Incumbents ordered to refund competitors for overpayments for essential services

Rogers Communications Inc. is set to get a refund from overpayments the company’s wireless arm made to incumbent telephone companies for access to some competitor services, according to a ruling from the CRTC. Telecom Decision 2007-6, released on February 2, states that the Bell Canada, Bell Aliant, MTS Allstream and SaskTel have been improperly charging competitors retail rates for certain competitor services rather than wholesale rates as set out in Telecom Decision 2005-6."ILECs should repay affected competitors for the improperly billed charges, consistent with their relevant terms of service," reads the decision, noting that supporting documents and the refunds should be submitted to the commission and the affected companies within six months. Rogers Wireless filed the application in December 2005, accusing the incumbent telcos of assessing retail link charges as opposed to the mandated wholesale rate. The company stated at the time that this ran counter to ILECs’ tariffs and the February 2005 decision 2005-6 establishing the types of wholesale access services incumbents must furnish to their competitors.The wireless operator discovered that in migrating its access facilities to those services covered in Decision 2005-6, the incumbents had included link charges that, in its opinion, should not have appeared on its carrier bills. Rogers argued that the incumbents, by levying such a charge, were conferring an undue preference on themselves and such charges were not supported by the incumbents own cost studies, which indicated that rates for such services were not necessary. All incumbents, with the exception of Telus Corp., indicated that there was no requirement for a discrete charge because the functionality was already reflected in the rates for the DNA services it offered to competitors. But MTS Allstream was more sympathetic to the issues raised in Rogers’ application. MTS Allstream acknowledged that it had inadvertently charged competitors improperly, but took quick action to reimburse competitors for the oversight. In addition, the company noted that its competitive operation had received invoices from the incumbent carriers for services similar to those raised by the Rogers’ application. The Manitoba-based ILEC argued that there were no circumstances under which an incumbent should be assessing a separate charge and even admitted that "the DNA link service was essentially a rating element and was never designed to recover specific cost components." MTS confirmed that the actual costs of the link charge were already included in the cost studies for the digital network access (DNA) service and as such, a discrete rate was not required. The other incumbents were not as forgiving. Bell Canada, Bell Aliant and SaskTel stated that such a charge was either ‘sometimes appropriate’, ‘appropriate’ or ‘necessary and appropriate.’ Bell Canada submitted that there were certain circumstances where a retail charge was warranted, such as when a competitor was co-located with Bell in one of its switching centres or when a competitor connected to Bell’s, or another competitor’s, services within their switch. SaskTel contested MTS Allstream’s position that the costs for the link portion were included in the costs studies for the DNA service. Telus took the position that it had no legal authority to charge anything other than the commission-approved retail rate and admitted that it simply re-rated the existing retail service with no underlying change in functionality.In the end, the commission disagreed with the incumbents’ reasoning. Relying on its original determinations in Decision 2005-6 the commission noted that it concluded that separate copper-based links may be required and if so, left it to the incumbents to file a tariff for such services. On this basis, the commission found the retail link charges levied by the incumbents to be improper and ordered the companies to refund Rogers, and any other competitor who had been erroneously billed for similar services. Not all was lost for the incumbent telephone companies in the decision. The commission has allowed the ILECs to file new tariffs with accompanying cost studies if they believe that the current DNA rates don’t accurately reflect the costs of providing the services in question. This may mean that, before the competitors get their first payment, they may have to start paying for the services all over again. But this decision may become moot next year when the commission sets out a new framework for wholesale services as initiated in Telecom Public Notice 2006-14. This proceeding, still in its initial stages, could have a significant impact on which kinds of wholesale services are determined to be necessary for competitors and how they are finally priced. Incumbent telephone companies want a significantly narrower definition of what is an essential service, which competitors would be able to access at wholesale rates. Competitors, on the other hand, want as broad a definition as possible to ensure access to a wider set of services at the lower wholesale rates.

Incumbents ordered to refund competitors for overpayments for essential services

News | February 26, 2007

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