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Telecom Decision CRTC 2005-2
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Ottawa, 14 January 2005
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Forbearance from regulating interexchange private line services on the North Bay to Sudbury route
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Reference: 8640-B2-200405119
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In this Decision, the Commission forbears, with some conditions, from regulating high capacity/DDS interexchange private line services provided by Bell Canada on the North Bay to Sudbury route, for which at least one competitor in addition to the incumbent local exchange carrier now offers, or provides, such services at DS-3 or greater bandwidth.
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1.
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In Follow-up Proceeding to Telecom Decision CRTC 97-20: Establishment of criterion and process for considering further forbearance for High Capacity/DDS interexchange private line services, Telecom Order CRTC 99-434, 12 May 1999 (Order 99-434), the Commission directed competitors of the major incumbent local exchange carriers (ILECs) to file a semi-annual report identifying interexchange private line (IXPL) routes on which they provide, or offer to provide, high capacity/Digital Data Services (DDS) IXPL services (IXPL services) at DS-3 or greater bandwidth, using facilities other than facilities obtained from the ILEC or an affiliate of the ILEC.
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2.
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In Order 99-434, the Commission stated that ILECs may also submit applications for forbearance from regulation on routes not identified by competitors. The Commission noted that, in the case of such ILEC-initiated forbearance applications, interested parties would be given an opportunity to comment on such applications prior to their disposition.
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3.
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On 26 May 2004, pursuant to the Commission directive in Order 99-434, Bell Canada filed an application requesting forbearance from regulation for IXPL services on the North Bay to Sudbury route.
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Background
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4.
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The Commission's power to forbear from regulating a telecommunications service or class of services provided by a Canadian carrier originates from section 34 of the Telecommunications Act (the Act), which reads as follows:
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34. (1) The Commission may make a determination to refrain, in whole or in part and conditionally or unconditionally, from the exercise of any power or the performance of any duty under sections 24, 25, 27, 29 and 31 in relation to a telecommunications service or class of services provided by a Canadian carrier, where the Commission finds as a question of fact that to refrain would be consistent with the Canadian telecommunications policy objectives.
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(2) Where the Commission finds as a question of fact that a telecommunications service or class of services provided by a Canadian carrier is or will be subject to competition sufficient to protect the interests of users, the Commission shall make a determination to refrain, to the extent that it considers appropriate, conditionally or unconditionally, from the exercise of any power or the performance of any duty under sections 24, 25, 27, 29 and 31 in relation to the service or class of services.
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(3) The Commission shall not make a determination to refrain under this section in relation to a telecommunications service or class of services if the Commission finds as a question of fact that to refrain would be likely to impair unduly the establishment or continuance of a competitive market for that service or class of services.
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(4) The Commission shall declare that sections 24, 25, 27, 29 and 31 do not apply to a Canadian carrier to the extent that those sections are inconsistent with a determination of the Commission under this section.
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5.
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The Canadian telecommunications policy objectives set out at section 7 of the Act include the following:
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(c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;
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(f) to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective; and
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(h) to respond to the economic and social requirements of users of telecommunications services.
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6.
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The Commission established a framework for considering whether or not to forbear from regulation in Review of regulatory framework, Telecom Decision CRTC 94-19, 16 September 1994 (Decision 94-19). In that decision, the Commission noted that the first step in assessing whether it is appropriate to forbear from regulation involves defining the relevant market. The relevant market is essentially the smallest group of products and geographic area in which a firm with market power can profitably impose a sustainable price increase. The Commission established a number of criteria to be examined when determining whether a market was competitive. These criteria include the market shares of the dominant and competing firms, demand and supply conditions, the likelihood of entry into the market, barriers to entry into the market and evidence of rivalrous behaviour.
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7.
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In Stentor Resource Centre Inc. - Forbearance from regulation of interexchange private line services, Telecom Decision CRTC 97-20, 18 December 1997 (Decision 97-20), the Commission, further to an analysis in accordance with the framework set out in Decision 94-19, granted forbearance from regulation pursuant to section 34 of the Act with respect to the provision, by Stentor companies, of IXPL services for the routes identified in that decision. The Commission found that forbearance from regulation of the routes at issue would, under subsection 34(1) of the Act, be consistent with the Canadian telecommunications policy objectives set out in section 7 of the Act, including paragraphs 7(c) and (f). The Commission also found that it would be appropriate to forbear from regulation under subsection 34(2) of the Act on the basis that the forborne services are or will be subject to a level of competition sufficient to protect the interests of users. Finally, the Commission found, pursuant to subsection 34(3) of the Act, that to forbear from regulation would not impair unduly the establishment or continuance of a competitive market for the forborne services.
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8.
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In Decision 97-20, the Commission noted that high capacity IXPL services were offered and provided on a route-specific basis and customers required these services on one or more routes. The Commission determined that each route should be considered as a separate market for purposes of forbearance analysis, and that forbearance from regulation is appropriate for routes for which rivalrous competition exists or will exist in the near future.
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9.
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The Commission later determined in Order 99-434 that, given that the IXPL market is route-specific, forbearance from a route is appropriate if there is at least one competitor that provides, or that is offering to provide, IXPL services, at DS-3 or greater bandwidth, on that route using facilities other than facilities obtained from the ILEC or an affiliate of the ILEC.
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10.
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In Order 99-434, the Commission stated that where service is offered or provided between intermediate exchanges on a particular route, that service is a separate route and must be assessed on the basis of the state of competition on that intermediate route or routes.
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11.
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In Northern Telephone Limited and O.N. Tel: forbearance from IXPL and ATM services, Order CRTC 2000-631, 7 July 2000 (Order 2000-631), the Commission extended the IXPL reporting requirement to O.N. Tel (now known as Ontera) and other competitors operating in Northern Telephone Limited's territory that met the criteria established in Order 99-434.
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12.
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With respect to the scope of forbearance, in Decision 97-20, the Commission forbore from the exercise of its powers and duties under section 25, subsections 27(1), 27(2), 27(4), 27(5), and 27(6) and section 31 of the Act. The Commission found it appropriate to impose conditions pursuant to section 24 of the Act with respect to the protection of customer confidential information and the bypass of Canadian telecommunications services and facilities. In addition, the Commission retained its powers pursuant to section 24 of the Act to impose future conditions upon the forborne services provided by the Stentor companies, where the circumstances so warrant.
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13.
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In Decision 97-20, the Commission considered that it was appropriate to retain its powers pursuant to subsection 27(3) of the Act to the extent that this subsection refered to compliance with powers and duties not forborne from in that decision.
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14.
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The Commission also found it appropriate to continue to exercise its powers under section 29 of the Act with respect to the requirement to file for and obtain Commission approval of certain agreements or other arrangements.
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15.
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However, in TELUS' application for forbearance from section 29 of the Telecommunications Act with respect to forborne interexchange private line and long distance services, Telecom Decision CRTC 2003-77, 19 November 2003 (Decision 2003-77) and in Aliant Telecom, Bell Canada, MTS Allstream and SaskTel - Forbearance from section 29 of the Act for agreements related to forborne domestic toll services and forborne interexchange private line services, Telecom Decision CRTC 2004-80, 9 December 2004 (Decision 2004-80), the Commission found it appropriate to forbear from the exercise of its powers and the performance of its duties under section 29 of the Act in relation to forborne IXPL services provided by TELUS Communications Inc. and in relation to forborne IXPL services and domestic toll services provided by the companies listed in Decision 2004-80.
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Process
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16.
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The Commission received comments from O.N.Telcom (now known as Ontera) dated 20 August 2004, and reply comments from Bell Canada on 1 September 2004.
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17.
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On 17 September 2004, the Commission addressed interrogatories to Ontera, and on 24 September 2004, Ontera filed its responses.
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18.
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In light of the information provided by Ontera in reply to the Commission's interrogatories, the Commission, in a letter dated 26 October 2004, addressed an interrogatory to Persona Communications Inc. (Persona) and included Persona in the proceeding.
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19.
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Persona replied to the Commission's interrogatory on 28 October 2004, and Bell Canada provided reply comments on 29 October 2004.
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Position of parties
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20.
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Bell Canada requested forbearance of regulation for the North Bay to Sudbury route, submitting that the route met the criteria for forbearance of regulation pursuant to Order 99-434.
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21.
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Bell Canada noted that Ontera stated on its website that it ".has an extensive fibre optic infrastructure and digital telecommunications network from North Bay to Timmins, Cochrane, Hearst, Mossonee, Moose Factory and now Sault Ste. Marie". Bell Canada claimed that Ontera was currently providing DS-3 or equivalent service to at least one customer on the North Bay to Sudbury route.
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22.
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Bell Canada also requested that the Commission take prompt and appropriate action to bring Ontera into compliance with the on-going requirement to report on a semi-annual basis all routes that might meet the criteria for forbearance from regulation outlined in Order 99-434. Bell Canada noted that Ontera, in spite of the semi-annual reporting requirements set out by the Commission in Order 2000-631, to date had only filed one report, identifying one IXPL route between Sudbury and Timmins that met the criteria for forbearance.
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23.
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In reply, Ontera stated that it did not have a customer subscribing to DS-3 bandwidth or greater on a private line basis on the North Bay to Sudbury route.
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24.
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In reply, Bell Canada submitted that Ontera's response did not fully address the established criteria for forbearance set out in Order 99-434. Bell Canada submitted that Ontera should be required to identify whether it was providing, offering, or in the past "offered" the equivalent of DS-3 service, on a private line basis to at least one customer. Bell Canada noted that such service could be provided or offered using a combination of DS-1/0 facilities, using terrestrial facilities from other than Bell Canada, in order to provide the equivalent of DS-3 service.
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25.
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In its response to interrogatories, Ontera stated that it does offer to provide DS-3 bandwidth or greater IXPL service to customers on the North Bay to Sudbury route; however, currently it only had customers who subscribed to DS-3 bandwidth or greater, whose services transited the North Bay to Sudbury route, of which the North Bay to Sudbury route was a leg of the overall circuit provided. Ontera also stated that it did not own transport facilities on the North Bay to Sudbury route, but leased a SONET OC-12 facility from Persona.
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26.
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In its response to interrogatories, Persona stated that it owned and operated an OC-48 transport platform and a Gigabit Ethernet transport between North Bay and Sudbury. Persona also stated that it leased bandwidth capacity equivalent of DS-3 or greater on the North Bay to Sudbury route to a customer.
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27.
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In reply, Bell Canada submitted that Persona's and Ontera's responses demonstrated that the established criterion for forbearance on the North Bay to Sudbury route was met, and that the route should be forborne from regulation. Bell Canada also submitted that both Persona and Ontera should be ordered by the Commission to file a full report on routes that met the criterion set out in Order 99-434.
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Commission's analysis and determination
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28.
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The Commission notes that Persona indicated that it owned terrestrial facilities on the North Bay to Sudbury route and that it provides a DS-3 or greater IXPL service to at least one customer on the North Bay to Sudbury route using its own terrestrial facilities.
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29.
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The Commission finds that, based on the record of this proceeding, the IXPL route between North Bay and Sudbury satisfies the criteria set out in Order 99-434.
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30.
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The Commission notes that Persona and Ontera have not complied with the Commission's directive to report on a semi-annual basis identifying IXPL routes that meet the criteria for forbearance established in Order 99-434. The Commission hereby reminds Persona and Ontera of their semi-annual reporting obligation as set out in Order 99-434.
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Application of subsections 34(1), (2) and (3) of the Act
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31.
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The Commission finds, pursuant to subsection 34(1) of the Act, as a question of fact, that to refrain from the exercise of its powers and the performance of its duties, to the extent set out in this Decision, with respect to the regulation of the IXPL services on the North Bay to Sudbury route, is consistent with the Canadian telecommunications policy objectives set out in section 7 of the Act.
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32.
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The Commission also finds, pursuant to subsection 34(2) of the Act, as a question of fact, that it is appropriate to refrain from regulating the IXPL services on the North Bay to Sudbury route, to the extent set out in this Decision, on the basis that the forborne route is subject to a level of competition sufficient to protect the interests of users of these services.
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33.
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Finally, the Commission finds, pursuant to subsection 34(3) of the Act, as a question of fact, that refraining from regulating the IXPL services on the North Bay to Sudbury route, to the extent set out in this Decision, is unlikely to impair unduly the continuance of a competitive market for these services.
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34.
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In light of these findings, the Commission must determine the extent to which it is appropriate to refrain, in whole or in part, and conditionally or unconditionally, from the exercise of any powers or the performance of any duty under sections 24, 25, 27, 29 and 31 of the Act.
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Section 24
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35.
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Section 24 of the Act provides:
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24. The offering and provision of any telecommunications service by a Canadian carrier are subject to any conditions imposed by the Commission or included in a tariff approved by the Commission.
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36.
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The Commission considers that it is appropriate to retain its powers pursuant to section 24 of the Act to ensure that the confidentiality of customer information continues to be protected. Accordingly, the Commission directs Bell Canada, on a going forward basis, to incorporate, where appropriate, the existing conditions regarding disclosure of confidential customer information to third parties into all contracts and any other arrangements for the provision of the services forborne from regulation in this Decision.
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37.
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The Commission considers that it is also appropriate to retain sufficient powers under section 24 of the Act to specify possible future conditions upon the forborne services provided by Bell Canada, where circumstances so warrant.
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38.
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The Commission notes that the restrictions against the bypass of Canadian telecommunications services and facilities were terminated in Regulatory regime for the provision of international telecommunications services, Telecom Decision CRTC 98-17, 1 October 1998. Therefore, there is no need to impose a condition in this regard pursuant to section 24 of the Act as was done in Decision 97-20.
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Section 25
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39.
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Section 25 of the Act provides:
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25. (1) No Canadian carrier shall provide a telecommunications service except in accordance with a tariff filed with and approved by the Commission that specifies the rate or the maximum or minimum rate, or both, to be charged for the service.
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(2) A joint tariff agreed on by two or more Canadian carriers may be filed by any of the carriers with an attestation of the agreement of the other carriers.
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(3) A tariff shall be filed and published or otherwise made available for public inspection by a Canadian carrier in the form and manner specified by the Commission and shall include any information required by the Commission to be included.
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(4) Notwithstanding subsection (1), the Commission may ratify the charging of a rate by a Canadian carrier otherwise than in accordance with a tariff approved by the Commission if the Commission is satisfied that the rate
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(a) was charged because of an error or other circumstance that warrants the ratification; or
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(b) was imposed in conformity with the laws of a province before the operations of the carrier were regulated under any Act of Parliament.
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40.
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The Commission considers it appropriate, given the competitive market, that Bell Canada no longer be required to file tariffs and obtain the Commission's approval in respect of the forborne services in this Decision. Accordingly, the Commission will refrain from the exercise of all of its powers and the performance of all of its duties under section 25 of the Act with respect to the forborne services in this Decision.
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Section 27
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41.
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Section 27 of the Act provides:
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27. (1) Every rate charged by a Canadian carrier for a telecommunications service shall be just and reasonable.
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(2) No Canadian carrier shall, in relation to the provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage.
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(3) The Commission may determine in any case, as a question of fact, whether a Canadian carrier has complied with section 25, this section or section 29, or with any decision made under section 24, 25, 29, 34 or 40.
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(4) The burden of establishing before the Commission that any discrimination is not unjust or that any preference or disadvantage is not undue or unreasonable is on the Canadian carrier that discriminates, gives the preference or subjects the person to the disadvantage.
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(5) In determining whether a rate is just and reasonable, the Commission may adopt any method or technique that it considers appropriate, whether based on a carrier's return on its rate base or otherwise.
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(6) Notwithstanding subsections (1) and (2), a Canadian carrier may provide telecommunications services at no charge or at a reduced rate
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(a) to the carrier's directors, officers, employees or former employees; or
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(b) with the approval of the Commission, to any charitable organization or disadvantaged person or other person.
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42.
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The Commission considers that there is no need to apply the regulatory standards for "just and reasonable" rates to rates that are set in a competitive market. Accordingly, the Commission will refrain from the exercise of all of its powers and the performance of all of its duties under subsection 27(1) of the Act with respect to the IXPL services forborne from in this Decision. Similarly, the Commission will refrain from the exercise of all of its powers and the performance of all of its duties under subsection 27(2) of the Act.
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43.
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However, the Commission considers it necessary to retain its powers under subsection 27(3) of the Act with respect to compliance with powers and duties not forborne from in this Decision.
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44.
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The Commission will also forbear from all of its powers under subsections 27(4), (5) and (6) of the Act, since these subsections relate to subsections 27(1) and (2) of the Act with respect to which the Commission is forbearing from in this Decision.
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Section 29
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45.
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Section 29 of the Act provides:
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29. No Canadian carrier shall, without the prior approval of the Commission, give effect to any agreement or arrangement, whether oral or written, with another telecommunications common carrier respecting
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(a) the interchange of telecommunications by means of their telecommunications facilities;
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(b) the management or operation of either or both of their facilities or any other facilities with which either or both are connected; or
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(c) the apportionment of rates or revenues between the carriers.
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46.
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Given the finding in Decision 2004-80 that the competition on IXPL routes that meet the criteria of Order 99-434 is sufficient to protect the interests of users with regard to agreements respecting such routes, the Commission considers it appropriate to forbear from the exercise of its powers and the performance of its duties under section 29 of the Act in respect to the route forborne from in this Decision.
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Section 31
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47.
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Section 31 of the Act provides:
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31. No limitation of a Canadian carrier's liability in respect of a telecommunications service is effective unless it has been authorized or prescribed by the Commission.
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48.
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The Commission considers it appropriate that Bell Canada be able to limit its liability with respect to the provision of the forborne services on the North Bay to Sudbury route, without need for Commission approval. Any provision limiting liability in existing contracts or arrangements will continue to remain in force until their expiry. A contract or arrangement will be deemed to terminate on the date or in the manner provided therein as of the date of this Decision, notwithstanding extensions provided for therein.
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Declaration pursuant to subsection 34(4) of the Act
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49.
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In light of the above, the Commission declares, pursuant to subsection 34(4) of the Act, that sections 24, 25, 27, 29 and 31 of the Act do not apply to Bell Canada's high capacity and DDS IXPL services on the North Bay to Sudbury route, except with respect to:
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(a) the conditions pursuant to section 24 of the Act set out in this Decision with respect to the confidentiality of customer information;
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(b) any future condition that the Commission may impose, pursuant to section 24 of the Act; and
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(c) the Commission's powers under subsection 27(3) of the Act with respect to compliance with powers and duties not forborne from in this Decision.
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Tariff filings
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50.
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The Commission directs Bell Canada to issue tariff pages forthwith removing the tariffs for the services in question on the North Bay to Sudbury route, effective on the date of issuance of the tariff pages.
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Secretary General
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This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca
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Date Modified: 2005-01-14