Mark Goldberg


www.mhgoldberg.com





Pumping and dumping

On Friday, the CRTC issued a Decision finding both Iristel and TELUS guilty of violating the non-discrimination provisions of the Telecom Act (Section 27(2)) and it also issued a companion Notice of Consultation, seeking public comment on whether it should issue fines for the incidents.

Nearly 4 years ago, I wrote about the back story on all of this [see Gaming the system • November 2016].

The allegation at the time was that Iristel was artificially stimulating calls to telephone numbers operated the company in area code 867. Because these numbers were in the far North, the terminating carrier received an exceptionally high rate to route long distance/ calls to the final destination. There was a financial incentive to create an artificial imbalance of calls and in December 2017, the CRTC found that Iristel was guilty of “engaging in regulatory arbitrage activities”. No penalties were issued at that time.

At stake was the financial viability for Canadian telecom service providers to continue to offer nationwide calling that included calls to the north. Even though the cost of routing calls to the North was so substantially higher than calls to the rest of Canada, service providers considered the extremely low percentage of the population living there are were willing to take the financial risk.

Skip ahead. Just 7 months later, TELUS filed an application with the CRTC saying Iristel “stopped only briefly after the issuance of that decision” and was back in the traffic stimulation business again.

As one of the major wholesale long distance providers, TELUS started limiting the size of its trunk groups to Iristel in a move to mitigate its financial exposure.

TELUS and Rogers submitted data to the CRTC that showed the volume of calling to Iristel’s telephone numbers in the 867 area code dropped in after the CRTC’s 2017 Decision, but then traffic volumes started to increase. “By May 2018, the volume of traffic had increased to levels similar to the volume of traffic levels that existed prior to the effective date of Telecom Decision 2017-456.”

So, on Friday, the CRTC decided to retroactively (and significantly) change the rate that Iristel charges for calls to its customers. The rate drops about 75% retroactive to November 2018.

The Commission found that Iristel was conferring upon itself an undue preference, and that TELUS unjustly discriminated against Iristel, both in contravention of Section 27(2) of the Telecom Act.

The regulatory process is not speedy. It took more than 2 years for the CRTC to respond to the TELUS complaint. The CRTC took 3 and a half months to respond to applications for interim relief. Tens of millions of dollars were at stake representing hundreds of millions of minutes.

As the CRTC wrote “[TELUS] submitted that its control of traffic was justified, given the renewal of traffic stimulation activities and the associated costs that it would incur if it ceased that control.”

On the other hand, the CRTC says “there are avenues available for Commission direction to stop the offending activity. It is not open to [TELUS] to take matters into its own hands.”

As the Commission moves into the penalty phase of this proceeding, it will be interesting one to follow. Will the CRTC take into account the mitigating circumstances for TELUS’ traffic management, and the audaciously “narrow interpretation” of the Commission’s 2017 Decision that led to the continued traffic pumping? Will the retroactive rate setting be able to be implemented meaningfully?

Is self defense justified in telecom traffic management?

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