ARCHIVED - Transcript
This page has been archived on the Web
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Providing Content in Canada's Official Languages
Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.
TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET :
HELD AT: TENUE À:
1 Promenade du Portage 1, Promenade du Portage
Salon Réal Therrien Salon Réal Therrien
Gatineau, Quebec Gatineau (Québec)
September 23, 2005 Le 23 septembre 2005
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
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.
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.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
BEFORE / DEVANT :
Richard French Chairperson / Président
Helen Ray del Val Commissioner / Conseillère
Barbara Cram Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS :
Stephen Millington Legal Counsel /
Lynne Fancy Telecom Staff Team Leader /
chef d'équipe aux
Len Katz Executive Director, Telecom /
directeur exécutif des
Scott Hutton Director General, Competition,
Costing and Tariffs /
directeur général, Concurrence,
établissement des coûts et des
Paul Godin Director, Competition,
Implementation and Technology /
directeur, Concurrence, mise en
oeuvre et technologie
HELD AT: TENUE À:
1 Promenade du Portage 1, Promenade du Portage
Salon Réal Therrien Salon Réal Therrien
Gatineau, Quebec Gatineau (Québec)
September 23, 2005 Le 23 septembre 2005
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA
Opening remarks by the Chairperson / 1 / 1
Remarques d'ouverture par le président
Opening remarks by YP Corp. / 4 / 22
Remarques d'ouverture par YP Corp.
Opening remarks by Bell Canada / 14 / 71
Remarques d'ouverture par Bell Canada
Questions by Commission / 21 / 113
Interrogatoire par la Commission
Questions by YP Corp. / 96 / 558
Interrogatoire par YP Corp.
Questions by Bell Canada / 108 / 662
Interrogatoire par Bell Canada
Closing remarks by YP Corp. / 111 / 688
Remarques de fermeture par YP Corp.
Closing remarks by Bell Canada / 118 / 720
Remarques de fermeture par Bell Canada
Gatineau, Quebec / Gatineau (Québec)
‑‑‑ Upon commencing on Friday, September 23, 2005
at 0859 / L'audience débute le vendredi
23 septembre 2005 à 0859
seq level0 \h \r0 seq level1 \h \r0 seq level2 \h \r0 seq level3 \h \r0 seq level4 \h \r0 seq level5 \h \r0 seq level6 \h \r0 seq level7 \h \r0 1 LE PRÉSIDENT : Bienvenue au CRTC. Au cas où vous pensez que la branche de la Radiodiffusion s'est accaparée de la Salle Réal Therrien, il n'en est rien. Il s'agit plutôt d'une décoration ou d'un décor approprié à une campagne de financement pour les bonnes oeuvres pour le personnel du CRTC.
2 I apologize for the decorations but it has to do with a charitable financial campaign involving the staff and I can assure you we did clean out actually a good deal of other decorations in anticipation of your presence.
3 Mon nom est Richard French. Je suis Vice-Président, Télécom du CRTC, et je suis, aujourd'hui, en présence de mes deux collègues, qui sont toutes les deux avocates, alors que moi, le Président, ne le suis pas. À ma gauche, Helen Ray del Val, qui est Conseillère pour les régions de Colombie-Britannique et du Yukon; à ma droite, Barbara Cram, Conseillère pour les régions de Manitoba et de la Saskatchewan.
4 Pendant le courant de cette audition, nous allons bénéficier des conseils de quelques personnels du Conseil.
5 À ma droite, Stephen Millington, Conseiller légal; éventuellement, en arrière, Léonard Katz, Directeur exécutif, Télécom -‑ il n'est pas arrivé encore; Scott Hutton, Directeur général, Concurrence, Costing et Tarifs -- le monsieur avec la barbe; à sa droite, et représentant aussi la branche légale, Allan Rosenzveig; à sa droite, Lynne Fancy; ici à ma gauche, Paul Godin; à sa gauche, Claude Brault; et à droite de Stephen Millington, Mario Bertrand.
6 Please don't hesitate to contact Steve Millington if you have any procedural questions about the conduct of the hearing.
7 The purpose of the hearing today is to hear and adjudicate YP Corp. Part VII Application seeking non-discriminatory billing and collection arrangements from Bell Canada.
8 Before we begin, I would like to say a few words about the operation of this hearing this morning.
9 This hearing is less formal than our traditional telecom hearings and much narrower in scope.
10 Due to its expedited nature, interveners and the general public will not participate in its oral phase.
11 The parties will be asked first to introduce the members of their respective teams.
12 The Applicant, followed by the Respondent, will have 10 minutes each for opening remarks.
13 Following these remarks, the Applicant and then the Respondent will be questioned on matters related to the Application, first by the Commission, followed by the Applicant, then the Respondent and ending with the Commission's final questions, if any.
14 There will be no final written argument. Rather, the parties will have an opportunity at the end of the hearing to make final oral submissions.
15 The Notice of Public Hearing letter indicated that the parties must file all documents with the Commission and serve them on the other parties prior to the hearing. We are, therefore, not inclined to accept any additional documents at this stage.
16 We intend to issue a brief written decision by 5 October 2005.
17 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, please make sure that your microphone is turned on when speaking, simply by pushing the button under the microphone.
18 If you have any questions on how to obtain all or parts of this transcript, please approach the court reporter at the end of the hearing.
19 We would very much appreciate it if all of you, including the members of the Commission, would turn off your cellphones and pagers while you are in the hearing room, which the President is trying desperately to do as we speak.
20 We will now begin with opening remarks by the Applicant.
21 I want to say that we want to be flexible within reason but we are serious about an expedited hearing and that means that a degree of mutual respect with respect to the time horizons of each intervention will be helpful to all of the parties.
OPENING REMARKS / REMARQUES D'OUVERTURE
22 MR. DUNBAR: Thank you very much, Mr. Chairman, and good morning to the Commissioners and all the participants and staff in the room.
23 I would like to begin by thanking the Commission for convening this expedited hearing at our request. We do appreciate if and we are looking forward to the proceedings this morning.
24 I would like to begin by introducing our representatives of the Applicants this morning.
25 On my immediate left is Peter Bergman, who is the CEO and Chairman of the Board of YP Corp.; and on my far left is Len Watson, who is the Vice-President of Marketing of YP Corp.
26 Then going in the other direction, on my immediate right is Guy Feats, who despite the sign is actually CEO of Tritan Global Business Services, who are the Canadian agents for YP Corp. in the billing and collection clearinghouse business; and on Mr. Feats' right is Robin Legg, who is Vice-President of Business Development for Tritan.
27 So with the introductions out of the way, I would like to make our opening statement.
28 This application concerns billing and collection services provided by Bell Canada to third parties.
29 YP Corp. is in the business of providing Yellow Page type directory services in the United States and in Canada. It is a leading supplier of these services in the U.S., with over 18 million listings.
30 It is attempting to enter the Canadian market to provide these same types of services in competition with Yellow Pages Group or YPG in this country. I am going to refer to them as YPG. That is Yellow Pages Group.
31 YP Corp. and YPG's competing services are accessible on the Internet. Both in Canada and the United States, ILECs have traditionally billed customers who place advertisements in Yellow Page type directories on their telephone bills and have been compensated by the directory service provider for performing this function for them.
32 The practice started in an environment in which the ILEC owned the directory service or in which the directory service was provided by an affiliate of the ILEC. It has since evolved into the provision of this service for non-tariff directory services and has been extended to both hard copy and Internet-based directory services.
33 In the United States, the ILEC performs this function for competing directory service providers, including YP Corp.
34 In Canada, Telus does follow this practice and offers a billing and collection service for competing suppliers of directory services, both hard copy and Internet-based directory services, in its channel tariff. In contrast, Bell Canada only performs this service for YPG, both with respect to YPG's hard copy directory advertising and its Internet-based directory services.
35 What the Applicants are seeking in this proceeding is for Bell to provide them with the same kind of billing and collection service that it provides to YPG.
36 YP sought to negotiate these terms with Bell Canada and looked for normal commercial terms. To this end, we met with Bell in the summer of 2004, and subsequent to that tried to advance commercial discussions. YP Corp. even went so far as to satisfy certain conditions precedent set by Bell, including receiving approval from the Commissioner of Competition for its advertising material.
37 However, Bell ultimately refused to meet again with YP Corp. to discuss commercial terms and then Bell also refused overtures by YP to have CRTC staff mediate these discussions. This ultimately led to YP Corp.'s Part VII application.
38 The Commission might wonder why YP Corp. is so interested in having Bell Canada perform this billing function for it. Why doesn't YP Corp. simply do its own billing and collection?
39 As its representatives will tell you, the answer lies in what the business community has come to expect as well as in the effectiveness of the telephone bill as a collection tool.
40 Businesses in Canada are used to this form of billing and don't wish to change. The importance of local telecommunications services to businesses also means that customers are more likely to pay telephone bills than some of their less vital business expenses. This means that there is considerably less bad debt associated with this form of account.
41 Therefore, if one directory service provider has access to an ILEC's billing and collection services and another does not, the service provider with access has a leg up in the marketplace.
42 YP Corp.'s inability to offer its customers a comparable arrangement acts as a barrier to entry into the Canadian directory services business.
43 YPG is already dominant in the Ontario and Quebec directory business with a 93 per cent market share, according to YPG's own estimates, and Bell's billing system accounts for 83 per cent of total advertisements billed in its territory.
44 Bell's extension of this billing and collection arrangement to YPG has helped to perpetuate YPG's dominance in the Yellow Pages directory market in Ontario and Quebec.
45 You don't have to take my word or YP's word for the fact that Bell's discriminatory conduct helps YPG in the market and hurts competitors like YP Corp., you can actually find YPG's acknowledgement of this fact in its prospectus, excerpts of which we have filed with our argument.
46 To quote YPG at page 33 of the excerpt filed:
"Management believes that the company's strategic working relationship with Bell results in several competitive advantages to the company. These advantages include..."
47 And the second item is:
"...the inclusion of the company's advertising charges with regular phone charges, enabling advertisers to receive one monthly bill." (As read)
48 Just to be clear, Bell Canada no longer owns YPG. It was purchased from Bell Canada in 2002. As part of the sale, Bell entered into this billing and collection agreement, a five-year agreement, for a number of services and licences, including billing and collection services.
49 So Bell has agreed to contract these billing and collection services to one company while refusing to do so for another, and in our view, that is a violation of section 27(2) of the Telecommunications Act.
50 The Commission has found on a number of occasions that the provision of billing and collection services by Bell Canada to third parties constitutes the provision of a telecommunications service that is subject to the non-discrimination provisions in section 27(2) of the Act.
51 Detailed reference to the precedents and to other examples of such services are found in YP Corp.'s response to the Commission's interrogatories in this process as well as at paragraphs 29 to 40 of the Applicants' argument.
52 These precedents establish that the provision of billing and collection services by Bell do constitute a telecommunications service since these services are incidental to the business of providing telecommunications services within the meaning of section 23 of the Act.
53 As discussed in YP Corp.'s responses to the Commission's interrogatories, there are a number of examples of the Commission regulating ILEC provision of billing and collection services to third parties.
54 These include providers of certain types of long distance services such as collect calls, providers of 900 information services, providers of 976 information and chat line services. In these instances, the Commission regulates the form of the agreement, the terms of service and the rate charged.
55 In the case of 900 services, which are also information services accessible by telecommunications, Bell has recently extended its billing and collection services to cover third party provided 900 services. So these are 900 services that are not provided on its network.
56 Perhaps most importantly, the Commission has also approved Telus's tariff item 401, which I referred to earlier, that provides for exactly the type of service requested by YP Corp.
57 So the Commission and Telus are already treating this type of billing and collection service as a telecommunications service in Telus's territory.
58 While YP Corp. does have some problems with Telus's tariff, the fact that this tariff exists and has been approved by the Commission demonstrates that billing and collection services provided to third party directory service providers are being treated as telecommunications services by both Telus and the Commission.
59 Once this is accepted and once this discriminatory or preferential treatment is established, section 27(4) of the Telecommunications Act shifts the evidentiary burden on Bell Canada to justify why the discrimination is not unjust or why the preference is not undue or unreasonable.
60 We don't believe that Bell Canada has discharged that onus in this case which does involve clear discrimination and adverse effects on YP Corp.
61 So what the Applicants are seeking in this case is non-discriminatory treatment by Bell Canada, not a special deal. We are seeking orders requiring Bell to extend billing and collection services to the Applicant on terms that are substantially the same as the terms of the billing and collection arrangement between Bell Canada and YPG.
62 YP Corp.'s Canadian agent, Tritan Global Business Services Inc., which is represented by Mr. Feats and Mr. Legg today, are the Canadian agents for YP Corp. performing billing and collection arrangements in Canada as a clearinghouse. This company already has a billing and collection arrangement with Bell for other billable services and has expertise in providing these services on a clearinghouse basis.
63 If the Commission sees fit to grant the relief requested, Tritan will be working as YP Corp.'s interface with Bell Canada and they are fully prepared to adjust to Bell's operating requirements in order to make this service work for both companies.
64 I would like to thank you for considering our request and that concludes our opening statement.
65 THE CHAIRPERSON: Thank you, Maître Dunbar.
66 Qui va prendre la parole pour Bell Canada?
67 M. HERBERT : Ça va être moi.
68 LE PRÉSIDENT : Et vous allez présenter vos collègues?
69 M. HERBERT : Oui.
70 I will do my opening statements in English.
OPENING REMARKS / REMARQUES D'OUVERTURE
71 MR. HERBERT: Good morning, Mr. Chair, commissioners and all participants to today's hearing.
72 I will begin today by introducing my colleagues.
73 First, to my immediate left is Francine Bourgon, who is Bell Canada's Sales representative for Yellow Pages Group with respect to directory matters.
74 Further to my left, you may recognize David Elder, who is Vice-President, Regulatory Law, and who is here to assist me as counsel.
75 To my immediate right is Sam Glazer, who is involved with the implementation of Bell's billing and collection agreements in our Wholesale Services Group.
76 To my far right is Scott Collyer, who is responsible for regulated directory issues.
77 I will turn now to the reason we are all here this morning.
78 YP Corp. is asking the Commission to order Bell Canada to provide it with billing and collection services for its online advertising.
79 In our view, the application boils down to the fundamental question of whether billing and collection for advertising is really a telecommunications service that falls under the Commission's jurisdiction. We say that it does not.
80 Billing and collection taken on its own is not a telecommunications service. Directory advertising also taken on its own is not a telecommunications service. And if neither is taken separately as a telecom service, then the combination of billing and collection for directory advertising isn't either.
81 It is our view that if it is not a telecom service, then the Commission does not have jurisdiction over it.
82 Parliament, through the Telecommunications Act, has granted the Commission jurisdiction specifically over telecommunications services. Section 2 defines a telecommunications service as a service that is provided by means of telecommunications facilities and includes the provision, in whole or in part, of telecommunications facilities and any related equipment whether by sale, lease or otherwise.
83 There is no doubt that billing and collection or directory advertising aren't provided through a telecom facility. So they are not direct telecom services under section 2.
84 It is true that section 23 expands the definition of telecom services to include any service that is incidental to the business of providing telecommunications services. But what is incidental?
85 We submit that the approach followed by the Commission in Decision 2003-41, Bell Canada Provision of Telephone Directory Database Information in Machine Readable Form, is the correct one.
86 Applying the principles laid out under the Railway Act in Decision 90-12, the proper analysis examines if a telecom service engages fundamental elements of the telephone system or bears a relationship to the essential nature of the telephone business. In other words, there must be a close connection between the would‑be incidental service in question and a true telecom service.
87 The Commission has found in past decisions that billing and collection can be an incidental telecom service in some limited circumstances, in cases where it attached to direct telecom services like toll calls or the provision of billing information pertaining to telephone calls to subscribers. The Commission did not find that billing and collection in every context was a telecom service.
88 In the case at hand, what is billing and collection really attached to? Advertising. The Commission has never found advertising to be a telecom service.
89 As the Commission is aware, directory advertising has existed for decades and it has never been characterized as a telecom service. If directory advertising is not a telecom service, why would billing and collection for it, which is one more step removed, be a telecom service?
90 Given that directory advertising is not a telecom service, then billing and collection is not incidental to the provision of a telecom service.
91 As I understand the Applicant's argument, billing and collection in and of itself would always be a telecom service. We disagree.
92 Parliament didn't intend to make every back office or support function performed by a telecom carrier fall under the Telecom Act. There is no compelling public policy rationale behind Bell billing and collection for Sears appliances, for instance. No objective of the Act would be furthered by requiring payment of Ottawa Citizen subscriptions on one's phone bill. This would not be smart regulation.
93 Like any other business, Bell Canada does require various support functions. Yes, billing and collection, like HR or billing management, facilitate the delivery of telecom services, but that doesn't mean that billing and collection or those other support functions are always a telecom service.
94 I refer the Commission to its Decision 92‑9, AGT Limited Revenue Requirement for 1992, where it applied a distinction and used a purposive interpretation. There the Commission found that while leasing space for microwave towers was incidental to a telecom service, leasing space in a warehouse for a general commercial purpose, and in this case it was to ACT directly, was not.
95 Directory advertising is not a telecom service, nor is billing and collection for directly advertising, and the Commission therefore we think lacks the jurisdiction to grant the applicant's remedy.
96 Even if we assume that billing and collection for advertising were a telecom service, we submit that it would be no violation of section 27(2). YP Corp is not subject to unjust discrimination or disadvantage.
97 First of all, the Commission has consistently found that there is no unjust discrimination or undue preference in competitive markets. Differential treatment of customers or suppliers can be a hallmark of competition.
98 The evidence on the record, especially if you look at the Competition Bureau's reaction or, more properly, the lack thereof, to the merger of YPG and ADS, two leading directory publishers, clearly indicate that directory advertising was found to be competitive. As a result, differential treatment between directory advertising market participants is neither undue nor unjust.
99 YP Corp also alleges that it finds it more different to secure advertisers because it cannot bill them on their phone bill. There is nothing otherwise on the record to support this argument of advertiser reticence. Business owners are familiar and comfortable with cheques or using credit cards as payment methods. Most suppliers of directory advertising in Canada rely on these methods of payment, showing that access to Bell's billing and collection services is not essential.
100 As well, while it may be marginally more convenient to pay for both advertising and telecom expenses on a single phone bill.
101 There is no evidence that this is a determining factor in a business choice of advertising vehicle. In any event, credit cards already allow businesses to combine various purchases on a single bill.
102 Finally, I want to be clear about the service that Bell offers YPG.
103 As was mentioned, Bell and YPG have a particular relationship, as drawn from the history where directory publishing used to be done internally by Bell. Bello and YPG have a complex relationship.
104 The billing and collection services that YPG receives for director advertising are not stand‑alone services that Bell provides. They are part and parcel of a much larger arrangement, which notably sees YPG publish Bell Canada's White Pages directories.
105 The broad arrangement that Bell has with YPG is not what YP Corp seeks to replicate. It only wants the billing and collection portion of it.
106 YP Corp seeks a stand‑alone billing and collection service for director advertising from Bell Canada. Bell Canada does not offer stand‑alone billing and collection for directly advertising to anybody, and not even to YPG.
107 Accordingly, there is nothing unjust in Bell Canada's treatment of YPG and YP Corp. They are treated differently because they are different.
108 In summary, Bell Canada submits that billing and collection for directory advertising is not a telecom service and thus it lies outside the jurisdiction. In any event, Bell denied that there is anything unjust and undue in its treatment of YP Corp.
109 That concludes the opening statements. We would be happy to answer questions.
110 THE CHAIRPERSON: Thank you very much.
111 We now move to the stage where the Commission questions the parties, beginning with the applicant, YP Corp.
112 I will ask my colleague, Commissioner Cram, to begin.
113 COMMISSIONER CRAM: Thank you.
114 Welcome gentlemen. I notice, Mr. Watson, you have a yellow pen. Very nice.
115 I will direct my questions to you, Mr. Dunbar, just to start and then I expect anybody to jump in.
116 If I accept your argument, my question then is: What's in a name? What if Yellow Pages or YP only advertise gas stations, but you called yourself Yellow Pages, would your argument then be the same?
117 MR. DUNBAR: I'm not sure that it would be. I think the fact of the matter is that we are ‑‑ Peter Bergmann may want to add to this, but my understanding is in the broader advertising market I don't think a specialized directory like a gas station directory or a real estate directly, or something like that, really competes head on with the broader Yellow Pages telephone directory, which generally speaking people consider to be a broad directory of business services.
118 In response to this idea that Bell shouldn't have to provide warehouse space or other types of services, I agree with Bell on that, that there are services that they shouldn't have to provide, but telephone directories have historically been one of the unique cases in the history of CRTC regulation of the telephone companies.
119 There are a whole line of cases dealing with telephone directories where the Commission has said that they are an integral part of providing basic telephone service. The Commission has required access to the database for the telephone directory, they have required the phone companies to provide Yellow Page directories. They have actually decided that advertising in Yellow Page directories is an integral part of providing basic telephone service. So it is a pretty unique case.
120 I would agree, Bell Canada should not have to provide us with warehouse space and stuff like that.
121 But I would argue that where they engage part of their telephone system to provide a service to a third party, they do then engage the provisions of the Act which requires them to treat them in a nondiscriminatory manner.
122 COMMISSIONER CRAM: So you would draw the line that if they provided Yellow Pages billing and collection to YPG that they would provide it to Yellow Pages, provided it was as comprehensive?
123 MR. DUNBAR: Or in the same ballpark, the same kind of a service category of a service. I mean, that is a tricky point on where to draw that line. It's a good question.
124 COMMISSIONER CRAM: My point is, what if you are unsuccessful and you have ‑‑
125 MR. DUNBAR: Yes.
126 COMMISSIONER CRAM: ‑‑ you know, one airline and one B&B and one ‑‑ the point is, how far do we go? Where do we draw the line between, say, a restaurant guide.
127 MR. DUNBAR: Yes. I must say, though, in regard to that, when the Commission decided to require Bell and the other ILECs to provide access to their database for directory services because they found that element was important to provision of directory services ‑‑ really a similar case to this ‑‑ the Commission didn't limit the use people could make of that, you know, what kind of directory was it going to be. As long as it was a directory they are allowed to use that tariff.
128 I think it gets kind of complicated if the Commission tries to draw circles around what exactly the service is.
129 But in this case ‑‑ I will let Peter add to this ‑‑ I think it is a broad‑based service we are dealing with here.
130 MR. BERGMANN: Madam Commissioner, first of all, we only deal with businesses, not with individuals. There are 18 million businesses in the United States, of which we list about 8 million. So I don't think that we are restricted to one or two businesses.
131 I think it would be very cumbersome if we had directories for specific industries.
132 Certainly it is much more convenient for the subscriber, the user of a telephone service, to have one book which covers all of the businesses and makes it accessible to that subscriber. It decreases the cost for the subscriber.
133 Simultaneously, those people who wish to advertise with us have a reduced cost if we are able to bill them, and have a lower bad debt ratio, we are able to provide this service to the Canadian subscriber for a much lower charge than if we have to try to bill them, either direct bill through an invoice or through a credit card.
134 So we are serving two purposes simultaneously.
135 In fact, addressing the credit card issue, we created an alliance in the United States with MBNA, which is one of the largest credit card providers in the States, and have offered our subscribers the ability to pay by credit card and we haven't had a single taker.
136 We have laid it out for our users in the States. Historically they are used to getting a bill on their phone bill and they are very comfortable with that. From my perspective of having been in this business, it is clear that this is something that people are used to. This is how they expect to be billed and how they want to continue to be billed. Doing that enables us to provide the service for the business at a much lower rate.
137 As I'm talking I realize that some of the businesses that we deal with are small and medium sized businesses that may not even with to put this kind of a charge on a credit card.
138 COMMISSIONER CRAM: When did you establish that agreement with MBNA?
139 MR. BERGMANN: YP was established in 1998 to utilize the Internet and has only been a directly service on the Internet. We have never published a book.
140 COMMISSIONER CRAM: Sorry, the agreement with MBNA.
141 MR. WATSON: Late June.
142 COMMISSIONER CRAM: When did that start?
143 MR. BERGMANN: Oh, I'm sorry. The MBNA started in June.
144 MR. WATSON: Late June, yes.
145 MR. BERGMANN: Of this year.
146 COMMISSIONER CRAM: Of this year. So when were people informed of the availability?
147 MR. BERGMANN: In June.
148 COMMISSIONER CRAM: Okay. So you have really only had two months to sort of try it?
149 MR. BERGMANN: Correct.
150 COMMISSIONER CRAM: Mr. Dunbar talked about the effectiveness, and you have referred to it too, Mr. Bergmann: Customers are more likely to pay their phone bills than other bills.
151 Do you have any data on that? Any studies?
152 MR. BERGMANN: I don't have any hard data with me, but I think that particularly in today's world where the Internet has become so prominent and where telecommunications is so effective, people realize the criticalness of having a telephone for a business and I'm sure it is one of the first bills that they would pay prior to things that they see as less effective to bringing business into their establishment.
153 COMMISSIONER CRAM: Thank you. Thank you gentlemen.
154 Mr. Chair...?
155 THE CHAIRPERSON: Mr. Bergmann, I would like you or your colleague to tell us a little more about ILEC practices in the United States.
156 Is it your contention that the vast majority of ILECs in the United States offer to any and all general directory providers what you would call nondiscriminatory access to their billing and collection systems?
157 MR. BERGMANN: Mr. Commissioner, the answer is yes.
158 There are four major ILECs in the United States, all of which allow aggregators and directors to bill through them. Verizon, BellSouth, SPC, Qwest. We bill through all of those, as well as MCI, Sprint and other CLECs in the States. It is a common practice and one which is prevalent in the business.
159 THE CHAIRPERSON: Of course that is what, 80 per cent, 85 per cent of local telephony in the United States?
160 MR. BERGMANN: Yes.
161 THE CHAIRPERSON: Why, if this ILEC arrangement was so satisfactory, did you make the MBNA arrangement?
162 MR. BERGMANN: The MBNA arrangement was made because (a) we thought it might offer some convenience to our clients and it was also a way to reach ‑‑ MBNA in the States has a program specifically targeted for small businesses and they offer a credit card to the small business. We thought this was a way that we might be able to reach small businesses that we have not solicited and which we haven't reached for advertising.
163 THE CHAIRPERSON: So you didn't offer the MBNA arrangement to any of your existing customer base?
164 MR. BERGMANN: Oh, no. We absolutely sent mailers out to our existing customer base informing them of this service and have yet to have a taker.
165 THE CHAIRPERSON: So you are keeping an eye on Mr. Watson's direct mail budget?
166 MR. WATSON: Yes, he is.
‑‑‑ Laughter / Rires
167 THE CHAIRPERSON: I want to go back to Mr. Dunbar, or whoever, for a moment, because he will appreciate that logically prior question here is whether or not we are talking about a telephone service incidental to the business of providing telephone service ‑‑ the business of telephone service.
168 Words like "telephone system", and so forth, are precisely at the core of that question and one wants to be as sympathetic and as tolerant as possible, but the contention is that you have failed to establish a sufficiently intimate relationship between billing and collection for directory advertising with the core services contemplated by the legislator when he talked about telecom services.
169 It is unfair, but I want to give you one more chance to tell me that as lucidly and as clearly as possible, just so we have it on the record.
170 MR. DUNBAR: Yes. I think there are a couple of ways to go at this.
171 One Bell suggested is, one, that the service my client offers isn't a telecom service.
172 Second, that the billing and collection service isn't a telecom service.
173 If I went to the first one first, a telecom service is defined as a service provided by means of telecommunications and, as everyone knows here, the Telecommunications Act defined "telecommunications" extremely broadly.
174 My client's service is only accessible by means of telecommunications. You can only reach it via the Internet.
175 In our argument we have put the website down, we have put the competing website down of YPG. Those two services are only accessible by means of telecommunications.
176 So our contention is that the service itself is a telecommunications service that we are asking to be billed.
177 However, that wasn't our central argument in this case. We believe that the service provided by Bell Canada, being the billing and collection service, is also a telecommunications service in this instance.
178 There are a number of reasons for this.
179 If we go through the sections of the Act, we have the primary definition of "a service" as being:
"... a service provided by means of telecommunications facilities".
180 Then a "telecommunications facility" in turn is defined to include:
"... any facility, apparatus or thing that is used for any operation directly connected with telecommunications."
181 So, in our view, the billing system is a facility, apparatus or other thing that is used for an operation directly connected with telecommunications.
182 The billing system is a core part of Bell Canada's telecommunications business.
183 In our written argument, which I would refer you to, we referred to a number of Commission decisions that have discussed the importance of the billing and collection system.
184 In 92‑12 the Commission made the point that Bell was able to develop its billing and collection system by virtue of the fact that it has had a monopoly in the provision of local and long distance service. That makes it different from other billing and collection systems.
185 This is a system that was built and is operated and is integral to the telephone company's operations.
186 I would like to refer you to a quote by the Commission in another proceeding, which was the AGT Limited Revenue Requirement for 1993 and 1994. That is Decision 93‑18. That case had a hard look at directory services and this is what the Commission said:
"The Commission considers that the production, publishing and distribution of directories, including directory listings and advertisements, to AGT subscribers is integral to the provision of basic service, since the provision of directories forms an essential part of, and significantly enhances the value of, the company's basic telephone service."
187 So the Commission has already found that this type of directory service is integral to the provision of basic telephone service. If it is integral, it is certainly incidental, it is certainly part of it.
188 "Integrality" is a pretty strong term, so we think the Commission has already made that determination.
189 I referred earlier to the Commission's decision to make the directory database available to third parties. That was specifically so that third parties could competitively provide telecom directories. If the Commission hadn't thought that the telecom directory was an important part of the ‑‑ if the Commission had not thought that it was a telephone service or part of the service or incidental to the service, it would never have ordered the database to be provided to third parties.
190 We think the database provision is very similar to this billing and collection. The database itself isn't a telecom service. It is an important part of providing a telecom service, as is the business, as is the business of billing and collecting.
191 So we think the sections of the Act ‑‑ and then we have the section about the incidental. Certainly we believe the billing and collection system is incidental to the provision of the provision of telecommunications services.
192 Bell has made the argument in its argument that the integralities cases aren't relevant to this discussion. They don't extend the definition of services.
193 Section 33 of the Act, which allows the Commission to include revenues from services it deems to be integral in calculating the phone company's rates, we think that section doesn't extend the definition of what a telecommunication service is, but it certainly found that the provision of directories was integral, and if it is integral it surely is incidental.
194 So we think that both the Commission's decisions and the Act support our contentions.
195 THE CHAIRPERSON: Thank you.
196 MR. DUNBAR: Thank you.
197 COMMISSIONER DEL VAL: Mr. Dunbar, in your view, is it relevant or not whether the service that is being billed for is or is not a telecom service?
198 MR. DUNBAR: Well, I would argue that it is not relevant, although in this case we would say that it is in fact a telecom service.
199 I don't think it is relevant. The reason I say that is, I think what we have here is the Act is regulating the provision of telecom services by Bell. I think when Bell uses a key component of its telephone system to provide a service to a third party it is making a choice: Do we want to provide this to a third party or not? Do we want to provide it YPG?
200 It could have said no. It said yes. I think once it says yes and is engaging a fundamental part of the phone system, I think the Act kicks in and says you have to treat people in a non‑discriminatory manner. I think Bell could have decided, "We are not going to do any of this", but it didn't.
201 COMMISSIONER DEL VAL: So if your client, YP Corp were in the business of, say, water delivery and YP Corp and Bell made a deal that the water delivery will be included in the telephone bill, then is that a telecom service, the billing and collection for water delivery?
202 MR. DUNBAR: Well, I would say it is. It is because Bell has decided to use its telephone system to provide that service. I think it is technically caught by the Act.
203 My view would be they don't have to provide that service, but if they provide it to one water provider they probably have to provide it to another.
204 COMMISSIONER DEL VAL: Just to understand ‑‑ sorry.
205 MR. DUNBAR: Unless it is ‑‑ no, that's okay.
206 COMMISSIONER DEL VAL: In your argument, the service that is being provided, that is the subject matter of the bill, it does not matter whether it is a telecom service or not. Is that ...?
207 MR. DUNBAR: Yes, I would say that is the case when arguing that the billing and collection service in and of itself is a telecommunications service when it is provided by Bell Canada on a phone bill.
208 The only reason that phone bill is going out is because they are in the business of providing telecom services and sending out a telecom bill. It is not like sending out a water bill. They could do that and, you know, it might be a different case.
209 COMMISSIONER DEL VAL: Okay.
210 MR. DUNBAR: This is actually on the bill.
211 The other thing is that we are not talking about water here, obviously, we are talking about the directories which the Commission has consistently found is a very important part of providing telecom services.
212 COMMISSIONER DEL VAL: In Bell's submission ‑‑ and you can correct me if I am wrong ‑‑ the service that is being provided is just initial billing and not collection.
213 If that were in fact the case, would YP Corp still want the service?
214 MR. DUNBAR: Yes. I'm not sure that is just the case, but yes, what we are asking for is the same arrangement as YP Corp has. We are not asking for more than they have.
215 We are hoping to ask Bell some questions about exactly how that works, so we are also interested in that statement.
216 COMMISSIONER DEL VAL: Then on your second argument, the tariff that TCI had filed, what would you say if the Commission were to say, "Well, it is a tariff that should not have been accepted" or "should no longer be required"?
217 What would your response be?
218 MR. DUNBAR: Well, my response would be that I think when Telus was selling its directory business it probably thought about this and said to itself: Well, we know that we have to treat people on a nondiscriminatory basis, we had better file a tariff if we are going to keep providing directory services to Super Pages.
219 I am surmising this. I think they were acting properly in accordance with the Act.
220 Now, it is always open for the Commission to reverse itself. I don't think they should in this case. I think that Telus was acting responsibly when they did that, that they knew that once they started providing that service to a third party, being the purchaser of their directory business, they would have to offer it to other people, and that's what they did.
221 COMMISSIONER DEL VAL: Thank you. I might just ‑‑
222 MR. DUNBAR: I would urge you not to reverse that.
‑‑‑ Laughter / Rires
223 THE CHAIRPERSON: I know you have another question, did you want to ‑‑
224 COMMISSIONER DEL VAL: No, that's it. That's all. Thank you.
225 THE CHAIRPERSON: In effect, in your responses to my colleague you are thinking about this in broadest terms. You are suggesting that when Bell Canada offers a part of its core infrastructure for the purposes of billing and collection for another service it triggers features of the Act which require that service to be offered to all‑comers on a nondiscriminatory basis.
226 MR. DUNBAR: Yes, that is what I'm saying. That is what I'm saying, yes, sir.
227 THE CHAIRPERSON: And that the fact that one happens to access this particular third service, or third party service, through the telecommunications system is an incremental but not essential part of your argument?
228 MR. DUNBAR: That's correct. That's correct.
229 I would draw the analogy between that and some of the other services Bell bills for like 900 service, which 900 service is basically using the phone system to access a third party information site. The Commission has set a tariff for that. It has set the collection rate, it approves the collection agreements.
230 And, as I said earlier, that has been extended to even where a third party network is used to provide the service, so Bell is not even involved in the provision of the 900 service. It still ‑‑
231 THE CHAIRPERSON: It would now be your view that with respect to these third party 900 networks Bell has to offer them to all on what you would call a nondiscriminatory basis, and in fact does.
232 MR. DUNBAR: And it does.
233 THE CHAIRPERSON: Yes.
234 MR. DUNBAR: And it has the tariff.
235 THE CHAIRPERSON: Yes.
236 You said that the Commission has constantly found ‑‑ and I am choosing my words carefully here because I'm not sure I remember exactly what you said ‑‑ that the burden of the purpose of your intervention was to say that and to affirm that ‑‑ and you will correct me if I'm wrong ‑‑ Yellow Pages have been consistently found by the Commission to be a very important part of telecom service.
237 Is that true of Yellow Pages? I'm not talking about directory listing. Yellow Pages advertising, not the listing.
238 MR. DUNBAR: Yes. Well, I could point to a couple of decisions supporting that view.
239 One is that the Commission has required the telephone companies to deliver Yellow Page directories to their customers. I assume they wouldn't have required that had they not thought it would be an important part of providing basic phone service.
240 The other is that quote I mentioned in the AGT case which actually refers to distribution of directories and it says:
"... including directory listings and advertisements ..."
241 The advertisements are only in the Yellow Pages. In that case the Commission says it:
"... is integral to the provision of basic service..."
242 So I would say, yes, the Commission has decided that in the past and we are relying on that.
243 THE CHAIRPERSON: So we will have to wrestle with the question of integrality versus incidentality?
244 MR. DUNBAR: Yes. I refer you to the dictionaries when you do that.
‑‑‑ Laughter / Rires
245 COMMISSIONER DEL VAL: Just one more follow‑up question for you.
246 It is the phone bill, isn't it? It is the phone bill that is generated by the billing system or the telecommunications facilities?
247 MR. DUNBAR: It is the phone bill. It is the phone bill that you and I get in out mail. There is a line item on it that says "Yellow Page directory charges" and it has a dollar amount.
248 COMMISSIONER DEL VAL: So it really doesn't matter what the substance of the service is. If Bell decides to collect for car rental services on their phone bill, then as long as it is on the phone bill then in your argument it would fall within telecom services. It is the phone bill, isn't it?
249 MR. DUNBAR: That is what I'm saying, yes.
250 Now, I am also saying we have the backup in this case of having a telecom service which might make you more comfortable.
251 I would say they have the discretion. They don't have to do the car rental thing, but once they engage their telephone billing system to do it I think they are caught by the Act.
252 COMMISSIONER DEL VAL: Thank you.
253 MR. DUNBAR: Sorry. Mr. Fietz just wanted to add something to what I had said.
254 MR. FIETZ: I just wanted to add a comment that the terminology of the word "advertising" as opposed to the term "listing", really the advertising component is an extension of a listing and YP Corp, as YPG does, is providing a listing service as well, or directory assistance service.
255 The directory assistance service can come in multiple forms of media, whether it is in print, on the Internet or in telecom interactive voice response switch known as directory assistance 4‑1‑1.
256 I just wanted to add that as well.
257 MR. DUNBAR: I would like to add to that, just the fact that the only way to access the Internet is through a telephone line or wireless, which is provided by the telcos. The Internet has become such a perverse part of our business and our lives that I think most subscribers are looking to the Internet. It is growing expedientially.
258 So as opposed to car rental, the Internet is a very effective part of the telecommunications business.
259 MR. FIETZ: If I can add to that, we have provided an excerpt from the Calgary Business Magazine. It is an excerpt on the Yellow Pages Group propelling from $17 million from the previous year to tripling its revenues based on Internet access to the directory listing or their advertising to $64.3 million. So it obviously had a significant impact on their business model.
260 THE CHAIRPERSON: Well, will you be seeking access to cable Internet providers billing systems? They have nearly 50 per cent of the market in this country.
261 MR. FIETZ: I would suggest, yes. I would suggest that we would be accessing what I would call a standard telecom base footprint for billing and collection in Canada. That being said, it would include CLECs, cable corps as well.
262 MR. DUNBAR: I should add, YPG just doesn't have an agreement with Bell, it has agreements with the independents as well. In the United States, as Mr. Bergmann said, he has agreements with CLECs.
263 So the thing is, in Ontario and Quebec YPG is saying that Bell does 83 per cent of their billing. Bell doesn't cover the entire footprint of Ontario and Quebec, but they have agreements with other ILECs, and maybe with CLECs, I don't know.
264 CLECs in Canada don't have the large market share yet of the local telephone business but, as Mr. Bergmann says, in the United States if you ask CLECs if they have a significant market share why not, but they are doing it, as I understand it, in the United States ‑‑ Mr. Bergmann can correct me ‑‑ they are doing it without being forced to I believe, aren't they?
265 MR. BERGMANN: Correct. The CLECs have not been mandated to do this, but they do.
266 To further expand on cable, we are happy to make arrangements with cable providers, but I know ‑‑ and again, our subscribers are businesses and I question whether businesses have cable in their business. I know they have telephone service in their business, so there is a differentiation there.
267 THE CHAIRPERSON: Mr. Millington...?
268 MR. MILLINGTON: Thank you very much, Commissioner French.
269 I have a couple of questions generally about the business.
270 As I understand it today ‑‑ and I'm not sure if this is true also in the United States ‑‑ you only offer an Internet‑based directory service. You don't provide a book of any type in the United States?
271 Is it your intention to provide a book either in the United States or Canada?
272 MR. BERGMANN: No, Mr. Commissioner, we are purely Internet‑based.
273 MR. MILLINGTON: I am just a lowly legal counsel.
274 MR. MILLINGTON: I was also interested in the discussion about the use of alternate collection methods.
275 Bell Canada has made the argument ‑‑ it is argument dated the 22nd of August, paragraphs 21 through 24 ‑‑ that there are a number of on‑line directory advertising providers in Canada and they have alternate payment options available to them.
276 They conclude, on page 6 in paragraph 24, that:
"Given the ready availability of alternative collection methods such as cheques, credit cards and the ability of directory advertising providers to set up their own billing and collection system, it is clear that Bell Canada's billing and collection services are not an essential facility or a significant barrier to entry." (As read)
277 You have indicated this morning that you set up a relationship with MBNA in the United States and there have been very few takers.
278 Have you set up a similar or are you contemplating a similar arrangement here in Canada?
279 MR. BERGMANN: The answer is we would like to look at that, but so far the results that we have had in the States in terms of MBNA have been abysmal. There is promotion and marketing involved in setting up this kind of relationship.
280 What we would like to do is offer our subscribers any possible means of being billed. We want to make it as convenient as possible to them. But we have found so far that subscribers, from a historical point of view, are most comfortable with seeing this on their phone bill and paying it through their phone company. We think that seems to be a comfort level to the subscriber.
281 MR. MILLINGTON: But in the United States your customers have the option of being billed through the CLEC. So in point of fact your MBNA arrangement already would compete and you would need to migrate ‑‑ if I am understanding you correctly, they would need to migrate from the telephone company bill to a credit card arrangement which, absent some other form of inducement, given the fact that there is this historical relationship between directory advertising on telephone bills, there would need to be some sort of inducement to promote that ‑‑
282 MR. BERGMANN: We have actually offered them an inducement ‑‑ we will give them a year of service for the cost of 10 months ‑‑ and we still haven't had takers.
283 MR. MILLINGTON: Why would you want to move them off the telephone bill onto a credit card if the telephone bill is such a good system?
284 Is it just the cost?
285 MR. BERGMANN: There is a tariff with the phone company and the credit card is less expensive for us and more facile.
286 MR. MILLINGTON: But in Canada where the option isn't available at this point in Bell Canada's territory, you might conceivably get a different take up rate than you would in the United States where the option is available to continue with the existing billing practice?
287 MR. BERGMANN: I'm sure that is correct, but the point is we might. On the other hand, I wonder how many small businesses have a credit card and how many of them would accept a credit card offer.
288 I think our experience has shown that small businesses are reticent to take on a credit card.
289 MR. FIETZ: Could I add something?
290 MR. MILLINGTON: Absolutely.
291 MR. FIETZ: Generally speaking the YPG options for billing are much the same as YP Corp. They do offer direct billing and credit card purchases as well, but the statistics speak for themselves. You have an 83 per cent uptake in the marketplace on the Bell bill itself.
292 MR. MILLINGTON: I want to turn to the discussion that the Commissioners began with the extension of the billing and collection service to non‑telecom services. We had suggestions about water delivery as an example.
293 Water delivery, or the provision of water, is not a telecom service. I think that is fairly clear. I don't think we would have much debate on that. I'm wondering, if that were the case would it not be the logical result that Bell Canada could be asked to actually provide billing services for forborne telecom services on their bills for competitors?
294 Because surely if you can make the argument that once they make the billing and collection service available for water delivery, which is not a regulated service under the Telecom Act and never could be, would it not be possible to make the argument that something that is completely forborne, which is also not subject to the Telecommunications Act and the Commission Regulation, could therefore then be dragged back in as something that it would have to be billed and collected for such as satellite service or forborne long distance or Internet service?
295 I'm just asking the question: Would you not get there eventually? Could the argument not be made that something that is completely unregulated such as water delivery, and we had some other examples, would that not take you there eventually and Bell would be in the position of having to provide billing services for Shaw's satellite service because it has ExpressVu on its bill?
296 MR. DUNBAR: Well, Bell is providing billing services for some forborne services already for third parties.
297 MR. MILLINGTON: That's what I'm saying. So couldn't Shaw come in and say, if it wanted to ‑‑ I'm not saying that it would ‑‑ or an independent ISP because it bills Sympatico, couldn't an independent ISP come in and say "I would like Bell to provide billing and collection for my Internet service because it provides it for Sympatico on its bill, even though Internet service is a forborne service under the Act?
298 MR. DUNBAR: Yes. I think that this is a little bit different from that.
299 As I said earlier, I think there may be some bounds around this, because I think that in the case ‑‑ first of all, I think directories have been a special case over the years and I think we have already discussed why that is.
300 Also, Bell has divested itself of that business. It is not billing its own business, it is billing a third party's business now, it is YPG's business it has decided to bill. My argument is, well, if it is deciding to bill that third party it has to bill ours.
301 I'm not saying that is our argument. We are not saying that Bell has to bill for every service it provides itself.
302 MR. MILLINGTON: So if we go back to the provision of the Act, in order to get us from the starting point which says that it must be a telecom service, and we look at the definition of telecom service, which refers to a service that is provided by a telecommunications facility. If we look at facilities ‑‑ and you mentioned this as well:
"... means any facility or apparatus or other thing that is used or is capable of being used for telecommunications or for any operation directly connected with telecommunications and includes a telecommunications facility." (As read)
303 If we look at the definition of telecommunications:
"... means the emission, transmission or receptions of any intelligence by any wire, cable, radio, optical or other electromagnetic system or by any other similar technical system." (As read)
304 I think when I read those sections together, and I go back to where you pointed us earlier, which is:
"... means a service provided by means of a telecommunications facilities." (As read)
305 We go back to facilities and it talks about:
"... for any operation directly connected with telecommunications." (As read)
306 I kind of bump up against that what we are talking about in these subsections is really telecommunications, something connected, where people are connected to each other and there is a transmission of some sort of electronic impulse.
307 I'm not sure that under the section 2 series of definitions when read together you can get billing and collection as a telecom service under that series of interrelated definitions.
308 That is certainly Bell Canada's position. You, in your arguments and submissions, have made that it is both a section 2 telecom service and a section 23 expanded definition telecom service.
309 I have difficulty, quite frankly, reading the series ‑‑ and I know that is a little convoluted to read them together, but when I read them all together it seems to me what we are talking about in a telecommunications service is a facility, and the facility is really focused on telecommunications, not sort of the broader business.
310 MR. DUNBAR: Yes. In response I would say that if we look back at that definition of telecommunications facility, which I think is the key part to look at, it says:
"... any facility or apparatus or other thing that is used or is capable of being used for telecommunications ..." (As read)
311 And I would agree with you on that part, that that is the provision of what we would think of like transmission or something like that, but it also says "or" after that:
"... for any operation directly connected with telecommunications ..." (As read)
312 I think that "or" is very important, because when you read back it says:
"... means any ... apparatus or other thing that is used ... for any operation directly connected with telecommunications ..." (As read)
313 I think that is where you get into things like the database. It is not a transmission service, but it is certainly an apparatus or a thing that is used for an operation directly connected with telecommunications.
314 I think you get the same argument for the billing system. It is not a transmission service, but it is an apparatus or thing that is used for an operation directly connected with telecommunications.
315 It doesn't have to be a telecommunications facility, it has to be something that is used for an operation. In telecom the operation is all kinds of systems.
316 The Commission has granted access to a lot of different parts of those systems which in themselves don't constitute telecommunications.
317 MR. MILLINGTON: So I guess what we are really talking about is reading up or down the word "telecommunications" in that definition as to whether it is expansive enough to include billing and collections, which is related certainly to the business of telecommunications. That would be reading the definition up.
318 If you read it ‑‑
319 MR. DUNBAR: I certainly would agree, though, that the section 23 is the easier argument to make.
320 MR. MILLINGTON: Okay.
321 MR. DUNBAR: I made them both, but section 23 is the easier one, I would argue.
322 MR. MILLINGTON: Okay. So if we go to 23, billing and collection, we can talk about being incidental to the business of telecommunications. Bell Canada argues that if you are going to have a section 23 telecommunications service it must be linked to a true section 2 telecommunications service, which is this rather tortuous definition we just went through.
323 Their argument would be that even if you make the case that billing and collection on its own is a section 23, you must find a section 2 service at the end of it.
324 Their position, as I understand it, would be that directory advertising has never been considered a true section 2 telecom service and, therefore, you would have to make the case that director advertising would be a type of ‑‑ a section 23 telecom service.
325 I think what they are saying is, you can't have a section 23 telecom service of another section 23 telecom service at the best of cases and end up with overall a telecom service.
326 I don't think they agree that directory advertising is a section 23, but even if you got to there their proposition would be you can't have a 23 of a 23, it must be a 23 of a 2.
327 So I'm just wondering if you would comment on that, because I think if we back off the position that we are not going to bill for water, can you make the argument that a section 23 of a 23 still is a telecom service for the purposes of our regulatory framework?
328 MR. DUNBAR: I'm glad you said that.
‑‑‑ Laughter / Rires
329 MR. DUNBAR: I don't think I could repeat the question, but I think I understand it.
330 MR. MILLINGTON: That's all that matters.
‑‑‑ Laughter / Rires
331 MR. DUNBAR: I would argue that you probably wouldn't need section 23 if Bell was correct. If it had to be a section 2 service that we are talking about, I don't see why you would ever go to section 23.
332 Having said that, I think it is expansive. It is talking about things that are incidental. It has gone beyond what section 2 says, which is "used for an operation directly connected with telecommunications".
333 This is a service that is incidental to the business of providing telecom services.
334 If we look at the kind of decisions that have happened under these kinds of expansive sections in the past, we get things like late payment charges.
335 Well, that is not a telecom service, but the Commission has found in the past that that is a service that is incidental to the provision of telecommunications services. We get a bunch of stuff being brought in under this section which isn't a transmission service.
336 I wouldn't have thought there was much point in having section 23 if we could live with section 2. I would argue that it is the billing service that is incidental to the provision of providing telecommunications services and that is being included in something that is being subjected to section 27(2) of the Act.
337 In short, we don't agree with Bell's linkage between those two.
338 MR. MILLINGTON: I have one final question that relates to Decision 93‑18. This is the integrality question.
339 In that decision I believe what the Commission decided was to include the revenues from the Yellow Page directory advertising into the rate base for the determination of whether the overall AGT rates were just and reasonable.
340 I'm going to ask you the question and I will try to make it much simpler this time: Could you comment on the relationship that you are trying to advance today with respect to the incidental integrality question when what the Commission was really deciding here was to include revenues into a rate base to ensure that rates were just and reasonable as opposed to whether it was a telecom service for the purpose of regulation?
341 Because I don't think in this case there was any suggestion that the Commission was going to step in and regulate the rates that the directory part of the business was charging for Yellow Page advertising, they just wanted to include those revenues in the overall rate base.
342 MR. DUNBAR: No, I agree with what you say about that decision, that is what it was about.
343 My argument on that decision is that in order to make that decision the Commission made a determination that the Yellow Page advertisements and the Yellow Page directory and the listings in the directory were an integral part of providing basic telephone service.
344 So my point on that is more of an evidentiary one. If the Commission goes so far as to say that those elements are integral to the provision of basic telephone service, then they must at least be incidental to the business of providing telecommunications service. Because the Commission has gone way further than incidental. It said "integral" and there are big repercussions of saying it. It brought in tens of millions of dollars into the rate base that AGT was trying to keep outside the rate base.
345 So I think the Commission has already determined this issue, that these types of services are an important part of providing telecommunications service and that they must be incidental. That is my argument.
346 MR. MILLINGTON: But it seems to me there is a difference to say that the revenues are integral for the basis of determining just and reasonable rates and saying that it is incidental to the business of telecommunications such that it is subject to regulation, because we never went the further step and actually regulated those rates.
347 MR. DUNBAR: Well, they were being provided by a third company at that stage. So they weren't being provided by AGT any more, they had moved out into an affiliate, so I'm not sure the Commission could have regulated it.
348 It is true that the Commission has never regulated the rates for advertisements in Yellow Pages. I agree with that. It is a decision the Commission made, but for a lot of that time these telephone directory services were in separate affiliates. The purpose of that section 33 was to stop the telephone companies from being able to sort of hive off profitable parts of their business and keep the revenues out of the rate base.
349 But I would have thought that the Commission could never have got to that determination of integrality unless it has gone through the motions of figuring out: Well, is this a normal part of a phone business? Is this an important part of a phone business? Is this something we should care about under the Act? They decided yes, yes, yes and we need to get that money back into the rate base.
350 So I go back. I don't want to sound like a broken record, especially in a room full of records.
‑‑‑ Laughter / Rires
351 MR. DUNBAR: But, you know, if it is integral, I come back to their argument, it has to be at least incidental.
352 I am not saying it is a decision by the Commission to treat it as a service, it wasn't, and it was being provided by a third party.
353 By the same reasoning that should go back into section 23, in my view.
354 MR. MILLINGTON: I will just conclude on this: In that same decision they lump basic listing information and directory advertising in the same sentence and characterize them as integral.
355 There is a different treatment with respect to basic listing information. The basic listing information forms part of your basic service such that if you are a residential telephone subscriber, that basic listing service is part of what you get in your basic telephone rate and your number is published in the White Book. If you are a business customer you get a basic listing in the Yellow Pages and is published in the book, and you get both of those books as part of your basic service.
356 So while the wording relates to both of them as integral, the treatment is quite different.
357 So I'm not sure that I could draw the same conclusions, because in one case you can see the Commission treated the pieces of information with the same adjective calling them "integral" but chose to regulate one and make one part of basic service and didn't do anything with the other.
358 MR. DUNBAR: Well, I don't know. In response I would say that the Commission did do something, it required the phone companies to deliver Yellow Page directories. If it only was concerned with listings it would have just required the White Page directory, but it never has, it required the Yellow Page directory.
359 I have to assume part of that is because that is a big, lucrative part of this thing, but the Commission actually decided that it is important because it lets people call each other, it shows where the businesses are, it enhances phone service. So they have actually required the phone companies to provide a Yellow Page directory and it included the revenues in the rate base even when it was provided by an affiliate on the basis that it was integral.
360 So I would say that the rationale from the Commission's perspective must have gone beyond just looking at listings, because it has dealt with Yellow Pages and Yellow Pages advertising directly. That is where all the money was. It wasn't in the White Pages.
361 MR. MILLINGTON: Those are my questions.
362 THE CHAIRPERSON: I think we will take an 8‑minute break, please. We will be back, please, by 10:30 by the clock on the wall in the far corner.
363 Thank you.
‑‑‑ Upon recessing at 10:20 a.m. /
Suspension à 10 h 20
‑‑‑ Upon resuming at 10:29 a.m. /
Reprise à 10 h 29
364 THE CHAIRPERSON: All right, ladies and gentlemen, as to the questioning by the Commission of Bell Canada, I will ask Commissioner Cram to begin, please.
365 COMMISSIONER CRAM: Thank you. Welcome gentlemen and Ms Bourgnon. It is so nice to see a woman on the other side of the table.
366 I wanted to start and I will address it to anybody, so anybody can answer.
367 I read in one of the interrogs of YP Corp that Bell Canada ‑‑ and in fact Mr. Dunbar mentioned it again ‑‑ that Bell Canada is offering its billing and collection service to other 900, 976 operators who are not on their lines.
368 Is that correct?
369 MR. HÉBERT: Typically under the 900 or 976 billing arrangements, under the 900 and 876 specific tariffs, Bell Canada performs billing and collection services through the ABA Agreement.
370 For other types of 900s, 900 calls are listed as eligible calls under the IXE, I guess if you want to call it that, billing and collection agreement. That is where the connection is.
371 COMMISSIONER CRAM: Okay. So it is under the tariff that we required you to implement?
372 MR. HÉBERT: Yes. It is one of those pay per use calls, like collect calls or third party calls.
373 COMMISSIONER CRAM: We required you to provide that service to third parties that weren't using your lines.
374 MR. HÉBERT: It is a wholesale billing for IXEs basically, for competitors.
375 COMMISSIONER CRAM: Did we require you to provide it to other users, not on your lines, that didn't have that nexus of using your lines?
376 MR. HÉBERT: Well, we bill for calls that are made on our lines.
377 COMMISSIONER CRAM: So you do not bill, then, for calls that are made on other lines? Maybe I'm ‑‑
378 MR. HÉBERT: Would you mind answering, Sam?
379 MR. GLAZER: I guess in the same way that one would will bill for long distance calls that are made over other networks, these fall into the same category of telephone calls that are made available as eligible services under the mandatory billing and collection arrangement.
380 COMMISSIONER CRAM: Okay. Maybe I can be clearer.
381 On page 5 or 6 of the YP Corp‑CRTC interrogs, under the middle section "Bell Canada's billing and collection arrangement for 900 service" there is a paragraph at the bottom:
"Bell Canada has also recently agreed to perform the billing and collection function for service providers who do not utilize Bell's 900 service." (As read)
382 Is that correct?
383 MR. HÉBERT: Yes, that is correct.
384 COMMISSIONER CRAM: Are you required to do it under the actual tariff?
385 MR. HÉBERT: It is listed as one of the eligible services in the industry standard agreement. To that extent I would say we are including that as a result of that agreement.
386 COMMISSIONER CRAM: So it is your understanding that you were required to do this?
387 MR. HÉBERT: Well, it is through the IXE billing and collection tariff, yes.
388 COMMISSIONER CRAM: Through the interexchange billing and collection tariff you are required to do this?
389 MR. HÉBERT: Correct. Correct. 900 is one of the eligible types of calls in that tariff.
390 COMMISSIONER CRAM: I see.
391 It is your position, if I understand it correctly, that you have reached ‑‑ I can't find the terminology in the file but I read it ‑‑ you have reached a satisfactory commercial arrangement with YPG and therefore you are billing and collecting for them on your consumer bills, on your customer bills?
392 MR. HÉBERT: We have an arrangement with YPG that dates back from the original divestiture of our directory business to YPG. As part and parcel of the various agreements that were put in place at the time, one of those is that we agreed to perform billing and collection services for their directory advertising.
393 COMMISSIONER CRAM: Your distinction between billing for YPG and not billing for YP is that you have reached a satisfactory commercial arrangement with YPG and you are therefore entitled to do it?
394 MR. HÉBERT: Not exactly. Bell Canada does not as a general rule consider itself engaged in the billing and collection for products generally. It has, of course, historically billed for telephone calls and for other direct telecommunications services.
395 In the specific case of YPG, the billing and collection for YPG's directories service is part of the overall agreement and it was negotiated at the time of divestiture. One counterpart of this is that YPG publishes our White Pages directories.
396 So it is not a stand‑alone agreement that we signed with them. It was not something that we signed at a later time particularly than the divestiture. So it was not negotiated per se and it was not signed individually pursuant to a satisfactory agreement, it was part and parcel of the big divestiture.
397 COMMISSIONER CRAM: But absent that agreement and absent the history, today you would say that you would not be required by us to bill and collect for YPG because it is not a telecom service?
398 MR. HÉBERT: That's correct. It is a purely business choice.
399 COMMISSIONER CRAM: That's right. So Bell Canada could make a business choice to make an agreement with a restaurant directory and bill and collect for the restaurant directory?
400 MR. HÉBERT: Technically it would be possible. If we wished to, we could.
401 COMMISSIONER CRAM: But you do agree that the bill itself is a telecom service?
402 MR. HÉBERT: No, we disagree that the bill itself is a telecom service. We portray the billing and collection service as one of the general infrastructure we operate. It only can become a telecom service as a function of what it bills for.
403 COMMISSIONER CRAM: You do not agree that we then have jurisdiction over the contents of your bills?
404 MR. HÉBERT: Not without reservations, no. It depends on what it is that you are trying to regulate on the content. For instance, in the case of information that had to be provided to the visually impaired, then you are asking that the information the subscribers look at with respect to their phone calls be readily accessible.
405 Similarly, take the example of late payment charges. They are late payment charges notably for phone calls that the customer has made. So again, they relate specifically to the use of the telecom system or through direct telecom services. It is not just any aspect of the bill.
406 COMMISSIONER CRAM: So by virtue of the fact that you are a telephone company, you could send a bill out ‑‑ and I'm talking hypothetically ‑‑ you could send a bill out to ABC Company that would have a bill for the part that we would regulate, the local access, et cetera, et cetera, then there would be another part to the bill that would include Yellow Pages advertising, perhaps their water bill, perhaps their bill for their Globe and Mail, and five or six items, and you think that that would be totally possible if you had satisfactory arrangements with the water corporation and the Globe and Mail and the other companies?
407 MR. HÉBERT: Well, it would be possible. There are elements of the bill that are regulated and that fall under the Commission's jurisdiction provided they are sufficiently related to a telecom service, and there may be other elements of the bill depending on the circumstances.
408 But Bell doesn't normally put those kinds of items on the bill. We don't bill for those things.
409 COMMISSIONER CRAM: Yes, I understand, but hypothetically you could do that. Because you test is that aside from the regulated items that you say we regulate, you could add any third party bill to that particular bill provided you had satisfactory commercial arrangements with them.
410 MR. HÉBERT: Correct.
411 COMMISSIONER CRAM: Could you go to the point ‑‑ and it seems to me you could ‑‑ where you could ‑‑ maybe I'm future‑gazing too much, but I am here in Ottawa and I brought my dog here ‑‑ this is a true story ‑‑
‑‑‑ Laughter / Rires
412 COMMISSIONER CRAM: ‑‑ and I was looking for a dog walker. So I might go on the Internet and use YPG to find dog walkers and end up with a charge on my bill ‑‑ because one of these days we are going to be charged for using the Yellow Pages ‑‑ end up with a charge on my bill for accessing the Yellow Pages looking for a dog walker.
413 You say you can do that?
414 MR. HÉBERT: That is a lot of hypotheticals. I mean, what we have ‑‑
415 COMMISSIONER CRAM: Well, the dog is real.
416 MR. HÉBERT: Yes.
417 UNIDENTIFIED SPEAKER: And you are here in Ottawa. That is very real.
418 COMMISSIONER CRAM: And the dog is here.
‑‑‑ Laughter / Rires
419 MR. HÉBERT: If I could maybe parse it out, what we have with YPG now, YPG makes a sale of advertising to an advertiser and advises the advertiser that the payment can be done over the Bell bill.
420 We certainly do not bill for somebody who accesses the Internet. But in a more general context, what we are saying is that billing and collection of things that are not telecom service are left to business choices.
421 By the same token, to take the Shaw example, Shaw could similarly bill for dog walking, but it would be a purely commercial decision of Shaw. It would have nothing to do with telecom or broadcast.
422 COMMISSIONER CRAM: You acknowledged the efficacy of being able to bill and collect for YPG.
423 Isn't that what the numbers show, at 83 per cent?
424 MR. HÉBERT: What the numbers show is that we can bill up to 83 per cent ‑‑ well, in our territory 83 per cent of YPG's customers at the time the statistics are taken from in 2003 were billed off the Bell bill. YPG offered advertising and the advertiser chose this as a payment method. We are not directly involved in the choice of the payment method.
425 COMMISSIONER CRAM: It is the connection that is bothering me. The bill per se is a telecom service, at least is certainly incidental to the provision of telecom service and therefore is a telecom service. The very fact that that telecom service, you can then add to it and piggyback on it, you don't think that is preferential?
426 MR. HÉBERT: I am not sure that I agree with the premise that a bill in and of itself is a telecom service. But working with that assumption, the fact that in this case Bell Canada, for instance, has developed a support system, whether it is the bill, for instance, means that everything that Bell does with it by definition is a telecom service also. It, to me, turns on its head a little bit the definition. Where we would define a service, instead of looking at a service and whether it is a telecom service, we would look at who provides the service to determine whether it is a telecom service.
427 You could have billing and collection support structure performed by, say, Sears and that would not look at all like a telecom service. But because Bell does it, it is a telecom service for the same product. To me, that turns over a bit the definitions in the Act.
428 COMMISSIONER CRAM: So you are saying that a bill is not a telecom service.
429 MR. HÉBERT: That is right. It is our position that it depends what it bills for.
430 COMMISSIONER CRAM: All right.
431 MR. HÉBERT: Similarly, we have other support ‑‑
432 COMMISSIONER CRAM: But if the bill is for a phone, it is a telecom service.
433 MR. HÉBERT: The phone charges on the bill, yes.
434 COMMISSIONER CRAM: Only that portion of the bill. So in terms of it is not the bill per se, it is the contents of the bill, only a portion of the contents of a bill are a telecom service.
435 Is that where you are coming from?
436 MR. HÉBERT: My position is that billing and collection where it relates to a true telecom service is incidental. Basically if you purchase a telephone service as part and parcel of getting access, you will be billed.
437 So the billing that comes with your telephone service is incidental.
438 But if you go to Bell and if, for instance, Bell sold teddy bears for a charity in its stores and you purchased a teddy bear, being billed for that teddy bear would not be a telecom service.
439 COMMISSIONER CRAM: Thank you.
440 THE CHAIRPERSON: Commissioner Del Val?
441 COMMISSIONER DEL VAL: Mr. Hébert, following up on that line, I want to understand your position is that a bill is not caught under section 23 as being incidental to the business of providing telecom services if what it is billing for is not a telecom service.
442 MR. HÉBERT: That is correct, in any shape or form. For instance, in the case of late payment charges, because they applied notably to direct telecom service, that was caught; or the provision of readily available information to the visually impaired. It applies to everything on the bills.
443 COMMISSIONER DEL VAL: The phone bill itself, then, is not in your submission a service that is incidental to the business of providing telecom service.
444 MR. HÉBERT: Correct. The phone bill, in my submission, is not a service under section 23, period. It is an input to our business. Every business will bill its customers in some fashion.
445 For the same reason we use repair trucks to convey our technicians, the trucks themselves are not a service. So if on the truck we were to sell advertising the way buses do, that would not make it a telecom service because it happens to be in a repair truck.
446 Obviously the repair service of the technician at the subscriber's residence would be.
447 COMMISSIONER DEL VAL: So it all depends on what you are billing for.
448 MR. HÉBERT: Correct.
449 COMMISSIONER DEL VAL: I'm sorry, I don't have a Bell telephone bill and I guess I could have looked it up myself. What other non‑telecom services do you currently include in your bill, starting with the YPG, yellow page display advertising, which you say is not a telecom service?
450 So what other non‑telecom services do you currently bill for?
451 MR. HÉBERT: As far as I can tell, it is the only one.
452 COMMISSIONER DEL VAL: All right.
453 What third party services are included in Bell's phone bill currently?
454 MR. HÉBERT: Bell ExpressVu.
455 COMMISSIONER DEL VAL: Are those the only two?
456 MR. HÉBERT: I can't think ‑‑
457 MR. ELDER: The bill that ExpressVu is on, it's a bit more complicated than that. The one bill that is put out is actually a bill that is put out on behalf of a number of different companies. The actual Bell Canada input to that bill doesn't contain ExpressVu.
458 COMMISSIONER DEL VAL: On behalf of a number of companies. Which companies then?
459 MR. ELDER: Currently Bell Canada and Bell ExpressVu, and we hope in the future Bell Mobility, all of which are distinct corporate entities, have engaged a third party to put out a bill collectively for those three companies.
460 But on the actual Bell Canada portion of the bill, there are no other non‑telecom services that I am aware of and there are no other third party services that I am aware of.
461 COMMISSIONER DEL VAL: Following that, is it your position that CRTC would only have jurisdiction if what Bell is billing for is a regulated telecom service?
462 MR. HÉBERT: Yes, unless for some reason a forborne service's billing, the Commission had retained jurisdiction over it; for instance, on section 24.
463 But yes, it has to have been, to start, a service that the Commission could have had jurisdiction over, whether it still does because it is the regulator or it let it be because it was forborne.
464 COMMISSIONER DEL VAL: Thank you.
465 THE CHAIRPERSON: Mr. Millington?
466 MR. MILLINGTON: I am going to pick up on the questions that Commissioner Del Val was asking, which is that a section 23 service only can arrive, in the case of billing and collection at least, only becomes a section 23 service if it relates to a section 2 service.
467 Let's look at it more generally for a minute. If we were just to talk about other services that are incidental to the business of telecommunications, because it is the business of providing telecommunication services, you talked about repair trucks. Let's talk about fleet management.
468 You run INR trucks and the management of those trucks would be definitely incidental to the business of providing telecommunications services. So it is a section 23. We won't call it a section 2 service.
469 Where is your basis for saying that billing and collection for fleet service, which would be section 23 of another section 23, would not be subject to the jurisdiction of the Commission?
470 In section 23 it doesn't say section 23 only arises in relation to a section 2 telecom service. If that was the intent, it would have been specified in the Act saying this section 23 can only relate to a telecom service as defined under section 2. But it simply says that it arises generally in relation to the business of providing telecommunication services.
471 MR. HÉBERT: First of all, I am not convinced that fleet management is necessarily incidental to the business of providing telecommunications services in every context. Again it depends what we do with it and how we would provide it.
472 I draw a distinction between services that are incidental to the business of other telecom services and simply inputs or infrastructure that a carrier may have put in place. I don't think that the infrastructure, in and of itself, until it has a purpose and until it is used for a particular reason becomes a service. It has to be delivered to someone.
473 MR. ELDER: I think as the Commission itself has said when they are looking at section 23, they are finding services incidental where they engage fundamental elements of the telephone system and are closely related to the essential nature of the telephone business.
474 Any business, whether it is a service business or a retail business, is going to necessarily have certain back office functions. You are going to need employees. You are going to need delivery, distribution, warehousing. All of those things on one broad definition you could say are incidental. But do all of those things, which are common to businesses, engage fundamental elements of the telephone system and are they closely related to the essential nature of the telephone business?
475 I would say no. Anybody who is in business issues a bill. So it is only where there is something about that bill that is linked to a particular telecom service that puts it in the realm of section 23 and within the Commission's jurisdiction.
476 So casual calling, for example, the Commission sets up a competing long distance service. They want customers to be able to dial around. They don't need them to commit. So they set up a regime where billing for those particular types of telecom services are caught by section 23 and they impose a rule; they impose an obligation.
477 900, 976 service is a service that is sold with network elements, billing matrix and billing and collection as one service, one continuous service. The Commission finds in that case the billing and collection part is integrally related to essential matters of the telephone system.
478 I think once you step outside of that kind of analysis ‑‑ I mean, section 23 to an extreme could mean anything that we do that is at all connected with our business, if we happen to offer it to a third party, becomes a telecommunications service. I don't think that is what the architects of the Telecom Act had in mind. I don't think that has anything to do with fulfilling the objectives of the telecom service.
479 I think the Commission has always taken a very purposive approach to section 23 and said: How does this relate to the essential nature of the telephone business and why is it we have to reach in and regulate it to fulfil the objectives of this Act?
480 MR. MILLINGTON: I agree that that argument takes you a long way, and I would agree also that section 23, because of the broadness of the language, would certainly encompass a large number of activities that are common to a large number of companies and wouldn't be specific to a telecom company.
481 But going back to my example ‑‑ and we could find others ‑‑ the example of the management of ‑‑ well, you talked about warehousing. I don't know the nuts and bolts of it well enough, but there might be something that is very specific to the treatment and warehousing of fibre optic cable, which is not going to be something you are going to find in a large number of businesses generally. There might something that is very specific to a telecom company and it is part of the business and I think reasonably would be construed as incidental to the business of providing telecommunications services.
482 Obviously you guys read the section down and say it doesn't include anything. You have to find a true section 2 service.
483 I don't necessarily agree, the way the statute is drafted, that it supports that narrow construction of section 23. There is, reasonably speaking, a line where you could draw a line in the sand where it becomes so generalizable that it is true that it doesn't relate, that it is not specific enough, and from a public policy perspective we would probably all agree that it is too far down the road and it wouldn't be the purpose of the Act to regulate it.
484 But if we pull back in, it seems to me you do find a suite of services which would properly fit under section 23 that aren't the extreme of the ones that you have identified, which would be a section 23 service, not section 2. I don't see anything in the Act that prevents a section 23 of a section 23; a billing and collection, which we have agreed is incidental in some circumstances ‑‑ you are saying section 2.
485 I don't see anything in the Act that would prevent us from saying billing and collection for another service incidental to the business of providing telecommunications services would not be subject to our jurisdiction. I don't read that construction into the Act.
486 There may be public policy reasons for determining how far we want to take the ambit of the operation of the two subsections. I don't disagree with that. But I don't read the narrowness in the operation of those two sections that you would like us to entertain.
487 MR. ELDER: I think that is somewhat circular. This goes back to the question that you posed originally to Triton or YP Corp. about section 23 of a section 23 essentially. I think that is a very circular construction.
488 You use section 23 to create a telecommunications service as if it was a section 2 service, and then you bootstrap that to another service that you make incidental to that service.
489 I am not sure, frankly, that the construction supports that. You can pull anything out of your hat to make it a section 23 of a section 23 service.
490 Getting back to the specifics of this particular case, I don't think that is where we are. I think we are looking at a service that is provided by many other businesses in many other contexts, and I don't think it is one that really warrants the Commission, for any public policy rationale, to reach out and grab and force an ILEC to provide a billing service to that type of directory advertising business.
491 MR. MILLINGTON: We had some interesting information provided about one bill. It is produced by a third party?
492 MR. ELDER: Yes.
493 MR. MILLINGTON: Who is that third party?
494 MR. ELDER: It is a company called Amdocs. They are an Israeli‑based billing specialist.
495 MR. MILLINGTON: So each independent company, Bell Canada ‑‑ what is the name of your satellite company there ‑‑ ExpressVu and at some point Bell Mobility will submit inputs to this company, and that company produces the bill on behalf of all three?
496 MR. ELDER: That is exactly right. Currently you have options about whether you are on one bill or not on one bill. You can get individual bills or, depending on your preference or certain packages that you take that necessitate you being on one bill, you get a single bill that includes inputs aggregated from each of those companies.
497 MR. MILLINGTON: Can you get a bill from Bell Canada, not from one bill, which includes ExpressVu and/or Sympatico today?
498 MR. ELDER: It will include Sympatico, but Sympatico is a Bell Canada service. Sympatico is an Internet service offered by Bell Canada. It will not include ExpressVu.
499 MR. MILLINGTON: Originally, if we go back to the beginning of this process that was introduced by YP Corp., Bell Canada originally entered into discussions with YP Corp. about providing this service and I will say that those discussions were entered into in good faith and that Bell Canada asked YP Corp. to go and get a ruling from the Competition Bureau, which I am sure they wouldn't have asked them to do unless they were intending to proceed because that is a rather onerous undertaking for a company. They wouldn't have done it frivolously, so I will give you the benefit of the doubt on that.
500 So you go down the road, you are negotiating for this service. You ask the other side to take some steps to comply, and then there is a change of mind. There is a right turn and the discussions end and Bell Canada says "No, thanks, we are not prepared to go any further." Why?
501 MR. HÉBERT: I want to clarify. The scenario that led to where we are today, there was indeed a meeting in the summer of last year, but it was not ‑‑ maybe it was a misunderstanding. What was done was concerns were identified that needed to be addressed before Bell would contemplate negotiating issues any further.
502 We did not ask specifically that YP Corp. get a Competition Bureau opinion, but we did say that without one, we would not discuss things further.
503 Bell Canada right now just doesn't want to have independent stand‑alone billing and collection agreements for directory advertising.
504 MR. MILLINGTON: I understand that is the position today, but why didn't you just say that at the beginning? Instead of saying there are some things that need to be cleared up, we want clarification, which would, to a reasonable person, think that there is some possibility that this could end up in a relationship.
505 If you weren't going to provide the billing, which you don't want to today, why not simply communicate that at the very first meeting and say, "Look, we are not in that business. We don't want to be in that business."
506 Why lead YP Corp. to believe ‑‑ perhaps they were overly optimistic. But why would you create in their minds ‑‑ these are reasonable people ‑‑ the belief that they needed to do some steps in order to push the negotiations to its next logical step?
507 MR. HÉBERT: I think it is normal in any business relationship to have a preliminary meeting and to discuss about where things may go and then to explain what everybody's position is. We simply communicated that there were conditions that needed to be met before we discussed things any further.
508 We certainly had not signified that we were necessarily willing to negotiate further. It was a preliminary view only.
509 MR. ELDER: I am not sure at that point that we knew definitively whether we wanted to or not, whether we wanted to enter into a business relationship with them or not.
510 My understanding is we had a preliminary meeting. We raised a number of concerns and that was that.
511 I don't think we ever said at any time, "We will sign this deal. We will do business with you if X."
512 MR. MILLINGTON: Well, I am sure that is not the case, because there are other remedies that would have been available to YP Corp. had that been the case.
513 We are engaged in a process here that results from the fact that these negotiations were started and then were interrupted. It seems to me that if Bell Canada was not at a point where it could make the decision, maybe that would have been a prudent thing to do first: to simply adjourn the meeting and say, "We are not sure we want to be in this business. Let's find out."
514 And then go back to the parties with the decision saying "yes, we are" or "no, we aren't", instead of allowing these people to invest time, monies and energies toward satisfying Bell Canada requirements when in fact Bell Canada didn't even know if it wanted to be in the business.
515 MR. ELDER: Perhaps. The problem is I wasn't at that table, so it is difficult for us to say.
516 Our feeling is there was perhaps somewhat of a misunderstanding about what the outcome of the meeting was, what the expectations were. We regret if there was that misunderstanding. Perhaps there would have been things that we could have done to make that clear and make our position clear. And yes, that may have been a beneficial thing to do.
517 MR. MILLINGTON: Why is it today that Bell Canada does not want to offer this service?
518 At one point it was a possibility and today you have just made the decision you don't want to do it. Why is that?
519 If Telus figures that they can make money at it and has filed a tariff, if the companies in the United States have decided that they can make a business out of it and do it, why is it that Bell Canada feels that this is not in their commercial interest?
520 MR. HÉBERT: I am not sure that is really the question for today. The question is whether Bell Canada would have to as opposed to whether it would wish to.
521 But putting that aside, we have had early discussions with YP Corp. We have looked at the business merits of this case. We have done our homework; how much cost it would be to our infrastructure if we were to go forward.
522 And based on the expected revenues, expected costs, we decided not to pursue this kind of enterprise further.
523 COMMISSIONER DEL VAL: I have one further question.
524 Going back on the section 23, a phone bill ‑‑ and it is a phone bill because it has my toll services, my phone services on it ‑‑ if I had stopped there, then it would fit under section 23. The phone bill would be a service incidental to the business of providing telecom services.
525 Do you agree with that?
526 MR. HÉBERT: Those elements on your bill are incidental to the provision of a telecom service, whether there are others with them or not.
527 COMMISSIONER DEL VAL: Then when I add another item on it ‑‑ that is, if the phone bill is under those circumstances a telecommunications service and the phone bill will always have those telecommunications services on it, toll charges and things like that, and that is incidental under section 23, then why is it that when I add an item that is a non‑telecom service it breaks that incidental chain? It is no longer incidental.
528 MR. HÉBERT: It is not just a phone bill. Even if you were to look item‑by‑item, why is it that the information provided to you for your phone charges is a telecom service? Because it is a phone charge.
529 So in that instance, on the bill what you get is the information about what you owe about a phone charge. Inasmuch as Bell would convey information about what you owe on behalf of a third party about a product that is not a direct telecom service, I wouldn't see the connection any more to make it fit under section 2 or 23.
530 COMMISSIONER DEL VAL: Thank you.
531 THE CHAIRPERSON: Commissioner Cram?
532 COMMISSIONER CRAM: So it is: when is a phone bill not a phone bill?
533 You are saying, Maître Hébert, that this piece of paper that I get every month, it is only the elements about local access, readability for people who have problems reading, it is only those elements that are the phone bill and the rest is another bill, or the part that we are entitled to look at.
534 MR. HÉBERT: That is correct. It is elements that Bell has mailed you.
535 COMMISSIONER CRAM: Are we entitled then to say that those are the only elements?
536 MR. HÉBERT: I am not sure I understand your question.
537 That the elements relating to charges from the phone would be the only elements?
538 COMMISSIONER CRAM: The only elements on a phone bill.
539 MR. HÉBERT: I think it is those elements that satisfy the definition of what is incidental or the analysis that one should undertake to see if it is incidental. Is it an element that engages fundamental aspects of the telephone system or not?
540 COMMISSIONER CRAM: Are we entitled to say that on a phone bill there will only be phone bill items? There will only be telecom services because it is a phone bill.
541 MR. HÉBERT: I am not sure that the jurisdiction would be that in order to provide a phone bill that is a proper phone bill, it must not contain anything else.
542 I am not sure that I follow that line.
543 COMMISSIONER CRAM: Because it is a phone bill.
544 MR. HÉBERT: It is called a phone bill because it happens to have some phone charges. It may also have Sympatico on it, for instance. It doesn't need to have our local phone services on it.
545 If you had not forborne, say, from Internet, you could collect phone service and have Internet with us. You would have a bill from Bell that wouldn't be your phone bill, but if Internet was not forborne, that element on the bill would still be regulated.
546 COMMISSIONER CRAM: Mr. Elder, you talked about a public policy rationale. I want to try one on to you for size.
547 When a company has between 95 and 98 per cent of the entire market, and when only one Yellow Pages company has the ability to tag on their bill and 83 per cent of the customers of that company see the efficacy of it, that then means to me that there is a substantial detriment to anyone who wants to compete in that area on a bill that, at least to some extent, we have the ability to control.
548 What do you think about that for a public policy reason?
549 MR. ELDER: Well, frankly, I think it is a poor one.
550 COMMISSIONER CRAM: Tell me why.
551 MR. ELDER: If you are suggesting that any large institution, to the extent that they may do a deal with a smaller player or another business, should be required to do that for others because that gives them some kind of unfair competitive advantage, I think that is a rather staggering proposition.
552 If we are talking about something that is not part of our fundamental telecom business, I don't think that is within the contemplation of the objectives of the Telecom Act.
553 Where does it say in the Telecom Act that it is part of your job, CRTC, to police or to encourage emerging or struggling businesses that aren't in the telecommunications business? I just don't think that is there.
554 COMMISSIONER CRAM: Thank you, Mr. Chair.
555 THE CHAIRPERSON: We now pass to the phase of questioning by the Applicant and the Respondent, beginning with YP Corp.'s questioning of Bell.
556 The period is 20 minutes, including the answers.
557 I suggest, therefore, not long questions and I will police the filibuster again ‑‑ which won't occur. But if it were to, I would police it.
558 MR. DUNBAR: I will try to be quick.
559 Just to follow on from Commissioners Del Val and Cram, I believe you said that generally speaking you have different parts of some phone bills. You have the telephone part and then you have maybe the satellite TV part and other parts.
560 Is that correct? You said there is a telecom part or telephone service bill and then there are other parts on the bill that are non‑telecommunications?
561 MR. HÉBERT: Depending on the kind of bill you receive. If you get one bill, you would get billing from YPG, ExpressVu and Bell Canada proper.
562 MR. DUNBAR: I thought I heard you say that there are different parts of the bill going out on the same bill? No?
563 There is one from ExpressVu, one from ‑‑ they are not separate parts? They are all just line items?
564 MR. HÉBERT: If you have one bill, yes, they are all together.
565 MR. DUNBAR: When Bell Canada sends out its ‑‑ let's say the customer only has local telephone service and there is a YPG charge. That is a line item imbedded in that telephone bill.
566 Is that correct?
567 MR. HÉBERT: No. It is in a separate section. It is on the same piece of paper but it is in its own section, identified as a YPG chunk.
568 MR. DUNBAR: Is it typically one line item on a bill?
569 MR. HÉBERT: Typically.
570 MR. DUNBAR: Is there any sort of average number of lines on a Bell phone bill?
571 MR. HÉBERT: I don't know off the top of my head.
572 MR. DUNBAR: But it is one line out of many.
573 MR. HÉBERT: I am not sure how the number of lines is an issue.
574 MR. DUNBAR: I wonder if you could describe for me, from an operational aspect, how Bell Canada interacts with YPG for the provision of the billing and collection service, starting with when YPG has a new customer.
575 What transacts? Could you just describe how that information is related to Bell Canada and how it goes onto the bill from a step‑by‑step type process?
576 MR. HÉBERT: In a very broad fashion, because the agreement between YPG and Bell Canada is confidential.
577 When YPG has a new customer and they have bills, they send us a database which we take and process on the bill.
578 MR. DUNBAR: Do they send that to you electronically?
579 MR. HÉBERT: Yes.
580 MR. DUNBAR: By telecommunications?
581 MR. HÉBERT: Yes. They send us the database electronically.
582 MR. DUNBAR: What part of Bell Canada receives that, what department in Bell Canada?
583 MR. HÉBERT: The specific one ‑‑ I think it goes to our general ISIT group. But I don't know which specific groups receives it.
584 MR. DUNBAR: Is that the same group that receives other billing changes, adds charges, et cetera, within Bell Canada, say for toll calls or whatever?
585 MR. COLLYER: No. Toll calls are handled through our settlements group.
586 MR. DUNBAR: Is this the same group that receives other billing data?
587 MR. COLLYER: The settlements group would receive what we call end collect calls or casual calls that are being completed by other carriers for being billed on our invoice. But our relationship with YPG, to my understanding, they are sending an electronic file over to us, or a tape over to us, that goes directly to one of our IT groups for billing.
588 MR. DUNBAR: So it is not coming through your courier services group.
589 MR. COLLYER: To my understanding, no.
590 MR. DUNBAR: Then what do you do with it when you get that information?
591 MR. COLLYER: The information is matched up with customer bill information and it is sent down for invoicing.
592 MR. DUNBAR: Via telecommunications to another ‑‑ is this to your contracting out the billing service?
593 MR. COLLYER: I can't say whether it is sent to us electronically. I would expect with the size of files that we would have that we would be getting tapes from them.
594 MR. DUNBAR: What happens if a customer has a complaint about the charge? Let's say the customer says we have been improperly billed for this. They call your regular billing service number for local service?
595 MR. COLLYER: Generally the first point of call is 310‑BELL but our SNB and Enterprise customers also have a dedicated YPG billing rep that would handle any billing inquiry.
596 MR. DUNBAR: So your basic Bell number gets the call and then what do they do? Do they hand it off to the other ‑‑
597 MR. COLLYER: Not necessarily. If the customer calls to Yellow Pages for questions with respect to their Yellow Pages advert, it will go directly to their dedicated sales rep.
598 MR. DUNBAR: Let's say they think they have a Bell Canada bill here for Yellow Pages and they call Bell Canada. You will handle the call?
599 MR. COLLYER: We would refer the customer back to Yellow Pages.
600 MR. DUNBAR: So do you hand that call off or do you just make them call over again?
601 MR. COLLYER: Specifically, I don't know. Is it a warm transfer?
602 MS BOURGON: No. I believe it is directly addressed to YPG.
603 MR. DUNBAR: Sorry?
604 MS BOURGON: It is addressed to YPG. The call goes directly to YPG.
605 MR. DUNBAR: So it is a handoff.
606 MS BOURGON: No, I don't think it is a handoff.
607 MR. DUNBAR: So they have to recall YPG?
608 MS BOURGON: They call YPG, yes.
609 MR. DUNBAR: Will Bell Canada handle any disputes over calls over the phone or is the decision whether or not to drop the charge made by YPG?
610 MR. HÉBERT: The disputes are handled by YPG, not Bell Canada.
611 MR. DUNBAR: So there is no sort of bad debt part of this agreement between the companies.
612 MR. HÉBERT: Bell Canada does not determine what constitutes a bad debt in that sense, no.
613 MR. DUNBAR: I assume that YPG pays Bell Canada for performing the billing function for it. Is that correct?
614 MR. HÉBERT: It is a reasonable assumption.
615 MR. DUNBAR: Well, you can tell me.
616 MR. HÉBERT: The terms of the overall arrangement with YPG are confidential.
617 MR. DUNBAR: I realize that.
618 MR. HÉBERT: But yes, there is a price for it.
619 MR. DUNBAR: Can you tell me whether it is based on a per‑line charge or on a percentage revenue type basis? I know that both kinds are common in different kinds of billing and collection arrangements.
620 MR. DUNBAR: I would prefer to give that information in camera, if need be, but not now.
621 MR. DUNBAR: Could you let the Commission know, off line?
622 I am wondering why you agreed to enter into the billing and collection arrangement with YPG because you have told us today that you don't really want to be in this business.
623 When you sold the company, why didn't you just let them go off and do their own billing?
624 MR. HÉBERT: I wasn't there at the time five years ago, four years ago. I imagine it made business sense at the time.
625 But YPG does operate its own parallel billing system. It does not rely solely on Bell Canada's system.
626 MR. DUNBAR: I realize that, but I think you said earlier, you agreed that somewhere in the order of 83 per cent of the billing is done by your company within your territory.
627 MR. HÉBERT: YPG's prospectus in 2003 stated that figure, yes.
628 MR. DUNBAR: You are aware, I suppose, that YPG cites the billing and collection arrangement with Bell as a competitive advantage in the directory advertising market, are you?
629 MR. HÉBERT: The prospectus says so.
630 MR. DUNBAR: Do you have any idea why they think that?
631 MR. HÉBERT: I do not. As the Commission knows, it is impossible for Bell Canada to leverage its bill to ensure payment of non‑regulated charges.
632 MR. DUNBAR: Do you have minimum volume requirements with YPG?
633 MR. HÉBERT: I do not believe so, but I would provide the information in confidence.
634 MR. DUNBAR: Thank you. I would like you to do that.
635 I know there is a non‑compete in the directory services business in that agreement, but have you agreed with YPG to provide the service on an exclusive basis contractually or is this just the policy, your business decision within Bell Canada?
636 MR. HÉBERT: We currently only provide it to YPG.
637 MR. DUNBAR: But are you contractually bound to do that, or is that a business decision of Bell Canada?
638 MR. HÉBERT: I an not sure how that is a relevant question.
639 MR. DUNBAR: Well, it is relevant as to whether or not you are contractually obligated to YPG to maintain an exclusive arrangement or whether you are free to make your own decision.
640 MR. ELDER: As we have said before, I think the terms of our agreement with YPG we consider to be confidential.
641 MR. DUNBAR: Could you provide the Commission with an indication of whether or not it is exclusive in the sense that is there a specific clause in the contract or a specific term that says that Bell Canada will not bill and collect directory services for any other third party?
642 MR. ELDER: I guess if the Commission orders us to do that and considers that relevant to the submission before us, we would do that.
643 But frankly, I don't see why it is relevant. We are in a case where your case is about this is something the Commission should order. I think the main issue here is jurisdiction. The reasons why we may or may not be doing business with you, frankly, I don't see as being relevant.
644 MR. DUNBAR: If the Commission does consider it relevant, I would like you to ask them to provide it. If you don't, you obviously don't need to do that.
645 I was just wondering whether it was your own free choice or whether you felt contractually bound to reject our offer to do business.
646 Can you tell me whether the price paid by YPG is comparable to the prices charged by Bell in its standard billing and collection agreements?
647 MR. HÉBERT: That is confidential information as well.
648 MR. DUNBAR: My understanding is that earlier this year YPG purchased Super Pages, which was owned by ADS, an affiliate of Telus. You have made reference in your argument to that transaction.
649 Are you aware whether the two companies have merged or whether they are being operated as separate companies?
650 THE CHAIRPERSON: Maitre Hébert, could you speak up a little bit. You are a long way from the microphone and, in turn, therefore, a long way from us.
651 MR. HÉBERT: I am not certain whether the ADS operations have been integrated or not in YPG.
652 MR. DUNBAR: Do you know whether Bell Canada is providing billing and collection services to the Super Pages or ADS part of the organization?
653 MR. HÉBERT: I believe that the ADS clients could fall under the same agreement.
654 MR. DUNBAR: So they are going to get the benefit of the arrangement with Bell?
655 MR. HÉBERT: I will answer that confidentially.
656 MR. DUNBAR: I am just wondering because that deal was done after you told us that you didn't want to deal with us. So I am interested in whether you extended the deal to them.
657 MR. DUNBAR: I think that is all our questions. Thank you very much.
658 THE CHAIRPERSON: Thank you, Mr. Dunbar.
659 Maître Hébert.
660 MR. HÉBERT: I will let David speak.
661 MR. ELDER: Sorry. I am not supposed to be speaking. I am just here for the free snacks.
‑‑‑ Laughter / Rires
662 MR. ELDER: I just have one question, Mr. Dunbar.
663 Has YP Corp. or Triton or any of the companies that you are here representing today doing business with Telus with respect to directory advertising, billing and collection for directory advertising?
664 MR. DUNBAR: I am going to ask Mr. Bergmann to answer that, please.
665 MR. BERGMANN: We are currently not doing business with Telus, but we have entertained the possibility of doing that. There are some issues with their tariff which we would have to negotiate in order to do business with them.
666 MR. FIETZ: Regarding the tariff itself, the point was mentioned really around the ability to engage, process and forward an arrangement through the tariff. The only roadblock that sits in place on agreeing with the tariff is really the ban that was set on the payment schedule.
667 Other than that, technically speaking, we are able to conform to any and all technical requirements that exist today in format acceptance, et cetera, in essence with Telus and/or Bell through a business arrangement, and therefore it would not constitute any real technical changes from Bell or Telus' perspective.
668 The rate schedule, once again, really constitutes a barrier of entry in the marketplace. You can see the one‑time charge implementation of $23,000, which is unusually high for an implementation charge. However, that being said, if there was some type of renegotiation from Telus, it is a simple change of moving the bottom bandwidth from 83,000 down to a minimum requirement. We would agree to the existing per‑line item transaction charge on a per‑month basis.
669 So it is a fairly simple change to this tariff to become engaged on the Telus side. But obviously as a tariff it would have to be changed or negotiated.
670 MR. DUNBAR: For people who don't have the tariff in front of them, what Mr. Fietz is referring to is the fact that there is a volume, a monthly volume minimum in the Telus tariff. It is 83,000 line items. That means 83,000 businesses. And we are talking about Alberta and B.C.
671 So for a company to start in the directory business in Alberta and B.C. and have 83,000 businesses ‑‑ probably half the market ‑‑ is an extremely high entrance fee.
672 I think what Mr. Fietz is saying is there are actual rates there. We could live with the rates. It is just that opening band of starting with a minimum of 83,000 line items is the problem. Is that right?
673 MR. FIETZ: Yes.
674 MR. ELDER: Thank you. I have no further questions.
675 THE CHAIRPERSON: Thank you very much.
676 Mr. Millington, colleagues, any further questions at this stage?
677 MR. MILLINGTON: I only have one. I don't know if anybody has the answer.
678 Is anybody taking or making use of the Telus tariff at the moment?
679 MR. DUNBAR: I don't believe we know the answer. We have sort of hoped that maybe it was Super Pages. But we don't know if they are using the tariff or had another deal. We don't know.
680 MR. HÉBERT: I don't know either.
681 THE CHAIRPERSON: I have closing remarks by the two parties, ten minutes each.
682 Do you need any more time? My colleague asks if you are ready to conclude.
683 MR. HÉBERT: I would not object to maybe a five or ten‑minute recess.
684 MR. DUNBAR: I may be able to cut five minutes out if we have a five‑minute break.
685 THE CHAIRPERSON: I was going to say that no one need feel that if their concluding comments are less than ten minutes that they have in any way penalized themselves.
686 We will be back at 20 minutes to 12:00, please.
‑‑‑ Upon recessing at 11:30 a.m. /
Suspension à 11 h 30
‑‑‑ Upon resuming at 11:40 a.m. /
Reprise à 11 h 40
687 THE CHAIRPERSON: Mr. Dunbar, the floor is yours.
CLOSING STATEMENT / REMARQUES DE FERMETURE
688 MR. DUNBAR: Thank you very much, Mr. Chairman.
689 I am going to try and hit some of the points in rebuttal at this stage.
690 Bell has argued that the classification of billing and collection services as telecommunications services is wholly dependent on the context in which the billing and collection is provided. In other words, billing is only incidental to the business of providing telecommunications services if it is billing for a telecommunications service.
691 Under this approach, we find, as questioning by the Commissioners indicated, that we have a telephone bill that is in large measure produced for the billing of local telephone and other telephone charges. That bill, according to Bell, would to that extent be a telecommunications service. But if they add a line item on that is not what they consider to be a telecommunications service, then suddenly the bill or that part of the bill is no longer a telecommunications service.
692 I would argue that the fact that they are engaging all the apparatus of their company in producing that bill and collecting the charges and remitting it to the customer as a telephone bill makes the whole thing a telephone bill.
693 In my argument that whole function, because it is produced out of the telephone company itself, engaging a key part of the telephone business apparatus, constitutes a service that is at least incidental to the provision of the telecommunications service.
694 In addition, I disagree with the Bell position that the provision of Internet‑based Yellow Page directory services doesn't constitute a telecommunications service.
695 First, the provision of online Yellow Page directory services really does fall within the section 2 definition of the Act, because it is a service provided by means of telecommunications. The only way you can get this service is through telecommunications.
696 Unlike a hard copy directory in that regard, the hard copy directory which the Commission has found to be integral to the provision of basic service, it itself is not provided by means of a telecommunications service.
697 I would argue that the Internet based service is more of a telecommunications service than the standard Yellow Page directory in hard copy.
698 We have a number of Commission decisions which we have outlined in our argument, previous decisions that the provision of Yellow Page directory significantly enhances the value of the ILEC's phone business and in particular facilitating the use of the network by telephone subscribers.
699 It is for this reason that in earlier decisions the Commission found that the provision of both White and Yellow Page directories form an integral part of basic phone service.
700 It is also for this reason that the Commission required the ILECs to provide Yellow Page directories to their subscribers. They could not have done that, in my view, unless those directories were considered to be incidental to the provision of the ILEC's telephone service.
701 I would argue that it is also for this reason that the Commission ordered the ILECs a number of years ago to make directory database information available to competing suppliers of directories on a non‑discriminatory basis. Had the Commission not thought that the provision of competing directories was incidental to the provision of telecommunications services, I don't think the Commission would have ordered the provision of the database information.
702 We are talking about Internet based services here, and that is the way the industry is going. As revealed in our evidence and as addressed by Mr. Fietz earlier today, that is the growing part of the business. People are increasingly going to the Internet to gather their directory service information and to use the Internet as a Yellow Page type directory.
703 We have also argued that Bell's billing service is a telecommunications in and of itself, and I don't want to go over all of that. I had a detailed discussion with Commission counsel and Commissioners on that issue. I won't repeat what I said there.
704 But we do believe that it is a telecommunications service in its own right. It fits the wording of section 2 and there are significant Commission decisions on the record which show that that service is considered to be a telecommunications service.
705 We think there is a clear case of discriminatory conduct in this case. It couldn't be more apparent. Bell has decided to deal with one party and not another. We believe we have put on the record information which shows why it is so important actually to have Bell do this billing. It includes the fact that that is what customers expect.
706 Mr. Bergmann has indicated that it also results in reduced churn.
707 It is true that YP Corp. hasn't had a lot of experience to date with its credit card offering, but the fact that it has no customers after two or three months indicates something. I think the other factor that really is important here is the fact that 83 per cent of YPG's customers still use Bell's telephone billing service as their preferred mechanism to receive their bills, even though YPG itself offers credit card and other alternatives.
708 So consumers are voting with their feet for the type of billing service they prefer.
709 We believe that YP Corp. has demonstrated that the discrimination by Bell is unjust or unreasonable in the circumstances.
710 We really haven't heard a good reason from Bell as to why they don't want to offer the service to us. They mentioned costs but in fact we have never discussed costs. We never got that far in the negotiations with Bell as to whether or not we could afford to pay them their costs for whatever changes they had to make.
711 So cost has not been discussed, and that is really the first time we have heard cost as a reason for not dealing with us.
712 I am not going to say much about Bell ‑‑ bell has raised the Competition Act arguments in the argument it filed with the Commission in advance of this hearing. They point to the fact that the Competition Bureau allowed the merger between Super Pages and Yellow Pages.
713 I would point out that we are not under the Competition Act here. We have chosen to seek our remedy at the CRTC. We believe the Telecommunications Act is much stricter than the Competition Act in dealing with preferential treatment by the telephone companies, and that is why we are here today.
714 That is the statute we are operating under. That is the statute that the Commission applies. And it is really irrelevant as to whether or not we would get similar relief before the Competition Bureau.
715 We are inclined to think that the issue is quite different and that the Competition Act isn't really relevant to this discussion.
716 I am not going to repeat any of the other arguments I have made. We are on the record in respect of all of them.
717 I would like to thank the Panel again and the Commission staff for convening this expedited hearing, which we much appreciate. Thank you very much.
718 THE CHAIRPERSON: Thank you, Mr. Dunbar.
719 Maître Hébert.
CLOSING STATEMENT / REMARQUES DE FERMETURE
720 MR. HÉBERT: Thank you. And I will try to speak a little bit louder.
721 I think I will be brief. I won't go through a lot of the arguments that were submitted in our written submissions and today.
722 I just want to point out a few things.
723 We have fairly little evidence on YP Corp.'s business in the sense that we don't really know on the record when it started operations in Canada, and we don't know what degree of success it has had yet. We don't have particular studies as to why advertisers are not willing to do business with YP Corp. I don't know whether they don't, but apparently the fact that they don't have access to being billed on their phone bill is one reason. We don't know that.
724 As well, we have had discussions that it would make things easier for YP Corp. if it had had access to Bell's billing and collection system, if it could piggyback on Bell's infrastructure. But that is not the point really.
725 The question really is whether the billing and collection services of Bell are telecom services, whether when it is for directory advertising it is a telecom service. In our view, it is not.
726 And if it is not a telecom service, then the Commission has no jurisdiction to grant the Applicant the remedies they seek.
727 I also find it interesting that if it is not a telecom service, we submit that Bell has the freedom to sign commercial agreements with who it wants to. It also has the freedom not to sign agreements.
728 I think it was Mr. Bergmann who mentioned the situation in the U.S. where some CLECs certainly have signed billing and collection agreements, but they were not mandated to. So I imagine it was a business decision on the part of the American CLECs.
729 I think Bell should be able to make the same kind of business decision and choose to sign or not for this kind of service.
MR. ELDER: I just want to comment again on this notion that use by a commercial undertaking of a telecom service makes that undertaking a telecom service. I find that preposterous.
730 I think Pizza Pizza with its phone number jingle doesn't become a telephone service because it relies with that number as a fundamental part of it. Similarly, I don't think the Globe and Mail online or itunes, because they are Internet‑based services that you use to access content, that makes them a telecom service.
731 I think the implications of that kind of a finding are absolutely staggering for the number of companies that all of a sudden are offering telecom services.
732 With respect to the issue about the Competition Bureau, it strikes me that this is fundamentally an argument about competition. There are fundamentally allegations here under the guise of some kind of unfair advantage, someone struggling in the marketplace against a market leader. These are fundamental competition issues and it seems to me that the Competition Bureau is the government sponsored watchdog of exactly those kinds of things.
733 I am wondering why we are here before the CRTC trying to plug this in through an incidental provision under section 23 to look at undue preference. I find that a bit of a stretch.
734 That is all I have to say. Thank you.
735 THE CHAIRPERSON: Thank you very much.
736 I would just ask you to give me one minute, please.
737 THE CHAIRPERSON: Could you give us five minutes, please. We are going to step out and we will be back.
‑‑‑ Upon recessing at 11:52 a.m. /
Suspension à 11 h 52
‑‑‑ Upon resuming at 11:55 a.m. /
Reprise à 11 h 55
738 THE CHAIRPERSON: Ladies and gentlemen, thank you very much for your attendance. We appreciate it. We look forward to issuing the decision by the 5th of October.
‑‑‑ Whereupon the hearing adjourned at 11:56 a.m. /
L'audience est ajournée à 11 h 56
Richard Johansson Kristin Johansson
Jean Desaulniers Fiona Potvin
- Date modified: