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Decision CRTC 2001-572
Ottawa, 10 September 2001
Reference: 8622-C25-07/00
To: Interested parties – Call-Net Part VII applications
Interested parties – PN 2000-124
Registered CLEC list
Netricom Communications Solutions
Subject: Direction, on an interim basis, that local exchange
carriers must retain responsibility and control of their in-building
wire pending the final determination in the PN 2000-124 proceeding
- In Decision CRTC 2001-364, dated 19 June 2001, in disposing of
applications filed by Call-Net Enterprises Inc., the Commission,
among other things, stated its intention to re-open the proceeding
launched by Public Notice CRTC 2000-124, Seeking public input on
access to multi-dwelling units, in-building wiring and riser space,
dated 25 August 2000, and to seek comment on the
following questions:
- in buildings where the transfer of responsibility and control of
in-building wire has not yet taken place, should the Commission
modify the demarcation points for unbundled local loops to
maintain the service provider demarcation point at the customer
demarcation point in the event that building owners assume
responsibility and control of incumbent local exchange carrier (ILEC)
owned in-building wire?
- The Commission also initiated a show cause proceeding to determine
whether local exchange carriers (LECs) should be directed, on an
interim basis, to retain responsibility and control of their
in-building wire pending the final determination in the PN 2000-124
proceeding.
- Call-Net Communications Inc., Saskatchewan Telecommunications and
TELUS Communications Inc. (TCI) were in favour of the interim
directive. Call-Net noted that where responsibility and control of
in-building wire has been transferred to the building owner, the
competitive local exchange carrier (CLEC) is responsible for making
arrangements with the building owner to connect the loop from the
main terminal room to the customer suite. Call-Net submitted, among
other things, that for CLECs, the added complexity and cost of
having to deal with building owners to extend unbundled loops to the
customer's suite is a further barrier to the development of local
competition. Call-Net stated that an interim order preventing
further transfer of responsibility and control of inside wire to
building owners will not prejudice either LECs or building owners;
if the Commission ultimately rules in favour of transfers, the only
effect of the interim order would be delay, which would be a minor
inconvenience. Call-Net also stated that if the Commission
ultimately rules that such transfers are not in the public interest,
there will likely be no practical way to undo any transfers that
have occurred.
- The Canadian Institute of Public and Private Real Estate Companies
(CIPPREC) on behalf of itself and the Building Owners and Managers
Association Canada (BOMA) (collectively, CIPPREC/BOMA); Bell Canada
on behalf of itself, Aliant Telecom Inc., and MTS Communications
Inc. (collectively, Bell Canada et al.); and Netricom Communications
Solutions were opposed to an interim direction to prohibit transfers
of in-building wire.
- Bell Canada et al. submitted, among other things, that the
proposed interim direction should not be issued as it would almost
certainly elicit a negative reaction from building owners, and would
likely make the resolution of other building access issues for Bell
Canada et al. and for the CLECs considerably more difficult. Bell
Canada et al. stated that such an order would only serve to
exacerbate concerns expressed by building owners regarding the
exercise by the Commission of power over building owners' property
rights. Bell Canada et al. also stated that they would be placed at
a serious disadvantage in relation to other infrastructure owners
(hydro, CLECs, tenants) in approaching building owners for such
things as the installation of additional facilities to meet growing
customer needs. Any building owner would be reluctant to permit the
installation of ILEC in-building wire. Bell Canada et al. also
argued that the Commission may not have the jurisdiction to make the
order. These arguments, and Call-Net's response on this point, are
addressed separately below.
- Bell Canada et al. also stated that if the Commission proceeds to
issue the directive in question, the Commission should extend the
directive to all LECs. If the Commission is to prohibit transfers of
in-building wire, then all Canadian carriers should be subject to
the same rule.
- CIPPREC/BOMA stated, among other things, that they do not wish to
create a problem for CLECs who are leasing unbundled local loops
through co-location at an ILEC central office, and that they have
been consistent in all proceedings that "they would not
regulate wire signal, in essence permitting any LEC to sub-license
signal traffic over in-building wire that the LEC owns or licenses
for use from the building owner on a without consent basis".
They noted that to date, they have only sought to control the
physical access required by facilities-based or co-located LECs.
CIPPREC/BOMA stated that it is prepared to work with LECs to develop
protocols and arrangements necessary to facilitate the leasing of
unbundled local loops by LECs to co-located LECs on the
understanding that the building owner is protected to the same
extent (as necessary) as it would be if the co-located CLEC were a
facility-based CLEC. They noted that they are not aware of any cases
outside of Alberta (except for new buildings) where a landlord has
voluntarily chosen to acquire in-building wire. However, they stated
that the acquisition of in-building wire to facilitate centralized
management could have considerable merit in many types of buildings,
and could result in reduced costs to LECS and improved service to
customers. Accordingly, CIPPREC/BOMA submitted that the Commission
should not prohibit transfers of in-building wire.
- Netricom stated, among other things, that the decision to reopen
the debate on the location of the demarcation point will create
difficulty for all parties, including the LECs, telecommunications
management companies (like Netricom) and the real estate community
in Canada. In Netricom's view, moving the demarcation point back to
the tenants' premises, even for an interim period, will cause
confusion in the market and will set back the cooperation between
LECs and building owners that has been developing since the
Commission issued Telecom Decision CRTC 99-10, Location of
demarcation point for inside wire in multi-dwelling units and
associated issues, dated 6 August 1999. Netricom noted that, by
allowing the transfer of responsibility and control, existing inside
wiring that has been neglected in many multi-dwelling units is now
undergoing long-overdue renovation and the technology available to
carry signals to the subscribers is becoming more robust, reliable
and advanced.
- In response to Call-Net's comments, Bell Canada et al. stated,
among other things, that Call-Net appeared to be focused solely on
consideration of the narrow issue of the location of the termination
point for leased local loops. Bell Canada et al. submitted that
Call-Net's proposal is not consistent with the Commission's
objectives for facilities-based local competition. Rather, it would
serve to perpetuate a form of unhealthy reliance on the ILECs for
the provision by Call-Net of service to its customers, while at the
same time potentially causing substantial harm to the currently
delicate relationship between facilities-based LECs and building
owners as LECs seek to enter into mutually acceptable arrangements
to deliver services to customers. Further, Bell Canada et al.
submitted that Call-Net's characterization of an interim prohibition
on the transfer of in-building wire as a "minor
inconvenience" completely ignores the damage that would be done
to the relationship between the LECs and the building owners if such
a prohibition were imposed, even on an interim basis.
- In its reply comments, Call-Net on behalf of itself and GT Group
Telecom Services Corp. (collectively Call-Net et al.) submitted,
among other things, that Bell Canada et al.'s allegation that it
could take several months before a final determination is made on
this matter, and that this may impair the ILECs' ability to serve
end-users, as well as jeopardize the resolution of other building
access issues with building owners, do not constitute valid reasons
for the Commission to refrain from imposing the interim directive
contemplated. Similarly, a negative reaction from building owners
does not constitute a valid reason not to issue the order. Building
owners, like all other parties, will not necessarily agree with
every aspect of a public policy or a judicial determination.
Call-Net et al. submitted that the balance of convenience favors the
issuance of the proposed directive. In Decision 2001-364, the
Commission noted that it may not have fully considered the
operational and cost implications of changing the demarcation point
for unbundled local loops used by co-located CLECs. Call-Net et al.
stated that there is no evidence that an interim order or even a
permanent order prohibiting transfer of in-building wire could
reduce the ILECs' bargaining position or stop them from pursuing
other arrangements with building owners.
Jurisdiction
- As noted above, Bell Canada et al. argued that the Commission may
not have the jurisdiction to make the order in question. Bell Canada
et al. stated, among other things, that:
"the Companies do not believe that the Commission is
empowered under the authority conferred by the Telecommunications
Act (the Act) to issue such a directive. No provision in
the Act today prohibits, requires or permits the transfer of
responsibility and control over in-building wire from a Company to a
building owner. Such transfer of responsibility and control does not
constitute the provision of a telecommunications service defined in
section 2 of the Act. Consequently, the directive
contemplated in the show cause may be beyond the powers conferred
upon the Commission in Part III of the Act (and notably in
section 32(g), or in section 48(1) of the Act.)"
- In addition to suggesting that the Commission may not have
statutory authority, Bell Canada et al. submitted that "the
order the Commission is contemplating in the show cause proceeding
raises questions as to whether the Commission, by issuing such a
directive, would be fettering its discretion". Bell Canada et
al. stated that a prohibition should be made on an individual basis
on the merits of each specific case, and that "to issue a
blanket prohibition would likely amount to an unlawful fettering of
the Commission's discretion".
- Call-Net et al. argued that the Commission does have the
jurisdiction to issue the order in question. Call-Net et al.
submitted, among other things, that Bell Canada et al. has
conveniently omitted the provisions of the Telecommunications Act
(the Act) that clearly and unequivocally empowers the Commission to
make the proposed order. In support of its first argument, Call-Net
et al. noted that "telecommunications service" is defined
in section 2 of the Act as follows:
"A service provided by means of telecommunications
facilities and includes the provision in whole or in part of
telecommunications facilities and any related equipment, whether by
sale, lease or otherwise;
"Telecommunications facility" means any facility,
apparatus or other thing that is used or is capable of being used
for telecommunications or for any operation directly connected with
telecommunications, and includes a transmission facility."
- Call-Net et al. submitted that clearly, ILEC-owned in-building
wire is a "telecommunications facility" within the meaning
of section 2 of the Act, and the transfer of such in-building wire
to a building owner constitutes "provision in whole or in part
of telecommunications facilities … by sale, lease or
otherwise".
- Secondly, Call-Net et al. noted that section 24 of the Act
provides that 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. Section 47(a) of the Act
specifies that in exercising its powers to make conditions under
section 24 (or any other section) of the Act the Commission shall
have regard to the implementation of the telecommunications
objectives listed in section 7 of the Act. Those objectives include
the facilitation of the orderly development of a telecommunications
system in Canada and the efficiency and competitiveness of Canadian
telecommunications. Call-Net et al. stated that:
"The Companies [i.e., Call-Net and Group Telecom] submit
that the magnitude of the records of these proceedings and the
complexities of the issues demonstrate that all parties are aware
that the transfer of ILEC-owned in-building wire to building owners
will significantly impact the orderly development of
telecommunications infrastructure and the competitiveness of
telecommunications in Canada. Therefore, the Commission clearly has
the power to order ILECs to refrain from transferring their
in-building wire to building owner, as a condition of their
operations, whether permanently, or pending final determination of
this crucial matter."
- Call-Net et al. also noted that in several past decisions, the
Commission has affirmed its powers and jurisdiction to regulate the
"telecommunications facilities" of the ILECs, including
co-location in central offices and optical fibre in, respectively,
Telecom Decision CRTC 97-15, Co-location, dated 16 June 1997,
and Telecom Decision CRTC 97-7, Tariff filings related to the
installation of optical fibres, dated 23 April 1997. Call-Net et
al. submitted that the same principles and rationale applied in
those decisions apply to the in-building portion of the ILECs'
telecommunications facilities.
- Finally, Call-Net et al. disagreed with Bell Canada et al.'s
contention that the proposed order would amount to an unlawful
fettering of the Commission's discretion. Call-Net et al. submitted
that the proceedings involve fundamental policy matters that will
affect the entire telecommunications industry in Canada and the
development of infrastructure and competition. Accordingly, Call-Net
et al. stated that the determination should not be left to a
case-by-case review. Secondly, Call-Net et al. noted that the
directive contemplated is an interim directive, and it would still
be open to the Commission to make a final determination on the
matter, and thirdly, a public proceeding is about to begin on this
final determination; all affected parties will have the opportunity
to make submissions to the Commission on the matter. For these
reasons, Call-Net et al. argued that the Commission would not be
unlawfully fettering its discretion by directing that the transfer
of in-building wire be disallowed on an interim basis pending
conclusion of the public hearing.
Conclusion
- The Commission considers that it has the jurisdiction to make the
interim order in question to ensure LECs retain responsibility and
control of in-building wire while the Commission considers the
issue, and that this would not constitute an unlawful fettering of
discretion.
- The Commission has determined that, on balance, the concerns of
competitive providers for access to multi-dwelling unit in-building
wiring justify the issuance of the proposed directive.
- In Decision 2001-364, the Commission noted that Decision
99-10 was
intended to support the development of facilities-based competition.
However, the Commission further noted that it may not have fully
considered the operational and cost implications of changing the
demarcation point for unbundled local loops used by co-located CLECs.
The Commission noted that the relocation of the service provider
demarcation under Decision 99-10 conditions (including under
scenarios 2 and 3 of Call-Net's Part VII applications), could reduce
end-user choice or modify the viability of services offered by
co-located CLECs.
- Call-Net et al. noted that any operational and cost disadvantages
suffered by CLECs will be difficult if not impossible to redress
should a final determination be made to prohibit transfer. By
contrast, no significant harm arises from an interim stay of the
transfer of responsibility and control of in-building wire pending
final determination of the matter. Therefore, on balance, the
Commission considers that the interim directive should be issued.
- The Commission notes that all the parties who addressed the scope
of an interim order either took the view that the proceeding does
apply, or should apply, in respect of all LEC in-building wire.
- In light of the above, the Commission directs that, on an interim
basis, as a section 24 (of the Act) condition on the
offering and provision of local telephone service, all LECs must, on
a going-forward basis, retain responsibility and control of their
in-building wire pending a final determination in the PN 2000-124
proceeding.
Yours sincerely,
Ursula Menke
Secretary General
cc: Mike Walker (819) 994-4716
Date Modified: 2001-09-10
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