFORD: But according to Mr. Campbell all you have really done is present it differently. You haven't changed anything at all.

547 MS TULK: We have done much more than that. We have presented it differently. We have communicated directly to each and every customer who may have thought that they were together. We have changed all of our training. We have retrained all of our reps.

548 COMMISSIONER LANGFORD: How does that go to the essence of whether it is a bundle or not? All that goes to, in essence, is presenting and marketing. It doesn't go to the essence of the question in 2004-21 as to what those two things together are.

549 As long as they are together it seems to me arguable nothing has changed. All that has changed, as Mr. Campbell said at the outset, is the presentation.

550 Anyway, those are my questions.

551 THE CHAIRPERSON: Just in my own mind to clarify, I take it it is your position that I can today, living in Halifax, in fact acquire local residence telephone service from an alternative provider other than Aliant and other than EastLink? Well, perhaps not other than EastLink.

552 I can in fact today acquire local residence telephone service from a service provider of than Aliant on a DSL-capable line and I could call you and seek the value package and get that value package when I have this DSL-capable line associated with my local residence telephone service that I am getting from an alternate provider, that I in fact can have that alternative in the Halifax market and have had that alternative for some time?

553 MS TULK: Yes.

554 THE CHAIRPERSON: That is your position?

555 MS TULK: Yes.

556 THE CHAIRPERSON: Either through these resellers or through, more recently, the All Stream --

557 MS TULK: With the recent one with All Stream, we are still trying to work and figure that one out, but certainly with the reconnectors it is possible. If any of those resellers were to -- obviously you first need to buy the service from them, but once you did, yes you would.

558 In fact, I know as a fact that we have, in recent weeks, received numerous calls from customers of the reconnectors asking us specifically that questions and we have, in all cases, clearly told them that they can in fact have our value packages and that we would make them available to them and we would be more than willing to sell them to them.

559 MR. CAMPBELL: Just to follow upon that, Mr. Chairman, EastLink could provide it to you on a DSL-capable.

560 THE CHAIRPERSON: That is why I corrected my point.

561 MR. CAMPBELL: They choose not to.

562 The others who are, frankly, more focused on business customers, could provide it to you although you might not like the price of the package, but they could.

563 THE CHAIRPERSON: Thank you for that.

564 Then we will move to closing remarks.

565 Ms MacDonald, you have 10 minutes.

CLOSING REMARKS BY EASTLINK TELEPHONE /

REMARQUES DE FERMETURE PAR EASTLINK TELEPHONE

566 MS N. MacDONALD: Okay. First, before I begin I just want to address a couple of things that were mentioned here today.

567 First of all, Mr. Campbell did state that there is an inequity that exists when an Aliant local customer can purchase EastLink's Internet bundle but an EastLink customer cannot purchase Aliant's Internet bundles if that customer is an EastLink local service customer.

568 Our position is that where that inequity exists it falls within the bundling rules and therefore that bundle should be tariffed.

569 The other thing is, there was a reference to EastLink's choice is not to provide the DSL-based local service.

570 Well, Aliant would have EastLink purchase further unbundled loops from Aliant in order to provision its own facilities-based customers with a local service. We don't think that is the real issue here today.

571 EastLink does not also require its customers to take specific services in order to get price discounts. Our bundles offer variations of all of the services. There is no bundle that requires customers to always take one service whether it be cable or local phone or the Internet service.

572 The other thing is, there was reference here to say that Aliant is not the dominant or majority provider of high-speed Internet.

573 The fact remains that Aliant is the majority provider of Internet services in its territory and it has the highest market share of provisioning Internet service. Not as relevant to the issue, but we just wanted to point that out.

574 The other thing is, there were references here made to the fact that requiring a tariff results in re-regulation of the Internet service.

575 I just point out that in the May 31st filing the reference that EastLink's position is that it does not result in re-regulating forborne services. The Commission made that clear in previous decisions, which is referenced in the May 31st filing.

576 So the evidence that we have here today is really, as far as EastLink is concerned, that the circumstances are no different than they were when the Commission issued Decision 2004-21. Sure, the advertisements are somewhat different, but the actual fact is no different. Where a package of services is offered at a discount and the customer cannot get that discount unless they take the local, then the discounted bundle is dependent on the purchase of a tariffed service.

577 Also in our May 31st submission we reference the fact that the Commission had acknowledged that where a package of services is dependent on the purchase of another service that is a bundle.

578 Decision 2003-49 is referenced throughout by Aliant as the decision that covers them and that ensures they don't have to file a tariff in these bundles. Our view is that that is a different situation in that we are talking about a price incentive here.

579 The question of the price incentive isn't a new issue. In 2004-21, the Commission already had this same evidence and found that when the local was required it was a bundle. Therefore, it already found that there was a financial benefit. So I don't think that is a new issue for today just because the advertisements are different.

580 There was some reference in terms of the filing of different companies that are capable of offering.

581 We basically say those companies are either offering to business customers or they are reconnect services, and in fact some of them don't even appear to offer phone services on that list. We don't think that satisfies the issue.

582 The other thing we point out is when you look at that list they are focused in Halifax, and we wouldn't say throughout the entire exchange, we would say potentially only in limited wire centres. So that means that in one exchange -- in part of one exchange if there happens to be other options then Aliant should be off the hook from tariffing where every other member of its general consumer population is required to take its local service.

583 We don't think that is what the bundling rules were set out to do.

584 The other issue that wasn't a focus of this presentation this morning but we know that Aliant has filed confidentially a number and that number is supposed to represent the number of its high-speed Internet bundle customers that do not have its local service.

585 Again, we just point out that number really has to be looked at in terms of what it really means. We would expect that number to be rather minimal.

586 I know some of the comments that were made here today seem to support that in terms of Aliant recognizing that there is a small segment of people who happen to have these services. Whether they are offered in one multi-dwelling unit where Aliant is the underlying provider of that local phone service or whether there is the odd couple of small business customers who may happen to have it, we are not sure, or if it is a university resident, but the fact remains that the general population of consumers are required to take Aliant's local service.

587 So really what we want to do is ask the Commission to really look at the purpose of what those rules were set out to do and the definition. We say that the definition is clear and that what is being offered in Aliant's high-speed Internet value packages does fall within the definition of a bundle and in that case it needs to be tariffed.

588 Questions about whether it is appropriate today or the fact that EastLink is capable of offering competitive services with Aliant, it is not relevant to the fact that there is an actual requirement on Aliant today to file a tariff and to be taken down the road of how competitive a service area is is not as key. The fact is that there are no other options for customers wanting Aliant's value packages that have high-speed Internet other than to take their local service.

589 Just in terms of the reference to the Primus, we also point out that hypothetical or potential companies that may be able to offer a local service over DSL isn't really relevant when we don't really have that evidence here in terms of actual provision, whether it be Primus or some other company that is working with All Stream to offer a solution. We also know that where All Stream is limited to the Halifax exchange, that doesn't even make it clear what could happen from that. So I don't think it is relevant to look at what could be down the road.

590 So those are my comments.

591 Basically the simple issue is this: Aliant still requires the majority of its general consumers to take its local service in order to get its high-speed value packages and we therefore say that is a bundle and it should be tariffed.

592 Thank you.

593 THE CHAIRPERSON: Mr. Campbell.

CLOSING REMARKS BY ALIANT TELECOM INC. /

REMARQUES DE FERMETURE PAR ALIANT TELECOM INC.

594 MR. CAMPBELL: Thank you, Mr. Chairman.

595 Ms MacDonald I'm afraid misunderstood my comment about the inequity. My point was that it was inequitable to Aliant, that our customers are exposed to their competition while theirs are not, but I will not belabour that point.

596 Mr. Chairman, your decisions are based on policy and based on a policy rationale and need for the action that you take. In the Decision 2003-49 and the subsequent one in FCI broadband, it was because there was a reason to grant the relief that the companies were requesting.

597 No such need or rationale has been expressed here.

598 When questioned by Commissioner Demers about whether there was any competitive problem Ms MacDonald was unable to express one.

599 This really is a regulatory game. The relief sought is without any merit at all. They are not seeking access to our service for their customers.

600 To the extent that there is lack of competition in providing of DSL-capable loop, that is beyond Aliant's control and it is not attributable to anything done by Aliant. The loops are available to any competitor who wants them, including EastLink.

601 But it is concerning to us that we are even having the discussion about the extent of competition there because it sounds like we are revisiting forbearance of Internet services.

602 If we are going to be looking at forbearance of Internet services we should not be looking at it so technologically based because the market for high-speed Internet services is very, very competitive in Halifax and the irony is, as has been acknowledged, Aliant has the minority share.

603 So the idea that the degree of competitive supply of copper-based service is somehow relevant to regulation of Internet services is, to say the least, very troubling to us.

604 EastLink's argument confuses two very different concepts and leads itself to an incorrect conclusion.

605 The first concept is bundling. You have some jurisprudence around bundling.

606 The second concept is preference and discrimination and you have jurisprudence around that.

607 In your analysis of this situation we urge you to remain clear-headed, apply your traditional standards to each one of these questions, and the correct answer will be that, consistent with your previous decisions, there is no bundle involving the Aliant high-speed Internet service and that there has been full compliance with your decision.

608 Thank you, Mr. Chairman.

609 THE CHAIRPERSON: Thank you, Mr. Campbell and to all of your team, of which we only utilized one or two. Thank you for coming nonetheless.

610 Ms MacDonald, thank you and all those who participated in this proceeding.

611 I guess I should say by way of closing, I thank the other four parties for resolving their respective two disputes before today as well. it is certainly helpful to the process and helpful to us.

612 Again, I thank you. We will adjourn now to consider the written evidence and what we heard today. As I indicated at the outset, we expect to get a decision out before next Friday -- not this Friday, next Friday.

613 Thank you very much.

--- Whereupon the hearing concluded at 1100 /

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