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Telecom Public Notice CRTC 2003-1
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Ottawa, 15 January 2003
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Review of winback promotions
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Reference: 8622-C12-2003-0020-3, 2003-1-1 and 8740-B2-6711/02
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1.
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The Commission received an application by Bell Canada dated 29 November 2002, to revise General Tariff item 70 - Rates Schedules for Primary Exchange (local) Service, in order to introduce a two-month residential winback promotion from 3 February 2003 to 3 April 2003.
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2.
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Bell Canada proposed to waive the $55.00 service connection charge for the duration of the promotion as an incentive to residential customers, currently with an alternate provider of local services, to subscribe to Bell Canada's individual-line local service.
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3.
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Bell Canada stated that it would not promote this offer to those customers who have completed a transfer of their local service to a competitive local exchange carrier (CLEC) and who have been with that CLEC for a period of three months or less.
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4.
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On 17 December 2002, Futureway Communications Inc. (Futureway) filed comments on the application. Futureway submitted that the Commission should deny the application on the basis that such a promotion would jeopardize the ability of CLECs to build a sustainable customer base.
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5.
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Futureway noted that the Summary report of selected 2001 telecommunications statistics (the Summary) issued by the Commission on 5 November 2002 revealed the state of competition in the residential market. In particular, Futureway noted that the Summary indicated that competitors had 0.6% of all residential local lines in 2001, leaving the incumbent local exchange carriers (ILECs) with a 99.4% market share.
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6.
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Futureway stated that, given the limited amount of competition in the residential local market, the need for Bell Canada to run a winback promotion was questionable.
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7.
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Futureway argued that any such winback promotion may also deter new or existing competitors from entering the residential market altogether. Futureway stated that the fact that the ILECs have retained almost 100% of the residential local market share after nearly five years of local competition is evidence that there were still significant hurdles that competitors must overcome. Futureway submitted that winback promotions by the ILECs, such as that proposed in the application, were an additional hurdle that would be factored into the decision to enter the market made by any potential new competitors.
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8.
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Bell Canada did not file reply comments.
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Background
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9.
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In Local competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8), the Commission relieved the ILECs of the requirement to file imputation tests in support of promotions in the local wireline market where sufficient information was provided by the ILECs to demonstrate that the offering was a legitimate promotion of limited duration.
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10.
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In Decision 97-8, the Commission did not specify the time frame in which a promotion would be considered to be of "limited duration". The Commission has, however, since approved ILEC local wireline promotions, without the support of an imputation test, where the combined enrolment and benefit period of the proposed promotion and any previous promotion for the same services and target groups did not exceed 12 months.
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11.
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The Commission has also approved promotions where the combined enrolment and benefit periods, including any previous promotions for the same services and target groups exceeded 12 months, where these have been supported by filings demonstrating that they have met the imputation test.
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Call for comments
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12.
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In Report to the Governor in Council: Status of Competition in Canadian Telecommunications Markets - Deployment/Accessibility of Advanced Telecommunications Infrastructure and Services, issued 20 December 2002 (GIC - report), the Commission noted that, in the 2001 local wireline market, the ILECs continued to provide over 96% of total local lines and to derive over 97% of total local revenues. The Commission also noted that in 2001 the competitors' market share of local business lines remained unchanged from 2000 at 8%, and that the competitors' market share of local residential lines remained extremely low at 0.6% in 2001. Competitors captured only 4.7% of business local revenues and 0.4% of residential local revenues.
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13.
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The Commission notes that competitors in the local wireline market continue to face substantial barriers to entry which, among other things, limit their ability to expand their networks. For example, competition in the local wireline market is particularly capital intensive and, therefore, has evolved on a narrow geographic basis. In addition, access issues related to municipal rights-of-way, support structures and multi-unit buildings, some of which are before the courts, continue to remain unresolved. As stated in the GIC - report, resolution of these issues is crucial to facilities-based competition.
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14.
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Given the state of competition in the local wireline market, the Commission is concerned about the appropriateness of continuing to approve ILEC winback promotions and other ILEC promotions that have the effect of targeting customers of competitors. In the circumstances of the current market this concern extends to such promotions whether or not they meet the imputation test.
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15.
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Accordingly, the Commission invites parties to comment on the appropriateness of continuing to approve ILEC winback promotions and other ILEC promotions that have the effect of targeting customers of competitors in the local wireline market, whether or not these promotions meet the imputation test.
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16.
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Parties may also comment on any other aspect of the current regulatory framework for ILEC promotions in the local wireline market, such as whether it is appropriate to change the existing approach to determining whether or not a promotion is of limited duration.
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17.
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In light of the above, the Commission will suspend consideration of applications for winback promotions and other promotions that have the effect of targeting customers of competitors in the local wireline market until a decision is issued on the matters raised in this Public Notice.
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Procedure
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18.
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Aliant Telecom Inc., Bell Canada, MTS Communications Inc., Saskatchewan Telecommunications, TELUS Communications Inc., TELUS Communications (Québec) Inc. and Société en commandite Télébec are made parties to this proceeding. Other parties wishing to participate fully in this proceeding must notify the Commission of their intention to do so, by 27 January 2003. They should contact the Secretary General by mail at CRTC, Ottawa, Ontario, K1A 0N2, by fax at (819) 953-0795 or by email at procedure@crtc.gc.ca. They are to indicate in the notice their email address where available. If parties do not have access to the Internet, they are to indicate in their notice whether they wish to receive disk versions of hard copy filings.
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19.
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The Commission will issue as soon as possible after the registration date, a complete list of parties and their mailing address (including their email address, if available), identifying those parties who wish to receive disk versions.
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20.
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Parties may file with the Commission submissions on the issues raised in this Public Notice, serving copies on all parties, by 14 February 2003.
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21.
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Parties may file reply comments with the Commission, serving copies on all parties, by 3 March 2003.
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22.
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Where a document is to be filed or served by a specific date, the document must be actually received, not merely sent, by that date.
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23.
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Parties can file their submissions electronically or on paper. Submissions longer than five pages should include a summary.
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24.
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Where the submission is filed by electronic means, the line ***End of document*** should be entered following the last paragraph of the document, as an indication that the document has not been damaged during electronic transmission.
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25.
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Please note that only those submissions electronically filed will be available on the Commission's web site and only in the official language and format in which they are submitted.
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26.
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Each paragraph of your submission should be numbered.
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27.
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The Commission also encourages parties to monitor the public record of this proceeding (and/or the Commission's web site) for additional information that they may find useful when preparing their submissions.
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Location of CRTC offices
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28.
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Submissions may be examined or will be made available promptly upon request at the Commission offices during normal business hours:
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Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage, Room G-5
Hull, Quebec K1A 0N2
Tel: (819) 997-2429 - TDD: 994-0423
Fax: (819) 994-0218
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Metropolitan Place
99 Wyse Road, Suite 1410
Dartmouth, Nova Scotia B3A 4S5
Tel: (902) 426-7997 - TDD: 426-6997
Fax: (902) 426-2721
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405 de Maisonneuve Blvd. East
2nd Floor, Suite B2300
Montréal, Quebec H2L 4J5
Tel: (514) 283-6607 - TDD: 283-8316
Fax: (514) 283-3689
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55 St. Clair Avenue East, Suite 624
Toronto, Ontario M4T 1M2
Tel: (416) 952-9096
Fax: (416) 954-6343
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Kensington Building
275 Portage Avenue, Suite 1810
Winnipeg, Manitoba R3B 2B3
Tel: (204) 983-6306 - TDD: 983-8274
Fax: (204) 983-6317
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Cornwall Professional Building
2125 - 11th Avenue, Room 103
Regina, Saskatchewan S4P 3X3
Tel: (306) 780-3422
Fax: (306) 780-3319
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10405 Jasper Avenue, Suite 520
Edmonton, Alberta T5J 3N4
Tel: (780) 495-3224
Fax: (780) 495-3214
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530-580 Hornby Street
Vancouver, British Columbia V6C 3B6
Tel: (604) 666-2111 - TDD: 666-0778
Fax: (604) 666-8322
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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: http://www.crtc.gc.ca
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Date Modified: 2003-01-15