PIAC application to CRTC for disclosure by telcos of long distance rates – PIAC Reply Comments

Philippa Lawson
Senior Counsel
Ms. Diane Rheaume
Secretary-General
Canadian Radio-Television and Telecommunications Commission
Ottawa, ON
K1A 0N2
Dear Ms. Rheaume:
Re: Part VII Application by PIAC for enforcement of CRTC ruling regarding Basic Toll Rate disclosure by ILECs
1. We are in receipt of Answers from Bell Canada, TELUS, Aliant, MTS and SaskTel to our above-mentioned Part VII Application. The following is PIAC’s reply.
2. Failure to address any particular allegation or argument should not be construed as acceptance of, or agreement with, that allegation or argument, where such acceptance or agreement would be contrary to the interests of PIAC.
3. This reply is organized primarily by issue rather than by Respondent. A few points specific to each Respondent are, however, addressed near the end of these comments.

Terminology

4. In its August 28th application, PIAC used the term “Basic Toll Service”, with the abbreviation “BTS” (see para.1). In their Answers, the Respondents have used the same abbreviation, “BTS”, to mean “Basic Toll Schedules”. It is important that the Commission appreciate the different uses of this abbreviation in different documents, so as not to misunderstand any party’s argument.
5. In an attempt to minimize the confusion that has already been created by the different uses of this abbreviation, PIAC will adopt the Respondent usage of “BTS” (“Basic Toll Schedules”) in these Reply comments.

Misunderstanding of PIAC’s Argument

6. The Respondents’ Answers portray serious misunderstandings of the PIAC Application in a number of respects, as well as confusion among different arguments made by PIAC. As a preliminary matter, therefore, PIAC reiterates its argument in summary form.
7. First, PIAC is alleging two separate “wrongs” on the part of the companies:

1. “Making Basic Toll Schedules Available”:
2. The Respondents have failed to make their Basic Toll Schedules (BTS) “publicly available” by refusing to provide the BTS to consumers upon request, or to refer such consumers to a method by which they can obtain the BTS, and by failing to take reasonable steps to make the BTS available to consumers in a meaningful way (e.g., via websites and other general publications); and
   “Disclosing BTS as a toll plan option”:
   The Respondents have, to varying degrees, misrepresented their long distance service options to consumers by failing to disclose the option of Basic Toll service at appropriate times and in appropriate locations.8. While these two issues are related, it is important not to confuse them as some companies have done. Each point stands on its own, regardless of how the Commission determines the other.
   9. Second, PIAC points out the consequence of these wrongs: that some customers on toll plans have paid more for toll service than they would have paid under BTS rates. PIAC argues that at least some of these customers would have chosen BTS rates had the option been properly disclosed to them. Hence, a causal relationship can reasonably be assumed between the Companies’ failures to disclose and at least some of the “excess” monies paid for toll service. The companies have been unjustly enriched as a result.
   10. Finally, PIAC proposes that:
3. the companies should be required to change their practices so as to accord not only with the words, but also with the spirit of the CRTC order; and
4. the companies should be required to rebate adversely affected customers by the difference between their actual toll bills and what their toll bills would have been under BTS rates, over the period since Decision 97-19.
   11. Whether deliberate or not, the confusing and embellishing of these arguments by some Respondents in their Answers should not be allowed to obscure the straightforward points made by PIAC.

   Confusion between Basic Toll Schedules (BTS) and Basic Toll information

   12. Some companies refer in their arguments alternatively to “the BTS”, “BTS information”, “BTS rates”, and “BTS rate information”. By doing so, they attempt to draw attention away from from the fact that they have not been making their Basic Toll Schedules publicly available, as required by the Commission.
   13. PIAC does not dispute that the companies provide point-to-point BTS rate information upon request; that is not the issue. The issue is whether the companies have been making their Basic Toll Schedules available upon request, and it is clear from the record that they have not been doing so.

   Confusion between availability of the schedules and disclosure of the basic toll option

   14. Some companies have confused the two separate arguments made by PIAC in its application:

5. that the BTS is not being made publicly available (i.e., available upon request and easily accessible); and
6. that “full and pertinent information” regarding the basic toll service option is not being disclosed to customers by telcos at appropriate times.

15. Bell, for example, confuses these two points when it states, incorrectly:
“PIAC alleges that all ILECs have failed to meet the requirements of Decision 97-16 to make the BTS publicly available because the BTS was not prominently and frequently mentioned in every medium of communication between the ILECs and their customers.” (para.16)
16. Bell repeats this error in paragraph 29 of its Answer.
17. Contrary to Bell’s assertion, PIAC’s allegation that the Company has failed to make the BTS publicly available is not premised on an interpretation of Decision 97-19 requiring disclosure of the BTS rate option alongside other toll options.
18. Bell is confusing the issue of public availability of the schedules with the issue of misrepresentation. The simple requirement for public availability of the BTS can be satisfied without mentioning the BTS option to customers at appropriate times. Nevertheless, failure to disclose the BTS option to consumers is misleading where the BTS option may be a relevant option for the consumer. The requirement to mention the BTS option to consumers at appropriate times, regardless of the medium of communication, stems from the obligation not to mislead, not from the obligation to make the BTS publicly available.
19. It is important not to confuse these two issues, since a finding on one issue is not determinative of the other issue.

Confusion between past and present wrongs

20. All five companies point out that they have changed, or about to change, their practices in response to PIAC’s Application. In doing so, they suggest that because past non-compliance has been corrected, no more regulatory action need be taken.
21. As set out below, the companies are still far from full compliance with the CRTC order and the requirement to disclose all pertinent information so as not to mislead consumers. Regardless of whether they have become compliant, however, the issue of past wrongs remains.
22. It has been almost five years since the order in question was rendered. It is important that the Commission consider both past wrongs and present wrongs. That companies have improved their practices after PIAC’s Part VII application (or upon being notified of the problem by PIAC in June 2002) should not absolve them of responsibility for wrongs committed prior to this time. The Commission should not allow such wrongs to go unaddressed.
Misinterpretation of PIAC’s point that BTS rates should be presented as an option alongside other toll plans, in all modes of communication
23. Some companies have misinterpreted PIAC’s point, in para.31 of its Application, that “the BTS rate option should be disclosed alongside other toll options in all modes of advertising or customer communications: on websites, in print advertising, in email communications, and during telephone and in-person communications with customers.”
24. Specifically, Bell interprets this as “an onerous requirement that [the BTS] be disclosed in each and every communication relating to long distance calling”, and argues that “there is not currently, nor should there be, a requirement to include the BTS in every customer communication relating to long distance calling”.
25. SaskTel similarly misinterprets PIAC’s point, arguing that “the requirement to present the BTS rates in ‘all modes of advertising and customer communications’ would produce clutter and confusing messages, is not necessary, and has no obvious benefit….”.
26. The Companies are attacking illusory arguments. PIAC never suggested that the Companies should be required to disclose the BTS option “in each and every communication relating to long distance calling”. Rather, PIAC’s point was that the disclosure of BTS rates as an option along with other toll service options should not depend on the mode of advertising or communications. It should not be limited to the website, for example. Nor should it be limited to print communications. The principle of disclosure at appropriate times and in appropriate locations should apply to all modes of communication chosen by the Company.
27. Nor did PIAC suggest that the BT rate schedules, or a listing of BTS rates, should be disclosed in all modes of advertising or communication; the point was simply that the existence of BTS rates as an option should be disclosed at appropriate times and in appropriate locations. The details of such rates should then be provided to customers upon request, and made available for customers to review at their leisure.

Misinterpretation of the duty to advise customers of the basic toll option

28. The companies also misinterpret PIAC’s point that they should “be required, when directing consumers to the best toll plan based on the consumer’s calling patterns, to advise those customers who may be best off under BTS rates that this is the case”.
29. They respond by arguing that “the Company cannot pre-determine the economic and personal factors that would establish when a customer is ‘best off’ on the BTS”, that “the toll option that results in the customer being better off is dependent on each customer’s individual situation”, that “in order to ensure that customers are receiving the ‘best buy’ it would be necessary to continuously monitor customers’ calling patterns to determine the optional [sic] toll calling arrangement”, and that “it is therefore impractical, unreasonable and unnecessary to order the Company to advise customer that they may be financially best off under BTS rates, based on customers’ current calling patterns”. 30. These responses portray a misunderstanding of PIAC’s point.
31. First, PIAC is not suggesting that the companies be required to advise customers of the BTS option at all times and in all situations. Rather, the point is that where assisting consumers in identifying the appropriate toll plan given their calling patterns, companies must not ignore the BTS option. Not to disclose the BTS option in this context constitutes misrepresentation insofar as the consumer is led to believe that their best option is a toll plan which may in fact cost them more in the end than BTS rates.
32. Second, PIAC is not suggesting that companies should be required to make a determination for the customer as to which toll option best suits their needs. Indeed, PIAC agrees wholeheartedly with Bell that “it is inappropriate for the Company to replace its judgment for that of its customers”. Rather, when advising customers of toll options that might meet their needs, the companies should not ignore any obvious options, such as BTS rates. To provide full and pertinent information to consumers in response to inquiries and at the time of service selection does not in any way constitute replacing the Company’s judgment for that of its customers.
33. Third, the companies frequently assist customers in identifying the least expensive toll option for them on the basis of the profile presented to them by the customer. It is thus disingenuous for the companies to argue here that a requirement for such assistance to include the BTS option where relevant is “impractical” and “unreasonable” because customer calling patterns change, As they do now, companies can continue to provide this advice based on the calling profile presented to them. It is then up to the customer to decide which option to choose.
34. It is similarly disingenuous for the companies to argue that advising customers, where appropriate, that the BTS option might be their “best option” would be “impractical” or “unreasonable” because financial considerations are not the only ones important to customers. It is well understood by both company representatives and customers that a reference to “best deal” is based on price considerations. Indeed, the companies themselves use the term “best option” to mean financially best option; to argue here that it means something else either to them or to consumers is insincere. If there is any doubt, companies can be specific about what they mean when they refer a customer to the best deal for that customer. It is then up to the customer to decide which option to choose.
35. In fact, Aliant admits (like other companies) that its “representatives undertake a general analysis of customer calling patterns as a matter of course to help the customer select the most appropriate long distance service”. In the same breath, however, the company argues that “in order to ensure that customers are receiving the ‘best buy’ it would be necessary to continuously monitor customers’ calling patterns to determine the optional [sic] toll calling arrangement”. It is particularly ironic that Aliant, whose website includes an option “Unsure of which plan is right for you?”, should argue here that a requirement for such advice to include all pertinent options is “impractical” and “unreasonable”.
36. If the companies can advise customers of the most appropriate long distance service for that customer, they can surely do so in a way that does not mislead customers, by disclosing all relevant options.
37. In brief, the proposed requirement to advise customers that BTS rates might be their best option would apply only where not to do so could be misleading.

Irrelevant Arguments

38. Some companies distract attention from the issues in this proceeding by making irrelevant arguments. For example, the fact that a company’s Basic Toll Schedule has not been revised since 1997 has no relevance to the issues in this proceeding. The fact that customers are charged BTS rates unless they choose a toll plan, can switch among long distance plans at will, and can choose to go with BTS rates at any time, are also irrelevant. The fact that discount plan long distance rates have fallen significantly since 1997 is similarly irrelevant to the issues in this case.
39. What is relevant to this Application is the extent to which customers are fully aware of the BTS option and BTS rates, both in general and at the time they are making decisions about their toll service.

Making Basic Toll Schedules “Publicly Available”

40. All five companies argue that they have met the Commission’s requirement to make their Basic Toll Schedules “publicly available”.
41. In order to determine the proper meaning of the term “publicly available”, it is important to review the CRTC order in question, which states:
To protect the interests of users, including users in high-cost remote areas, and in light of the Canadian telecommunications policy objectives, the Commission considers it appropriate to adopt the following additional conditions applicable to the offering or provision of toll services:
(i) The Stentor companies shall provide to the Commission, and make publicly available, rate schedules setting out the rates for basic toll service. These schedules are to include the 50% discount currently applicable to calls which originate from, and are billed to, the residence service of a registered certified hearing or speech-impaired Telecommunications Devices for the Deaf (TDD) user. The Stentor companies shall update their respective schedules within 14 days of any change to the rates for basic toll service.

The value of Basic Toll Schedules to consumers

42. The CRTC’s order to make basic toll rate schedules publicly available is premised on the notion that such schedules contain potentially useful information for consumers in a competitive marketplace. Most respondents, however, explicitly challenge the notion that basic toll rate schedules are useful to consumers. By doing so, they effectively challenge the CRTC order itself.
43. For example, Bell argues that “the rates contained in the BTS are of limited value to customers” because they are based on distances between rate centers, and hence that “BTS rate schedules are inherently of little use to customers”. MTS argues that “the BTS schedules have only limited value to most customers because these schedules are the rates for toll calls made only by a small percentage of customers”, and that “the BTS schedules have very limited use to customers without the customer first knowing what the distances are between the calling and the called locations of interest to the customer”. SaskTel argues, similarly, that “since the BTS provides the rate to be charged based on the distance between the originating and terminating rate centers, the BTS proves to be of little value to SaskTel’s customers…”.
44. It would appear that some companies have consciously chosen not to comply with the CRTC order because they disagree with its premise. Such disrespectful behaviour should not be tolerated by the Commission. The companies know full well that the appropriate course of action to take in such a case is to apply to the Commission for a review and variance of the order, under s.62 of the Telecommunications Act.
45. As TELUS states,
”…it [the company] has an obligation to ensure that consumers have access to all pertinent information they may need in order to make economically rational decisions regarding what long distance service to subscribe to.”
46. As TELUS recognizes, a fundamental criterion for the effective functioning of a competitive market is that consumers have full information about their options. Because it is often in a company’s interest to provide less-than-full information to consumers, governments have enacted numerous statutes and regulations requiring specific disclosures. Moreover, the common law (both contract and tort) demands a certain level of disclosure in order both to make contracts valid and to avoid misleading customers.
47. The Commission clearly states, in the preamble to the order, that the purpose of the order is “to protect the interests of users”. There can be no doubt of the Commission’s intention to ensure, through this order, that consumers have reasonable access to the companies’ basic toll rate schedules. Nor can there be any doubt that the Commission considered such access to be a valuable protection for consumers – otherwise, it would not have bothered to make the order.
48. The Commission appreciated, in this order, that basic toll rate schedules contain valuable information for those consumers who wish to understand their toll rate options. It is particularly valuable information for the increasing proportion of consumers for whom BTS rates may be the best option.
49. Indeed, Bell acknowledges that “in recent years, the BTS has become relevant to more customers”, and admits that “the intent of Decision 97-19 was to ensure that BTS information is available to customers in a way that allows them to reasonably assess the BTS as an option for their long distance calling needs”.
50. That these schedules contain rate information by distance does not diminish their value to consumers. Clearly, it is impractical to provide schedules showing toll rates by every possible origin-destination combination. Instead, the schedules are provided in summary form, by distance between rate centres. That the consumer does not know the exact mileage applicable in each case does not mean that these schedules have no value to her. To the contrary, the schedules provide clear per minute rate information for many destinations (e.g., beyond a given distance). Where the customer is not sure of the applicable distance, they provide an indication of the applicable rate. Finally, and most importantly, they provide this information in a format that the consumer can consult at her leisure, without having to contact the telephone company repeatedly with specific point-to-point rate inquiries.
51. At the same as they argue that the schedules are of limited value to customers, the companies also acknowledge that “it is inappropriate for the Company to replace its judgment for that of its customers”. Yet, that is precisely what companies are doing when they choose not to disclose their basic toll rate schedules to consumers on the basis that the information in the schedules is of limited use. They are replacing their judgment about the utility of basic toll rate schedules for that of their customers.

Providing point-to-point BTS rate information is insufficient

52. Bell, TELUS, and Aliant argue that the provision of point-to-point BTS rate information to consumers upon request constitutes fulfillment, to greater and lesser degrees, of the CRTC order to “make publicly available, rate schedules setting out the rates for basic toll service”. (emphasis added)
53. Basic toll rate schedules are not the same thing as a specific rate between two locations. In some cases, consumers will want the former; in others they will want the latter. Point-to-point rate information is sufficient when all the customer needs is the applicable rate between two centres, but it is not sufficient when the customer desires a reference document outlining the all applicable rates under the BTS (in the same way that the rates under specific toll plans are set out in a document).
54. As the companies point out, specific point-to-point rate information has always been available upon request. The Commission was fully aware of this when it made the order for basic toll rate schedules to be made publicly available. The requirement in Decision 97-19 for rate schedules to be made available cannot therefore be reasonably interpreted as anything other than a requirement for additional disclosure, beyond that already being offered by way of point-to-point rate information.

Providing schedules to the CRTC is insufficient

55. The companies also argue that provision of the basic rate schedules to the CRTC constitutes full satisfaction of the requirement that they be made publicly available.
56. Paragraph 81(i) of Decision CRTC 97-19 states as follows:
The Stentor companies shall provide to the Commission, and make publicly available, rate schedules setting out the rates for basic toll service…… (emphasis added)
57. On a plain reading of this order, it is clear that the requirement to make basic toll rate schedules publicly available is in addition to the requirement that they be provided to the Commission.
58. In other words, provision of basic toll rate schedules to the Commission does not satisfy the requirement that these schedules be made “publicly available”.
59. This makes sense, insofar as availability through CRTC public examination rooms alone would provide little value to the users that the Commission meant to benefit by this order. The point of the order was to make it easy for consumers to access the basic toll schedules. CRTC public examination rooms are not meant to be used by the public for general rate information that should be available directly from the companies.

Availability for inspection at Company business offices is insufficient

60. TELUS argues that the requirement for public availability of the BTS is identical to the requirement for public availability of company tariffs, and that the latter requires only that the document be “available for public inspection” in company business offices as well as at the CRTC.
61. TELUS is mistaken in a number of respects. First, TELUS ignores the significantly different context of these two regulations. The 1997 CRTC rule regarding Basic Toll Schedules was made in the context of competition, a context in which end-customers need full information in order to be able to compare their options and make rational choices. The CRTC Tariff regulations, on the other hand, were designed for the purpose of ensuring that tariffs were available for inspection by interested parties.
62. Second, TELUS ignores the way in which the practical implementation of making information “publicly available” has evolved over the past decade. Most notably, it is now expected that documents subject to a requirement of public availability will be posted on company websites, if not provided electronically (by fax or email) to persons upon request. Companies are no longer limited to sharing hard copies of documents such as the BTS. Now that they can make this important rate information available to the public much more conveniently than in the past, it is expected that they will do so.
63. Finally, and most importantly, TELUS ignores the requirement in the Tariff Regulations to produce and provide copies upon request. Subsection 11(5) states:
At each business office where tariffs are kept on file as required by this section, the person in charge at that office shall, on request,
(a) produce any tariff on file for inspection;
(b) arrange to provide single copies of up to 10 tariff pages at no charge; and
(c) arrange to provide copies of any other tariff pages at a reasonable charge.
64. This is precisely what the companies failed to do, and continue to fail to do, in the case of the BTS. As the record shows, PIAC’s requests to company business offices for copies of the BTS were repeatedly turned down.

Provision in response to an Interrogatory is insufficient

65. Aliant even goes so far as to argue that provision of the BTS in response to an interrogatory in a CRTC proceeding is evidence that it makes its BTS “publicly available”.
66. Provision of the BTS to parties in a regulatory proceeding, via a response to a Commission interrogatory, can hardly qualify as making this document “publicly available” in a meaningful sense. Clearly, it does nothing for the users whose interests the CRTC meant to protect through the disclosure requirement in Decision 97-19.

Posting schedules on a website is insufficient

67. The companies also argue that posting the schedules on their websites, which most have now done in response to demands from consumer groups, together with provision of this information to the CRTC and availability for inspection at business offices (where such offices exist), constitutes full satisfaction of their requirement to make the BTS publicly available.
68. Bell argues that “public accessibility [of the BTS] is greater today than it was prior to forbearance being granted”. Presumably, Bell is referring to the online availability of the BTS. While online accessibility of Bell’s BTS is an improvement, it does not mean that the general level of accessibility is either adequate or in keeping with the CRTC order.
69. While a necessary component of making the BTS publicly available, website posting is not sufficient, even in combination with public availability of the BTS at certain Commission and Company office locations. As the companies well know, many consumers do not have Internet access. For those that do, company websites are perhaps the most convenient method of accessing the BTS. But all consumers, not just those with Internet access, need to be able to obtain copies of this rate information.
70. As well, website postings are helpful only to the extent that they are easily accessible and easily found by those consumers seeking the information online. As the Affidavits of Michael Nesbitt indicate, the online availability of this information was in some cases of limited value, given its obscure location on the company website. The companies have improved this in response to PIAC’s Application.

Directory information is insufficient

71. In response to an illusory argument, some companies argue that presenting BTS rates in “all modes of advertising and customer communications” would be impractical. Presumably, they include print directories as part of “customer communications”, and would object to a requirement that their BTS be included, together with the time-of-day discount information currently provided, in the company white pages directory.
72. While time-of-day discount information is a critical aspect of Basic Toll Rate information to which customers should have easy access, it is of little use without knowledge of the rates themselves. In the past, companies provided sample BTS rates along with the time-of-day discounts, in their directories. It is unclear why this practice was ended, or why some BTS rate information, at least, cannot be provided in the company white pages.

Making publicly available includes referencing upon request

73. While methods of making information publicly available have evolved over time, the fundamental concept has not changed. It includes not only ensuring that the document is available for inspection by the public, but also that those requesting the information are referred to methods by which they can access it.
74. The record is clear that, with few exceptions, the companies repeatedly refused PIAC’s requests to access their Basic Toll Schedules.

Making publicly available includes providing upon request

75. It is not enough, however, that companies merely refer consumers to their websites, to the CRTC public examination room, or to their (few) business offices where the BTS can be inspected. It cannot be reasonably argued that forcing consumers to attend company or CRTC offices in person constitutes reasonable availability of this information in this day and age. Moreover, as noted above, many consumers do not have website access.
76. Any reasonable interpretation of “making publicly available” the BTS in the context of competition (and in view of the corollary importance of full information to consumers), surely includes provision of the BTS to consumers upon request. Indeed, the respondents for the most part explain their failure to respond to PIAC’s requests for the BTS as “human error”, as a slip between policy and practice, or as a result of the rarity of such requests, rather than arguing that they should not have to provide this information upon request.

The Companies acknowledge the problem

77. Despite arguing that their obligation to make the BTS publicly available does not extend beyond providing it to the Commission and keeping it at Company offices for inspection, all five companies acknowledge, in one way or another, that their practices regarding public availability of the BTS have been inadequate and need improvement.
78. Most companies state, as a result of the PIAC Application, that they are directing their front-line personnel to provide the BTS to customers upon request. All companies have now posted their BTS on their websites, or promise to do so imminently. Bell and SaskTel have improved the visibility of the BTS on their websites.
79. If the companies were correct that their past practices in respect of making the BTS publicly available were sufficient, then they would not be making the significant changes that they are. Despite their protestations otherwise, the companies’ actions belie their words.

Full compliance has not yet been achieved

80. As the record shows, none of the nine company units in question made their BTS available to PIAC upon request to their business offices in June 2002. In response to a similar request in late August 2002, only two of the nine companies offered to provide the requested information. Without conducting more test inquiries, it is not clear whether other companies are now providing the BTS to consumers upon request. The only way to determine whether companies are complying is to test them by way of consumer calls to their business offices.
81. With respect to website disclosure, the record shows that while the situation has vastly improved since PIAC’s first raising the issue with the companies in June 2002, online disclosure is still inadequate.
82. In June 2002, PIAC was able to find the BTS on only one company’s website (Bell’s), and there, the link to “Base Rate Schedules” was neither clear nor conspicuous. SaskTel’s online posting was so obscure that PIAC’s researcher could not find it without a specific URL from SaskTel. As of late August 2002, TELUS had posted its BTS online in a clear and conspicuous manner, and Bell had marginally improved its website posting. As of October 24, 2002 (see attached print-outs), Aliant had posted its BTS in appropriate locations on all four company sites, SaskTel had posted a link to its BTS on the webpage for long distance services, and Bell had further improved its website posting. However, all postings remain inadequate in one way or another:

• Bell continues to omit the BTS option from the bolded list of options at the top of its webpage on residential toll options; hence, viewers may miss the BTS option;
• TELUS refers to its “Non-Plan Rates” as “non-discounted long distance rates” and fails fails to reference the fact that time-of-day discounts apply, on the webpage that appears when viewers click “Non-Plan Rates” with its BTS; hence, consumers may be led to believe that BTS rates are higher than they actually are;
• SaskTel fails to referenceneither includes the time-of-day discounts in each BTS, ornor specifies them on the page listing all schedules; instead, consumers must open a separate PDF document in order to access the time-of-day discount information;
• NBTel and MTT present “Time of Day Discounts” and “Basic Toll Rates” as if they are separate toll options, and fail to reference Time of Day discounts in their BTS, thus confusing consumers and leading them to believe that BTS rates are higher than they actually are;
• Island Tel and NewTel do not mention Time of Day discounts in their BTS; hence, consumers may be led to believe that BTS rates are higher than they actually are.

1. MTS has still not yet posted its BTS online.

Disclosing BTS rates as a toll plan option

2. The second wrong alleged by PIAC in its Part VII Application is that the companies are misleading customers by not disclosing the option of basic toll service when such option could be of benefit to the customer.
3. The respondents either deny that they have any obligation to disclose the BTS option in communications with customers regarding toll options, or challenge PIAC’s evidence that they failed to disclose this information in circumstances in which it was relevant.

Failure to disclose in certain situations constitutes misrepresentation

4. As noted above, PIAC is not suggesting that the companies should be promoting the Basic Toll option to every customer in every instance. Rather, PIAC is merely stating what the law already requires: that the companies not mislead customers by failing to disclose the Basic Toll option when advising certain customers (i.e., those who might pay less overall under basic toll rates) of their toll service options.
5. All respondents engage in communications with consumers seeking information on their toll options and seeking advice as to the best deal based on their calling patterns. All respondents provide such advice to consumers. In the context of providing such advice, whether orally, via an automated web tool, or otherwise, the companies have an obligation to provide full and accurate information. Failure to advise a customer of the lowest cost option for that customer, when purporting to do just that, constitutes misrepresentation.

The Companies contradict themselves

6. The Respondents contradict themselves in respect of their practices of advising customers on toll service options. On one hand, they admit to assisting customers in the selection of an appropriate toll plan given calling patterns. On the other hand, they argue that such advice cannot be given. They cannot have it both ways.
7. The facts, however, are clear: the companies do provide advice to customers as to the most appropriate toll plan. Arguments that such advice cannot be given due to the many factors affecting each customer’s choice, should therefore be dismissed.

PIAC has provided indisputable evidence of misrepresentation due to failure to disclose

8. The Affidavits of Michael Nesbitt provide ample evidence of misrepresentation by the companies to customers regarding their toll service options, and in particular, regarding the toll service option(s) under which they would be best off.
9. Of the nine company units called in June 2002, only one (Bell) mentioned the basic toll option, when all should have done so. Even then, the Bell representatives wrongly advised Mr. Nesbitt as to the amount of monthly toll calling below which basic toll rates are the least expensive option.
10. Of the nine company units called again in August 2002, only MTS and TELUS proposed the basic toll option, when all should have done so.
11. MTS disputes its failure to mention basic toll rates as an option during Mr. Nesbitt’s inquiry in June 2002, by arguing that “the CSR statement…that ‘the plan that is best depends on where one lives in Manitoba’ is addressing basic toll rates and the basic toll schedules.” PIAC submits that MTS is grasping at straws; this argument is patently untenable. Telling a consumer that “the plan that is best depends on where one lives” says nothing to the consumer about which plan(s) they should be considering. At best, MTS’s argument is for recognition of telepathic communication. More realistically, however, the company is simply refusing to admit the obvious. If its CSR meant to suggest basic toll rates to Mr. Nesbitt, why did he recommend “First Rate 24 Hours” without mentioning the possibility of BTS rates?
12. Bell implicitly acknowledges that its website long distance selection tool was misleading, noting that in response to PIAC’s concerns, it “considered and withdrew the tool”.
13. However, Aliant continues to offer a website link directing customers to its toll plans. At the bottom of its webpage listing residential long distance options is the question “Unsure of which plan is right for you?”. If a consumer clicks on the question, they are taken to a webpage entitled “Long Distance – Choose the plan that’s right for you!”, on which are listed the company’s toll savings plans, without any reference to the Basic Toll option. (see attached print-out)
14. Aliant company websites continue to provide misleading information insofar as they show BTS rates but either do not provide any indication or information as to the applicable time-of-day discounts, or provide this information separately from the BTS rates in such a way that the link is not clear.
Reference to the basic toll option in notices of changes to non-BTS toll plans does not disprove PIAC’s evidence of misrepresentation
15. Bell, TELUS and MTS point to notices that they provided to their long distance customers some months ago, regarding the imposition of a monthly fee, as proof that they are informing consumers of the Basic Toll rate option. These notices noted that the new charge applied only to long distance savings plans, and that customers not subscribing to such plans would not incur the charge.
16. The fact that customers reading these notices will be made aware of the BTS option in no way undermines PIAC’s point that the companies are not disclosing the BTS option to customers in other circumstances when they should be doing so. Even assuming that every customer reads the notice, and that the notice is sufficiently clear about the BTS option (neither assumptions of which PIAC accepts), the fact of this notice does not contradict the clear evidence provided by PIAC that consumers are being given misleading, if not downright inaccurate, advice by the companies about their toll service options.

Recent increases in BTS customers in Bell territory do not disprove PIAC’s evidence of misrepresentation

17. Bell argues throughout its Answer that a substantial increase in its BTS customers (from 13% to 26%) since October 2001 “demonstrates that customers are generally aware of the BTS, have sufficient information to make the decision to switch to the BTS, and are not reluctant to do so”. Bell attributes this increase in subscribership to its “activities that have made the BTS effectively available to the public and increased public awareness”.
18. In fact, the recent increase in Bell’s BTS subscribership says nothing about general customer awareness of the BTS option and has little to do with Bell’s activities (or lack thereof) in making its BTS publicly available. Rather, it has everything to do with the imposition of new charges on Bell’s First Rate customers, first in late 2001 (the $1.25 “Network Charge”), and then in early 2002 (the $4.95 minimum monthly charge).
19. Having switched (or been switched) to this plan when it was free of charge, Bell’s low volume First Rate customers found themselves faced with toll bills substantially higher than expected, due to the new charges. It was in response to complaints and inquiries from these customers, not to any “activities” of Bell designed to raise public awareness of the BTS, that Bell switched them back to BTS rates.
20. The recent increase in Bell’s BTS customers is therefore due to Bell’s recent changes to its First Rate plan, not to any general awareness on the part of Bell’s customers about their toll service options.
21. In any case, the fact that 26% of Bell’s customers now use BTS rates does not in any way disprove the evidence provided by PIAC of misrepresentation on the part of Bell when advising customers of the toll service options available to them.

References to toll “savings” on customer bills does not disprove PIAC’s evidence of misrepresentation

22. Aliant suggests that, because it “lists the realized savings of the customer’s chosen toll plan vs. BTS rate schedules” on customer toll bills, it can be presumed that all Aliant customers are fully aware of the BTS option, and have the information necessary to make informed decisions as to their best toll service option.
23. In order to give any weight to this argument, the Commission must first determine the extent to which the information on Aliant toll bills communicates effectively and accurately to customers (a) the existence of the BTS option, and (b) what they would have paid under the BTS, given time-of-day discounts. Aliant does not provide enough evidence for PIAC or the Commission to make a determination on this issue.
24. It is PIAC’s understanding that the toll bills referred to by Aliant (a) do not specify on what basis the “savings” are calculated, (b) do not include time-of-day discounts in the “charge” to which the “savings” are applied, and^© do not specify that BTS rates are an option for customers.
25. Even assuming that the monthly toll bill from Aliant clearly indicated that BTS rates are an option, and told customers on savings plans what they would have paid under the BTS, including time of day discounts, this disclosure does not disprove the evidence of misrepresentation provided by PIAC. Those who simply call Aliant for advice are still receiving misleading information about their toll plan options. Moreover, consumers who are not Aliant toll customers will not receive this information, since they don’t receive a toll bill from Aliant.

Directory Information is inadequate

26. MTS argues that “it is appropriately disclosing information to its customers about toll options that include both the BTS and the toll savings plans” through its white pages directory.
27. MTS’s directory contains the same information as that of other telephone companies in respect of long distance service options. That is, it sets out time-of-day discounts for long distance calls under the BTS, notes that additional savings are available under a savings plan, and directs customers to call the company for more information on savings plans.
28. Nowhere in this section is there any explicit reference to the existence of the BTS or to how a customer may access the BTS in order to determine the rates to which the time-of-day discount applies. Moreover, the statement that “additional savings are available with an MTS LD savings plan” suggests that toll customers will always be better off under savings plans, as opposed to the BTS. Yet, even MTS admits that this is not the case.
29. Interestingly, as Bell Canada points out, telephone directories used to include sample BTS rates between major urban centres, prior to 1997. It is not clear why this practice was discontinued in the mid-1990s.
30. What is clear is that information the telephone directories on toll service options and prices is neither clear nor sufficient, and is itself misleading in some respects.

Company practice, not policy, is what matters

31. MTS refers repeatedly to its policy of providing full information in response to customer inquiries, in an apparent effort to downplay the clear evidence of its actual practice on point.
32. The evidence provided by PIAC, and confirmed by PILC, shows that MTS is in fact not responding to consumer requests in the way its policy would suggest. What matters is not company policy, but rather company practice.

Full disclosure of the BTS option does not constitute “re-regulation of forborne services”

33. Aliant argues that “any order stipulating that BTS rates be presented as an option along with other toll plans, as requested by PIAC, would dictate how the Company markets its competitive toll service offerings and would constitute a form of re-regulation of forborne services”.
34. Yet, PIAC merely seeks an order consistent with TELUS’s recognition that:
“it has an obligation to provide customers with accurate information regarding the benefits associated with the particular long distance savings plans, including BTS as an alternative. Accordingly, full and pertinent information is provided that would enable a customer to choose an appropriate calling plan based on his/her calling pattern….”
35. It is surprising that Aliant would oppose such fundamental tenets of fair market practices. PIAC is merely requesting that the CRTC confirm, through a specific order, what general consumer protection law already requires (of otherwise unregulated market sectors) in terms of full and fair disclosure. Such an order would clearly not “dictate” how the Company markets its toll service offerings any more than the general law against misleading advertising does.

The Companies acknowledge the problem

36. At least some of the respondents implicitly acknowledge the errors of their ways and have already taken steps to improve the situation. Bell has withdrawn its website toll plan selection tool, which purported to direct consumers to the most appropriate plan for them, but which did not even include BTS as an option. Aliant , SaskTel and TELUS have referenced the BTS rate option alongside other toll plans on their websites, while Bell has improved its website reference to the BTS option.
37. All of these measures constitute implicit acknowledgement of the problem cited by PIAC in its Application.

Compliance has not yet been achieved

38. However, compliance has not yet been achieved. As noted above under para.80, company website references to the BTS option remain inadequate. In most cases, they fail to include reference to the significant time-of-day discounts applicable to BTS rates. In the case of Bell, the BTS option remains unmentioned in the initial list of LD service options.
39. As of late August, most companies were still not mentioning the BTS option to customers for whom it might make sense. The only way to determine if companies have stopped misleading customers in respect of toll service options is to make more calls to their business offices requesting advice on toll service for a very low volume customer.

Reply to Specific Companies

40. The following comments do not provide a full reply to each company; rather, they focus on points that have not already been addressed above.

Bell Canada

41. Bell’s misrepresentations of PIAC’s argument, and as well as an internal contradiction in Bell’s argument, have already been outlined above and will not therefore be repeated here.
42. Bell’s implicit acknowledgement of the problems pointed out by PIAC, through the changes it has made to its website and internal practices, has also been set out above.
43. In para.26, Bell challenges the evidence provided by PIAC that a Bell CSR did not provide the BTS to PIAC’s researcher upon request. Bell notes that it is not clear from the evidence whether the question was unclear or whether Mr. Nesbitt was referred to another source for the BTS. PIAC confirms that the question was absolutely clear (Mr. Nesbitt asked for a copy of the BTS), and that Mr. Nesbitt was neither provided with a copy nor referred to any source where the BTS could be accessed.
44. This is consistent with Bell’s apparent policy of not providing customers with hard copies of the BTS. However, it is not clear why the Bell CSR failed to refer Mr. Nesbitt to the Bell website where the BTS was posted.
45. Bell states in para.11 that it “began to post the BTS on the Bell Canada web site” in July 2001. This is a surprise to PIAC, since an experienced Internet researcher was unable to find the BTS on the Bell Canada web site in March, 2002. As the Affidavit of Jean Sebastien states, he was first able to find the BTS on the Bell website only in May 2002.

TELUS

46. TELUS asserts in para.12 that “the substance of PIAC’s allegations that TELUS has been in breach of the Commission’s directive is based on the observation that the Company’s BTS rate schedules were not posted on TELUS’s website prior to July 24, 2002, and indeed did not get posted until after promptings from PIAC.”
47. TELUS clearly misunderstands the substance of PIAC’s allegations, which will not be repeated here. Suffice it to say that they are not limited to the failure of Companies to post their BTS online.
48. TELUS agrees with the principle that customers should be provided with “full and pertinent information” on toll options, but simply denies having breached this principle. TELUS’s argument regarding misrepresentation by TELUS and its representatives when advising customers of their toll options is almost entirely tautological. The only supporting arguments TELUS makes have to do with the notice it provided to its toll plan subscribers of changes to their plan (an irrelevant argument, as explained above), and the self-evident point that it is up to the customer to determine which option is best for them (a point that PIAC does not dispute).
49. TELUS’s denials and assertions do not disprove the evidence provided by PIAC of misrepresentation, as well as failure to make the BTS publicly available, by TELUS.

Aliant

50. In para.12, Aliant makes the completely unfounded assertion that “Customers knowingly subscribe to toll plans offered by the Company or competitors with the knowledge that they can choose not to subscribe to such plans and still avail of the BTS.” Aliant provides no evidence of customer awareness of the BTS option. Without clear supporting evidence, it cannot be assumed that all customers are aware of the BTS option.
51. In para.14, Aliant notes that it lists time-of-day and other discounts applicable to BTS rates in the introductory pages of its telephone directories. However, this information is not linked to the BTS rates themselves. Moreover, Aliant’s recent posting of the Basic Toll Schedules on its company websites does not include reference to the applicable time-of-day or other discounts.
52. PIAC’s point is that the discounts applicable to BTS rates need to be referred to together with the BTS. Providing one without the other is likely to mislead customers. Hence, the BTS schedules themselves should include reference to all applicable discounts, as well as any surcharges. As well, directory references to time-of-day discounts should include a reference to the BTS itself (e.g., web address, and tel # where BTS rates and schedules can be obtained).

MTS

53. MTS’s argument seems to be based largely on the notion that the failures to disclose on its part were aberrations, the result of “human error”, and contrary to company policy.
54. In reply, PIAC notes once again that company policy is meaningless if not followed. The evidence is clear that the failures by MTS to disclose are not exceptions to the rule, but rather are the norm. While MTS’s track record with PIAC may be marginally better than that of other companies, instances of disclosure by CSRs were the exception rather than the norm (and occurred only after PIAC’s notification to the companies of the problem). In this respect, PIAC notes that it had still not received the MTS Basic Toll Schedule in response to its August 21st request, as of September 30, 2002 – over a month after requesting it.
55. In paras.12 and 16, MTS notes that, having imposed a minimum fee on its LD savings plan, it now advises customers who do not make toll calls, not to select a toll savings plan. This approach is commendable, in PIAC’s view, and should be followed by other companies who impose minimum fees on their toll savings plans.
56. However, it does not go far enough. Many more of MTS’s customers are low toll users who may still do better under BTS rates than under a toll plan. It is important that these customers are properly advised of their options, including BTS, so that they can make a fully informed decision as to their toll service plan.
57. In para.16, MTS also refers to the fact that it “periodically produces a long distance rate schedule” comparing rates under different toll plans, and makes this pamphlet available to customers. MTS argues that this is evidence that it “neither misleads customers nor misrepresents its toll options.”
58. Again, PIAC commends MTS for this useful initiative. However, MTS is mistaken in believing that production of such pamphlets in any way satisfies its obligation to provide full and pertinent information to consumers in communications with them regarding toll service options. Nor does it in any way disprove the clear evidence provided by PIAC of failure to disclose pertinent information by MTS representatives.
59. In para.11, MTS points out that “all [of its] customers always would have been better off selecting MTS’s Real Plus Extra toll saving plan, prior to February of 2002”, when MTS introduced a $1.25 monthly charge on its toll savings plans. This point is relevant to the question of damages only. If MTS’s assertion is true, it may be the case that any damages suffered by MTS customers as a result of MTS’s failure to disclose, prior to February 2002, are negligible.
h3.SaskTel
60. SaskTel misunderstands PIAC’s arguments in a number of respects. This misunderstanding leads SaskTel to make extensive arguments that are off point.
61. In para.23, SaskTel argues “That a particular rate of the BTS on a day of the week , or time of the day is lower than what may be available via one of SaskTel’s toll plans is no demonstration that the BTS offer greater benefit overall to the customer.” PIAC agrees. This is not the point. The point made by PIAC is that where the BTS may offer greater benefit to the customer overall, the BTS option should be disclosed to them.
62. In para.24, SaskTel refers to “PIAC’s opinion that toll plans must provide a rate better than the BTS for each and every call….” This is not PIAC’s opinion. At no time has PIAC suggested that toll plans must provide a rate better than the BTS for each and every call. PIAC’s point is simply that the BTS rate option should be disclosed to customers when and where potentially relevant.
63. In paras.16 and 17, SaskTel completely misinterprets PIAC’s point about when SaskTel customers will be better off under the BTS than under a SaskTel toll plan. As stated by Mr. Nesbitt in his Affidavit #2,
“A SaskTel customer making only short-haul toll calls (cross-border if spending more than $5/mo.) before 8am any day of the week would be better off under BTS rates.”
64. Because it does not apply any monthly charge to its toll plans, and because of the nature of SaskTel’s toll plans, it is only in these unusual circumstances that a SaskTel customer is likely to be better off under BTS rates than under a toll plan. SaskTel is correct that this circumstance does not involve calls “made to the furthest destination in the province or country”. PIAC recognizes that in the case of SaskTel, very few customers are likely to be better off under the BTS, at least under SaskTel’s current toll plans.
65. Contrary to SaskTel’s understanding as set out in para.17, PIAC’s analysis is based on a customer’s overall toll bill, and in no way suggests that customers should “be charged for each and every call with the most favourable rate”.
66. PIAC acknowledges that any damages to customers as a result of SaskTel’s failure to disclose is likely to be very limited. This does not, however, absolve the company of responsibility to provide full and fair disclosure of its toll service options to consumers.

Orders Requested

67. PIAC requested that the Commission order the Companies to take specific measures in order to comply with the order in Decision 97-19, and in order not to mislead customers with respect to their toll service options. The companies responded to these suggestions in various ways.

Providing the BTS upon request

68. Some companies acknowledge this obligation, and argue that they are complying. Others dispute PIAC’s contention that they are, or should be, required to provide the Basic Toll Schedule (as opposed to specific rates under the BTS) upon request. Clearly, the companies differ amongst themselves as to the reasonableness of this obligation, and are not all in compliance with it.
69. PIAC reiterates its request that the companies be ordered not only to refer customers, upon request, to a method by which they can access the company’s BTS, but also to provide (by postal mail where the individual does not have Internet access or email) the BTS to customers upon request. Without a corollary requirement to provide upon request, “public availability” of this information is of limited practical use to ordinary consumers.

Posting the BTS online

70. All five companies acknowledge the reasonableness of this suggestion, and have either done it or promise to do it shortly. See above, under para.82 for further reply on this point

Presenting the Basic Toll option alongside other toll options

71. Again, all five companies acknowledge the reasonableness of this suggestion, at least in respect of their website disclosures. However, they dispute the need to disclose the Basic Toll option alongside other toll options in other media of communication.
72. For the same reason that it is misleading to omit the basic toll service option in website disclosures of toll service options, it is misleading to omit this information in other disclosures of toll service options. Wherever and whenever it can reasonably be assumed that a company is listing all relevant toll service options, failure to do so is misleading. This principle does not vary according to the media used.
73. Nor does this principle require companies to list all toll options in every promotion of toll service, as some companies have incorrectly concluded. As long as the promotion does not purport or appear to list all relevant options, it need not do so.

Clearly noting applicable discounts when and where appropriate

74. The companies submit that they are noting discounts applicable to BTS rates, primarily via the introductory pages of their telephone directories. However, as noted above under paras.82 and 108-112, their directory disclosures of time-of-day discounts do not adequately reference the BT rates themselves, and their disclosure of BT Schedules often does not include reference to the applicable time-of-day discounts.
75. In order for customers to receive full and pertinent information on the BT service option, these two key elements of the BT option should be disclosed together. Otherwise, customers referring to the BTS may not be aware of the applicable discounts, and may thus assume that BTS rates are higher than they actually are. Customers referring to time-of-day discounts need to be able to match those discounts with applicable rates; hence, references to time-of-day discounts on their own should be accompanied by information on how to access the BTS, as well as point-to-point BTS rates.

Advise customers of the Basic Toll option when appropriate

76. All companies object to any such requirement being imposed on them by the CRTC. Some suggest that they should have no such obligation, ignoring the fact that it already exists in common law and in consumer protection statutes. Others argue that they are satisfying this obligation by way of their current practices.
77. PIAC submits that the evidence clearly proves that the Companies are not advising customers of the Basic Toll option when they should be doing so, and that there is no evidence, other than some companies’ promises, to suggest that this will change significantly.
78. In any case, the fact that some companies challenge the appropriateness of such an obligation is reason enough for the Commission to confirm it via regulation.

Rebates to adversely affected customers

79. All companies object to
 

PIAC application to CRTC for disclosure by telcos of long distance rates

Ms. Diane Rheaume
Secretary-General
Canadian Radio-Television and
Telecommunications Commission
Ottawa, ON
K1A 0N2
BY COURIER AND EMAIL
Dear Ms. Rheaume:
Re: Part VII Application by PIAC for enforcement of CRTC ruling regarding Basic Toll rate disclosure by ILECs,
1. The following is an application made pursuant to sections 24, 48, 51, 55, 56, 57 and 60 of the Telecommunications Act, and filed under Part VII of the CRTC Telecommunications Rules of Procedure, on behalf of residential subscribers of telephone services offered by incumbent telephone companies (ILECs). The application is for enforcement of the CRTC order requiring that basic toll service (“BTS”) rate schedules be made publicly available, and for the payment of costs to PIAC for its investigation and pursuit of this matter.
2. Specifically, we are requesting that the CRTC:

• make a declaration confirming that certain ILECs have been, and continue to be, in violation of its order in para.81(i) of Telecom Decision CRTC 97-19 to ”…make publicly available, rate schedules setting out the rates for basic toll service”;

• order ILECs to comply with the above-mentioned order, and to take the following specific measures in that respect:

1. post and maintain current BTS rate schedules on their websites, and in particular on the webpage for residential long distance services;
2. clearly present BTS rates as an option along with other toll plans, both on their websites and in other communications with residential customers;
3. clearly note in appropriate places and at appropriate times the time-of-day discounts and any minimum charges that apply to BTS rates, as well as the fact that further discounts apply for registered certified hearing or speech-impaired TDD users;
4. provide BTS rate schedules to consumers upon request (including by postal mail where the individual does not have Internet access or email);
5. where assisting consumers in identifying the appropriate toll plan given their calling patterns, ensure that those customers who may be best off under BTS rates are so advised;

(vi) take any other measures that the Commission considers appropriate in the circumstances.
3. order ILECs to rebate those customers who paid more for toll services under an ILEC “discount” toll plan than they would have under BTS rates, without prejudice to the exercise of any civil remedies that may be available to them; and
d) order the ILECs in question to pay PIAC its costs of investigating and pursuing this matter.

The facts

3. On 18 December 1997, the CRTC issued Telecom Decision 97-19, Forbearance – Regulation of Toll Services Provided by Incumbent Telephone Companies. In this decision, the Commission forbore from the regulation of ILEC toll and toll-free services, subject to certain conditions. One of the conditions was a ceiling on basic toll rates, with the corollary requirement that basic toll rate schedules shall be made “publicly available”.
4. Over the ensuing years, ILECs have offered an ever-changing array of discount toll plans to residential customers. These plans are advertised in the general media, by way of direct marketing, in bill inserts, and on the company websites. As well, many customers learn about their toll plan options primarily by speaking with company service representatives or listening to recorded information provided by the company’s customer service automated telephone system.

BTS rates vs. Discount Toll Plan rates

5. In addition to their “discount toll plans”, ILECs are required to offer toll service under regulated BTS rate schedules. Customers who are not subscribed to a discount toll plan are charged BTS rates, with applicable time-of-day discounts, for toll calls. Depending on the time of day and distance of the call, calls made under BTS rates can be less expensive than if made under a so-called “discount” plan. This has always been the case, such that some customers (e.g. those who only make short-haul toll calls during off-peak hours) have always been better off under BTS rates than under an ILEC “discount” toll plan.
6. Some discount toll plans involve a set monthly fee or minimum monthly charge; others do not. In late 2001, toll service providers began to levy a mandatory monthly $1.25 charge on their discount toll plans as a way of recovering high cost area subsidy funds from subscribers. With the exception of SaskTel, all of the major ILECs and competitors now levy a mandatory $1.25 monthly charge on their residential discount toll plans. Few discount toll plans promoted to residential customers do not now carry this fee. In early 2002, Bell Canada began to apply an additional minimum monthly charge of $4.95 for its popular First Rate plan.
7. The imposition of monthly fees and minimum charges for discount toll plans immediately increases the threshold of calling below which BTS rates make more economic sense for subscribers. In the absence of such charges, there may have been relatively few customers for whom BTS made more sense than a discount toll plan. Once mandatory monthly fees are added to discount plans, however, BTS rates become the best option for many more customers.
8. For example, a Bell customer who spends less than $6.20 per month on toll calling under BTS rates will now be better off under BTS rates than under Bell’s First Rate plan. This is because Bell’s First Rate plan now involves a minimum monthly payment of $6.20, even if no toll calls are made. From another perspective, a Bell customer calling from Ottawa to Toronto during off-peak hours, and making no other toll calls, would have to spend more than 36 minutes/mo. on such calls in order to realize any savings under Bell’s First Rate plan over BTS rates.

Customer calling patterns

9. According to data provided by Bell Canada during the recent Price Cap Review proceeding, 7.4% of Bell’s customer accounts used no long distance at all during the period January to June 2001, 25% used less than 7.5 minutes of toll calling per month, and the median customer (50th percentile) used 42.5 minutes per month.
10. TELUS provided similar data for the same period, as follows: 17.56% of customer accounts used no long distance at all; 25% used less than 4.75 minutes/mo., and 50% used less than 50.7 minutes/mo.
11. Based on this data, it would appear that a significant proportion of Bell and TELUS customers are better off under BTS rates than under discount toll plans. Yet, according to Bell in October 2001, “less than 5% of its residential customers make toll calls in a typical month yet are not signed up for a toll plan with either the Company or a competitor”.

Failure to Disclose BTS Rate Schedules

12. In June 2002, PIAC began researching long distance rates for its ten year review of competition and deregulation in the telephone industry. One of the many items researched was ILEC basic toll rates. This information is not provided in telephone directories. During the month of June, PIAC’s researcher, Michael Nesbitt, searched company websites and made numerous telephone calls to ILEC regulatory departments and customer service in order to obtain BTS rate schedules. Details of the results of his attempts to obtain this information are set out in his Affidavit of July 3rd, 2002, attached.
13. In summary, no company provided BTS rate schedules to us upon request to customer service (requests were made by both telephone and email). In no case other than Bell Canada were we able to find the BTS schedules on the company website. Bell had only recently posted this information on its website in May 2002, and only after persistent demands by a consumer advocate that the basic toll rate information be posted – see the attached Affidavit of Jean Sebastien. Even some regulatory departments had difficulty responding to our request for basic toll rate schedules, as the Supplementary Affidavit of Michael Nesbitt sets out.
14. During a meeting of the CRTC “BMT Committee” on June 17th, 2002, regulatory staff from each major ILEC were informed by PIAC counsel of this problem, and were notified that action would be taken if it was not resolved.
15. By late August, 2002, most of the ILECs in question still did not make their BTS rate schedules available upon request, and most still did not have this information posted on their websites. See the Supplementary Affidavit of Michael Nesbitt.
16. Of the three companies that now make this information available on their websites, only TELUS’s posting discloses the BTS rates as a toll option. Under the heading “Non-Plan Rates”, the service is described as: “Rates for calls that are operator-assisted or not under a TELUS Long Distance plan”. SaskTel’s BTS rate schedules are located on an obscure page of its website (“About SaskTel – Public Policy – Non-Tariffed Services”) and are not mentioned on the page listing long distance options. Bell Canada’s web posting of “base rate schedules” is presented in a manner and location that is unlikely to be noticed by consumers seeking to understand their toll options with Bell Canada. See the Supplementary Affidavit of Michael Nesbitt.
17. In addition, when low volume toll users inquire by telephone about the most appropriate toll option given their calling profile, research conducted by PIAC suggests that ILECs almost always direct them to discount toll plans, even when the customer may be better off under BTS rates. This was the case in both June and August 2002. See the Affidavit and the Supplementary Affidavit of Michael Nesbitt.

The Law

18. As noted above, basic toll rates continue to be subject to CRTC regulation. In Telecom Decision 97-19, Bell Canada, Aliant, MTS, TELUS, Sogetel, Telus(Quebec), and Telebec were ordered to “make publicly available, rate schedules setting out the rates for basic toll service”. By way of Telecom Decision 2000-150, SaskTel was made subject to the same requirement. This disclosure requirement was imposed by the Commission as a condition of toll forbearance under s.24 of the Telecommunications Act.
19. A contravention of condition referred to in section 24 is considered an offence under s.73(2)(a) of the Telecommunications Act and is punishable upon summary conviction with fines of up to $100,000 per day on which the offence is committed, for a first offence.
20. The CRTC has the powers of a superior court with respect to the enforcement of its decisions. Using this power in past cases of regulatory violations, the Commission has required companies to undergo independent audits, to file reports with the CRTC, to revise procedures, and to compensate affected customers.
21. The CRTC also has the power to order “by whom and to whom any costs are to be paid and by whom they are to be taxed….”.
22. Subscribers who have incurred unnecessary charges as a result of ILEC acts or omissions that are contrary to a CRTC decision may, subject to applicable limitations of liability, sue for and recover their damages in court.
Argument

Making BTS rate information available

23. It is clear that all major ILECs have been violating the 1997 CRTC order to make publicly available their basic toll rate schedules. Until very recently, none of the major ILECs were making this information publicly available. Only in response to pressure from consumer advocates have some companies begun now, some 4½ years after the original order, to make this information available.
24. In June, 2002, none of the major ILECs provided BTS rate schedule information to consumers upon request by telephone or email. Two months after PIAC’s notification that they were in breach of a CRTC requirement by not providing this information, most companies still do not provide BTS rate schedules to consumers upon request.
25. Only in response to persistent demands from consumer advocates did some companies (Bell, TELUS) post this information on relevant pages of their websites in the spring and summer of 2002. As of the date of this application, Bell Canada’s website posting of BTS rate schedules remains neither noticeable nor clear (although Bell has, since August 21st, removed the option “Help me pick a long distance plan”, as well as the text entitled “Bell First Rate Long Distance Plans” that specifically directed users to its discount plans). BTS rate schedules (other than for overseas rates) are still not available on the Aliant company or MTS websites. SaskTel’s BTS rate schedules continue to be posted on an obscure page of the company website that even researchers have difficulty finding.
26. Even some ILEC regulatory departments had difficulty providing BTS rate schedules to PIAC upon request. For example, it took PIAC’s researcher several days to obtain this information from the regulatory departments of TELUS and MTS (see Supplementary Affidavit of Michael Nesbitt).
27. In light of the situation described above, all ILECs should be ordered to post BTS rate schedules on their websites, in a clear and conspicuous manner.
28. Posting on websites is an appropriate method of disclosure, but it is not sufficient. Many individuals for whom this information is relevant do not have access to the Internet. ILECs should be therefore be required not only to post their BTS rate schedules on websites, but also to provide BTS rate schedules to consumers upon request by fax and postal mail.

Disclosing BTS as a toll plan option

29. It is not enough that ILECs merely provide BTS rate schedules to consumers upon request. Most consumers will not be aware of the BTS rate option in the first place, and will therefore not seek this information unless they are informed of its existence. The onus must therefore be on ILECs to present the BTS option alongside all other toll options that they make available to customers.
30. Mere posting of BTS rate schedules on a company website is insufficient insofar as it does not clearly communicate to online consumers the fact that BTS rates are an alternative to other toll plans, and the advantages of BTS rates over other options. There is little value in a website posting that is either inconspicuous or insufficiently informative. BTS rate schedules should be posted in a context and manner that makes the BTS option obvious to the online consumer seeking information on their toll options, and that clearly identifies relevant aspects of the BTS rate option in relation to other toll options (e.g., time-of-day discounts, no monthly fee). Otherwise, online consumers will not be fully informed when making decisions among the toll options available to them.
31. Nor is it sufficient that disclosure of this option is made on the company website, since many customers do not have Internet access or do not use it for this purpose. The BTS rate option should be disclosed alongside other toll options in all modes of advertising or customer communications: on websites, in print advertising, in email communications, and during telephone and in-person communications with customers.
32. The evidence further shows that many ILECs fail to inform customers of the BTS rate option, even when it is clear that the customer would be best off with this option. Consumers are repeatedly directed, both online and offline, to so-called “discount” toll plans even when they would be better off under BTS rates. For example, Bell Canada’s web-based service that purported to identify the best Bell toll plan given the user’s calling patterns did not even include BTS rates as an option.
33. Thus, not only are ILECs misleading consumers through their failure to disclose BTS rates, some are explicitly misrepresenting what the consumer’s best toll option is.
34. ILECs should therefore be required, when directing consumers to the best toll plan based on the consumer’s calling patterns, to advise those customers who may be best off under BTS rates that this is the case.

The violation has benefited ILECs at the expense of consumers

35. The regulatory violation exposed in this application has had significant consequences for ILEC subscribers. ILEC failure to disclose basic toll rate schedules, indeed the existence of a basic toll rate option, has created a situation in which many customers have paid, and continue to pay, more than they would otherwise for long distance service. By effectively concealing this information from consumers, ILECs have benefited financially, at the expense of low volume toll users who were not informed of the basic toll rate option.
36. Data available to PIAC on subscriber toll calling patters suggests that as many as 30-40% of ILEC customers could have been adversely affected by this violation. The extent of damages incurred by subscribers as a result of this failure to disclose is thus not yet clear.
37. ILECs were notified of this problem in June 2002 (and in Bell’s case, as early as April 2002). Yet, non-compliance continued to be the norm as of late August, 2002. It therefore appears that non-compliance is due not merely to ordinary negligence, but to conscious corporate strategy.
38. Clearly, there needs to be a greater regulatory incentive for ILECs to comply with CRTC orders regarding disclosure of information, where such disclosure is contrary to their financial interests. In particular, the cost of non-compliance must outweigh the cost of compliance.
39. As well, greater specificity of the disclosure requirement is needed in order to ensure that the objective of disclosure is met. ILEC responses to the CRTC’s 1997 order, and to subsequent requests from consumer advocates, suggest that the term “make publicly available” is insufficiently clear and specific to counter the strong ILEC incentive not to inform consumers of this option. If the Commission wishes to ensure that consumers are informed of the basic toll rate option, it must provide more specific guidance to the ILECs on what constitutes adequate disclosure of this information.
40. PIAC encourages the Commission to exercise the full scope of its enforcement powers in respect of this long-standing violation, so as to ensure meaningful compliance with this and other similar consumer safeguards, now and in the future.
41. Any CRTC order should explicitly leave open the exercise by aggrieved customers of their rights under s. 72 of the Telecommunications Act.

PIAC Costs

42. This application for enforcement and relief has been necessitated by the ILECs’ ongoing negligence and/or intentional disregard of regulatory requirements. PIAC’s investigation and pursuit of this issue has required a significant amount of time. It is appropriate that the ILECs pay PIAC’s costs of bringing this application.

Order Requested

43. PIAC therefore requests that the CRTC:

1. make a declaration confirming that certain ILECs have been, and continue to be, in violation of its order in para.81(i) of Telecom Decision CRTC 97-19 to ”…make publicly available, rate schedules setting out the rates for basic toll service”;
2. order ILECs to comply with the above-mentioned order, and to take the following specific measures in that respect:
   • post and maintain current BTS rate schedules on their websites, and in particular on the webpage for residential long distance services;
   • clearly present BTS rates as an option along with other toll plans, both on their websites and in other communications with residential customers;
   • clearly note in appropriate places and at appropriate times that no minimum charges apply under BTS rates, that time-of-day discounts do apply, and that further discounts apply for registered certified hearing or speech-impaired TDD users;
   • provide BTS rate schedules to consumers upon request (including by postal mail where the individual does not have Internet access or email);
   • where assisting consumers in identifying the appropriate toll plan given their calling patterns, ensure that those customers who may be best off under BTS rates are so advised;

vi) take any other measures that the Commission considers appropriate in the circumstances.
3. order ILECs to rebate those customers who paid more for toll services under an ILEC “discount” toll plan than they would have under BTS rates, by the difference between what they actually paid and what they would have paid under BTS rates, without prejudice to the exercise of any civil remedies that may be available to them; and
d) order the ILECs in question to pay PIAC its costs of investigating and pursuing this matter.
All of which is respectfully submitted,
Philippa Lawson
Senior Counsel
Public Interest Advocacy Centre
Attach.
cc: Bell Canada, Aliant, TELUS, MTS, SaskTel (by courier and email)
NWTel, Independent ILECs, Interested Parties PN 2001-37 (by email only)

NOTICE

TAKE NOTICE that pursuant to subsections 8(1) and 59(1) of the CRTC Telecommunications Rules of Procedure, the respondents are required to mail or deliver their answers to this application to the Secretary General of the Canadian Radio-television and Telecommunications Commission, Ottawa, Ontario, K1A 0N2, and to serve a copy of the answer on the above by 30 September 2002.
Service of the respondent’s answers on the applicant may be effected by personal delivery, e-mail or by facsimile, at the address set out above.
If the respondent does not file or serve its answer within the time limit prescribed, this application may be disposed of without further notice to it.
END OF DOCUMENT
 
Link to telco submissions

Bell overcharging for party-line rental phone sets

Ms. Diane Rheaume
Secretary-General
Canadian Radio-Television and
Telecommunications Commission
Ottawa, ON
K1A 0N2
BY FAX AND EMAIL
Dear Ms. Rheaume:
Re: Bell Canada – unauthorized rate increases to party line rental sets;
Part VII Application by PIAC for enforcement and relief
1. The following is an application made pursuant to sections 25, 48, 51, 55, 56, 57 and 60 of the Telecommunications Act, and filed under Part VII of the CRTC Telecommunications Rules of Procedure on behalf of Bell Canada’s residential party-line customers. The application is for enforcement of Bell Canada’s tariffed rate for party-line rental sets, compensation to overcharged subscribers, further enforcement measures designed to ensure compliance with CRTC tariffs in the future, and payment of costs to PIAC for its investigation and pursuit of this matter.
2. Specifically, we are requesting that the CRTC:

1. confirm that Bell Canada increased the monthly charge for party-line rental sets above the tariffed rate without CRTC approval, and did so on more than one occasion;
2. order Bell Canada to rebate affected customers all amounts improperly charged, with interest;
3. order Bell Canada to pay PIAC’s costs of investigating and pursuing this matter
4. grant any further relief as the Commission considers reasonable.

3. PIAC also requests that the CRTC determine whether any other telephone companies have been overcharging for party-line rental sets, and if it is found that they have, make an order similar to that for Bell Canada, designed to ensure ongoing compliance in the future.

The Facts

4. In March 2002, PIAC was contacted by a Bell Canada two-party-line subscriber complaining about new and increased charges on her March 2002 telephone bill. One of the charges in question was $5.30 for “equipment rentals”. Upon investigation, it was confirmed that this charge related to an old 500-type rotary dial telephone set, and that the customer had no choice but to rent her telephone set from Bell Canada because she was a party-line subscriber. In response to an inquiry about the validity of the $5.30 charge for set rental, Bell Canada’s customer service representative confirmed that $5.30 was the correct charge for the rental set in question, and that the charge had recently been increased.
5. In June 2002, PIAC began researching Bell Canada’s telephone service options and prices as part of a study into how residential customers have been affected by competition and deregulation over the past ten years. One of the services examined was rental set prices. The Bell Canada tariff for rental sets, Item 2300 in Bell’s General Tariff, gives a rate of $2.95 for 500-type telephone sets provided to party-line subscribers. This tariff has an effective date of 1996 02 01, and there is no indication that it has been changed since that date.
6. Noticing the discrepancy between the confirmed $5.30 charge and the $2.95 tariffed rate, PIAC staff began investigating. Over the course of several weeks from June to August 2002, PIAC made numerous inquiries to Bell Canada’s regulatory department, customer service line (310-BELL), and Executive Office (1-800-267-7734) in an attempt to resolve this issue. As set out in the attached Affidavit of Michael Nesbitt, Bell representatives gave conflicting responses to the question of what is the applicable rate for party-line rental sets.
7. Finally, on August 7th, Bell confirmed that the approved rate is $2.95 and that the specific account-holder noted above had been improperly charged. A Bell service representative further confirmed that the improper rate increases had been applied across the board, such that this particular account holder was not unique in being overcharged.
8. Bell indicated that the specific account-holder would be credited with the improperly billed amounts, but did not confirm that all other similarly affected customers would be rebated.

The Law

9. Under sub-section 25(a) of the Telecommunications Act,
No Canadian carrier shall provide a telecommunications service except in accordance with a tariff filed with an approved by the Commission that specifies the rate or the maximum or minimum rate, or both, to be charged for the service.
10. While the price of terminal sets is generally no longer regulated, an exception exists for terminal sets rented by party-line subscribers. This is because party-line subscribers have no choice but to rent telephone sets from their service provider. As stated by the Commission in Telecom Decision CRTC 94-19,
The above findings and determinations [deregulating the sale, lease and maintenance of terminal equipment] do not apply to terminal equipment supplied on a monopoly basis, specifically, to equipment required by tariff to be supplied by the telephone company in conjunction with the provision of two-party, four-party or multi-party primary exchange services.
11. The approved tariffed rate for 500-type terminal sets rented by Bell’s party-line customers is $2.95. Bell Canada is not permitted to charge higher than this amount for rental telephone sets on party-lines. By doing so, Bell is in violation of s.25 of the Telecommunications Act.
12. A contravention of section 25 is considered an offence under s.73(2)(a) of the Telecommunications Act and is punishable upon summary conviction with fines of up to $100,000 per day on which the offence is committed, for a first offence.
13. Article 19 of Bell’s Terms of Service addresses Bell’s liability for charges that should not have been billed and those that were overbilled. It states:
19.1 In the case of a recurring charge that should not
have been billed or that was overbilled, a customer must be credited with the excess back to the date of the error, subject to applicable limitation periods provided by law. However, a customer who does not dispute the charge within one year of the date of an itemized statement which shows that charge correctly, loses the right to have the excess credited for the period prior to that statement.
19.2 Non-recurring charges that should not have been
billed or that were overbilled must be credited, provided that the customer disputes them within 150 days of the date of the bill.
19.3 A customer who is credited with any amount that
should not have been billed or that was overbilled must also be credited with interest on that amount at the rate payable for interest on deposits that applied during the period in question.
14. The CRTC has the powers of a superior court with respect to the enforcement of its decisions.
15. The CRTC also has the power to order “by whom and to whom any costs are to be paid and by whom they are to be taxed….”.

Argument

16. It is clear that Bell Canada has been charging higher than the approved rate for party-line rental sets for some time, in contravention of s.25 of the Telecommunications Act. Indeed, Bell appears to have increased its rate for this tariffed service without CRTC approval on at least two occasions.
17. Moreover, consumer advocates and at least one affected customer challenging the validity of the $5.30 rate were wrongly assured by Bell, as early as March 2002, that the $5.30 rate was valid.
18. This is not simply a case of human error resulting in overcharging, where the overcharging is rectified as soon as it is brought to the attention of the Company. On the contrary, Company representatives continued to defend the invalid charges when queried about them. Only after persistent investigation by the Public Interest Advocacy Centre did the Company finally admit its error and offer to refund the customer who had complained to PIAC.
19. It is unreasonable to expect ordinary customers to challenge Bell Canada’s assurance that a given rate increase has been approved. It is furthermore unreasonable to expect ordinary customers to research CRTC tariffs (that even Bell service representatives cannot find) in order to second-guess the company on its own ground. When a company is first questioned about an improper charge, the error should be immediately identified and rectified, by way of refunding all affected customers forthwith.
20. However, there is no indication that Bell Canada intends to refund all affected customers. Indeed, Article 19 of Bell’s Terms of Service puts the onus on customers to dispute overbilled charges; Bell need not refund overbilled amounts unless they are disputed by the customer. Article 19 furthermore removes the customer’s right to a refund one year after a statement on which the correct billed amount appears.
21. Such limits on Bell liability for overcharged amounts are clearly inappropriate when there is no reasonable way for a customer to determine that he or she has been overcharged, and when the company itself asserts that the charge is legitimate.
22. This instance of overcharging was only uncovered by a serendipitous confluence of events: the fact that the same person supervising research on telephone rates had received a few months earlier an inquiry about an account on which the impugned charge appeared. In other words, the ongoing overcharging would likely have never been appreciated by Bell customers or consumer advocates in the absence of this unusual confluence of information flowing to PIAC.
23. It is important that such persistent violation of CRTC regulations be effectively deterred. Mere reimbursement of the amounts improperly billed to those customers who complain, as required by Article 19 of Bell’s Terms of Service, will provide no incentive for Bell Canada and other regulated companies to comply with CRTC tariffs. Indeed, it would send the opposite message: that regulated companies can violate their tariffs with impunity.
24. In many instances, tariff violations may never be caught, especially where the company’s customer service representatives are not provided with the tools or training to accurately confirm tariffed rates (as was the case here).
25. If a company is caught violating a tariff, the opportunity to reimburse affected customers can be used to the company’s advantage, as the company contacts affected customers, apologizes, takes credit for noticing the error, and offers to reimburse and otherwise satisfy the customer. Mere reimbursement is clearly an insufficient incentive for ongoing compliance with tariffed rates.
26. Using its powers of enforcement (those of a superior court), the Commission should therefore require Bell Canada to take further measures, above and beyond reimbursement of the overcharged amounts, so as to effectively deter such violations in the future.
27. The only effective deterrence measure is one that more than offsets any financial advantage from non-compliance (i.e., makes compliance less expensive than non-compliance).
28. Clearly, Bell Canada needs to take more effective measures (a) to ensure ongoing compliance with CRTC tariffs, and (b) to ensure that its customer service representatives can quickly and accurately answer straightforward questions about current tariffed services.
29. While Article 19 of Bell’s Terms of Service requires a refund, with interest, of amounts overcharged, it does not limit Bell’s liability in the case of negligence. Article 16 does limit Bell’s liability for negligence, to “the greater of $20 or three times the amounts refunded or cancelled in accordance with Articles 13.1 and 15.1, as applicable”. However, Article 1.2 state that Bell’s liability is not limited “in cases of deliberate fault or gross negligence”.
30. Nor do the Terms of Service limit the CRTC’s powers of enforcement, which are those of a superior court. In past cases of regulatory breaches, the Commission has exercised this power in a variety of ways, including requirements for companies to undergo independent audits, to file reports with the CRTC, to revise procedures, and to further compensate affected customers.
31. Given the facts of this case, which show not an isolated incident involving only one Bell staff member, but rather a general lack of awareness by Bell personnel of basic tariffs, as well as a failure to distinguish between regulated and unregulated services, remedial orders above and beyond mere reimbursement are warranted. The Commission should therefore order Bell to:

1. further compensate affected customers for the improper charges by way of an additional credit to their accounts of an amount equal to the rebate;
2. post security for use in any future instances of non-compliance with CRTC tariffs;
3. undergo an audit of its regulatory compliance by an independent third party, the results of which are to be made public; and/or
4. file a semi-annual compliance report, including a personal declaration from its Chief Executive Officer confirming that the company is in compliance with all CRTC orders, tariffs and other regulations relating to residential telephone service, and documenting any instances of non-compliance.

Costs Argument

32. As indicated above, and in Exhibit A, this tariff violation would not have been uncovered and acted upon but for PIAC’s persistent investigation. It is only fair that Bell Canada reimburse PIAC for the costs of its investigation and pursuit of this matter.

Order Requested

33. For all these reasons, PIAC requests that the Commission make an Order:
a) requiring that Bell Canada rebate affected customers all amounts improperly charged, with interest;
b) requiring that Bell Canada take further remedial action such as:
i). further compensating affected customers for the improper charges by way of an additional credit to their accounts of an amount at least equal to the rebate;
ii) posting security for use in any future instances of non-compliance with CRTC tariffs;
iii)undergoing an audit of its regulatory compliance by an independent third party, the results of which should be provided to interested parties; and/or
iv) filing a semi-annual compliance report, including a personal declaration from its Chief Executive Officer confirming that the company is in compliance with all CRTC orders, tariffs and other regulations relating to residential telephone service, and documenting any instances of non-compliance; and
c) requiring that Bell Canada pay PIAC’s costs of investigating and pursuing this issue.
All of which is respectfully submitted,
original signed
Philippa Lawson
Senior Counsel
Public Interest Advocacy Centre
Attach.
cc: Bell Canada – Legal Department
CRTC – Legal Department

NOTICE

TAKE NOTICE that pursuant to subsections 8(1) and 59(1) of the CRTC Telecommunications Rules of Procedure, the respondents are required to mail or deliver their answers to this application to the Secretary General of the Canadian Radio-television and Telecommunications Commission, Ottawa, Ontario, K1A 0N2, and to serve a copy of the answer on the above by 16 September 2002.
Service of the respondent’s answers on the applicant may be effected by personal delivery, e-mail or by facsimile, at the address set out above.
If the respondent does not file or serve its answer within the time limit prescribed, this application may be disposed of without further notice to it.
END OF DOCUMENT

A Comparative Analysis of Residential Telephone Service: 1992-2002 – Press Release

The full report is available in PDF [pdf file: 0.44mb]

A Comparative Analysis of Residential Telephone Service: 1992-2002

While competition has brought welcome changes in choice, service innovation, and reductions in the price of long distance service, it has also brought higher overall telephone prices for the typical Canadian residential customer, a deterioration of service quality and a number of new marketplace problems. These are the key findings of a study released today by the Public Industry Advocacy Centre, a national non-profit organization that provides legal and research services on behalf of consumer interests concerning the provision of important public services. The report, authored by Andrew Briggs and Philippa Lawson, is the result of a yearlong study, conducted with the assistance of Industry Canada.

• Significant increases in prices in basic local service took place between 1992 and 2002. Some of the increases were due to the CRTC approved “rate rebalancing” plan under which local rate increases effectively funded long distance rate reductions. Others were due to rate applications, extension of local calling areas, mandatory surcharges, directory assistance, and connection installation and maintenance fees.

• While heavy usage customers reduced telephony costs by 15-30%, light users (some 25% of local service customers of Bell, MTS, Sasktel, Telus, and Aliant telephone companies) had substantial increases in their bills over the 10-year period of 35-65%. The typical medium use telephone user also was subject to increased telephone costs up to 33% in the referenced period.

• While the Statistic Canada index for telephone services for the entire sector rose at slightly less than inflation, telephone company productivity, largely because of advances in digital technology, was 5 times the rate in the economy. If telephone rates had tracked actual telco costs, bills would likely have been much lower.

An electronic copy of the report is available on request. A hard copy is available at a cost of $15.00
For further information contact Michael Janigan 613 562-4002 ex 26, mjanigan@piac.ca
NOUVEAU RAPPORT

Analyse comparative des services téléphoniques offerts aux particuliers : de 1992 à 2002

Même si la concurrence offre certains avantages, comme un choix plus large, de nouveaux services et des réductions des frais d’appel interurbains, elle est aussi à l’origine de la hausse des frais d’appel en général pour le consommateur canadien moyen, de la détérioration de la qualité des services et de nouveaux problèmes. Telles sont les principales conclusions d’une étude publiée aujourd’hui par le Centre de la défense de l’intérêt public, organisme national à but non lucratif qui offre des services juridiques et de recherche dans l’intérêt des consommateurs en ce qui concerne la prestation d’importants services publics. Le rapport, rédigé par Andrew Briggs et Philippa Lawson, est le résultat d’un an de recherches et de collaboration avec Industrie Canada.

Faits saillants

• Les frais d’appel pour le service local de base ont augmenté de façon significative entre 1992 et 2002. Certaines de ces hausses sont dues au « rééquilibrage des tarifs », projet approuvé par le CRTC en vertu duquel l’augmentation des tarifs des communications locales subventionnait effectivement la réduction des tarifs des appels interurbains. Les autres augmentations se justifient par la mise en place de nouveaux tarifs, l’élargissement de la zone d’appel locale, les nouveaux frais additionnels obligatoires, les frais pour l’Assistance-annuaire, le branchement et les frais d’entretien.

• Tandis que les consommateurs qui font fréquemment des appels ont vu leur facture de téléphone diminuer de 15 à 30 %, les clients qui font rarement des appels (environ 25 % des clients de Bell, MTS, Sasktel, Telus et Aliant) accusent une augmentation de 35 % à 65 % sur dix ans. Les consommateurs se situant entre ces deux catégories (c.-à-d., nombre d’appels moyen) subissent également une augmentation allant jusqu’à 33 % durant cette même période.

• Alors que l’index de Statistique Canada pour les services téléphoniques a subi une hausse légèrement inférieure au taux d’inflation, le taux de croissance de la productivité des compagnies de téléphone a été cinq fois supérieur à la croissance globale à long terme de la productivité totale des facteurs, et ce, grâce à l’informatique. Il est probable que les frais des services téléphoniques auraient été largement inférieurs durant cette période s’ils reflétaient les coûts véritables.

Vous pouvez obtenir une copie électronique du rapport pour une somme de 15 $. N’hésitez pas à nous contacter pour en faire la demande.
Pour de plus amples renseignements, veuillez contacter Michael Janigan par téléphone au (613) 562-4002 poste 26 ou par courriel : mjanigan@piac.ca

A Comparative Analysis of Residential Telephone Service: 1992-2002 – Executive Summary

The full report is available in PDF [pdf file: 0.44mb]
 

Executive Summary

The historic decision of the Canadian Radio-Television Commission (CRTC) in 1992 (Telecom Decision CRTC 92-12)¹ to allow competition in the provision of long distance services between the incumbent monopoly telephone companies (ILECs) and new entrant providers provoked more than a contest for customers. The 1992 decision, together with subsequent CRTC implementation decisions, set up the framework for the delivery of competitive telecommunications services extending to the provision of local exchange service by non-incumbent carriers. The restructuring of the regulation of the telephony provoked and continues to provoke debate as to the winners and losers in the new world created by competition based decisions.
This study examines the impact of the restructuring changes in the delivery of residential wireline services on residential consumers. It attempts to do so using measurements that are factual and meaningful to the actual usage of residential consumers. The report relies on information in large part collected from a variety of referenced and publicly available sources for the period 1992-2002.
The report notes the significant increases in prices for basic local service that occurred between 1992 and 2002. Some of these increases were attributable to a CRTC-approved “rate rebalancing” plan under which local rate increases effectively funded long distance rate reductions. Other increases were due to ILEC revenue requirement applications, extension of local calling areas, new mandatory surcharges for 911 and Message Relay Service, and revenue based contribution charges to fund high cost serving areas. New or increased charges for directory assistance, connection installation, and maintenance fees were also implemented during this period. As well, consumers saw the prices for optional features such as voice mail, call display, and call waiting increase over the same period.
The report reviews the changes in long distance calling plans available to residential customers, noting a significant increase in the variety of options, as well as in the discounts available. However, the addition of a monthly “Network Service Charge” by the telephone companies applicable to most long distance calling plans has significantly compromised savings to low and medium use long distance consumers.
Given the presence of both price benefits and price burdens delivered by competition, it is important to arrive at a bottom line. To assess the overall impacts of the changes in prices for telephone services, the report uses five customer usage profiles based on telephone company data. Representative customer profiles, based on recent calling data, are priced out at 1992 and 2002 prices. Not surprisingly, heavy usage consumers were the biggest winners; showing reduced telephony costs of between 15-30%. On the other hand, light users of telephone services, (some 25% of ILEC customers) received substantial increases in telephone bills over the ten year period of between 35%-65%.
The median, or medium use, customer was also generally subject to increased telephone costs, ranging from –4% to +33%.
Statistics Canada also tracks consumer price changes in the telephone services sector, using a representative basket of services. Over the period, January 1992 to June 2002, the Statistics Canada price index for telephone services rose 17.4%. While this data shows that telephone service costs across the board have generally increased at slightly less than the rate of inflation, it is important to note that period in question was one in which the telephone companies experienced significant productivity growth. Improvements in productivity came about primarily as a result of the installation of computer based technology, such as digital switches, that greatly reduced telephone company costs. For example, Bell Canada’s productivity growth rate over the period 1988-2002 was 5 times the long run economy-wide TFP growth. It is therefore likely that telephone service prices would have been much lower during this period had they tracked actual costs.
The report also notes the deterioration in customer service that appears to have accompanied the development of competition over this ten-year period. Telephone companies seem to be focused more on capturing customers than on servicing them, once captured.
As well, while competition has greatly expanded customer choice, new problems have arisen. The frequent changes in plans and options make it difficult for customers to compare services and prices to ensure the best deal. Unwanted and misleading marketing is a persistent problem. Customers are far too frequently not given accurate information about charges and costs associated with service plans. While the frequency of occurrence has diminished in magnitude, the switching of service providers without the consumer’s permission (“slamming”) remains a marketplace problem.
While availability of basic local service did not suffer over this period, competition in the provision of local residential service was very slow to develop. As of 2002, most residential communities in Canada did not have wireline options to ILEC local service. Only a few providers were offering alternative wirelines services, and only in a few locations. The report concludes that while competition has brought welcome changes in choice, service innovation, and reductions in the price of long distance service, it has also brought higher overall telephone prices for most residential customers, a deterioration in service quality, and a number of new marketplace problems for consumers.
1 Telecom Decision CRTC 92-12

RÉSUMÉ

En 1992, la décision du Conseil de la radiodiffusion et des télécommunications canadiennes (CRTC) marqua d’une pierre blanche l’histoire des télécommunications. Connue sous le nom de Décision 92-12¹, elle autorisa la concurrence dans le secteur des services de télécommunications interurbaines entre les entreprises de services locaux titulaires qui en avaient le monopole (ESLT) et les nouveaux fournisseurs. Cette décision suscita un véritable tollé chez les clients. La décision de 1992 suivie de la mise en œuvre des mesures adoptées par le CRTC créa un environnement propice à la concurrence en matière de services de télécommunications en autorisant les fournisseurs non titulaires à offrir des services locaux. La révision de la Loi sur les télécommunications provoqua à l’époque et continue de provoquer aujourd’hui de vives discussions quant aux gagnants et aux perdants de ce nouvel environnement dorénavant régi par des décisions axées sur la concurrence.
Ce rapport étudie les conséquences sur les particuliers de la restructuration relative à la prestation des services de branchement résidentiel. Ce rapport tente d’évaluer ces répercussions en utilisant des données factuelles et représentatives des habitudes téléphoniques des particuliers. Le présent rapport repose sur des données provenant, en grande partie, d’ouvrages de référence divers et de sources mises à la disposition du public sur une période située entre 1992 et 2002.
Le rapport fait état des hausses importantes des frais d’appel pour le service local de base qui ont eu lieu entre 1992 et 2002. On attribua certaines de ces augmentations au « rééquilibrage des tarifs » approuvé par le CRTC en vertu duquel l’augmentation des tarifs des communications locales subventionnait effectivement la réduction des tarifs des appels interurbains. Les autres augmentations se justifiaient par les besoins en revenus des ESLT, l’élargissement de la zone d’appel locale, les nouveaux frais additionnels obligatoires pour le service d’urgence (911), le service de transmission des messages et les régimes de contribution fondés sur les revenus afin de financer les zones de desserte à coût élevé. Les frais additionnels ou l’augmentation des frais pour l’Assistance-annuaire, le branchement et les frais d’entretien ont également été constaté durant cette période. De plus, les consommateurs ont remarqué que les prix des options tels que les services de messagerie vocale, d’afficheur et d’appel en attente avaient augmenté pendant la même période.
Le rapport examine les changements observés dans les plans d’appels interurbains offerts aux particuliers. On remarque une augmentation significative dans le nombre des options ainsi que des rabais offerts. Cependant, l’addition des frais mensuels « frais de réseau » imposés par les compagnies de téléphone applicables à la plupart des forfaits d’appels interurbains a diminué de façon significative les économies que pouvaient faire les consommateurs qui faisaient rarement, voire occasionnellement, des appels interurbains.
Étant donné les économies et les augmentations que génère une plus grande concurrence, il est important d’en tirer des conclusions. Afin d’évaluer les conséquences générales des variations de prix en matière de services téléphoniques, le présent rapport s’est basé sur trois profils d’utilisateurs principaux: nombre d’appels limité, nombre d’appels moyen et nombre d’appels élevé. Les profils des clients ayant un nombre d’appel limité et moyen sont chacun divisés en deux sous-profils qui reflètent de manière plus précise les habitudes relatives aux appels. Les profils des clients se fondent sur les données des compagnies de téléphone. Il n’est pas étonnant de constater que les consommateurs qui font fréquemment des appels sont les grands vainqueurs, leur facture de téléphone diminuant de 15 à 30 %. D’autre part, les clients qui font rarement des appels (environ 25 % des clients des ESLT) voient leur facture de téléphone augmenter de 35 % à 65 % sur dix ans. Les consommateurs se situant entre ces deux catégories (c.-à-d., nombre d’appels moyen) subissent également une augmentation entre 4 % et 33 % selon la zone.
Statistique Canada suit les fluctuations des prix à la consommation dans le secteur tertiaire des services téléphoniques selon une gamme de services représentatifs. Entre janvier et juin 1992, l’indice des prix de Statistique Canada pour les services téléphoniques a augmenté de 17,4 %. Même si cette augmentation est légèrement inférieure au taux d’inflation, il convient de noter que la période concernée a été l’une des plus fructueuses pour les compagnies de téléphone. L’amélioration de la productivité est due en grande partie à l’arrivée de l’informatique. On peut citer les commutateurs numériques qui ont réduit de façon importante les dépenses des compagnies de téléphone. Par exemple, le taux de croissance de la productivité de Bell Canada a été cinq fois supérieur entre 1988 et 2002 à la croissance globale à long terme de la productivité totale des facteurs. Par conséquent, il est probable que les frais des services téléphoniques auraient été largement inférieurs durant cette période s’ils reflétaient les coûts véritables.
Le présent rapport mentionne également la détérioration des services à la clientèle qui semble avoir accompagné l’arrivée de la concurrence pendant cette décennie. Les compagnies téléphoniques semblent plus se préoccuper d’attirer de nouveaux clients que de rendre service aux clients existants.
Aussi, alors que la concurrence offre au consommateur un choix plus varié, de nouveaux problèmes sont apparus. Il est de plus en plus difficile pour le consommateur de comparer les services offerts et les prix en vue d’obtenir des tarifs plus intéressants : les forfaits et les options changent trop fréquemment. Le marketing non-sollicité et frauduleux persiste. Les clients reçoivent trop souvent des informations inexactes sur les taxes et les frais associés à un forfait. Même si le changement de fournisseur sans le consentement du consommateur (« détournement ») ne constitue plus un problème majeur, il persiste toujours sur le marché.
Les services locaux de base n’ont pas été affectés durant cette période. Cependant, la concurrence dans ce secteur a débuté très lentement. Depuis 2002, la plupart des ensembles résidentiels au Canada n’ont toujours pas d’autre choix que les ESLT pour les appels locaux. Seuls quelques fournisseurs offrent d’autres services de télécommunications, et ce, dans des zones particulières.
Le rapport aboutit à la conclusion suivante : même si la concurrence a des avantages, comme un choix plus large, de nouveaux services et des réductions des frais d’appel interurbains, elle est aussi à l’origine de la hausse des frais d’appel en général pour le consommateur moyen, de la détérioration de la qualité des services et de nouveaux problèmes.
1 Décision CRTC 92-12
 
 
 

Consumer Groups make proposals for 900 service rules

Ms. Ursula Menke
Secretary-General
Canadian Radio-Television and
Telecommunications Commission
Ottawa, ON
K1A 0N2
BY FAX AND EMAIL
Dear Ms. Menke:
Re: Public Notice CRTC 2002-2: 900 Service
1. The following comments are submitted on behalf of the Consumers’ Association of Canada, the National Anti-Poverty Organization, and l’Union des consommateurs (“the Consumer Groups”, previously “ARCetal”), pursuant to the above-mentioned Public Notice.

Problems with 900 Service

2. Unfortunately, very limited data on customer complaints regarding 900 services has been made available to interested parties by way of the record of this proceeding. The Commission has provided no data on the complaints it has received, and the Companies have provided limited data in response to an interrogatory from the Consumer Groups. Our understanding of the problems experienced by consumers with 900 services is accordingly limited.
3. Nevertheless, the data provided by the Companies is revealing. Most notably, it shows that customer complaints regarding 900 services are on the increase. Moreover, Bell’s internal complaints data over a five month period suggests that complaint volumes are high (app.1,360/mo. in Ontario alone). The vast majority of these (78%) are first time occurrences.
4. The fact that Bell has seen fit to establish a dedicated group of service representatives for the purpose of handling customer complaints regarding 900 services in Ontario is further evidence of significant ongoing problems with 900 services.
5. Data provided by the Companies indicates that the most common complaint by far is that the call was not made (“denies call made” and “disputed the call”). “Call not authorized” is another common complaint. Less frequent, but still significant, are complaints that the caller was not aware of the charge.
6. Anecdotal evidence provides further insight as to the problems experienced by consumers with 900 services. Consistent with the Companies’ data, most of the complaints of which the Consumer Groups are aware deal with disputed charges appearing on telephone bills. For example, people have complained to PIAC and the Consumer Groups about being billed for 900 services they claim not to have used, and for which the telephone company refuses (at least initially) to waive charges.
7. Another problem of which we are aware is unsolicited call-backs by 900 service operators to previous callers to the 900 service. It would appear that 900 service operators are collecting telephone numbers of incoming calls (e.g., through “900 Caller Identifier”), and using that information to solicit repeat business from past users, without the users’ knowledge or consent. That such practices are currently prohibited under s.3.15 of the Service Provider Agreement does not appear to have solved the problem.
8. Other problems are suggested by the telephone companies’ own rules, such as their refusal to provide billing services to 900 services that use “repetitive scripts, long holding periods, extraneous verbiage or long downloading procedures as a means of prolonging the call”.
9. In the Consumer Groups’s submission, while the available evidence is limited in terms of elucidating the specific aspects of 900 service that cause problems for consumers, it does identify a number of specific problems, and does show that the current regime governing 900 services is inadequate. Clearly, much more needs to be done to prevent the problems driving these complaints.

The current approach to 900 service consumer protection

10. The current regulatory regime governing 900 services includes a number of consumer protections by way of the agreements between the 900 service providers and the telephone carriers. This regime centers around the following safeguards:

1. the consumer’s right to have first-time 900 service charges waived;
2. the consumer’s right to have all 900 service calls from their line blocked; and
3. advance notice to callers, prior to the imposition of any charges, of all charges that will be levied if the caller does not hang up.

1. Subscribers are thus protected against 900 calls from their line that they did not authorize and can’t control (via charge waivers and blocking), and callers are protected against unexpected charges for calls made by them to 900 services (via the preamble in each call).
2. However, the current regime is flawed in a number of respects. Below is a brief outline of some key respects in which the current regime needs to be improved. More detailed discussion of each, along with other suggestions, follows under separate headings.
3. First, the level of protection differs depending on whether or not the 900 service provider obtains billing and accounts receivable services from the telephone company. For the reasons set out below, under “Uniform Application of Consumer Safeguards”, the Consumer Groups submit that the same consumer safeguards should apply regardless of billing arrangements between 900 service providers and telcos, unless impractical. In particular, the right to a waiver of charges for first-time calls should apply in all cases.
4. Second, the existing safeguards are inadequate. They can and should be improved and supplemented so as to provide better protection against unauthorized and unintentional calls. See below, under “Additional Safeguards that should be implemented”. In particular, charge-backs should be automatic for first-time disputes; blocking should be free of charge; consent to incur charges should be demonstrated via positive action by the caller; and advance notice of per-call charges should be required in all cases, except where over-ridden by the consumer.
5. Finally, it should be recognized that a consumer protection regime centered around blocking and advance notice of charges leaves a gap: those subscribers who wish to have access to 900 services from their own lines, but who cannot stop unauthorized calls from being made. Such subscribers must choose between blocking their own access to 900 service or accepting responsibility for unauthorized calls. This gap could be covered through the option of personal password access to 900 services.

Telco-proposed revisions (TN 740 and TN 741)

6. The Companies have proposed a number of revisions to the existing agreements with 900 service providers, by way of Tariff Notices 740 and 741. The Consumer Groups support the revisions proposed in TN 740. As noted by the Commission in Telecom Order 2002-143, the proposed changes provide additional consumer safeguards without unduly burdening the service providers. However, the proposed revisions do not go far enough.
7. With respect to the proposed safeguard when 900 services are accessed via the Internet, the Consumer Groups note that the proposed wording in s.1.1(q) of the ARM Agreement requires that “Before charges commence, Callers to Internet protocol based 900 services must mouse click on an “I Agree” button, or otherwise clearly indicate their consent.” (emphasis added) The Consumer Groups are concerned that this provision may be interpreted as permitting negative option consent. In order for consumers to be effectively protected against unintentional 900 service calls via the Internet, it is critical that this rule clearly require an “opt-in” form of consent. We therefore propose that the phrase “through an opt-in process” be added to the end of the sentence quoted above.
8. While the Consumer Groups support the reduction of maximum charges for games of chance from $25 to $5, they submit that even $5 per call is too high for such services. Indeed, Quebec law stipulates a maximum charge of $0.50 for entry into games of chance. The Consumer Groups submit that the Quebec law provides an appropriate benchmark and that games of chance offered by 900 service providers across Canada should charge in a manner consistent with the most stringent provincial law. The maximum charge for games of chance offered via 900 services should therefore be $0.50.
9. Without evidence of customer demand, the Consumer Groups do not support the TN 741 proposal to double the maximum per call charge to psychic lines from $100 to $200. While some consumers may be willing to pay this much in order to maintain continuity of service, the Companies have provided no evidence of significant customer demand for increasing this limit. At the same time, there is evidence that customers are being taken advantage of by these services, and therefore need the protection of maximum per call charges (e.g., the Ottawa Citizen article referred to in The Companies(CRTC)9Apr02-11).
10. However, the Consumer Groups do support the lowering of the per minute charge for psychic line services, from $10 to $6, in keeping with current billing practices. There is no reason to permit rates higher than are currently being charged for this type of service. If anything, per minute rates should be capped at a lower rate than $6.
11. If the per call maximum charge for psychic lines is increased, the Consumer Groups submit that 900 service providers should be required to inform callers when their bill has reached certain amounts (e.g., at $50 intervals).
Indeed, such a notice requirement should be considered whenever the maximum per call charge is over $50. Such a warning would remind callers that they are running up a large bill, and that the responsibility for such bill is theirs.

Additional Safeguards that should be implemented

12. Even with the company’s proposed new safeguards, consumers will remain inadequately protected against unauthorized and unintentional 900 service charges. The Consumer Groups therefore propose the following additional safeguards:

Application of charge-backs to all first-time 900 service charges that are disputed

13. Section 6.4 of the ARM Agreement provides for the waiver of disputed charges where “reasonably disputed pursuant to each Company’s collection procedures for 900 service”, and where the disputed charges “pertain to calls made before a Caller has had the opportunity to avail himself of call blocking for 900 service”.
14. As noted above, anecdotal evidence suggests that some companies may be applying an unreasonably high standard to the first part of this test. A waiver-of-charges policy is only fair, given that 900 services are blocked only upon request rather than by default, and that telephone service is commonly shared among household members including, in many cases, children and mentally impaired individuals. Hence, subscribers are put at risk of unwillingly and unintentionally incurring large bills for 900 service, not by their own desire but rather by a regulatory regime which exposes them to such liability without their knowledge.
15. As long as the ability to make calls to 900 service providers is automatically provided to subscribers (rather than provided upon request), it is only fair that first time billing disputes are resolved in the subscriber’s favour, where any doubt exists. Such service charge waivers should be provided automatically upon dispute.
16. The Consumer Groups therefore submit that the charge-back rule should be modified so as to apply to all first-time disputed charges.
The fact that the Caller has never incurred 900 charges in the past, and has not yet been informed of the call blocking option, is proof enough of the reasonableness of the dispute. Telephone companies should not be in a position of judging the “reasonableness” of the dispute beyond these clear parameters.
Immediate notification of first-time 900 service charges over $50
17. Prior to the rule requiring service charge waivers and charge-backs in the context of 976 services, the CRTC required Bell Canada to notify subscribers “in writing whenever their total charges for 976 Service during a single billing period has exceeded $50.00 and, in addition, to make one attempt by telephone to notify subscribers directly”. This rule was retracted at the time that the charge-back rule was implemented.
18. If all first-time 900 service charges that are disputed by the customer are charged-back as a matter of course, then a notification requirement is not needed to protect consumers against liability. However, as noted above, the current charge-back rule includes a reasonableness test that can be, and apparently is in some cases, used by the companies to deny customers immediate reversal of the disputed charges.
19. If telephone companies continue to be arbiters of the reasonableness of customer disputes regarding first-time 900 service charges, an immediate notification rule should be implemented. Waiting up to 30 days before notifying customers of the fact that they have (for the first time) incurred substantial charges attributable to 900 service use, exposes customers to significant billing risk. Immediate notification by telephone would likely reduce the magnitude of charge-backs as well as the number of complaints that the companies have to deal with.
20. If the charge-back rule is not modified as proposed above, the Consumer Groups therefore submit that telephone companies should be required to notify customers immediately, by telephone, of any first-time 900 service charges over $50.
21. Such notification should include instruction on how to block future calls to 900 service charges. The Consumer Groups further submit that an immediate notification requirement should be considered in any case, given the additional benefits that it provides to both customers and telephone companies. Specifically, such notification would serve to reduce customer anxiety, customer time and effort involved in disputing the charges, and company time and resources spent dealing with complaints. Given the amount of resources currently deployed by Bell in the resolution of 900 service disputes, the costs of such notification might be less than the savings in terms of fewer disputes.

Unresolved disputes

22. Some disputes involve 900 service charges to previous users of the service (i.e. subscribers who do not qualify for the waiver of charges under Art.6.4 of the ARM). Such disputes do not automatically qualify for charge-backs, as long as the customer was offered (and refused) call blocking. Bell’s internal data, for example, indicates that close to one quarter of complaints do not involve first time occurrences, and 12% of complainants are not provided with a credit. In such circumstances, the dispute may not be resolved between the customer and the telephone company. The Consumer Groups submit that unresolved disputes should be dealt with in an expeditious and fair manner.
23. Specifically, where billing disputes have not been resolved within a given period (e.g., 30 days), they should be submitted to the CRTC for a ruling. Customers should not be charged interest on amounts in dispute.

Blocking Fee

24. As noted above, blocking of 900 calls is an integral aspect of the consumer protection regime applicable to this service. The alternative – blocking all 900 calls unless and until the consumer requests access to the service – should be considered if the current regime continues to generate high numbers of consumer complaints.
25. As noted in The Companies(ARCetal)27May02-2, most customers who complain about 900 service order call blocking when it is offered to them. Moreover, it appears that where call blocking is offered free of charge (e.g., by TELUS), many more customers take it. In Bell’s case, 56% of complainants to the Executive Office and/or CRTC ordered call blocking. Of its recorded complaints, TELUS reports that 91% take call blocking as part of resolution of the complaint. These statistics suggest that the $10 fee is a deterrent to some customers.
26. The justification for the $10 blocking fee appears to have been two-fold:

1. to compensate the companies for the incremental cost of implementing such blocking; and
2. to deter frivolous requests for call blocking.

1. The Consumer Groups submit that both of these justifications should be re-examined.
2. First, Company costs have changed significantly over time. Data on which the $10 charge was first established is, in the Companies’ own words, “so dated that it would be of little value in this proceeding”. In particular, it is likely that the costs of provisioning call blocking are substantially less now than they were at the time that the tariff was approved. Given that the call blocking fee is a deterrent for some customers who could benefit from the service, the Consumer Groups submit that the fee for it should be eliminated, or at least lowered to a level justified by reference to Phase II costs.
3. Second, any fear that some customers might use free call blocking frivolously is unsupported by the evidence. The Companies state that they “are unaware of any frivolous requests for 900 call denial/blocking”. The Consumer Groups can imagine no circumstances under which a request for 900 service blocking would be considered frivolous. Hence, there is no need to apply any fee for this service, other than to compensate the Companies for the incremental costs of providing it.
4. TELUS charges an administrative fee of $18 to remove or subsequently add call blocking. The Consumer Groups submit that this charge is inappropriate and contrary (in spirit if not technically) to the rule that a maximum of $10 be charged for this service. TELUS should be required to lower this fee to no more than $10.

Bills for 900 service calls should include full detail

5. The Companies note that “where the 900 charges are billed on the Companies’ bills, callers may call the appropriate company directly and receive information about the time and duration of the call as well as the identity of the service provider and the service provider’s toll-free inquiry line.”
6. In the USA, the Federal Trade Commission “900 Number Rule” stipulates that for each 900 call billed by the telephone company, the statement should include the date, time and, for services that have per-minute rates, the length of the call. These charges must appear separately from local and long distance charges.
7. While the Consumer Groups have not surveyed the Companies’ billing practices re: 900 services in order to determine whether they provide this information, the Companies’ response to ARC et al’s interrogatory on point (quoted above) suggests that they do not always provide time and duration of the call.
8. The Consumer Groups submit that the minimum disclosure requirements on telephone bills set out by the FTC are appropriate and should be adopted by the CRTC. The more information that consumers have on their bill statements about 900 service charges, the less likely it is that they will need to call the telephone company with questions about the charges.
9. The same billing disclosure requirements should apply to 900 service providers who bill directly, and to any other agents billing on behalf of the 900 service provider.
Telephone companies should not be permitted to disconnect, or threaten to disconnect, local or long distance service for failure to pay 900 service charges
10. The Consumer Groups are concerned, based on anecdotal information, that some companies may be threatening individual customers with disconnection if 900 service charges appearing on their bills are not paid. It is not clear how widespread this problem is. In any case, it would be helpful to establish a clear rule that failure to pay 900 service charges cannot result in disconnection of any service other than access to 900 services.
11. Subscribers are made vulnerable to unauthorized and unintentional 900 service calls by a regulatory regime which allows unlimited access to 900 services as a matter of default (rather than by customer choice). It is therefore completely inappropriate for telephone companies to threaten disconnection of local or long distance services for failure to pay 900 service charges. The appropriate measure to take in such a circumstance is to disconnect the customer from 900 services, not from basic local or long distance services.
12. The CRTC should do as the Federal Communications Commission (FCC) has done in the USA, and expressly prohibit disconnection of local or long distance service for failure to pay 900 number charges.
900 service providers should be made subject to collection practice rules reflecting industry standards and best practices
13. In Order CRTC 2001-502, dated 29 June 2001, the Commission directed Bell Canada to amend its ARM agreement with 976 providers to include the same list of prohibited practices, with necessary changes, as exist in the relevant provincial collection agency legislation and regulations. (Bell had proposed that 976 providers be required to use collection agencies that are provincially licensed, rather than in-house bill collection.)
14. Given “persistent complaints from callers about collection practices associated with 976 program calls that have been previously charged back and absorbed by a 976 SP”, as noted by Bell Canada in its application, the Commission considered that “in-house collection activities by a 976 service provider should follow the same practices in the provinces of Ontario and Quebec as those set out in the respective acts and regulations for third-party collection activities”.
15. The Companies state that the concerns about 976 collection practices do not exist with 900 services. While unethical/annoying collection practices do not appear to be the subject of many complaints reported in The Companies(ARCetal)27May02-1, the Consumer Groups submit that there is insufficient evidence on the record to conclude that they are not a significant cause of complaints regarding 900 services.
16. The Companies also point out in response to the ARC et al interrogatory that laws and regulations apply in any case, and therefore don’t need to be repeated in contracts. While this is true, the Consumer Groups submit that reminding parties of certain statutory obligations by way of the agreements, where compliance with such obligations has been problematic in the past, is likely to improve compliance and is therefore desirable.
17. For these reasons, unless it can be conclusively shown that unethical/annoying collection practices by 900 service providers are not a cause of consumer complaints, the Consumer Groups submit that the same rules regarding collection practices applicable to 976 providers should apply to 900 service providers.
18. Moreover, the Consumer Groups submit that the collection and reporting to credit bureaus of disputed 900 service charges should be prohibited, until the company handling the dispute has provided the customer with a full explanation of why it considers the charges legitimate, and the Commission has upheld the company’s right to collect

The preamble should apply to all 900 service calls

19. The limited data provided by the Companies on 900 service complaints shows that in some cases, the caller claims not to have been aware of the charge. Further measures, beyond those already in place and proposed by the Companies, can be taken to reduce these types of complaints. First, the preamble requirement should be extended to all 900 service calls, with the sole exception of caller-controlled bypass.
20. Article 3.4 of the SP Agreement sets out the preamble requirement. Exceptions to this requirement include situations where:

• the charge for the call is a flat rate of $3 or less, and the call does not involve a program that uses the receipting option or involve a number that is listed in a telephone directory or involve a program directed a callers under 18 years of age; and
• a repeat caller voluntarily bypasses the preamble (although such bypass must be disabled for 30 days following any price increase).

1. The Consumer Groups submit that the first exception to this rule should be removed, as it leaves open the potential for callers to be charged when they did not expect to be so charged. While charges of $3 per call may be considered trivial by some, $3 is a significant amount for many customers, and in any case can accumulate to a large amount over a 30 day period. To the extent that complaints involve charges for 900 service calls falling into this category, removing the exception for flat per call charges under $3 would likely reduce the incidence of unintentional 900 service activation, and hence the number of complaints.

Callers should be required to signal their desire to incur charges by way of a positive act

2. Another measure that would reduce the likelihood of 900 service callers being charged more than they expected for the call, is to require 900 service providers to obtain a positive indication from the caller that they wish to continue with the call, after the preamble setting out the applicable fees. This can be done at minimal cost and with little inconvenience to the customer, in the same way that IVR systems commonly require customers to “press #” in order to continue.

References to other 900 service programs, and requests or requirements to call the program number again, should be prohibited

3. Another way of limiting the damage caused by easily accessible 900 services is to prohibit 900 service providers from pressuring callers to use the service again, or encouraging them to call other 900 services. The Consumer Groups are not aware of the extent to which such practices contribute to the current level of consumer dissatisfaction with this service, but it is possible that they are part of the problem. Unless it can be conclusively shown that the practices in question are not a problem, such safeguards are appropriate. In any case, precautionary measures such as this are prudent even where there may be no clear evidence of abuse.

900 service providers should be required to inform callers of any free ways to enter a game of chance offered through the 900 service

4. As long as games of chance are offered via 900 numbers, it is important that consumers be fully informed of their options with respect to entering the game of chance. In particular, callers should be informed of any free ways to enter a game of chance offered through the 900 service both in general advertising and at the commencement of all calls to the 900 number in question, prior to any charges being applied.

Indirect access to 900 services

5. Another potential cause of unintentional 900 service calls is the linking of toll-free numbers with 900 numbers, such that customers may believe they are making a toll-free call when in fact they are being channeled into a pay-per-use calling service. For this reason, the FTC 900 Number Rule prohibits the following practices:

• using toll-free numbers for pay-per-call services, unless the caller has a pre-existing agreement with the company or the call is charged to a credit card;
• connecting callers directly from a toll-free number to a 900 number, and
• collect call-backs by 900 service providers where the customer has dialed a toll-free number first.

1. The Consumer Groups submit that similar safeguards are appropriate for Canadian consumers.

Uniform Application of Consumer Safeguards to all 900 Service Providers

2. The Consumer Groups strongly support the application of the same consumer safeguards to all 900 (and 976) service providers, not just those who choose to bill through the Companies. Consumers deserve to be protected from the same abusive practices regardless of billing arrangements between the 900 providers and telephone companies. Exceptions to uniformity of safeguards should be fully justified.
3. In addition to the new safeguards proposed above, the following existing safeguards which currently exist in the 900 Service ARM agreements should therefore also be included in 900/976 Service Provider Agreements and tariffs for 900 (and 976) services:

• service charge waivers for first time 900 service users who reasonably dispute the charges and agree to 900 service blocking;
• notification to customers disputing 900 service charges that they can have such calls blocked upon request to their local telephone company;
• maximum charges per call for programs aimed at persons under the age of eighteen;
• maximum charges per call for games of chance for profit;
• maximum charges per minute and per call for psychic line programs;
• maximum charges per call for subsequent value programs as set out in Art.7.5(d) of the ARM agreement;
• prohibition of charges for programs that use repetitive scripts, long holding periods, extraneous verbiage or long downloading procedures as a means of prolonging the call;
• customer privacy protection rules as set out in Schedule “D” to the ARM.

1. In the Consumer Groups’ submission, all of the above protections, which currently apply when 900 services are billed through the Companies, should also apply when 900 service provider bill consumers directly.
2. It is revealing that the Companies refuse to deal with certain types of 900 services, and indeed that they are considering withdrawing their 900 billing and collection service (The Companies(CRTC)9Apr02-14). Clearly, the cost to them of dealing with consumer complaints regarding 900 services – at least those of the types listed in Schedule “C” to the ARM – outweigh the revenues obtained from such 900 services. It follows that the very services that are not subject to the ARM Agreement (and hence the consumer protections therein) are the most likely to generate consumer complaints (and hence the most deserving of consumer protections). If anything, consumers need more protection, not less, in respect of direct-billed 900 services.
3. The Companies do not object to the application of service charge waiver requirements in the Service Provider Agreements and/or relevant tariffs: The Companies(CRTC)9Apr02-15. They do, however, object to the application of service-specific prohibitions and maximum charges, on the grounds that such restrictions would “amount to a form of control over the content or meaning of calls”, contrary to s.36 of the Telecommunications Act and possibly s.2(b) of the Charter of Rights and Freedoms.
4. The Consumer Groups submit that the service-specific restrictions proposed above would be approved by the Commission and would therefore meet the requirements of s.36 of the Telecommunications Act. Moreover, such restrictions, even if they were found to infringe the right to free speech, would meet the Charter requirement of being demonstrably justified in a free and democratic society.
5. In particular, the Consumer Groups note that the restrictions in question would not limit the ability of 900 service providers to offer their services. Rather, they would simply limit the charges that can be applied for certain types of services, and prohibit charges where the service prolongs the call unnecessarily. None of these restrictions unduly limit freedom of expression on the part of 900 service providers. To the extent that they infringe s.2(b) of the Charter, they do so in the aid of an important and legitimate goal: consumer protection, and would only involve only a minimal impairment of the right to free expression.

Consumer privacy rights should be explicitly protected

6. The Consumer Groups further propose that the privacy principles included in Schedule “D” to the ARM should also be included in the Service Provider Agreements.
7. These principles have been made law via the federal Personal Information Protection and Electronic Documents Act, which presumably applies to 900 service providers (almost all of which operate across provincial boundaries). Hence, it can be argued that they apply in any case and therefore need not be repeated in the service provider agreements. In response, The Consumer Groups submit that it is helpful to remind 900 service providers of their obligations when collecting caller information, by way of this Schedule.
8. Moreover, if there is any doubt about the application of PIPEDA to 900 service providers, then the rules should definitely be made part of the Service Provider agreements, such that customer privacy is properly protected.

Enforcement

The Commission should issue termination orders and should pursue offenders under s.73 of the Telecommunications Act
9. One problem with the current 900 service regime has to do with repeated violations of existing rules. The current approach to enforcement of 900 service rules appears to be inadequate.
10. It is critical that any rules, existing as well as new, are properly enforced. There is no point in creating rules that can be disregarded without consequence.
11. The only enforcement tool currently being used appears to be termination of service by the ILEC under the service agreement. According to the Companies, Bell disconnected 64 service providers for breaches of the ARM or SP agreements between 15 Sept 1999 and 14 March 2002. The vast majority of these disconnections (56) were for content violations. Eight (8) were disconnected due to misleading or deceptive preamble/advertising.
12. The Companies note that disconnection is part of the larger sanction of termination. Based on their experience, they “view termination as a sanction with limited effectiveness”. In particular, they note that:

• the prospect of liability for improper termination causes them to be cautious in suing this sanction;
• the termination process is “a relatively slow and procedurally cumbersome process”; and
• 900 service providers can take steps to limit the effectiveness of termination through the use of multiple corporate identities (i.e., treating terminated numbers as “little more than business overhead”).

1. Clearly, reliance on voluntary telephone company disconnection for enforcement of consumer protection regulations affecting 900 service is inadequate. The Companies themselves state that “in certain circumstances, …it would be appropriate for the Commission to take a more active role in sanctioning non-compliant 900 service providers”. The Consumer Groups therefore propose that the CRTC make disconnection orders when appropriate, based on complaints received or referred to them by the telephone companies.
2. In addition, the Consumer Groups note that s.73(2)(b) of the Telecommunications Act provides for prosecutions where a condition of service under s.24 of the Act has been contravened. Because the Service Provider Agreement is approved by the CRTC, the safeguards in it constitute “conditions of service”, as do the rules set out in relevant ILEC tariffs. As with telemarketing abuses, the CRTC should establish a streamlined process under which such prosecutions take place as a matter of course when 900 service providers are clearly violating the rules.
All of which is respectfully submitted,
Philippa Lawson
Counsel for The Consumer Groups
cc: Interested Parties, PN 2002-2
CRTC proceeding

Consumer Groups demand monthly bill detail by Bell and Aliant

Ms. Diane Rheaume
Secretary-General
Canadian Radio-Television and Telecommunications Commission
Ottawa, ON
K1A 0N2
BY FAX AND EMAIL
Dear Ms. Rheaume:
Re: Follow-up to Decision CRTC 2002-34:
Detailed Billing Statements
1. In para.805 of Decision 2002-34, the Commission initiated a process to determine whether Bell Canada and Aliant Telecom should be required to provide itemized billing statements to their customers on a monthly basis. The following comments are submitted on behalf of the Consumers’ Association of Canada, the National Anti-Poverty the Organization, and l’Union des consommateurs (previously “Action Réseau Consommateur”) (“the Consumer Groups”), pursuant to that process.
2. Most major telephone companies in Canada provide itemized bills for local as well as long distance service on a monthly basis, such that customers can see, each month, what local services they have subscribed to, and what they are paying for each service. Bell and Aliant (NB and Nfld), however, provide itemized bills only once per year and when there is a change to a relevant service or service charge. Otherwise, the monthly bill provided to residential customers contains no itemization of local services. MTS used to follow the practice currently followed by Bell and Aliant, but has reverted to monthly itemization. SaskTel has also begun implementing monthly itemized statements to its customers.
3. The Consumer Groups strongly support the Commission’s preliminary view that all ILECs should provide customers with itemized billing statements on a monthly basis.

Separate the issues of billing frequency from billing detail

4. In its submission, Aliant argues that “Customers should be able to specify the billing detail they desire and the frequency of its delivery.” (para.6)
5. It may be helpful to separate the issues of billing frequency and billing detail for the purposes of this proceeding. Billing frequency per se (i.e., monthly as opposed to quarterly or semi-annual) is not an issue in this proceeding; all ILECs appear to bill their residential customers on a monthly basis, and are not proposing to change this practice. It is in this context that the Commission has invited comments on the issue of itemized billing statements.
6. The bottom line, in the Consumer Groups’ submission, is that all bill statements should be sufficiently detailed that customers can determine from each billing statement what services they are subscribed to and how much they are paying for each service. Thus, as long as companies bill for service on a monthly basis, each monthly bill should include the minimum level of detail considered adequate by the CRTC.
7. On the question of how frequently bill statements should be delivered to customers, the Consumer Groups submit that the standard practice of monthly billing should not change without a public proceeding to examine the implications of less frequent billing.

Why bill detail is important

8. Itemization of each separate charge on each bill statement is particularly important so that customers can see, on any given statement of account, what optional local services they are subscribed to, and how much they are being charged for each optional service.
9. Without such itemization, customers can lose track of the various optional services they are subscribed to, and can end up paying for services they neither want nor need. For example, customers seeking ways to reduce their monthly telephone bill may be unaware of the fact that they can do so by canceling certain optional services. They may instead assume that the consolidated local charge shown on the bill is entirely mandatory.
10. In addition, customers may believe that they have ceased subscribing to a given service (e.g., an optional service provided free of charge for a limited period of time, or a rental telephone set no longer used) when in fact the company is continuing to charge them for the service. Anecdotal evidence available to the Consumer Groups indeed suggests that such misunderstandings are not uncommon when companies fail to provide itemized bills on a monthly basis.
11. Both Bell and Aliant argue that their customers are satisfied without monthly itemized billing, and that requiring them to provide detail on a monthly basis to every customer is therefore unnecessary and inefficient. They cite QofS monitoring results indicating that customer complaints regarding billing are minimal.
12. In response, the Consumer Groups note that just because customers have not formally complained in large numbers about the lack of bill detail on a monthly basis does not mean that they are satisfied with it. In order to properly test customer satisfaction on this issue, focus groups and/or customer surveys need to be conducted. Indeed, Bell’s own focus group testing indicates that customers prefer the level of detail provided by Bell on the annual statement.
13. Given the importance of the underlying principle (full information to customers), however, the Consumer Groups submit that testing of consumer preferences on this issue is unnecessary. Customers who wish to forego their right to a monthly detailed bill may be able to do so upon request. Others should be entitled to a detailed bill as a matter of default.
14. In Telecom Decision 86-7, the Commission ordered ILECs to provide customers with detailed itemized bills “at service commencement, after any rate or service and equipment changes and, at a minimum, once a year”.
15. It is important to recognize the tremendous changes that have occurred to residential telephone service since 1986. At that time, customers had relatively few options in terms of local service. Over the past 16 years, dozens of new optional services have been made available to customers, and the companies have transformed themselves into aggressive marketers of these services such that large numbers of customers subscribe not only to basic local service, but also to any number of local optional services. Indeed, average revenues per residence NAS for optional local services in 2001 ranged from app. $5-$9 per month, according to data provided by the Companies in the recent Price Cap review proceeding.
16. The fact that annual itemization of local service charges was considered appropriate in 1986 thus in no way suggests that annual itemization of such charges is sufficient for telephone customers in 2002. The context is now entirely different.
17. It is further instructive that the US Federal Communications Commission has seen fit to require telephone companies to provide “full and non-misleading descriptions of all charges” on all telephone bills. Specifically, the FCC rules state that:
“Charges contained on telephone bills must be accompanied by a brief, clear, non-misleading, plain language description of the service or services rendered. The description must be sufficiently clear in presentation and specific enough in content so that customers can accurately assess that the services for which they are billed correspond to those that they have requested and received, and that the costs assessed for those services conform to their understanding of the price charged.”
18. Canadian consumers should be no less protected than American consumers in this regard.

Bill detail vs. paper reduction

19. Aliant states that NBTel withdrew monthly itemized billing “a number of years ago when customers raised serious concerns about the amount of paper utilized to provide monthly billing detail”.
20. The Consumer Groups share the environmental concerns raised by these customers, and concur with the goal of minimizing unnecessary paper usage. However, this goal must be weighed against the goal of providing adequate billing information to customers on an ongoing basis. In any event, the goal of paper reduction can be achieved while providing meaningful bill detail to customers who have not requested otherwise. Specifically, much of what appears on current bills is relatively unimportant (in some cases even meaningless) from the consumer perspective; the length of billing statements can be significantly reduced without sacrificing important bill detail.
21. In any case, the Consumer Groups submit that the issue of paper reduction centers around the manner in which charges and services are identified on the bill, not whether or not bill detail is provided. In para.806 of Decision 2002-34, the Commission “concludes that it would be appropriate for these issues of content and related issues to be considered by the BMT Committee”. That is the appropriate forum in which to discuss ways of minimizing paper usage in the billing process.

Billing detail should be the default

22. Both Bell and Aliant propose to offer monthly bill detail only to those customers who request it. The companies would make customers aware of this option via a bill insert. In this way, they suggest that the costs of monthly billing can be minimized while customer desires for more frequent billing detail can be accommodated.
23. In other words, the companies wish to make less frequent bill detail the default (or standard) service offering. Customers would be able to get more frequent bill detail, but only upon request. This proposal has a number of important implications:

• because results are always biased toward the default, many customers who would in fact prefer the option of detailed billing will never exercise it (whereas, if the default were detailed billing, many customers who would be satisfied with less frequent detail will never choose it);
• because of this inertia effect, many people will be denied the billing detail they need in order to make informed choices on an ongoing basis; and
• the companies will be in a position to treat the option of more frequent billing detail as a value-added service, for which a charge may apply.

1. If the companies wish to ensure that all customers who want monthly bill detail get it, they would treat monthly billing detail as the default, and offer the option of less frequent billing detail to those who specifically request it. Instead, they have proposed an approach which achieves meaningful consumer choice only if all customers are fully informed of their options, appreciate the implications thereof, and can quickly and easily exercise the option at no cost. In the Consumer Groups’ submission, none of these preconditions to meaningful choice apply.
2. First, many customers will not be aware of the option, despite any number of bill inserts and statements on the bill. In a nation-wide survey conducted by EKOS Research for PIAC and other organizations in 1996, 34% of respondents said that they rarely or never “read the inserts the telephone company sometimes sends with its bills”. A further 35% only read inserts “sometimes”. Recent experience with customer complaints regarding Bell Canada’s imposition of a minimum $4.95 charge on its First Rate discount toll plan further confirms that many customers do not notice important messages delivered via bill insert (many customers were unaware of the new charge until it appeared on their bill, despite a bill insert notifying them of it in advance).
3. Given that most bill inserts received by customers fall into the category of “junk mail” (i.e., marketing material), it is not surprising that many customers fail to notice the few that contain important information. In the Consumer Groups’ submission, important notices cannot be effectively communicated through a medium which is used primarily for marketing purposes.
4. Second, requiring customers to write or telephone the service provider in order to obtain detailed bills on a monthly basis is sufficiently onerous that many customers who would prefer monthly detail will not in fact get it. Even if they are adequately informed, many customers will fail to take advantage of the option provided, simply because of the effort required to do so. Telephone companies should not be permitted to take advantage of this “inertia” effort to the detriment of consumers.
5. Clearly, the companies are seeking ways to reduce their billing costs. One way is to provide monthly billing detail only to those customers who request it. (Another is to replace paper bills with electronic bills.) While efforts to reduce unnecessary costs are commendable, The Consumer Groups submit that the companies’ proposal goes too far in terms of sacrificing important customer information for the sole purpose of reducing cost.
6. The default level of service provided to customers should be that which (a) automatically provides customers with the information necessary to make informed choices about their ongoing service on an ongoing basis, and (b) conforms to general customer expectations and desires. Options for a lower (or less costly) level of service, whether it be replacement of the paper bill with an online bill, less billing detail, or any other option, should not be forced upon any customer without their informed consent.
7. Billing detail should therefore be provided on a monthly basis to all customers, unless they request otherwise. Moreover, there should be no extra cost to the customers associated with this level of service. While the companies have not yet attempted to charge for monthly detailed bills, it would be a logical next step for them to take once they establish a standard of billing involving less-than-monthly detail.
8. The Consumer Groups are concerned with this apparent trend toward lower standard levels of service to residential customers. Monthly bill detail may be just the first example: paper bills could be the next. It is important that a Consumer Bill of Rights clearly establish the standard of service to which all customers are entitled without extra cost.

The costs of providing monthly bill detail are covered by existing rates

9. Both companies state that a requirement to provide monthly billing detail would cause them to incur costs, both initial and ongoing. Hence, they argue that all such costs should be recoverable from ratepayers. Specifically, Bell proposes that “it should be allowed to draw down from the deferral account any incremental expenses and/or capital costs which would be attributable to the provision of detailed billing on a monthly basis.” (para.5) It is not clear whether the companies are proposing to treat these expenses as exogenous factors.
10. The Consumer Groups strongly oppose any such downloading of normal costs of business onto ratepayers, for a number of reasons. First, it would be unfair to those companies who have, in the best interests of their customers, implemented or continued to implement monthly itemized bills without any such cost recovery. It would instead reward those companies who have chosen to reduce customer service in the name of cost reduction.
11. Second, it would ignore the cost savings that these companies have generated as a result of infrequent billing detail. The general marketplace standard for billing of ongoing services is to provide full detail on a monthly basis. This is what customers expect, and what they need in order to make informed purchasing decisions on an ongoing basis. Companies that have saved money by providing less than this standard of billing should not now be able to recover from ratepayers the cost difference between the two approaches to billing.
12. Third, the new price cap regime was established on the basis of general cost data and regulatory principles; the companies were not subjected to revenue requirement examinations, and rates were not “rebased”. The companies thus benefited from a lack of scrutiny of their reduced costs (vs. rates) for specific services. For them to suggest now that increased costs as a result of the price cap decision should be treated like exogenous factors and recovered via the deferral account is inconsistent and unfair to ratepayers.
13. Finally, the Commission’s direction to provide monthly bill detail comes as part of the establishment of the new price cap regime, not as a regulatory requirement imposed on the companies during the course of a price cap regime. The fact that there are costs associated with this direction has been taken into account by the Commission in the establishment of the new price cap formula. To recover such costs via the deferral account would therefore result in double-counting, to the benefit of company
All of which is respectfully submitted,
Philippa Lawson
Counsel for the Consumer Groups
cc: Interested Parties, PN 2001-37
 
CRTC proceedings

PIAC opposes disconnection of local phone service for non-payment of toll charges

DISPUTE
CRTC BMT/Telephone Access Committee
Subject of Dispute: Terms of Service regarding disconnection of basic local service for non-payment of toll or other non-tariffed charges Dispute Initiator: Philippa Lawson, PIAC/NAPO Date: June 26, 2002
Dispute Description: This dispute can be divided into a number of elements, as follows:
1. Do the terms “service”, “account”, and “payment” in Article 22.1, 22.1(a), 22.1^©, 22.1(h), 22.2, 22.2(b) and 22.2^© of Bell Canada’s Terms of Service refer to tariffed services only, or to non-tariffed services as well?
2. Is Bell permitted, under Art.22.2(a) of its Terms of Service, to disconnect the local service of a customer who has paid enough to cover local service charges (current and arrears)?
3. Is TELUS permitted, under Art.115.4 of its Terms of Service, to disconnect local service of a customer who has paid enough to cover local service charges (current and arrears)?
4. Should the rules regarding disconnection of basic local service for non-payment of toll and other non-tariffed charges be uniform among ILECs?
5. What rule(s) should apply to ILECs in respect of disconnection of local service where the customer has arrears in respect of non-tariffed services (e.g., toll, 900 service) and is making partial payments?
6. What rule(s), if any, should apply to ILECs in respect of their communications to customers regarding potential disconnection for non-payment? (For example, should ILECs be required to distinguish between local, toll, and possibly optional service, disconnection?)
History of Dispute within Committee:
This issue was raised by PIAC in the first Committee meeting (April, 2001).
Through discussion and interrogatories, it became clear that:
1. the existing terms of service on this point are interpreted differently by different parties (even among companies);
2. there is a significant difference in the rule applicable to TELUS and SaskTel, on one hand, versus the rule applicable to Bell, Aliant and MTS on the other hand;
3. even among companies subject to the identical rule, practices differ and there is disagreement as to how the rule should be interpreted; and
4. ILECs and consumer groups disagree on the rule(s) that should apply in this situation.
In an email dated May 13, 2002, PIAC/NAPO proposed to treat the matter as a dispute. TELUS and Bell, in response, requested that further discussions take place before treating the matter as a dispute. Further discussions were held at the June 17, 2002 meeting, with a view to achieving consensus on any of the above-noted issues. No consensus could be reached.

Issue Background

In Telecom Letter Decision CRTC 88-4, regarding Bell Canada’s collection practices in respect of its 976 service, the Commission noted that under Bell’s Terms of Service, “Bell may deny service for non-payment of tariffed charges but not for the non-payment of non-tariffed charges.” The Commission ordered as follows:
“The Commission reiterates that non-payment of non-tariffed charges cannot result in denial of service. Accordingly, it would be unacceptable for the company or any party acting on behalf of the company to suggest that disconnection of service would result from non-payment of 976 non-tariffed charges. As customers may not differentiate between the payment of tariffed and non-tariffed charges, the Commission directs that, any partial payments are to be applied first to tariffed charges.”
In the proceeding that led to Telecom Decision CRTC 96-10 (Local Service Pricing Options), a competitors and consumer groups argued that ILECs “should not be permitted to continue the practice of disconnecting local service for the non-payment of toll bills”. The Commission rejected this argument, reasoning that:
”…the approved procedures which must be followed by the companies in order to suspend or terminate service area adequate to prevent unjust discrimination against other long distance providers or the conferral of an undue preference in favour of the Stentor member companies”. (p.18)
In Telecom Decision CRTC 98-4 (Joint Marketing and Bundling), the Commission summarized its approach to partial payments in the context of bundled services as follows:
”…In those Decisions [97-11 and 97-12], Bell and TELUS were permitted, without the requirement to file tariffs, to bundle tariffed telecommunications services with non-telecommunications services subject to the condition that the bundled service must not be sold for less than the sum of the tariffed rates of the telecommunications services and that the bundled service must not be designed to circumvent the tariff for any tariffed service included in the bundle. The companies were also required to itemize the tariffed services on the customer’s bill and to ensure that payments for bundled services were allocated first to primary exchange services and other tariffed services….”
By way of letters to ILECs dated April 11, 2000, CRTC staff noted as follows:
“With regard to your policy for partial payment, we note that most companies do not differentiate between tariffed and non-tariffed charges in arrears and would have to incur additional costs to either modify their billing systems or to manually track tariffed and non-tariffed charges on past due account[s].
In our view, those costs would likely outweigh the benefits that customer facing disconnection for making partial payments would receive. In light of the above, we consider that your current policies regarding toll denial and the application of partial payment do not appear to be unreasonable…..”

Proposed Resolution

PIAC/NAPO’s position on this issue is set out in our email of June 7, 2002. In respect of the specific issues set out above, PIAC/NAPO’s position is as follows:
Regarding the existing rules:
1. The current Terms of Service relate only to tariffed services. Hence, references to “service”, “account”, and “payment”, unless otherwise specified, refer to tariffed services, accounts, and payment therefor only.
2. Bell is not permitted to disconnect the local service of a customer who has paid enough to cover their local service charges, or who has complied with a “reasonable deferred payment arrangement” regarding any local service arrears.
3. TELUS and SaskTel may be permitted to disconnect the local service of a customer who has paid enough to cover their local service charges, or who has complied with a “reasonable deferred payment arrangement” regarding any local service arrears. (This is not clear.)
and regarding what rules should apply:
4. The same rule regarding disconnection of local service for non-payment of non-tariffed service charges should apply to all ILECs equally.
5. The appropriate rule on this issue is as follows:
That, unless otherwise directed by the customer, partial payment be applied to basic local service charges first, regardless of the relative age of outstanding bills. Remaining payment should then be applied to other charges by oldest outstanding. Basic local service should only be disconnected where the customer has failed to pay basic local charges, and only after attempts have been made to negotiate a reasonable deferred payment agreement regarding any outstanding local charges. Failure to pay toll charges should result in toll blocking, and failure to pay optional local service charges should result in disconnection of those services, before basic local service is disconnected for non-payment.
ALTERNATIVELY,
That the companies continue to apply partial payments as they wish, but that there be no disconnection of basic local service as long as the partial payment covers local charges, or is in keeping with a reasonable deferred payment agreement regarding outstanding local charges. Failure to pay toll charges should result in toll blocking, and failure to pay optional local service charges should result in disconnection of those services, before basic local service is disconnected for non-payment.
6. ILECs should not threaten to disconnect a customer’s basic local service as long as customer payments cover basic local charges. ILECs should threaten toll disconnection for failure to pay toll charges, and optional service disconnection for failure to pay optional service charges.
END OF DOCUMENT

Explanatory Notes

DISPUTE
CRTC BMT/Telephone Access Committee
Subject of Dispute: Terms of Service regarding disconnection of basic local service for non-payment of toll or other non-tariffed charges Explanatory Notes
“Terms of Service” are the rules that apply to the phone company in respect of the regulated services it offers. They are found in the front of your telephone directory.
“Tariffed services” are telephone services set out in a regulated “tariff” that has been approved by the CRTC. In other words, they are services whose rates are regulated by the CRTC. Basic local service is tariffed, but long distance service is not.
“ILECs” stands for “Incumbent Local Exchange Companies” and means the local phone companies that have been providing service in their territories for ages.
“toll service” is the same as “long distance service”
CRTC proceeding
 

Eliminating Phonelessness in Canada: Possible Approaches Second Edition

By Philippa Lawson
While Canada prides itself on a 98% household penetration rate of telephone service, closer examination reveals a persistent problem of phonelessness among lower income households. This problem needs to be addressed if Canada is to achieve its goal of universal service. Bill management tools and other market initiatives (such as prepaid local service) while helpful to some users, have failed to close the gap. Other approaches deserve examination. In the USA, under the Lifeline and Link-Up assistance programs, low income households are offered basic phone service at discount rates. Studies indicate that these programs are successful in increasing subscribership among the low income population. Canada should consider implementing a similar program.The second edition of this report includes updated statistics and more analysis of the issue.
Hard copy, including Appendix B, 140 pp. price: $20
(Soft copy is 37 pages, without Appendix B)
March 2002

Eliminating Phonelessness in Canada: Possible Approaches Second Edition

Full report is available as a PDF [pdf file: 0.28mb]

EXECUTIVE SUMMARY

Phonelessness: The Problem
Phonelessness is a social policy problem that needs to be addressed by the federal government. In particular, it has serious implications for employment, skills development, and the delivery of social services, all of which are central components of HRDC’s mandate.
While overall household telephone penetration rates in Canada are high (98-99%), they are significantly lower among low income households (95-96%). The predominant characteristic of phonelessness in Canada is low income.
Based on Statistics Canada data, it can be conservatively concluded that at least 0.8% of Canadian households, or over 100,000 households, do not subscribe to residential telephone service because they can’t afford it. How many more can’t afford phone service is not clear, given important gaps in Stats Can survey samples.
Those without telephone service for affordability reasons constitute the mere “tip of the iceberg”; many more Canadian households are struggling to keep phone service in the face of ever-increasing basic rates.

Responses to the problem of phonelessness

In Canada

• the CRTC has required telephone companies (a) to offer toll restriction and instalment payment options, and (b) to monitor penetration rates, disconnection rates and related data in order to track the affordability problem;
• some companies offer bad debt repayment plans, aimed at helping customers pay off outstanding debts while still receiving phone service;
• some communities offer free or low-cost voice mail for the homeless or those without telephones at home; and
• a private company offers prepaid local-only phone service, as an alternative for those who face large security deposits and/or debt repayment in order to regain service from their local service provider.

In the USA

• there is an extensive system of subsidies designed to assist low income households get on and stay on the telephone network, most of which fall under the FCC’s “Low Income Program”. The key programs, offered throughout the USA, are Lifeline (monthly rate discounts), Link-Up (installation fee discounts), and Toll Limitation Service (free blocking of toll service). Additional benefits and/or alternative discount rate plans are available in many states.

Eliminating Phonelessness in Canada: Possible Approaches

• These programs are generally funded by revenue-based charges levied on telecommunications companies, and to some extent by end-user surcharges.
• In 2000, an estimated 5.9 m. US households paid reduced local rates under the Lifeline program. App. 10.6 m. low-income customers have benefited from the Link Up program since its inception in 1987.
• prepaid local service is available in at least one state (Texas);
• metered service is an alternative option in many states;
• some states offer equipment subsidies for visually and hearing impaired customers.

In the UK, -local service is metered, and mobile service is very popular; -local phone companies are required to offer customers “the option of a more restricted package at low cost”; such services include incoming-only service (not popular), prepaid local service with access code, and a
“light user scheme” which is attractive for those making little use of local phone service;

• service providers are also required to provide alternative payment options, including pre-payment options.

The impact of assistance programs on subscribership

Targeted subsidies in the USA appear to have had at least some success in raising penetration levels. A recent study concludes that the Lifeline program “has raised penetration rates and the sizes of the increases are related to the amount of assistance provided”.
While phonelessness in the UK has dropped significantly over the past two decades, it is difficult to attribute this to any particular cause.
Penetration rates in Canada appear not to have been affected by the minimal efforts made to date to facilitate subscribership in this country.

Lessons to date

Phonelessness is inextricably linked to income. Any program designed to combat phonelessness should therefore focus on low income households.
There are at least three different aspects of the affordability problem, each of which requires its own solution:

• inability to afford the up-front costs of connection or reconnection;
• inability to afford the ongoing cost of basic phone service; and
• inability to control the use of one’s phone.

Eliminating Phonelessness in Canada: Possible Approaches

The more generous the assistance, and the more effort that goes into promoting it, the more successful it will be in improving the affordability of phone service.
Challenges in designing and implementing a telephone assistance program in Canada
A preliminary challenge is a perception of many that no such program is needed in Canada, given our relatively high telephone penetration rates.
If the goal of the program is to close the phonelessness gap, rather than to make basic phone service more affordable for low income Canadians, a dilemma exists: making benefits available only to the phoneless will create a perverse incentive for subscribing households to disconnect.
If the goal is to make phone service more affordable for low income Canadians and to thereby bridge the phonelessness gap, the key challenge lies in targeting the program at those who need it while minimizing administrative costs.

Conclusions and Recommendations

In order to achieve the goal of truly universal telephone service in Canada, more effort is needed to close the phonelessness gap.
A program designed to reduce phonelessness cannot simply focus on the phoneless; it must focus on all those experiencing telephone affordability problems.
Lower-value, unsubsidized, “budget services” do not respond to the needs of all those experiencing affordability problems, and hence do not offer a full solution.
The two main options for funding a targeted subsidy program are (a) direct taxpayer-funded subsidies, or (b) a subsidy scheme administered via telephone companies, as in the USA. Providing subsidized service through telephone companies, rather than social assistance agencies, is likely to be the most efficient method.
Each of the three problems identified above (connection fees, monthly rate, toll bills) needs to be addressed if phonelessness in Canada is to be eliminated. Currently, only one of these three problems is being effectively addressed, through the CRTC-mandated toll restriction service. Statistics suggest that the other two problems are more significant, and therefore worthy of further attention.
Key elements of an effective program to combat phonelessness in Canada include:

• income-based eligibility (self-certified), combined with automatic enrolment of social assistance recipients;
• a variety of benefits designed to address each particular problem;
• sufficiently generous benefits to attract non-subscribers;
• ongoing promotional and outreach efforts; and -oversight by a multi-stakeholder Advisory Committee.

Public Interest Advocacy Centre March, 2002