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Order CRTC 2001-502
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Ottawa, 29 June 2001
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CRTC gives final approval to changes to 976 service
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Reference: 8740-B2-6391/99 and 4760-388/14162
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The Commission approves, on a final basis, the following changes
to the 976 service providers and accounts receivable management
(ARM) agreements:
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· an increase in the ARM fee for 976 service from 5% to 10%;
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· the introduction of Program Content Guidelines;
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· the introduction of deposit requirements that would not
exceed 30% of the accounts receivable for each billing cycle; and
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· the clarification that 976 service programs, which operate
at chargeback levels of 25% or more for three consecutive months,
are subject to immediate termination.
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The approved provisions are similar to those that apply to 900
service.
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The Commission denies the introduction of a provision in the ARM
agreement that would have precluded 976 service providers from
collecting debts using in-house resources. However, the Commission
directs Bell Canada to amend the ARM agreement to include provisions
that reflect the codes of conduct set out in Ontario and Quebec
collection agency laws.
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1.
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On 31 August 1999, Bell Canada filed Tariff Notice 6391 to ask
for the approval of changes to the 976 service provider (SP) and
accounts receivable management (ARM) agreements to align the terms
and conditions of 976 service with 900 service.
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2.
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In aligning the agreements, Bell Canada proposed to introduce the
following new attributes to 976 service:
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· deposit requirements;
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· program content guidelines;
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· business/government exchange programs; and
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· provisions requiring service providers to use collection
agencies that are provincially licensed.
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3.
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Moreover, Bell Canada proposed to clarify the application of the
attributes associated with initial disputes, repeat disputes and
bad-debt charge-back provisions, and with the charge-back criterion
for program termination.
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4.
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Bell Canada also proposed to increase the ARM fee from 5% to 10%.
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5. |
On 12 October 1999, in Telecom Order CRTC 99-980, the Commission
approved the changes proposed by Bell Canada in TN 6391.
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6. |
On 26 October 1999, 934691 Ontario Inc., operating as First Media
Group Inc., requested that the Commission rescind Order 99-980
and
initiate a proceeding to consider the changes proposed by Bell
Canada in TN 6391. In the alternative, First Media asked that the
Commission stay Order 99-980 and in the further alternative, make
interim the changes approved in Order 99-980, pending completion of
a public process to assess the amendments to 976 service proposed by
Bell Canada in TN 6391.
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7.
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In a letter dated 23 December 1999, the Commission dismissed the
review and vary application. However, the Commission stated that it
considers it desirable and appropriate to provide for fuller public
participation on the changes to 976 service. Pending the outcome of
that process, the Commission made interim the approval of Bell
Canada's application in Order 99-980.
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8.
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On 9 February 2000, the Commission issued Public Notice CRTC 2000-23, Bell Canada – Changes to 976 service provider and
accounts receivable management agreements, to initiate a proceeding
to examine the appropriateness of the changes to 976 service.
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9. |
Comments were received from First Media, 851653 Ontario Inc. and
the Aziza Group Inc. Reply comments were received from Bell Canada.
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10. |
The Commission notes in passing that, as a result of a separate
proceeding held pursuant to Public Notice CRTC 2000-114, Seeking
comments on proposed safeguards associated with Advantage 900
subsequent value programs, dated 8 August 2000, Order CRTC
2001-208, CRTC approves changes proposed by Bell Canada to broaden
the scope of 900 service, dated 9 March 2001, broadened
the scope of 976 service by permitting the provision of subsequent
value programs.
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Proposed changes to 976 service
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a) Increase ARM fee from 5% to 10%
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11. |
In TN 6391, Bell Canada explained this proposed change by noting
that the 900 service fee is 10% of caller charges, whereas the ARM
fee for 976 service was only 5%. Bell Canada noted that its billing
and collection activities included in the management of the accounts
receivable for 976 service are at least as onerous as for 900
service. Bell Canada added that higher chargeback levels are
generally associated with 976 service programs than 900 service
programs, because of the higher proportion of adult and other
entertainment programs. Bell Canada stated that, for each service to
adequately contribute to the recovery of its corresponding costs, it
was necessary to increase the 976 service ARM fee, at least to the
level of 900 service (the industry standard).
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12. |
The Commission considers that the billing and collection
activities associated with the ARM agreement for 976 service are at
least as onerous as they are for 900 service. Bell Canada's comments
showed that substantially the same activities are performed by the
same staff for both services. However, since there is a higher
proportion of adult and other entertainment programs for the 976
service and in view of the fact that the level of chargebacks
associated with 976 service is significantly higher than 900
chargebacks, the Commission considers that the increase in the ARM
fee is appropriate. The Commission also notes that the 976 ARM fee
has been the same since 1986.
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b) Introduction of content guidelines
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13. |
In TN 6391 Bell Canada proposed to introduce schedule B of the
976 service ARM agreement to include the Program Content Guidelines
(the Guidelines). These Guidelines are referred to in the new
article 2.4 of the amended 976 service ARM agreement, which states
that Bell Canada will not purchase, and the service provider will
not sell, its accounts receivable for any programs that do not
comply with the Guidelines. The 976 service Guidelines are identical
to those contained in schedule C of the approved 900 ARM agreement,
except that items 1, 5, 7 and 8 of the 900 service Guidelines were
not reproduced for the 976 service Guidelines. According to Bell
Canada, these proposed 976 Guidelines would provide a reasonable
safeguard against the negative impact that such programs impose on
callers, reputable 976 SPs and the company. Bell Canada suggested
that most of the 976 Guidelines serve to establish and clarify that
programs of an illegal, inflammatory or fraudulent nature are not
permitted on 976 service. Breach of the Guidelines by a service
provider may lead to Bell Canada taking steps to terminate the ARM
agreement.
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14. |
First Media alleged that the Guidelines raise the issue of
carrier involvement in content and impair 976 SPs' right to freedom
of expression. It alleged that limitations on freedom of expression
such as those proposed by Bell Canada will only be upheld if found
to be "such reasonable limits prescribed by law as can be
demonstrably justified in a free and democratic society".
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15. |
In the Commission's view, the purpose and effect of the inclusion
of the Guidelines in the 976 ARM agreement should not be considered
to breach freedom of expression (if any) of service providers. Any
service provider who is denied access to 976 service should be able
to use local access lines or 900 service with alternate billing
arrangements such as the use of credit cards.
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16. |
Any service provider who is currently using 976 service will not
be terminated with regard to existing programs as a result of the
introduction of the Guidelines. The types of services offered by the
parties who intervened in this proceeding would still be allowed on
Bell Canada's 976 facilities after adoption of the Guidelines.
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c) Debt collection to be governed by provincial collections
legislation
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17. |
In TN 6391, Bell Canada stated that it continues to receive
persistent complaints from callers about collection practices
associated with 976 program calls that have been previously charged
back and absorbed by a 976 SP. Complaints include attempts to
collect on amounts that are not owed (such as chargebacks associated
with initial disputes and amounts that were previously settled),
attempts to collect a $40 mark-up on the amounts allegedly owed, and
excessive provocation (e.g., calling as many as 12 times a day, and
using threatening and abusive language).
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18. |
Bell Canada noted that such collection activities are not
permitted by existing provincial legislation; however, such
legislation does not apply to all collection activity. Much of
Ontario's Collection Agencies Act and Quebec's An act respecting the
collection of certain debts do not apply to collection activity
carried out by a creditor in-house. Accordingly, to help ensure that
consumers are protected against unsavoury collection practices
associated with 976 program caller charges, Bell Canada proposed to
introduce article 9.5 into the 976 service ARM agreement, which
would ensure that all collection activity regarding 976 programs
(i.e., associated with repeat-dispute and bad-debt chargebacks)
would be conducted by registered collection agents that are governed
by provincial collections legislation, thus precluding 976 SP from
collecting debts on an in-house basis.
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19. |
In addition, Bell Canada stated that it has received a number of
complaints from callers who are being pursued by collectors with
respect to stale accounts. Where the accounts are several years old,
neither Bell Canada nor the caller may any longer possess a record
of such a call. In such a case, neither is able to confirm that the
charges are, in fact, owed, or have been paid or otherwise waived.
In order to protect callers from unscrupulous service providers or
their agents, article 9.5 would require that collection activity
must commence within a reasonable time period.
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20. |
The Commission considers that the requirement to use registered
collections agents (and consequently to prohibit in-house collection
activity) is an overly broad restriction. In the Commission's view,
Bell Canada has not demonstrated a pressing need for such a broad
restriction and the records of complaints handled by the Commission
do not provide support for such a restriction.
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21. |
The Commission notes that all parties agreed that the objective
sought by Bell Canada – preventing undesirable collections
practices – could be achieved by amending the ARM agreement to
include a definition and description of unacceptable practices.
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22. |
The Commission notes that the Collections Agency Act of the
Province of Ontario, An act respecting collection of certain debts
of the Province of Quebec, and associated regulations, contain
provisions setting out prohibited practices and methods for the
collection of debts. The Commission also notes that where a party,
such as a 976 SP, refers accounts receivable to a collection agency,
the collection agency or collector must not engage in any of the
prohibited practices.
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23. |
The Commission considers that in-house collection activities by a
976 SP should follow the same practices in the provinces of Ontario
and Quebec as those set out in the respective acts and regulations
for third-party collection activities.
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24. |
Accordingly, the Commission considers it appropriate to deny, in
part, the inclusion by Bell Canada, of the proposed article 9.5. The
Commission also considers it appropriate to direct Bell Canada to
amend the ARM agreement to include separate provisions for use in
the provinces of Ontario and Quebec that contain the same list of
prohibited practices, with necessary changes, as exist in the
above-noted provincial collection agency legislation and
regulations.
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25. |
In addition, the Commission approves Bell Canada's amendment of
article 9.5 of the ARM agreement to specify that collection
activities must begin within six months of the date of the report
contemplated by articles 9.3 and 9.4 of the ARM agreement that first
includes the charges in question.
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d) Introduction of deposit requirements
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26. |
Bell Canada proposed to introduce deposit requirements to the 976
ARM agreement. The deposit required would not exceed 30% of the
accounts receivable for each billing cycle. The deposit requirement
for 900 service is 25%.
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27. |
Bell Canada expected that these new deposit requirements would
deter the operations of some 976 SPs, who plan to leave the 976
service market shortly after entering to avoid having to pay
chargeback amounts to Bell Canada.
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28. |
In the Commission's view, the introduction of a deposit
requirement is appropriate.
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e) Introduction of business/government exchange
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29. |
Bell Canada proposed to introduce business/government exchange to
976 service. Previously, Bell Canada introduced such a program as a
900 attribute following the Commission's approval in Telecom Order
CRTC 96-1120. Programs that meet the business/government focus
and low chargeback levels will receive the benefit of offering 976
programs with a $50 per call maximum charge limitation. A
business/government program must clearly have a non-profit, business
or government focus and comply with all of the current standard 976
program application criteria. Bell Canada stated that the 976
service proposal recognizes that, due to the low chargeback ratios
associated with programs of a business/government nature, these
business/government programs can support a higher maximum caller
charge, with little or no adverse affect on subscribers or on Bell
Canada.
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30. |
In the Commission's view, the introduction of a
business/government exchange to 976 service is appropriate.
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f) Chargeback clarification
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31. |
Bell Canada proposed to insert into the 976 service ARM
agreement, article 7.7 (similar to an existing provision in the 900
ARM agreement) which clarifies that 976 service programs which
operate at chargeback levels of 25% or more for three consecutive
months are subject to immediate termination.
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32. |
According to Bell Canada, this article provides a reasonable
safeguard against the negative impact that "poor value"
programs impose on callers, reputable 976 SPs and Bell Canada.
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33. |
In the Commission's view, the introduction of this chargeback
clarification is appropriate.
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Disposition
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34. |
In light of the above, the Commission approves, on a final basis,
the amendments to 976 service proposed by Bell Canada in TN 6391,
with the following exception:
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The Commission denies the part of the proposed article 9.5 that
specifies the use of registered collection agencies to collect
debts incurred through 976 programs.
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35. |
The Commission directs Bell Canada to amend the ARM agreement to
include separate provisions for use in the provinces of Ontario and
Quebec that contain the same list of prohibited practices, with
necessary changes, as exist in the above-noted provincial collection
agency legislation and regulations.
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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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