Affiliate bundling rules to apply to ILECs other than Bell Canada: commission

Not surprisingly, the CRTC decided July 22 its bundling rules for ILEC affiliates will also apply to incumbent telcos other than Bell Canada (Telecom Decision 2004-50). A year-and-a-half after the record closed in the original proceeding (Telecom Decision 2002-76) the commission will now force ILECs such as TELUS Communications Inc. and MTS/Allstream Inc. to ensure that the internal teams responsible for dealing with competitors when they buy services reside within the incumbent proper, and that information about dealings with CLECs remains at arm’s length from the ILECs’ own competitive affiliates. The ruling also makes clear that rules that apply to an incumbent telco also apply to the affiliates when selling services within the ILEC’s territory. The decision was originally applied just to Bell Canada and its affiliate, Bell Nexxia Inc. Over the course of the original proceeding, it was determined that Nexxia had responsibility as Bell’s Carrier Services Group (CSG), the arm of the company that sold services to competitors. Chris Peirce senior VP of regulatory and government at Allstream, says the discovery likely took the commission aback. "What became clear as the commission sort of peeled back the onion of Bell Nexxia is that Bell had purported to move its carrier services group to the affiliate. The whole notion of the affiliate was that the regulatory rules that applied to the incumbent would not apply. It’s kind of audacious that (Bell) would have done this in the first instance. It startled the commission to see that here’s this carrier services group that they had such concern over making sure had Chinese walls or whatever to protect the type of information that the incumbent would, therefore, have about the competitor, and here it was sitting in the bowels of the competitive affiliate. So, 2002-76 said no, that can’t be, you’ve got to move that back inside Bell Canada. This decision just affirms that a carrier services group needs to be located within an incumbent." Peirce says he’s not surprised by the decision, and that, like other recent rulings by the regulator, it represents a continuation of previous policies. "The decision is significant in that it reaffirms what the commission said in 2002-76, which is, in our view, the right view: that the commission has to be careful that affiliates are not being utilized in order to skirt the regulatory rules, which is clearly what had been going on with Bell Nexxia. There remain in front of the commission a number of contracts that were uncovered, if you will, as a result of the commission discovering how Nexxia was being used. This decision affirms that. It’s a little unexpected to appear at this point, because, of course, the record closed well over a year ago. The world was operating as if the decision in 2002-76 set forth the rules. This decision, interestingly, at this point in time, a good year and a half later after the proceeding closed, makes the same points." Peirce downplays any impact the ruling might have on MTS/Allstream. During the original process that led to 2002-76, Allstream participated as AT&T Canada Corp., a pure-play competitor. Now, the company is the national competitive affiliate of MTS Allstream Inc., and Peirce confirms the company will have to ensure that its own CSG resides within the Manitoba regional incumbent, and that it will have to file tariffs whenever its parent company would have to do so. While each of the other incumbents - Aliant, TELUS, and SaskTel - raised objections to the commission’s preliminary view that the rules in 2002-76 should apply to them as well as Bell, commissioners were unmoved by arguments that the framework would create too much red tape. It writes: "The commission notes the submissions of the ILECs with respect to the impact of the proposed safeguards on the competitiveness of affiliated carriers competing for national or regional accounts. The commission also notes that other interested parties argued that the proposed safeguards were appropriate and necessary to allow fair and effective competition, and to ensure that regulatory obligations were not circumvented."

Affiliate bundling rules to apply to ILECs other than Bell Canada: commission

News | August 4, 2004

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