Small CLECs competing in local telephony get regulatory relief from CRTC

The CRTC is providing partial regulatory relief to smaller companies offering local telephony (Telecom Decision 2006-58). Responding to an application filed by the now-defunct Canadian Cable Telecommunications Association (CCTA; NL, Sept. 16/05 and Feb. 15/06) the commission will no longer require small CLECs offering VoIP services through a reseller to meet all the regulatory obligations as outlined in Decision 97-8 – the landmark ruling that opened local telephony to competition. "The commission relieves certain competitive local exchange carriers (CLECs) of the requirement to meet, and file tariffs for, the equal access obligation at this time. The commission also determines that those CLECs must meet all the remaining CLEC obligations, with some modifications, as set out in Local competition, Telecom Decision CRTC 97-8 May 1997, either directly or through the facilities or agreements of a third party," reads Decision 2006-58. In previous decisions (Decisions 2005-28 and 2006-53) the commission concluded that the existing regulatory obligations as applied to circuit-switched local competitors would also apply to those competitors using VoIP. Now, the CRTC has further refined the rules for smaller VoIP providers. Smaller VoIP operators now have more flexibility at the early stages of offering competitive local services. For example, instead of interconnecting directly with all LECs and WSPs in a serving territory, a small CLEC now only has to interconnect with the underlying LEC. Further, when implementing local number portability (LNP), a small CLEC is now required to only offer outbound LNP (where it releases the telephone number of one of its clients if they elect to switch to a competitor), while inbound LNP has become a choice. This is similar to the rules established in Decision 2006-14 for small ILECs (SILECs). If the small CLEC chooses to offer inbound LNP, the commission stated that it must do so for all of its customers. The CCTA stated in its application that small cable companies could not economically deploy local services without partnering with a reseller. The CCTA argued that, as resellers are only subject to some of the regulatory obligations of a CLEC while cable companies are subject to the full spectrum of obligations, such partnerships were not viable because the cable company could not fulfill its regulatory obligations through the reseller partnership. As a result, the CCTA stated, many small cable companies could not operate as a CLEC. Underpinning its application was the CCTA’s request that local competitors be classified into two groups – CLECs and Group 2 CLECs. The latter category would be defined as those smaller companies with telecommunications revenues of less that $10 million per year. The CCTA was borrowing and adapting the terminology of Group 2 CLECs directly from the commission (Telecom Circular 2005-4). CLECs, the CCTA submitted, would continue to adhere to the full slate of regulatory conditions, while Group 2 CLECs would be relieved of a host of obligations, including the requirement to obtain at least one CO code per ILEC exchange and the requirement to provide interconnection arrangements, equal access, directory listings and both inbound and outbound LNP. The commission disagreed with the CCTA on its proposed definition of Group 2 CLECs, stating that using revenue to define a separate class of local competitors was not appropriate. It noted that with $10 million in annual revenue, a LEC would have more than 20,000 customers, making such companies larger than all but three of the existing SILECs and larger than many of the existing local competitors operating in Canada, all of which must comply with the full range of regulatory obligations. However, in rejecting the CCTA’s proposed definition of Group 2 CLECs, the commission decided on one of its own, stating that a definition based on the number of customers would be more appropriate. The CRTC has therefore defined small CLECs as those companies having less than 10,000 subscribers, are non-dominant and offer local VoIP services via a reseller. As soon as a small CLEC successfully attracts more than 10,000 customers or begins to offer services over its own facilities, it will be required to adhere to full CLEC regulatory obligations within six months.

Small CLECs competing in local telephony get regulatory relief from CRTC

News | September 28, 2006

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