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Order CRTC 2001-501
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Ottawa, 29 June 2001 |
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CRTC refrains from regulating O.N.Telcom's delivery of mobile
wireless services
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Reference: 8640-O4-01/00
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Since 1994, the Commission has generally refrained from the
regulation of cellular service providers where a competitive
environment either exists or is likely to exist. |
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In prior forbearance decisions, the Commission has refrained,
with some conditions, from regulating markets where mobile voice
wireless telecommunications services are connected to the public
switched telephone network (PSTN). Examples of these wireless
services include cellular services, personal communications service,
enhanced specialized mobile radio service, and satellite-based
mobile services. |
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Mobile wireless voice services connected to the PSTN are the only
cellular services that O.N.Telcom provides. |
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With this order, the Commission refrains from regulating
O.N.Telcom's cellular services. However, the Commission has decided
to retain some of its regulatory powers to ensure that the company
will protect the confidentiality of customer information, and that
it does not either discriminate unjustly against other companies or
extend an undue preference to itself. |
1.
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On 29 November 2000, O.N.Telcom requested that the Commission
refrain, pursuant to section 34 of the Telecommunications Act
(the Act), from exercising its powers and performing all its duties
under sections 24 (in part), 25, 29 and 31, and sections 27(1),
27(5) and 27(6) of the Act in relation to mobile wireless services
provided by the company.
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2.
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Beginning with Telecom Decision CRTC 94-15, Regulation of
wireless services, dated 12 August 1994, the Commission forbore
from regulating cellular and other mobile wireless services when it
found, as a matter of fact that:
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· markets for mobile wireless services were or will be
sufficiently competitive to protect the interests of users
(section 34(2));
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· forbearance would further the government
telecommunications policy objective of greater reliance on market
forces (section 34(1)); and
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· forbearance would not endanger unduly the
establishment or continuation of a competitive market (section
34(3)).
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3.
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The Commission outlined the criteria it would use to assess
applications for forbearance from regulation in Review of
regulatory framework, Telecom Decision CRTC 94-19, dated
16 September 1994.
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4.
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The Commission generally has forborne from regulation of mobile
wireless services:
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· where markets are competitive and new suppliers could
enter the market;
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· where there are safeguards against cross-subsidies
from utility to wireless services; and
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· where carriers have few incentives to cross-subsidize
wireless services with revenues from utility or regulated services
since, with the entry of new suppliers, carriers would be unable
to recoup losses from below cost pricing.
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5.
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In Decision 94-15, the Commission forbore from the regulation of
mobile wireless services when the services were provided at arm's
length from a telephone company's utility operations by a
structurally separate affiliate. In subsequent decisions, the
Commission has forborne from regulating mobile wireless services
provided in-house by a telephone company, if the company had
implemented the split rate base or other accounting separations
between the company's utility and competitive operations, and
provided that markets for mobile wireless services were competitive
and entry was possible. These decisions included:
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· Telecom Decision CRTC 98-15, Application
by Bell Canada to review and vary Telecom Decision CRTC 96-14,
dated 2 September 1998;
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· Telecom Decision CRTC 98-18, NBTel
Inc. – Forbearance from regulating cellular and personal
communications services, dated 2 October 1998;
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· Telecom Decision CRTC 98-19, Forbearance
from regulation of mobile wireless services provided by
municipally owned telephone companies, dated 9 October 1998;
and
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· Telecom Order CRTC 99-991, dated
13 October 1999.
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6.
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In prior forbearance decisions, the Commission has forborne
conditionally from mobile wireless voice services connected to the
public switched telephone network. These are the only cellular
services that O.N.Telcom provides.
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O.N.Telcom's application
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7.
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O.N.Telcom submitted that Bell Mobility, NorTel Mobility, TELUS
Mobility and Rogers AT&T provide mobile wireless services in
O.N.Telcom's territory in areas where O.N.Telcom does not now offer
such services. In addition, it stated that it is subject to
competition from satellite-based carriers, such as Globalstar, and
all of these carriers provide services on a forborne basis.
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8.
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O.N.Telcom submitted that, pursuant to prior Commission
decisions, an integrated telephone company could provide mobile
wireless services.
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9.
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O.N.Telcom also submitted that, pursuant to Telecom Decision CRTC
98-14, Regulatory framework – Ontario Northland Transportation
Commission, dated 1 September 1998, the company has adopted the
Phase III accounting framework. It has also split its rate base into
utility and competitive segments, as described in Phase III
costing, Carrier Access Tariff and split rate base procedures
Manual. O.N.Telcom argued that, consistent with the Commission's
views in previous forbearance decisions, costing safeguards prevent
cross-subsidies between O.N.Telcom's utility services and the
company's competitive mobile wireless services.
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10.
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Further, O.N.Telcom submitted that forbearance from regulation of
its mobile wireless services would be consistent with the Canadian
telecommunications policy objectives stated in section 7 of the Act,
in particular, enhanced competitiveness and increased reliance on
market forces.
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Conclusion |
11.
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The Commission considers that in most of its territory
O.N.Telcom's mobile wireless services would face competition from
established land-based carriers (Bell Mobility, NorTel Mobility,
Rogers AT&T and TELUS Mobility), as well as satellite based
carriers. These carriers provide mobile wireless services on a
forborne basis. The Commission considers that O.N.Telcom's presence,
on a forborne basis, in this market would further increase
competition.
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12.
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The Commission notes that in Moosonee and Moose Factory (two
communities where only O.N.Telcom has wireless facilities), NorTel
Mobility and Bell Mobility have entered into roaming agreements with
O.N.Telcom, and they resell O.N.Telcom's mobile wireless services.
The Commission is of the view that such resale provides competition
for O.N.Telcom's wireless services. Further, the Commission notes
that Rogers AT&T already has a licence to serve the two
communities, and the possibility of entry by Rogers AT&T should
discipline O.N.Telcom's provision of wireless services.
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13.
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Accordingly, the Commission is of the view that there would be
sufficient competition to protect user interests if the Commission
were to refrain from regulation of mobile wireless services provided
by O.N.Telcom, and that, accordingly, it would be appropriate to
forbear pursuant to section 34(2) of the Act.
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14.
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The Commission notes that the company obtains only a small
portion of its revenues from utility services. The Commission also
is of the view that O.N.Telcom's implementation of the split rate
base accounting framework makes it unlikely that O.N.Telcom would
cross-subsidize mobile wireless services with revenues from utility
services. Based on these considerations, the Commission is of the
view that refraining from regulation of O.N.Telcom's mobile wireless
services would not unduly endanger the establishment or continuation
of a competitive market, consistent with section 34(3) of the Act.
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15.
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Further, the Commission is of the view that forbearance from
regulating mobile wireless services provided by O.N.Telcom would be
consistent with the Canadian telecommunications policy objectives of
the Act.
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16.
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In light of the above, in respect of public switched mobile voice
services provided by O.N.Telcom, the Commission finds that:
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a) pursuant to section 34(1) of the Act, it is
consistent with the Canadian telecommunications policy objectives
to refrain from exercising powers and performing duties under
sections 24 (in part), 25, 29 and 31, and sections 27(1), 27(3)
(in part), 27(5) and 27(6);
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a) pursuant to section 34(2) of the Act, the
provision of these services is subject to sufficient competition
to protect the interests of users;
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b) pursuant to section 34(3) of the Act, to
refrain from exercising the powers and performing the duties to
the extent set out in this order would not likely impair unduly
the continuance of a competitive market for these services; and
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c) it is appropriate to retain its powers and
duties under section 24 (in part) and sections 27(2), 27(3) (in
part) and 27(4) of the Act.
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17.
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The Commission will retain in part its powers under section 24 of
the Act to ensure that the existing conditions regarding disclosure
of confidential information to third parties will continue to apply,
and to impose conditions as may be needed in the future.
Accordingly, from now on, the existing conditions concerning
customer confidentiality will be included, where appropriate, in all
contracts or other arrangements with customers for the provision of
the services forborne in this order.
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18.
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The Commission is of the view that, consistent with Telecom
Decision CRTC 96-14, Regulation of mobile wireless
telecommunications services, dated 23 December 1996, and
Decision 98-18, retaining sections 27(2), 27(3) (in part) and 27(4)
will, for example, ensure that O.N.Telcom does not unjustly
discriminate against other service providers or customers, or confer
an undue or unreasonable preference with respect to access to its
network.
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19.
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The Commission considers it necessary to retain section 27(3) to
the extent that it does not refer to compliance with any of the
powers and duties forborne from in this order.
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20.
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The Commission therefore orders that:
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a) pursuant to section 34(4) of the Act, effective from the
date of this order, sections 24 (in part), 25, 29 and 31, as well
as sections 27(1), 27(3) (in part), 27(5) and 27(6), to the extent
that they are inconsistent with the Commission's determinations in
this order, do not apply to O.N.Telcom's public switched mobile
voice services; and
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b) O.N.Telcom issue, within two weeks of this order, revised
tariff pages reflecting the Commission's determinations in this
matter.
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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 |