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Telecom Decision CRTC 2002-1
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Ottawa, 10 January 2002
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Application of the winback rules with respect to primary
exchange service
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Reference: 8622-C25-12/01 |
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Summary
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The Commission amends the local winback rules by directing
incumbent local exchange carriers not to attempt to win back a
business customer with respect to primary exchange service, and, in
the case of a residential customer, with respect to primary exchange
or any other service, for a period of three months after that
customer's primary local exchange service has been completely
transferred to another local service provider.
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Background and relief requested
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1. |
Call-Net Enterprises Inc., on behalf of itself and its affiliated
companies, including Sprint Canada Inc., submitted an application on
11 June 2001 under Part VII of the CRTC Telecommunications
Rules of Procedure and pursuant to sections 48(1), 55, 60 and 70
of the Telecommunications Act requesting that the Commission
clarify the application of the local winback rules to ensure that
they cannot be circumvented through the use of bundled offerings.
Specifically, Call-Net requested that the Commission direct that
where a residential customer has switched local services from an
incumbent local exchange carrier (ILEC) to a competitive local
exchange carrier (CLEC), the ILEC be prohibited from making any type
of winback calls (e.g., Internet, long distance service) to the
customer until at least three months after that customer's local
service has been transferred to a CLEC.
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2. |
Call-Net submitted that where local services are bundled with
other services such as long distance and Internet, the ILECs have
the incentive and opportunity to approach a customer on the basis of
attempting to win back their long distance or Internet service and,
at the same time, effectively make a local service winback, contrary
to the winback rules. |
3. |
Call-Net argued that the ILECs' activities in the local exchange
market, including their winback practices, are a significant
contributing factor to the impairment of local competition.
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Comments on the application
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4. |
Comments on Call-Net's application were received from TELUS
Communications Inc. (TCI) and from Bell Canada on behalf of itself,
Aliant Telecom Inc., MTS Communications Inc. and Saskatchewan
Telecommunications (Bell Canada et al.), as well as from Futureway
Communications Inc. and EastLink Telephone.
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5. |
Bell Canada et al. and TCI submitted, among other things, that at
no time have they contravened the Commission's winback rules. Bell
Canada et al. and TCI argued that Call-Net's application is based
solely on conjecture without any evidence that harm is actually
occurring.
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6. |
Bell Canada et al. submitted that Call-Net has in effect
requested that the scope of the Commission's existing local exchange
winback restrictions be expanded significantly.
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7. |
Bell Canada et al. and TCI argued that Call-Net's proposal to
impose winback restrictions in respect of all services offered by
the ILECs would effectively re-regulate the offer and delivery of
services that the Commission has already found to be competitive and
for which it has issued forbearance decisions (e.g. long distance,
Internet). Further, TCI and Bell Canada et al. argued that it is not
necessary to extend the winback restrictions to every area to
protect Call-Net's residential local market operations.
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8. |
TCI stated that it is in agreement with Call-Net that, where a
residential customer has switched local services from an ILEC to a
CLEC, the ILEC should be prohibited from making a winback call to
that customer for the purposes of offering the customer local
exchange service (whether on a stand-alone basis, or via a bundled
offering), for at least three months after the customer's local
service has been completely transferred to the CLEC.
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9. |
Bell Canada et al. argued that Call-Net's proposal is unworkable
because the companies currently have no reasonable means of
determining, other than communicating directly with the customer,
what (if any) other CLEC services (other than local exchange
service) a customer might have purchased. Thus, any mandated changes
to the local winback restrictions that result in a wider internal
distribution of CLEC customer information would require the
development of new databases and control procedures.
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10. |
Futureway and EastLink agreed with Call-Net that the use of
bundled service offerings provide the ILECs with the opportunity to
convert a long distance or Internet sales call into a winback call
for local service.
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Conclusions
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11. |
The Commission notes that the local exchange winback restrictions
were first imposed on the ILECs in a letter decision, Commission
Decision regarding CRTC Interconnection Steering Committee dispute
on competitive winback guidelines, dated 16 April 1998.
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12. |
In this letter decision, the Commission stated, among other
things, that: |
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... [A]n ILEC is not to attempt to win back a customer for a
period of three months after that customer's service has been
completely transferred to another local service provider, with
one exception: ILECs should be allowed to win back customers who
call to advise them that they intend to change local service
provider.
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13. |
The Commission stated that without such guidelines, ILECs would
potentially be able to win back customers even before local service
is effectively transferred to a CLEC because ILECs control and have
access to customer specific information.
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14. |
Subsequently, in another letter decision, CISC dispute –
Rules regarding communication between the customer and the broadcast
distribution undertaking, dated 1 April 1999, the Commission
imposed winback rules on incumbent cable operators in respect of
customers who have chosen to subscribe to the services of a
competing broadcast distribution undertaking. Winback activities
were defined as:
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... the offering to customers of discounts, free services or
other inducements in order to convince those customers not to
change service providers or to revert back to their original
service provider.
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15. |
More recently, in Order CRTC 2001-92, Terms and rates approved
for large cable carriers' higher speed access service – Follow-up
to Order CRTC 2000-789, dated 1 February 2001, the
Commission imposed winback restrictions on Rogers Communications
Inc., Cogeco Cable Canada Inc., Shaw Communications Inc. and
Vidéotron ltée in respect of their high-speed (cable modem)
Internet access services.
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16. |
The Commission notes that circumstances have changed since the
winback rules were first applied in 1998. In particular, there has
been an increase in the marketing of bundled service offerings. In
this regard, the Commission notes that an attempt by an ILEC to sell
a bundle that included optional local services to a lost residential
primary exchange customer would generally constitute a winback
activity for primary exchange service since its acceptance would
generally mean that the customer, for technical reasons, would be
obliged to switch back to the ILEC's primary exchange service.
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17. |
In the case of the bundling of other services such as Internet
and long distance with primary exchange service or optional local
services, the Commission notes that a winback of a long distance or
Internet customer would also inevitably repatriate the primary
exchange service, despite the fact that such service might not be
the target of the winback in question.
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18. |
The Commission is persuaded that in order to ensure the effective
operation of the winback rules in the residential primary exchange
market, the ILECs should not be permitted to attempt to win back,
with respect to any service, any customer for a period of three
months after that customer has transferred its residential local
exchange service to another local service provider.
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19. |
The Commission notes that such a measure would only apply to
subscribers that have recently transferred their residential primary
exchange service to another service provider. In these
circumstances, the ILECs would not be prevented from continuing to
attempt to win back customers who have switched only services other
than residential primary exchange service. In addition, given the
very small number of subscribers that, to date, have chosen to
switch their residential primary exchange service to another service
provider, the Commission considers that the impact of the
restriction resulting from this decision will not unduly constrain
the marketing efforts of the ILECs. Moreover, the Commission notes
that the ILECs will be free to continue to market their residential
primary exchange service and other services through various other
means such as radio, print and television.
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20. |
The Commission disagrees with Bell Canada et al. that Call-Net's
proposal would be unworkable. The Commission notes that primary
exchange sales personnel are provided with lists of customers who
have switched to a CLEC. The Commission considers that the ILECs
will be able to implement this decision by circulating these lists
to the sales personnel who market other services, with a direction
that they are not to initiate contact with these customers.
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21. |
In light of the above, the Commission orders that the local
winback guidelines be amended to read as follows:
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... an ILEC is not to attempt to win back a business
customer with respect to primary exchange service, and in
the case of a residential customer, with respect to
primary exchange or any other service, for a period
of three months after that customer's primary local exchange
service has been completely transferred to another local service
provider, with one exception: ILECs should be allowed to win
back customers who call to advise them that they intend to
change local service provider. (Amendments in bold.)
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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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