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Newsletter – December 1997 Vol.4 No.3

IN THIS ISSUE

4-1-1 Charges Appealed
Unlisted Number Service
PIAC Commissions Special Study on Government’s Plans to Auction Spectrum
Ontario Government White Paper Proposes Change
Amendments to the Telecommunications Act
New Reports

4-1-1 Charges Appealed

In October of this year, the CRTC released a decision on a Tariff Application of Bell Canada which has gone largely unnoticed by customers and consumer reporters. Bell Canada applied to charge telephone subscribers who dial 411 for local directory assistance (LDA) for telephone numbers that do not appear in the local telephone directory. This means it will cost you .75¢ every time you try to telephone an individual who has changed his or her number, but the change is too recent to appear in the book.

The CRTC granted Bell’s request because it said a majority of customers don’t use LDA, so it is unfair for all customers to pay for the service in their basic service charge (the basic service charged won’t be lowered, however.

As well, the CRTC were concerned that there was no incentive to stop calling 411 once the telephone subscriber obtained the number.

On behalf of the Consumers’ Association of Canada (CAC) Federation Nationale des Associations de Consommateurs du Quebec (FNACQ) National Anti-Poverty Organization (NAPO), PIAC has appealed to the CRTC to vary this decision. Our appeal dismisses the idea of using frequency of use as the sole barometer of what is an essential service. It was noted that “the application of the (CRTC) reasoning to the policy choice of which medical procedures to publicly fund in medicare programs might lead to some socially unacceptable results. Treatment for leukemia, for example, might be denied coverage because it is needed by only a small percentage of the patient population.”

PIAC has suggested that if 411 cost recovery is necessary that subscribers be given the opportunity to obtain a certain number of free calls per month similar to the situation in US jurisdictions. If it is not overturned, the CRTC order is scheduled to go into effect on January 1, 1998. Our antidotal evidence seems to indicate that this new charge will be extremely unpopular with customers not to mention the detrimental effect on affordability of basic service. We are urging all groups and individuals to write to Mrs. Laura Talbot-Allan, Secretary General, CRTC, Ottawa, ON, K1A 0N2 of fax to 819-953-0795.

Unlisted Number Service

For years, consumers have had to pay a hefty sum in order to keep their personal information (name and telephone number) out of the telephone directory. First, there is a service fee to change from listed to unlisted service, ranging from $22 to $45 depending on the company (this fee doesn’t apply if you start off with unlisted service). Then, there is a monthly charge, which ranges from $1.55 in Manitoba to $5.75 in Nova Scotia (average is $4.25).

Privacy and consumer advocates have been arguing for years that people shouldn’t have to pay more in order to maintain a given level of privacy, and that in any case, unlisted service is priced well above its cost to the companies. The CRTC has finally seen fit to examine this issue, and to consider requiring the companies to lower the price of this increasingly important service.

Unlisted service has always been essential for some people – those fleeing violence or harassment, for example. It has, however, become increasingly valuable for those who wish to maintain control over their personal information. The information published in telephone directories and in directory databases is now available on the Internet and on CDS sold in retail stores across the country. This information is collected, sorted, used and traded by commercial enterprises whose sole goal is to sell you their products. The only effective way for people to avoid this use of their personal information is to keep it out of the directory.

Representing the Consumers’ Association of Canada (CAC), the Fédération Nationale des Associations de Consommateurs du Québec (FNACQ), and the National Anti-Poverty Organization (NAPO), PIAC has filed comments with the CRTC in support of the consumer position that unlisted service should be priced more fairly, that it should include automatic Caller ID blocking, and that listed subscribers should have various options in terms of how their listing appears in the directory.

It is particularly shocking to PIAC and its clients that only three companies (NBTel, MT&T, IslandTel) provide automatic Caller ID blocking with Unlisted Service. As an informal survey conducted by CAC showed, most people with unlisted service assume that their personal information is automatically blocked from appearing on the Call Display screens of the people they call. They were appalled to find out that this is not the case.

While the deadline for comments in the formal proceeding (Public Notice 97-31) has now passed, it is still worthwhile to let the CRTC know your views on this issue. Write to: Mrs. Laura Talbot-Allan, Secretary-General, CRTC, Ottawa, Ontario K1A 0N2, or fax to: (819) 953-0795.
PIAC Commissions Special Study on Government’s Plans to Auction Spectrum.

The federal department Industry Canada has been making plans to begin auctioning radio frequencies or spectrum to communication companies. Spectrum frequencies are the publicly-owned airwaves used for wireless telephone service, radio, and new Information Highway services, such as wireless Internet and wireless local cable television. Spectrum is also used for traditional over-the-air broadcasting signals. The federal government has stated repeatedly over the past few years that these wireless services will provide competitive alternatives to existing wire-based telephone and cable television services and help address the problem of providing new services to rural and remote areas.

Industry Canada’s rationale for auctioning is that it will realize more accurate economic value from companies for the public for the use of spectrum and this process will be easier to administrate.

However, in a series of recent public consultations conducted by Industry Canada, both consumers and industry have opposed auctioning. Instead, both interests prefer that the government continue to use a comparative selection process that assesses fees to companies for the use of this public resource and imposes conditions of license which provide public benefits such as employment and research and development spending in Canada. PIAC released a special study on this issue in December, called Inappropriateness of Spectrum Auctioning in a Canadian Context. The study found many problems with the proposed auction process. Spectrum is publicly owned property. Under auctioning, both companies and the financial community who will be providing loans to the companies, have indicated that they would want to treat spectrum as private property rather than public property. Contrary to rhetoric from Industry Canada, auctioning amounts to the privatization of public property. The federal government is not our real estate agent, but is supposed to act as or representative in the use of public property.

Auctioning also appears to be little more than an ideologically driven idea, largely intended to raise more money (tax) from companies. Companies and consumer groups expect that auctioning will add significant, unnecessary costs to the wireless services. Such higher costs will mean less competition and higher consumer prices. Moreover, auctioning also creates a disincentive for companies to provide traditional public benefits such as employment and R&D. These are likely to be negotiated away during the usual behind-the-scenes lobbying by any license winners. Other findings of the report include: Canadians have been provided with high quality services at affordable rates with the comparative selection process; using this traditional process Canada has developed sustainable competitive alternatives faster than other countries, including the United States; and, Canada shouldn’t blindly follow the United States in using auctions where they have not only led to massive market failures but have been subverted to the political budget balancing process.

PIAC and industry players are encouraging the Minister of Industry to publicly commit to continue using the comparative selection process rather than gut the public interest through auctions.

Ontario Government White Paper Proposes Change

In November, the Ontario Government issued its long awaited White Paper in response to the May 1996 Report of the Advisory Committee on Competition in Ontario’s Electrical System (Macdonald Report)

The report makes a number of broad ranging recommendations that are intended to establish a competitive electricity market for the year 2000 for both wholesale and retail customers. PIAC is pleased to see that the Ontario Government will give the Ontario Energy Board a greater role in regulating the activities of Ontario Hydro. The OEB’s previous function of rendering advice to the Minister was largely ineffective. There are however many questions arising concerning the future of the electricity industry in Ontario. Principally, the issue of potentially stranded debt of Ontario Hydro as a result of their under performing nuclear facilities has yet to be addressed. As well, although the report outlines a strategy for competitive access to electricity, there is no guarantee that actual competition, particularly at the retail residential level will come about.

PIAC intends to participate in the debate concerning the restructuring of this industry. For one thing, we wish to avoid the mistakes that were made in the deregulation of telecommunications were the benefits to date seem to have flowed primarily into the pockets of the largest consumers of telecommunications services.

Amendments to the Telecommunications Act

Bill C-17, An Act to Amend the Telecommunications Act and the Teleglobe Canada Reorganization and Divestiture Act is currently before Parliament. The proposed amendments are designed to permit the government to meet its commitments made to the World Trade Organization (open borders), while still maintaining control over quality and safety standards, and pursuing goals such as Canadian ownership and use of Canadian facilities.

Together with CAC and FNACQ, PIAC appeared before the legislative committee examining this bill, in order to express our support for expanded powers to the CRTC, especially those that would allow the Commission to regulate resellers directly.

At present, the CRTC is able to apply consumer safeguards (e.g., privacy protection, information to consumers, authorization rules for customer transfers) to facilities-based carriers, but has no legal jurisdiction to apply the same rules to non-facilities-based service providers, known as “resellers”. These companies buy service in bulk, then resell it to individual customers. From the consumer perspective, there is no difference between a facilities-based carrier and a reseller; they both offer the same service to the end-customer. Hence, there is no reason why resellers should not be subject to the same consumer protections as are other service providers operating in Canada.

We also pointed out a number of areas – directory assistance database; emergency 911 service; dispute arbitration between carriers – in which administration by a neutral third party will be the most appropriate solution in a competitive environment. In order for such third party administration to occur, the CRTC must be provided with statutory powers of administration and delegation.

Finally, we noted that the statutory term “basic telecommunications services” lacks a definition. We proposed the following:

“Basic telecommunications services shall be defined by the Commission from time to time, on application by an interested party or on its own motion, and shall include those services necessary for a person to participate fully in Canadian society.”

Our presentation was well-received by the Committee. The Vice-Chair of the Committee admonished responsible officials of Industry Canada for not consulting with consumer groups in advance.

New Reports

PIAC has just released Inappropriateness of Spectrum Auctioning in a Canadian Context (see story on page 1). The report was written by Max Melnyk, formerly Chief of Spectrum Policy in Industry Canada. The report is 113 pages long and is available from PIAC at a cost of $10 per copy, plus shipping (English only).

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