Communications Law Alert

Transcription

1 Communications Law Alert May 12, 2005 Fasken Martineau DuMoulin LLP The CRTC decision on regulation of VoIP services Vancouver Calgary Toronto Montréal Québec City New York London Johannesburg On May 12, 2005, the CRTC released Telecom Decision CRTC , entitled Regulatory Framework for Voice Communication Services using Internet Protocol (the Decision ). Among other matters, the Decision affirmed the Commission s preliminary view that local VoIP services (as defined below) provided by incumbent local exchange carriers (ILECs) will be subject to the tariff pricing regime. Given the Commission s preliminary view, expressed in Public Notice , this determination is not surprising, but it is not without controversy. Bell Canada and TELUS each immediately announced their intention to appeal. In essence, the ILECs believe that it is in the best interests of consumers for the ILECs to be allowed to compete freely on price in the local VoIP market at this time. The Commission believes that it is premature to allow ILECs to provide local VoIP services outside of the tariff regime, concluding that less competition today will allow for increased market penetration by competitors, and the greater potential for a more sustainable competitive market in the future. Summary In the Decision, the Commission determined that its previous forbearance determination for retail Internet service (IS) did not apply to VoIP services (as defined below), and declined to exercise any power to forebear from the regulation of VoIP services at this time. The Commission determined that local VoIP services should be regulated as local exchange services, and that the existing regulatory framework governing local competition applies to local VoIP service providers, with some exceptions. The Commission addressed particular issues relating to the implementation of this regulatory framework, including the licensing of VoIP resellers, access to numbers and local number portability, directory listings, equal access, winbacks, access for the disabled, message relay service, privacy safeguards, tariff filing requirements, regulation of non-dominant carriers, regulation of VoIP services in territories where local competition is not permitted, and IP interconnection. The Commission determined that VoIP services are contribution-eligible, and that existing subsidies are available to VoIP service providers that meet existing rules and requirements. The Commission addressed issues relating to access, and determined that the provision of VoIP services is subject to all existing applicable forbearance determinations.

2 Fasken Martineau DuMoulin LLP Communications Law Alert 2 1. The Proceedings The proceedings were initiated by Telecom Public Notice CRTC , which was released on April 7, 2004 and which set out the Commission s preliminary views on the regulatory regime applicable to the provision of VoIP services. Public hearings were held in September 2004, and a large number of parties made oral or written submissions to the Commission. Due to concerns for public safety relating to access to emergency services, the Commission first addressed the matter of and Enhanced (E9-1-1) service, in Telecom Decision CRTC entitled Emergency Service Obligations for Local VoIP Service Providers, which was released on April 4, The Commission directed Canadian carriers offering fixed (non-nomadic) local VoIP services to provide 9-1-1/E9-1-1 service where it is available from the ILEC, within 90 days. The Commission directed Canadian carriers offering nomadic local VoIP services to implement an interim solution within 90 days, providing a level of service functionally comparable to basic VoIP Services The Commission has defined VoIP services to mean only those services that use North American Number Plan (NANP) conforming telephone numbers and that provide universal access to and/or from the public switched telephone network (PSTN). VoIP services do not include P2P services, which are voice communication services using IP and which allow subscribers to make and/or receive calls from a computer, where communications only take place when all parties to the call use the same telephony application software and where the service does not use NANP conforming telephone numbers or provide access to the PSTN. Bell Canada, Aliant, SaskTel and Télébec (collectively, the Companies ) and TELUS each submitted that VoIP services should be segregated into different categories. TELUS divided VoIP services into two categories: access independent VoIP services, being services which do not require that the service provider provide the underlying network on which the service rides, and which do not require the service provider to obtain the permission of the network provider to offer the service application to customers of that network; and access dependent VoIP services, being IP based VoIP services in which access and service are necessarily linked, as they are provided by simply changing the underlying technology of the local access network from circuit-switched to packetswitched. The Companies divided VoIP services into three categories: Category 2 VoIP services, which are services that operate over a broadband Internet connection obtained by the customer from a supplier of choice and that enable the customer to make and receive calls to or from the PSTN and, typically, as well as to and from other broadband connected users; Category 3 VoIP services, which are IP services that provide the ability to make and receive voice calls to and from the PSTN, as well as to and from other connected users that are supplied with an underlying connection, other than a retail Internet connection, to the service provider s network; and Category 4 VoIP services, which are IP business services offered over network access facilities (LAN, WAN), either

3 Fasken Martineau DuMoulin LLP Communications Law Alert 3 provided by the service provider or by another party, connected to the service provider s IP network and which do not utilize retail Internet services for connection to the service provider s network. The Companies and TELUS agreed that the Companies Category 2 VoIP services were equivalent to the TELUS access-independent VoIP services, and that the Companies Category 3 VoIP services were equivalent to the TELUS accessdependent services. 3. Applicability of Existing Retail IS Forbearance Determinations The Companies and TELUS sought confirmation that certain VoIP services were already forborne under previous Commission determinations. The Companies and TELUS submitted that Category 2 or access-independent VoIP services are Internet services, delivered over retail Internet connections, and forborne pursuant to Order The Commission considered that the defining characteristic of VoIP services, which distinguishes them from retail IS, is that in order to connect users, their points of origination and termination are addressable by NANP numbers and their international equivalents, allowing for the ability to connect to anyone on the PSTN. In the Commission s view, the primary function of Category 2 VoIP services is not accessing the Internet, but rather is accessing the PSTN in order to make and receive telephone calls. For these and other reasons, the Commission determined that Category 2 local VoIP services are not within the scope of existing retail IS forbearance determinations. 4. Request for Forbearance from Regulation The Commission then considered requests of the Companies and TELUS for forbearance. With regard to the ILEC s arguments that cable companies have the capacity to emerge as strong competitors in VoIP services, the Commission recognized that cable companies possess certain strengths comparable to those of ILECs, but noted that cable companies also face certain obstacles that the ILECs do not face, and that the ILECs have certain advantages not shared by cable companies. With regard to the ILECs argument that Category 2 providers are already providing vigorous competition for local VoIP services at low prices, the Commission concluded that it was too early to draw conclusions about the state of competition, given the early stage of the development of Category 2 VoIP services. The Commission considered that, if forbearance were granted prematurely, the ILECs ability and incentive to engage in the combination of targeted below-cost pricing of local VoIP services, as well as bundling strategies, prior to the entry and roll-out of other facilities-based competitors, would have a material negative impact on the potential for sustainable competition in the provision of local VoIP services, and therefore on the protection of the interests of users. Accordingly, the Commission determined that it would not be appropriate, at this time, to extend the existing forbearance regime to local VoIP services. 5. VoIP Regulatory Framework The Decision addresses a number of issues relating to the details of the regulatory framework applicable to VoIP services. Among the determinations made by the Commission are the following:

4 Fasken Martineau DuMoulin LLP Communications Law Alert 4 Registration of VoIP Resellers The Commission considered that local VoIP service providers (other than Canadian carriers) operate as local VoIP resellers, and directed that all VoIP service providers that are not operating as Canadian carriers register with the Commission as resellers, as a condition of obtaining services from a Canadian carrier or other telecommunications service provider (TSP). Access to Numbers and Local Number Portability The Commission confirmed that its prior decisions requiring local exchange carriers (LECs) to implement local number portability (LNP) apply to LECs providing local VoIP services. Local VoIP resellers, like resellers of circuit switched services, are able to obtain numbers and number portability from any number of LECs in the marketplace. The Commission considered that the existing rules should apply equally to VoIP service resellers. Directory Listings The Commission concluded that existing directory listing requirements for ILECs, competitive local exchange carriers (CLECs) and resellers will also apply when they provide local VoIP services. Directory listings are to appear in the local directory where calls to and/or from that number are local calls, regardless of the geographic location of the customer s service address. Equal Access In Decision 92-12, the Commission had introduced competition in public long distance voice telephone services and required ILECs to provide equal access to interexchange carriers (IXCs). This allowed telephone subscribers to determine which IXC they wished to use for their long distance calls. Subsequently, the Commission required CLECs to also provide equal access to all IXCs. The obligation did not extent to resellers. In the Decision, the Commission determined that the existing equal access obligations will apply to LECs providing VoIP services. Win Back Rules The winback rules limit the ability of ILECs to attempt to win back business customers with respect to primary exchange service or residential customers of local exchange service with respect to any service, for a period of twelve months. The Commission extended the win back rules to local VoIP services. Access for the Disabled The Commission requested that the CRTC Interconnection Steering Committee (CISC) assess the accessibility needs of people with disabilities, with respect to the development of VoIP technologies. Message Relay Service Message Relay Service (MRS) allows hearingimpaired subscribers to communicate with others connected to the PSTN. The Commission determined that existing obligations to provide MRS apply with respect to local VoIP service offerings, to the extent technically feasible. The Commission directed that all LECs provide access to MRS throughout their operating territory, to the extent technically feasible. In addition, the Commission requested that CISC provide a report to the Commission within three months addressing certain technical issues relating to the implementation of MRS over VoIP. Privacy Safeguards The Commission concluded that all existing regulatory requirements designed to protect customer privacy apply to all local VoIP service providers, to the extent technically feasible. The Commission requested that CISC assess technical issues associated with implementing those privacy

5 Fasken Martineau DuMoulin LLP Communications Law Alert 5 safeguards that cannot be implemented immediately. The Commission directed all LECs, as a condition of providing local VoIP services, to obtain, prior to commencement of services, the customer s express acknowledgement of the extent to which the privacy safeguards are not available with their local VoIP services. Tariff Filing Requirements The Companies and TELUS argued that, due to the portability of IP telephony devices, there are no reasonable or reliable criteria for determining whether a local VoIP service subscription was in or out of the ILEC s territory. The Commission considered that local VoIP services, by definition, utilize NANP-conforming telephone numbers, which include an area code and telephone number that co-relate to an ILEC s exchange within a geographic area. The Commission determined that, if an ILEC provides a customer with a telephone number associated with an exchange within that ILEC s territory, it must do so in accordance with an approved tariff. Where multiple telephone numbers are associated with an IP device, presumably the tariff rule would apply if any of the numbers are associated with an exchange within that ILEC s territory. Regulation of Non-Dominant Carriers that Provide Local VoIP Service The Canadian Cable Telecommunications Association (CCTA) submitted that cable carriers should not be required to register as CLECs, and suggested that some cable carriers may consider offering local VoIP service as resellers. The CCTA argued that the resale of a LEC s PSTN services made a cable carrier a reseller in the local exchange services market. The Commission discussed the concepts of reseller and Canadian carrier, and confirmed that resellers are telecommunication service providers that do not own or operate their own (nonexempt) transmission facilities. A Canadian carrier may resell certain services without becoming transformed into a reseller. The Commission concluded that cable carriers cannot choose whether or not to become CLECs when they provide local exchange services in Canada. Contribution The Commission determined that, if the VoIP service allows for access to and/or from the PSTN, the services are to be considered eligible for the revenue-based contribution regime established by the CRTC to subsidize residential telephony services in rural and remote parts of Canada (even if the customer also uses the services to make P2P calls). Removal of VoIP Restriction on Third Party Internet Access; Removal of VoIP restrictions on DSLSPs The Commission directed the large cable carriers to remove a restriction in their third party Internet access (TPIA) tariffs in order to allow TPIA customers to provide VoIP services, in addition to retail IS. The Commission also directed the ILECs to remove a restriction in their tariffs in order to allow digital subscriber line service providers (DSLSPs) that obtain unbundled loops, connecting links, and colocation from ILECs to provide VoIP services, in addition to retail IS. Applicability of Existing Forbearance Determinations Finally, the Commission determined that the provision of VoIP services is subject to all existing applicable forbearance determinations. As an example, ILECs are not required to file tariffs in relation to their long-distance VoIP services.

6 Fasken Martineau DuMoulin LLP Communications Law Alert 6 6. Conclusion VoIP services are a disruptive technology which will inevitably transform the Canadian telecommunications industry, and which have the potential to create a truly competitive market for local exchange services. The ILECs believe that it is in the best interests of consumers for the ILECs to be allowed to compete freely on price in the local VoIP market at this time. The Commission believes that it is premature to allow ILECs to provide local VoIP services outside of the tariff regime, concluding that less competition today will allow for increased market penetration by competitors, and the greater potential for a more sustainable competitive market in the future. Fasken Martineau DuMoulin LLP has a special interest in VoIP services. For more information on the subject of this bulletin, please contact: Bruce Tattrie - Vancouver btattrie@van.fasken.com Barbara Miller - Toronto bmiller@tor.fasken.com Jean-François Hébert Montréal / Québec City jhebert@qc.fasken.com The struggle to exploit this rapidly disruptive technology has begun. We will all be fascinated as we watch the VoIP transformation carry our communications industry into the future. This publication is intended to provide information to clients on recent developments in provincial, national and international law. Articles in this bulletin are not legal opinions and readers should not act on the basis of these articles without first consulting a lawyer who will provide analysis and advice on a specific matter. Fasken Martineau DuMoulin LLP is a limited liability partnership under the laws of Ontario and includes law corporations Fasken Martineau DuMoulin LLP Vancouver info@van.fasken.com Québec City info@qc.fasken.com Calgary info@cgy.fasken.com Toronto info@tor.fasken.com Montréal info@mtl.fasken.com New York info@nyc.fasken.com London info@lon.fasken.com Johannesburg info@jnb.fasken.com