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Directory Assistance Appeal

Canadian Radio-Television and Telecommunications Commission
Ottawa, Ontario
K1A 0N2
Attention: Mr. John Keogh
Secretary General

Dear Mr. Keogh:

Re: Telecom Order CRTC 99-741: Bell Canada Directory Assistance;

Part VII Application for a Review and Variance of Order 99-741
1. This is an application made pursuant to section 62 of the Telecommunications Act for a review and variance of paragraphs 16, 17, 18, and 19 of Telecom Order CRTC 99-741.

2. This application is made on behalf of Action Réseau Consommateur (ARC), the Consumers’ Association of Canada (CAC), and the National Anti-Poverty Organization (NAPO), hereinafter referred to as “ARC/CAC/NAPO”.

3. On July 29, 1999, the Commission issued Telecom Order 99-741, in which, among other things, it permitted Bell Canada to begin charging for unsuccessful directory assistance requests (unlisted numbers, or listings that are not found). It is this part of the Order that ARC/CAC/NAPO appeal.

4. According to the Commission’s Guidelines for Review and Vary Applications (Telecom Public Notice CRTC 98-6), applicants under section 62 must demonstrate that there is substantial doubt as to the correctness of the original decision.

5. In its decision, the Commission cited two reasons for permitting Bell to charge for unsuccessful directory assistance (“DA”) requests:

(a) “it is reasonable that the costs incurred with respect to unsuccessful requests should be borne by those who use the service” (para.17); and
(b) “the removal of this exemption is an important factor in optimizing the efficiency of Bell’s DA service” (para.18).

6. ARC/CAC/NAPO respectfully submit that there is substantial doubt as to the correctness of both of these rationales, for the reasons set out below.

7. The Commission did not explain why “it is reasonable that the costs incurred with respect to unsuccessful requests should be borne by those who use the service”, other than to note that “an unsuccessful DA request can occur when the requested number is either an unlisted number or does not exist or when the request is not sufficiently precise” (para.17). It thus appears that the Commission neglected to consider the possibility that at least some unsuccessful DA requests are caused by an error on the part of Bell Canada (in the directory listings) or on the part of the operator.

8. As noted in the dissent of Commissioner Langford, there are numerous possible causes of an unsuccessful request, including error in the directory listings, or on the part of the operator. It is fundamentally unfair to allow Bell to charge customers for a service not rendered when it was as a result of Bell’s fault that the service was not rendered.

9. Bell provided no evidence as to the statistical breakdown between customer-caused and system-generated failures in respect of DA service.
10. In order to get some idea of the existing failure rate in respect of Bell’s DA service, PIAC conducted an informal survey of Bell’s DA service on August 23rd, 1999, using 100 known listed names and numbers. In all cases, subscriber error and unlisted numbers were thus ruled out. Of the 100 requests made, a total of 24 were unsuccessful. In 9 of these cases, the operator told the caller that there was no such listing.

11. This informal survey likely underestimates the rate of company error in respect of unsuccessful DA requests, given that the callers in question spoke fluent English and French, and knew the correct names of the institutions and individuals whose listings were requested. Many DA requests will require more effort on the part of the operator in order to understand the caller’s request or to assist the caller with a difficult but reasonable request.

12. Moreover, if Bell is equally reimbursed for failure and success, there is no financial incentive for it to minimize errors in the provision of DA, and its current error rate is therefore likely to increase.

13. ARC/CAC/NAPO submit that it is unreasonable to charge DA callers for a service not rendered when the failure to render was due to error on the part of Bell Canada. Until Bell Canada can separate customer-caused from company-caused failure, it should not be permitted to charge for unsuccessful DA calls. It may be reasonable to impose a user fee on DA callers whose requests are inaccurate or insufficiently precise. It is not reasonable to impose a user fee on DA callers who bear no fault, and who have already suffered the frustration of an unsuccessful request due to company error.

14. There is a third category of unsuccessful DA calls, which is neither customer-caused nor company-caused: that of unlisted numbers and truly non-existent numbers where the request was precise and reasonable. In these cases, neither the company nor the customer is at fault. However, a cost is incurred. Who should pay?

15. ARC/CAC/NAPO submit that it is inappropriate to charge customers for unsuccessful DA calls unless the customer is at fault. As Commissioners Langford and Cardozo both point out in their respective dissents, it is unusual in service industries for customers to be charged for a service not successfully rendered. The costs of such efforts are normally considered to be part of the general costs of doing business. They should likewise be considered a normal cost of providing DA service.

16. The majority’s second rationale for permitting Bell to charge for unsuccessful DA requests is that “removal of this exemption is an important factor in optimizing the efficiency of Bell’s DA service”.

17. Again, it is not clear from the decision how charging in this instance would improve the efficiency of Bell’s DA service. If accuracy or responsiveness have anything to do with efficiency, the decision will in fact have the opposite effect, since Bell will have lost the financial incentive to minimize error in DA service. Charging in this instance will certainly improve the revenue/cost ratio of the service, but net profit does not equate with efficiency. Efficiency, rather, has to do with cost and productivity.

18. ARC/CAC/NAPO can only speculate that this part of the Commission’s reasoning was based on Bell’s confidential PWAC study figures, provided in Table 4.5.1 of the Attachment to its application. Bell may be suggesting here that the cost per DA call will fall due to a reduction in difficult and time-consuming DA requests, as a result of the new charge. If this is the case, ARC/CAC/NAPO submit that further evidence of such an effect is required before Bell’s demand assumptions are accepted.

19. Unfortunately, Bell has not made public the costs of DA service. All that we know is that the Company’s Study Report on the Resource Cost for DA and ADACC “shows that the proposed service will provide a net economic benefit to the Company”, and that “the proposed rate has been set to recover costs” (Bell’s letter of application, p.2). In the report, Bell refers to “its current high and unacceptable operating costs resulting from the existing tariff” (para.23). And in its reply to PIAC’s initial comments on the application (para.8), Bell refers to “the necessity of off-setting its costs with commensurate revenues”.

20. ARC/CAC/NAPO infer from these statements that Bell was claiming in its application that the existing DA service did not cover its costs. There is evidence, however, suggesting otherwise.

21. In its Part VII application of January 29, 1999 regarding Bell’s operator services, the Communications, Energy and Paperworkers Union of Canada (CEP) stated the following:

19. Bell Canada has claimed for many years that its Operator Services division is not profitable and has used this claim as a basis for seeking wage and other concession from its operators. For its part, CEP has taken the position that Operator Services is not a loss centre and has resisted Bell Canada’s pressure for concessions.

20. In order to resolve this fundamental disagreement, CEP and Bell Canada undertook a joint study in 1997 of Bell Canada’s Operator Services division. The study was prepared by a joint committee of CEP and Bell Canada personnel and examined all relevant costs and revenues associated with the division. Unfortunately, due to a confidentiality agreement between CEP and Bell Canada, CEP cannot provide the Commission with a copy of the report at this time. However, CEP can disclose that the conclusion of the study was that the Operator Services division is profitable, contrary to Bell Canada’s earlier claims. This fact has been confirmed by Bell Canada’s Chief Executive Officer, Jean Monty: “Bell Canada met l’eau dans son vin”, Le Devoir, January 19, 1999.

22. ARC/CAC/NAPO submit that the existence and conclusion of this report cast doubt on any claim by Bell as to net losses incurred by its DA service. If the Order in question was based to any extent upon such a claim, it is incumbent on Bell to produce the joint CEP/Bell study and to explain any conflicting evidence as to the profitability of its DA services.

23. Finally, ARC/CAC/NAPO submit that the fact that two Commissioners dissented on this issue is evidence enough of substantial doubt as to the correctness of the majority’s decision.

24. For all these reasons, ARC/CAC/NAPO request that the Commission review its majority decision to permit Bell to charge for unsuccessful DA requests, and vary the decision so as not to saddle customers with the costs of reasonable but unsuccessful DA requests.

All of which is respectfully submitted this 31st day of August, 1999.

Philippa Lawson
Counsel for ARC/CAC/NAPO

cc: CRTC Legal Branch – Allan Rosenzveig
Bell Canada – Theresa Muir
BCT.Telus – Willie Grieve
MTS – Roy Bruckshaw
MT&T/Island Tel – Don MacDonald
NBTel – Richard Stephen
NewTel – Edmond Burry
NWTel – Araya Vivorakij
AT&T Canada – Peter Barnes
Call-Net – Jean Brazeau
Clearnet – Parke Davis
Paytel Canada –
CARP –
CRTCHQ –
Mr. Chris Wong –
FORM 12

FORM OF ENDORSEMENT ON APPLICATION UNDER PART VII NOTICE

This application is made jointly by Action Réseau Consommateur, the Consumers’ Association of Canada, and the National Anti-Poverty Organization (“ARC/CAC/NAPO”).

TAKE NOTICE that pursuant to section 59 of the CRTC Telecommunications Rules of Procedure, the respondent is required to mail or deliver his answer to this application to the Secretary General of the Canadian Radio-television and Telecommunications Commission, at:

John Keogh
Secretary General
Canadian Radio-television and Telecommunications Commission
Ottawa, ON
K1A 0N2

and to serve a copy of the answer on the applicant by October 1, 1999.

Service of the copy of the answer on the applicant may be effected by personal delivery or by ordinary mail. In the case of service by personal delivery, it may be effected at the address set out above.

If the respondent does not file or serve his answer within the time limit prescribed, the application may be disposed of without further notice to him.

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