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Order CRTC 2001-761
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Ottawa, 3 October 2001
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Commission approves terms and conditions for local exchange and
local payphone competition in the territories of TELUS
Communications (Québec) Inc. and Télébec ltée
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Reference: 8622-C12-13/01 |
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The Commission finds that it is appropriate to make use of the
terms and conditions for local exchange and local payphone
competition that apply in the large ILEC territories to TELUS
Québec and Télébec. |
1. |
In Public Notice CRTC 2001-24, Competition in the local
exchange and local payphone markets in the territories of
Québec-Téléphone and Télébec ltée, dated 9 February 2001,
the Commission set out to establish the terms and implementation
date of competition in the local exchange and local payphone markets
in the territories of TELUS Communications (Québec) Inc. (formerly
known as Québec-Téléphone) and Télébec ltée.
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2. |
PN 2001-24 named TELUS Québec and Télébec parties to this
proceeding. Bell Canada was subsequently made party to this
proceeding as determinations made in this proceeding could possibly
affect the company.
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3. |
The Commission received comments from the James Bay Cree
Communications Society (JBCCS), la Fédération des associations
coopératives d'économie familiale du Québec and Action Réseau
Consommateur.
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Terms and conditions for local competition
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4. |
TELUS Québec and Télébec agreed that, in general, the terms
and conditions that exist for local exchange and local payphone
competition in the territories of the large incumbent local exchange
carriers (ILECs) in Canada should also apply in their territories.
However, Télébec expressed some concerns regarding:
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a) exchanges where local service is
provided by DMS-10 switches; |
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b) exchanges where its remote switches
are linked to host switches owned by another ILEC; |
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c) the amalgamated exchange of
Rouyn-Noranda; and |
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d) the removal of payphones. |
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These concerns are discussed below.
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Exchanges where service is provided by DMS-10 switches in
Télébec's operating territory
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5. |
Télébec identified six exchanges (four in the James Bay region,
one on the Quebec/Labrador border and one on Îles-de-la-Madeleine)
where DMS-10 switches, which are not equipped to provide equal
access and are not connected to the common channel signalling 7
(CCS7) network, are used to provide local exchange services. The
company proposed that local competition not be allowed in these
exchanges until it had the opportunity to upgrade the facilities.
Télébec submitted that it planned to upgrade its DMS-10 switch in
Radisson in 2006 and its Wemindji switch between 2004 and 2006, but
did not forecast the replacement of the remaining four DMS-10
switches. The JBCCS submitted that it is concerned that competition
will be prevented in the communities served by DMS-10 switches.
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6. |
The Commission is of the view that the remote locations and low
population densities in these particular exchanges make them
unlikely targets for potential local competitors. To require
Télébec to upgrade its DMS-10 switches would require a significant
investment that would not necessarily result in local competition in
these exchanges.
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7. |
The Commission notes that it is possible to implement local
competition in Télébec's exchanges where local service is provided
by DMS-10 switches, notwithstanding that certain functions such as
local number portability (LNP) and certain advanced calling features
will not be available in these exchanges.
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8. |
The Commission is of the view that competition should be
permitted in these exchanges. In the event that a competitive local
exchange carrier (CLEC) proposes to compete in a Télébec exchange
where service is provided by a DMS-10 switch, the Commission will
examine, on a case-by-case basis, any supplemental terms and
conditions that would foster competition.
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Exchanges where service is provided by a Télébec remote linked
to a host switch that is owned by another ILEC
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9. |
In its evidence, Télébec noted that in some of its exchanges,
local service is provided by a remote switch linked to a host switch
that is owned by another ILEC.
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10. |
Télébec generally agreed with the terms and conditions that
apply in the territories of the large ILECs (former Stentor
companies) for interconnection with a CLEC for the purpose of
exchanging traffic, and for CCS7 interconnection. Télébec
submitted that because these remotes are linked to a host switch
owned by another ILEC, the process to conclude an interconnection
agreement would be a three-party negotiation. Télébec noted that
the increased complexity could cause delays beyond the established
time intervals for local competition in the territories of the large
ILECs.
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11. |
In addition, Télébec submitted that since 9-1-1 services are
provided through Bell Canada facilities, a CLEC would have to make
arrangements with Bell Canada. Télébec also noted that a CLEC
would have to make arrangements to obtain local, toll and CCS7
transiting functions, and message relay services with either the
owner of the host switch or a third party that can provide these
types of services.
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12. |
In the event the Commission required the company to provide any
of the above-noted services and/or functions, Télébec submitted
that the company should be allowed to recover its costs from the
CLEC making the request.
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13. |
The Commission considers that the terms and conditions for
interconnection between an ILEC and a CLEC that apply in the large
ILEC territories should also apply in the case of a CLEC that wants
to compete in a territory served by a Télébec remote that is
linked to a host switch owned by another ILEC. As the ILEC serving
the exchange, Télébec would be responsible for negotiating a
co-carrier interconnection agreement with the CLEC. This could
include, but would not be limited to, the provision of a point of
interconnection within the exchange for the interchange of traffic
and the provision of a signalling point of interconnection in the
numbering plan area for purposes of CCS7 interconnection. The
Commission considers that Télébec and the CLEC should develop the
most efficient interconnection agreement possible that fully serves
their needs. This could involve Télébec and the CLEC agreeing to
alternative arrangements for the provision of a point of
interconnection at a location outside of the exchange and alternate
arrangements for the provision of signalling points of
interconnection.
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14. |
The Commission further considers that Télébec must respect the
service intervals put in place for the implementation of local
competition in the territories of the large ILECs, even where it
provides service through the use of a remote linked to another
company's host switch.
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15. |
With regard to the functions and/or services provided to remotes
by the host-switch owner that CLECs require to compete with
Télébec, the Commission is of the view that these functions and/or
services should be made available to CLECs at terms and conditions
that are no less favourable than those that apply to Télébec.
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16. |
The Commission notes that the costs Télébec incurs as a result
of having these responsibilities are part of the local competition
implementation costs, which are being considered in the proceeding
initiated by Public Notice CRTC 2001-36, Implementation of price
cap regulation for Québec-Téléphone and Télébec, dated
13 March 2001.
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Local competition in the amalgamated exchange of Rouyn-Noranda
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17. |
In its evidence, Télébec explained that the Rouyn-Noranda
exchange comprises five amalgamated exchanges where telephone
service is provided by 23 remote units. If, for example, a
competitor interconnected at the Rouyn-Noranda remote needed some
local loops from among the 23 remotes in the amalgamated exchanges,
Télébec submitted that it would incur extra costs that it should
be allowed to recover from the CLEC.
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18. |
The Commission notes that, among other things, the purpose of the
proceeding initiated with the release of Public Notice 2001-69, Implementation
of competition in the local exchange and local payphone markets in
the territories of Télébec and TELUS (Québec), dated 14 June
2001, is to establish rates to permit the purchase of the local
network components that CLECs might need to provide local exchange
service in Télébec's operating territory. The Commission considers
that the local loop cost issue will also be addressed in the PN 2001-69
proceeding. Therefore, the Commission will not address this issue in
this order.
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Local competition – conclusion
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Reports justifying removal of payphones
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19. |
Télébec proposed not to provide an annual report justifying the
removal of its payphones as required by Telecom Decision CRTC 98-8, Local
pay telephone competition, dated 30 June 1998. Télébec
submitted that it has sufficient safeguards to ensure that payphones
will not be removed without proper justification. These safeguards
include its service contracts with location providers and its policy
of installing at least one payphone for emergency purposes in each
municipality where the company provides local exchange service.
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20. |
The Commission is of the view that in remote communities, the use
of local service payphones plays a more important role in providing
reliable and affordable telecommunications of high quality to the
general population than in urban communities. The Commission also
notes that wireless alternatives are not available in remote
communities to the same extent as they are in urban centres.
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21. |
In Decision 98-8, the Commission indicated that, in a future
proceeding, it would consider whether or not there was a need for
public interest payphones. The Commission noted that the analysis
would include, among other things, complaints received by the
Commission and the reports submitted by telephone companies to
justify the removal of their payphones.
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22. |
The Commission is of the view that it is in the public interest
that both TELUS Québec and Télébec conform to the directives in
Decision 98-8, including the need to file a yearly report justifying
the removal of payphones from their operating territories. The
Commission notes that TELUS Québec did not file any representations
concerning the directives in Decision 98-8.
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23. |
Therefore, the Commission directs Télébec and TELUS Québec to
conform to the directives in Decision 98-8. This includes filing an
annual report to justify the removal of payphones from their
respective operating territories.
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Tariff matters
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Recovering expenses to implement local competition and local
number portability
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24. |
In PN 2001-24, the Commission asked TELUS Québec and Télébec
to file justifiable proposals to recover the costs of implementing
local competition and LNP.
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25. |
In response, TELUS Québec submitted that it wanted the same
treatment that is provided to the larger ILECs. The company proposed
that the recovery of these costs should form part of the revenue
requirement calculation associated with PN 2001-36.
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26. |
By contrast, Télébec proposed that the expenses associated with
the implementation of local competition and LNP be recovered from
the Central Fund. Télébec stated that its operating territory is
among the highest-cost territories with some of the highest local
rates in the country. As the Central Fund is the mechanism used to
subsidize high-cost territories, Télébec submitted that it was
logical that the Central Fund pay for local competition in its
operating territory to protect its customers from more rate
increases.
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27. |
The Commission notes that the large ILECs raised similar concerns
when the Commission considered how to recover the costs of
implementing local competition in the large ILEC territories. The
Commission concluded that each carrier would be responsible for
recovering its own costs.
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28. |
The Commission is of the view that the customers in Télébec's
and TELUS Québec's territories will benefit from local competition.
Therefore the Commission, by majority vote, considers that the
companies should recover their own respective costs and accordingly,
finds that these costs should not be recovered from the Central
Fund.
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29. |
In order to reduce the size of these costs, the Commission
considers that both TELUS Québec and Télébec should incur
expenses only as they are required.
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Cost of implementing local competition and LNP
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30. |
In their submissions and responses to Commission interrogatories,
both companies provided estimates of costs to implement local
competition and LNP.
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31. |
Télébec updated its costing information on 13 July 2001. On the
same day, Télébec filed reply comments, which was the last stage
of the PN 2001-24 proceeding. The Commission notes that due to the
late date of filing, the interested parties did not have an
opportunity to provide comments on the costing information that
Télébec provided.
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32. |
TELUS Québec proposed to provide further information about the
costs of implementing local competition and LNP in the proceeding
initiated by PN 2001-36.
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33. |
On the basis of the record of this proceeding, the Commission
considers that it cannot make a determination on the total cost of
implementing local competition and LNP in the operating territories
of TELUS Québec and Télébec. Therefore, this issue will be
addressed during the proceeding initiated by PN 2001-36.
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Co-location tariffs
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34. |
TELUS Québec filed tariff notice 299 on 23 March 2001. Télébec
filed tariff notice 262 on 11 May 2001. Both proposed rates, terms
and conditions allowing co-location of competitors' transmission
facilities in their respective central offices. The proposed rates,
terms and conditions were similar to those that the Commission had
already approved for Bell Canada.
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35. |
The Commission approves TELUS Québec's TN 299 and Télébec's TN
262.
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36. |
Recently, the Commission has issued a letter decision and an
order on the issue of co-location. The Commission is of the
preliminary view that TELUS Québec and Télébec should reflect
these Commission determinations on co-location in their respective
tariffs. These determinations are contained in Decision CRTC 2001-204, The Commission, by majority decision, approves the
Coalition for Better Co-Location – Part VII application for
expedited relief with respect to the current co-location regime,
dated 30 March 2001, and Order CRTC 2001-695, CRTC reduces
co-location space restriction – Show cause to ILECs other than
Bell Canada, dated 10 September 2001. TELUS Québec and
Télébec are directed to provide their comments within 30 days of
this order.
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37. |
In establishing terms and conditions for local competition in the
territories of the large ILECs, the Commission sought to achieve a
balance among the interests and needs of consumers, new entrants in
the markets of local exchange and local payphone services, and the
incumbent telephone companies. The Commission finds that it is
appropriate to make use of the terms and conditions for local
exchange and local payphone competition that apply in the large ILEC
territories in the case of TELUS Québec and Télébec.
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Timing for the introduction of local competition
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38. |
In PN 2001-24, the Commission expressed the preliminary view that
local exchange and local payphone competition should begin in 2002.
Both TELUS Québec and Télébec submitted that local competition
should begin in late 2002. The companies argued that after the
determinations are made in this proceeding, the many issues that
would remain unresolved should be addressed before the introduction
of local competition in their operating territories.
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39. |
For example, in PN 2001-69, among other things, the Commission
seeks to:
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a) establish the rate band structure in
the respective telephone company territories based on Phase II type
costing; |
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b) establish local loop rates per band; |
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c) determine the per-line subsidy
available to providers of local services in high-cost exchanges; and |
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d) determine various rates such as those
for unbundled local network components, transit services and access
lines to payphone services. |
40. |
The Commission considers that permitting competition in the fall
of 2002 will ensure that all the required components for local
exchange and local payphone competition would be in place. |
41. |
Therefore, the Commission finds that competition in the local
exchange and local payphone markets should be permitted in
Télébec's and TELUS Québec's operating territories as of 1
September 2002.
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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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