ARCHIVED -  Telecom Order CRTC 99-351

Telecom Order

Ottawa, 14 April 1999

Telecom Order CRTC 99-351

By letter dated 3 December 1998, Call-Net Enterprises Inc. (Call-Net), on behalf of Sprint Canada Inc. (Sprint Canada), filed an application with respect to contribution exemption.

File No.: 8626-S2-10/98

1.Sprint Canada sought direction from the Commission on the scope of Telecom Order CRTC 97-1471 dated 14 October 1997 and Telecom Order CRTC 98-385 dated 23 April 1998 (Order 97-1471 and Order 98-385) and/or direction on whether the exempt configuration enlargement provision contained in Applications for Contribution Exemptions, Telecom Decision CRTC 93-2, 1 April 1993 (Decision 93-2) applied to Sprint Canada's cross-border Internet circuits. In the alternative, should the Commission determine that Sprint Canada's cross-border Internet circuits are not contribution exempt, Call-Net submitted a new contribution exemption application for these circuits with a requested effective date of 3 April 1997, or for circuits installed after 3 April 1997, the date of installation, due to special circumstances.

2.By letter dated 7 January 1999, Bell Canada (Bell) stated that it has reviewed the record with respect to Canada-United-States (U.S.) circuits and can find no reference to such circuits in the submissions of Sprint Canada associated with Orders 97-1471, 98-385 or Telecom Order CRTC 98-1143 dated 13 November 1998 (Order 98-1143). Further, Bell stated that it can find no record of a request for a contribution exemption with respect to Canada-U.S. circuits. Bell stated that the submissions of Sprint Canada consistently suggest that Sprint Canada was "...seeking contribution exemption for interconnecting line-side access circuits used ... to provide Internet services". Similarly, Bell stated that it can find no record of a technical review of Canada-U.S. circuits in the report of the technical audit.

3.Consistent with the requirements established in Decision 93-2 and subsequent Decisions, Bell noted that a technical audit of the facilities in question would be required to verify that the Canada-U.S. facilities are physically separate from Sprint Canada's voice network and circuits used by Sprint Canada to carry voice traffic. In light of this, Bell submitted that Sprint Canada has not satisfied the requirement to provide evidence with respect to the Canada-U.S. circuits that is consistent with the evidentiary requirements set out by the Commission.

4.Bell noted Sprint Canada's statement that the Commission has previously sanctioned the practice of adding circuits to an exempt configuration without the requirement to submit additional contribution exemption applications. Bell stated that in support of this, Sprint Canada cites a passage from Decision 93-2. Bell noted that the passage in question refers to the addition of circuits which are provisioned in the same manner as those which have been exempted from contribution charges pursuant to a previous Commission Order.

5.In this case, Bell submitted that Canada-U.S circuits were not part of the original configuration which was granted the exemption, and therefore would not be exempt pursuant to the Decision 93-2 guidelines referenced by Sprint Canada. Bell submitted that only the addition of line-side access circuits which are provisioned in the same manner as those which were part of the technical audit, would be contribution exempt pursuant to the section of Decision 93-2 that has been referenced.

6.Bell noted that the requirement for separate applications for contribution exemptions for different or revised configurations is well established as part of the current contribution exemption regime. Bell submitted that, Sprint Canada has been required in the past to submit new applications when its exempt configurations have been altered.

7.Bell agreed with Sprint Canada's request that an interim exemption be granted pending the provision of further evidence. Bell noted that the facilities in question have been reported to Bell as part of Sprint Canada's monthly contribution report, and therefore have been identified to Bell.

8.By letter dated 19 January 1999, Call-Net noted that its original contribution exemption application also generally refers to "Sprint Canada's Internet network" and Order 98-385 refers to "circuits used for Internet traffic". In addition, Call-Net submitted that BC TEL has accepted that the cross-border DS-3 used by Sprint Canada in its operating territory to carry Internet traffic is exempt from contribution pursuant to Orders 97-1471 and 98-385. Call-Net maintained that the circuit configuration enlargement provisions of Decision 93-2 would apply to Sprint Canada's Internet network.

9.Call-Net noted that Bell has provided examples where separate applications for contribution exemptions for revised configurations were submitted to the Commission. Call-Net submitted that Bell's examples involve revised configurations, not circuit additions and, therefore, are not helpful in this case. Call-Net submitted that in contrast, its present application involves the addition of circuits to an existing exempt network in accordance with the procedures outlined in Decision 93-2.

10.Call-Net submitted that should the Commission consider that a new contribution exemption application for these circuits is warranted, the factors briefly outlined above support the reasonableness of Call-Net's position that these circuits were already contribution exempt. Therefore, Call-Net submitted that special circumstances exist in the present case, and requested that the Commission find that a retroactive exemption order is justified.

11.The first issue is whether Orders 97-1471, 98-385, and 98-1143 included Sprint Canada's cross-border Internet circuits.

12.Based on the record of the proceeding which led to Orders 97-1471, 98-385 and 98-1143, including the pleadings and evidence submitted by Call-Net above, the Commission considers that the determinations made in those Orders were confined to interconnecting circuits and did not include Sprint Canada's cross-border Internet circuits. Accordingly, the Commission directs Call-Net to file, within 60 days of the date of this Order, a technical audit to verify that the Canada-U.S. facilities are physically separate from Sprint Canada's voice network and circuits used by Sprint Canada to carry voice traffic.

13.The second issue is Call-Net's submission that special circumstances apply to support an effective date of 3 April 1997 (the effective date of Order 97-1471), or for circuits installed after 3 April 1997, the date of installation. The Commission notes Call-Net's submission that Sprint Canada, in its monthly report of cross-border circuits provided to BC TEL and Bell, identified these circuits as being used to carry Internet traffic. Accordingly, Bell is already aware that these circuits are transmitting contribution exempt traffic. Given this, the Commission finds that there are special circumstances to justify the effective date of the contribution exemption being 3 April 1997 (the effective date of Order 97-1471), or for circuits installed after 3 April 1997, the date of installation. The Commission notes that Bell did not object to these dates.

14.The third issue is the appropriateness of interim approval. The Commission is of the view that interim approval would be appropriate, as there is no evidence that the Internet circuits carry voice traffic. The Commission further notes that Bell has no objection to interim approval being granted.

15.In light of the foregoing, the Commission:

(i) finds that Orders 97-1471, 98-385 and 98-1143 do not apply to Sprint Canada's cross-border Internet circuits;

(ii) directs Call-Net to file a technical audit, within 60 days of the date of this Order, to verify that the Canada-U.S. facilities in question are physically separate from the circuits used by Sprint Canada to carry voice traffic; and

(iii) grants interim approval for exemption effective 3 April 1997 (the effective date of Order 97-1471), or for circuits installed after 3 April 1997, the date of installation, with final approval subject to the provision of a satisfactory technical audit.

This document is available in alternative format upon request and may also be viewed at the following Internet site: www.crtc.gc.ca

Secretary General