CRTC blasts Bell for Nexxia relationship

The Canadian Radio-television Telecommunications Commission (CRTC) Thursday gave Bell Canada a slap on the wrist in a decision that could spell significant changes for both the carrier and its enterprise clients.

The CRTC on Dec. 12 let go a report that suggests the carrier broke the government’s rules in its dealings with an affiliated firm. Bell is accused of doing an end-run around federal regulations with BCE Nexxia Inc., an associated service provider offering carrier- and enterprise-class network connections, including ATM, Frame Relay and Internet Protocol virtual private networks (IP-VPNs).

At issue is Bell’s relationship with Nexxia. The Commission seems to think the companies work too closely for comfort.

Bell, an incumbent local exchange carrier (ILEC), is obliged to file with the government certain information about the services it offers. Some network services are regulated – the CRTC wants to see pricing plans, terms and conditions for these products before customers get a crack at buying them.

But Bell sold some of those regulated services through Nexxia, which is not an ILEC. As such, Nexxia is not subject to ILEC rules and is not required to file with the government tariff information.

Or so Bell thought. The Commission, in its decision dubbed 2002-76, set the record straight for the confused carrier.

“When…an affiliate wishes to resell a tariffed service of the telephone company, the telephone company will be required to obtain Commission approval of a tariff setting out the rates, terms and conditions under which the service can be sold by the affiliate,” read the CRTC’s statement.

Bell is mulling over the decision, said Bernard Courtois, the telco’s point person on regulatory affairs. He said it’s too soon to offer insight into the Commission’s 30-odd page-long report.

“The reason why we created Bell Nexxia in the first place was to better serve that market,” Courtois said. “We intend to maintain that objective. Of course, we comply with the regulatory regime, and as the regulatory regime changes, we’ll comply with that as well.”

Lawrence Surtees, a telecom analyst with IDC Canada Ltd., said the Commission’s decision makes no bones about Bell’s situation. He notes that the CRTC clarified the rules concerning ILEC offerings and affiliated firms in an attempt to ensure history does not repeat.

“At a minimum, the Commission’s saying, we don’t care what you call it, if it’s tariffed, it’s tariffed,” Surtees said. “If it walks like a duck, if it quacks like a duck, it’s a damned duck.”

Although it’s too soon to say just how the Commission’s decision will affect Nexxia’s business, Surtees said it could be a pain point for the service provider. Enterprise clients accustomed to Nexxia’s unregulated prices might not care for the ILEC-accordant pricing scheme.

“As the contracts come up, and if Bell and Nexxia have to come under tariffed rates, that could have an impact in a number ways. A customer might say, ‘I don’t like that rate. I’m going to go with a competitor.’ That might cost them business.”

The Commission’s decision also takes issue with Bell’s customer service group (CSG) – a government-mandated subset within the carrier in place to keep separate the ILEC’s various business lines.

The CSG is supposed to act as a divider between the ILEC and competitive local exchange carriers (CLECs), which lease from the incumbent network services to provide local voice and data connections.

Bell’s CSG resides within Nexxia, rather than the incumbent. Some CLECs – notably Group Telecom Inc. (GT) and Call-Net Enterprises Inc. – were concerned that Nexxia, itself a Bell customer, would put its own interests before those of competitors. The Commission said Bell must move its CSG out of Nexxia and into the incumbent division.

“For Group Telecom, the whole self-serving reason to bring about the complaint was, we’re coming in as a rival hybrid carrier,” Surtees said. “We may actually go to the Bell CSG as a customer. We don’t know what kind of deal we’re getting. But more importantly, we don’t know what Nexxia might be doing with the information about us.” Surtees explained that Nexxia might be indicating to Bell who GT’s customers are and who to target for contracts.

As well, the CRTC noted GT’s concern that Nexxia bundled regulated and unregulated services into nicely-priced packages for its business clients, but disregarded the tariff structure that is supposed to accompany some of those services. The Commission said it wants to take a closer look at those bundles.

“Bell Canada is required to file proposed tariffs and to provide the Commission with information regarding all contracts for single source and packaged arrangements,” reads the Commission’s decision.

The CRTC in its report invites other ILECs to show reasons why they should not have to abide the rules now clarified in 2002-76.

Bell’s Courtois said the carrier plans to bring up with the Commission its concerns about the state of competition in Canada’s telecom industry and best regulatory practices to ensure a healthy industry – once all the paper work for Thursday’s decision is wrapped up, that is.

“We will want to explore with the Commission how the regulatory regime could be changed to better reflect the changing market. It’s perhaps not the best to approach it with rules that stemmed from years ago. There’s a lot of work to be done here – a lot of administrative work, paper work and implementation work – so that’s going to be our first priority.”