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Ottawa, 3 September 1998
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Telecom Order CRTC 98-887
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In the matter of a letter dated 24 March 1998 from ACC TelEnterprises Ltd. (ACC) regarding contribution exemption.
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File No.: 8626-A14-01/97
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1.In Telecom Order CRTC 98-27 dated 23 January 1998 (Order 98-27), the Commission granted interim approval to ACC's application (on behalf of its division ACC NetMedia) for exemption from contribution charges for certain interconnecting circuits which are used by ACC NetMedia to provide Internet services. The Commission directed ACC to perform a technical audit within 60 days of the date of the Order to confirm that the network in question carries Internet traffic only.
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2.By letter dated 24 March 1998, ACC provided the required technical audit. ACC submitted that the audit verifies that: (1) its Internet service network is separate from its switched voice network; and (2) control procedures are in place to ensure that the arrangement remains configured to qualify for an exemption on a going-forward basis. ACC noted that in the technical audit it has added interconnecting line-side access circuits since the time of its application. ACC stated that Appendix 1 of the audit provided the details on the pilot numbers for each of the service access points to date.
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3.ACC submitted that by this filing, it has met the conditions prescribed in Order 97-28 (sic: should read 98-27) and requested final approval for exemption from contribution for the interconnecting circuits in question.
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4.By letter dated 6 April 1998, Stentor Resource Centre Inc. (Stentor) submitted comments on behalf of BC TEL, Bell Canada, MTS Communications Inc. (formerly MTS NetCom Inc.), Maritime Tel & Tel Limited and TELUS Communications Inc. (collectively, the companies). Stentor submitted that the technical audit report is unclear in two areas: (1) the use of Canada-United States (U.S.) facilities; and (2) control procedures.
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5.With respect to the use of Canada-U.S. facilities, Stentor stated that at page 1 of the audit report, the auditor noted that "interconnection to the global Internet is provided via connections to Sprint, UUnet and ICON in the U.S.A". Stentor stated that the network diagram included on page 3 of the technical audit report notes connections of ACC's Internet service with UUnet and Sprint. Stentor submitted that it is unclear if these are domestic connections or Canada-U.S. connections. Further, Stentor stated that the diagram does not reference a connection to ICON, but it does refer to a "U.S.A. Link" facility. Stentor submitted that it is unclear whether this designation refers to a facility to the U.S. or to a domestic connection to another Canadian Internet service provider's network.
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6.In this respect, Stentor submitted that if ACC leases facilities to the U.S. to carry Internet traffic, a contribution exemption may be required with respect to such cross-border facilities. Accordingly, Stentor submitted that ACC should be required to clarify whether an exemption is required with respect to such facilities.
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7.With respect to control procedures, Stentor stated that at page 6 of the technical audit report, the auditor stated: "In the Auditor's opinion, the control procedures in place are appropriate to ensure that the arrangement remains configured to qualify for an exemption on a going-forward basis."
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8.In this respect, Stentor noted that neither ACC nor the auditor has provided a description of the control procedures. Accordingly, Stentor stated that neither it nor the Commission can assess or comment on the adequacy of such procedures since they have not been clearly described. In light of this, Stentor submitted that ACC should be required to provide a description of the control procedures.
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9.In light of the foregoing, Stentor submitted that prior to the Commission rendering a final determination, the Commission should direct ACC to provide further clarification with respect to its control procedures and the Canada-U.S. facilities referenced at pages 1 and 3 of the technical audit report.
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10.By letter dated 8 April 1998 (sic: should read 8 May 1998), ACC submitted that the interconnections to the global Internet provided via connections to Sprint, UUnet and ICON in the U.S. are beyond the scope of its current application as these connections are not included in the Public Switched Telephone Network (PSTN) access circuits that are the subject of the current contribution exemption application.
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11.With respect to the issue regarding internal control procedures, ACC stated that it has implemented procedures and guidelines to ensure an ongoing review of facilities for which exemption from contribution has been granted by the Commission as being used exclusively to provide Internet service. ACC stated that an internal audit will be performed quarterly and published by the 30th day of the first month of each quarter. ACC stated that where any significant changes are made between audits, the changes will be logged and signed off by the senior engineer responsible to verify that the modified circuit configuration adheres to the contribution exemption requirements. ACC stated that the senior engineer responsible for Internet access engineering will review the design layout records for accuracy, each pilot number will be called to ensure it provides access to Internet service and the senior engineer will sign an affidavit to this effect.
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12.ACC submitted that it has met the conditions prescribed in Order 98-27 and requested final approval for exemption from contribution for the interconnecting circuits used by ACC NetMedia to provide Internet service.
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13.By letter dated 21 May 1998, Stentor provided further comments.
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14.Stentor first addressed the issue of the use of Canada-U.S. facilities. In its previous submission, Stentor noted that if ACC leases facilities to the U.S. to carry Internet traffic, a contribution exemption may be required with respect to such cross-border facilities. Stentor submitted that ACC has not provided further clarification as to whether or not a contribution exemption is required for such facilities. In the absence of further evidence to demonstrate that an exemption is not sought or required, Stentor submitted that ACC has failed to clarify the exemption status of such circuits. Accordingly, if any such circuits are leased by ACC, Stentor submitted that they would therefore be subject to contribution charges.
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15.Stentor then addressed the issue of control procedures. Stentor stated that ACC's control procedures appear to be satisfactory, in light of further clarification. Given the nature of the service arrangements, Stentor submitted that this configuration should be subject to the possibility of future random audits.
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16.The Commission is of the view that ACC has filed a satisfactory technical audit which verifies that: (1) the interconnecting circuits in question are used exclusively to provide dial-up access to the Internet; (2) ACC's Internet service network is separate from its switched voice network; and (3) control procedures are in place to ensure that the arrangement remains configured to qualify for an exemption on a going-forward basis.
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17.The Commission is of the view that ACC's control procedures are satisfactory and notes that Stentor agreed. The Commission agrees with Stentor that this configuration should be subject to the possibility of future random audits, which agrees with the Commission's precedent.
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18.The Commission notes that, based on the record of this proceeding, it is unclear exactly how interconnections to the U.S. are effected. The Commission agrees with ACC that such interconnections are not the subject of ACC's application. However, the Commission considers that Stentor has raised a valid issue as to the contribution status of the cross-border facilities over which ACC's Internet traffic is connected to the Global Internet.
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19.In light of the foregoing:
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(i) ACC's application for contribution exemption with respect to the PSTN access circuits in question, which were granted interim approval in Order 98-27, is granted final approval;
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(ii) ACC's control procedures are found to be satisfactory;
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(iii) this configuration is subject to the possibility of future random audits; and
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(iv) ACC is directed to file with the Commission, within 30 days of this Order, serving a copy on Stentor, a report confirming that: (1) the cross-border facilities in question are already contribution exempt, and if so, pursuant to which Commission Order; or (2) if such facilities are not contribution exempt, that contribution is in fact being paid.
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Laura M. Talbot-Allan
Secretary General
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This document is available in alternative format upon request.
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