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    FILE ID: CTCO015B.doc



    CONTRIBUTOR: David McKeown, Rogers Telecom Inc.

    DATE SUBMITTED: April 19, 1998

    DISTRIBUTION TO: Customer Transfer SWG

    SUBJECT: Arbitrator for disputes between LECs regarding

     Customer Transfers.


    This is the second draft of a contribution intended to focus discussion on the creation of an arbitrator for disputes between LECs regarding customer transfers.

    The minutes of the Customer Transfer SWG (CT SWG) meeting, held in Vancouver on January 12/13, 1998, included the following Action Item:

     ACTION: David McKeown will try to get David Colville conferenced in to one

    of our meetings in order to confirm that the private Arbitrator approach is

    consistent with the Commission's vision. At the same time, David McKeown

    will draft a proposal for an industry-wide LEC body to handle local customer

    transfer disputes. In so doing, he will consult with Dean Proctor to see what

    the MA SWG is doing with respect to dispute arbitration.

    This discussion paper provides an outline for an Arbitrator and, while it includes some proposals and recommendations, further discussion is required on certain issues (see Outstanding Issues).

Need for an Arbitrator:

    Currently, disputes over customer transfers between telephone companies and competitive long distance companies, and between competitive long distance companies are resolved by the telephone companies’ respective Carrier Services

    Groups (CSGs). A CSG represents the local arm of telephone companies and because of confidentiality requirements, can perform the role of an Arbitrator for disputes regarding transfers of long distance customers. In the context of a local competitive environment, it would be inappropriate for the CSG, which represents the local operations of a telephone company, to resolve disputes between LECs, including ILECs.

    The CT SWG needs to determine the type, role and scope of the body that will arbitrate customer transfer disputes among carriers.

    The CT SWG “Authorization and Dispute Procedures for Customer Transfers Between LECs” (Authorization and Dispute document) has been completed and will form a schedule to the Master Agreement on Local Interconnection (MALI), once the Commission resolves a dispute over the definition of a customer. Part C of the Authorization and Dispute document specifies that:

    An End-Customer local transfer dispute occurs when an End-Customer

    claims that their local service provider has been changed without their


    The Dispute Resolution process has been established to enforce proper

    authorization of local service changes and to provide a means of arbitrating

    inter-carrier complaints over improper authorization and associated costs.

    This process is not intended to determine who should be the End-Customer’s

    local carrier - the choice of LEC always rests with the End-Customer.

    The Authorization and Dispute document sets out the process which must be followed when a dispute is initiated and the Arbitrator is requested to determine

    whether or not a customer transfer was properly authorized. Paragraph 15 of the Authorization and Dispute document states:

    Either LEC involved has the option of invoking a dispute resolution process

    as outlined below. The Previous LEC may wish to do so in order to recoup

    costs from the Disputed LEC for restoring the End-Customer’s local service.

    The Disputed LEC may wish to do so in order to challenge the validity of a

    dispute report received from the Previous LEC. In either case, the dispute

    process should not be invoked merely to determine who should be the End-

    Customer’s local carrier.

    The Authorization and Dispute document defines a Dispute Arbitrator as follows:

    “Dispute Arbitrator” is the person or body responsible for resolving customer

    transfer disputes. This would be a person or body appointed by industry

    and/or government to handle disputes on an ongoing basis.

    The CT SWG needs to determine the type, role and scope of the body that will arbitrate customer transfer disputes between LECs.


Mandate of the Arbitrator:

    As noted above, the most urgent role for the Dispute Arbitrator is to resolve customer transfer disputes between LECs. However, in addition to this role, an Arbitrator could also perform the following:

    1. Investigate and resolve complaints between customers and LECs.

    2. Resolve customer transfer disputes between IXCs. (optional for CLECs

    with no CSGs)

    3. Resolve customer transfer disputes between BDUs.

    This paper is limited to the role of resolving customer transfer disputes between LECs. However, the CT SWG must decide if the Dispute Arbitrator’s mandate should it include one or both of the above.

Authority of the Arbitrator:

    The dispute Arbitrator would have authority over LECs only because the LECs have agreed amongst themselves to initiate disputes with the Arbitrator. This agreement could be contained in the MALI, requiring LECs to initiate a dispute regarding local customer transfers with the Arbitrator, before taking any other action. In fact, the most recent draft of the MALI has a place-marker for an Arbitrator to resolve disputes between LECs involving customer transfers.

An Arbitrator is viable only so long as the LECs voluntarily recognize the Arbitrator’s

    role to resolve disputes. The CRTC cannot delegate its authority to another party. This point was made by Carolyn Pinsky in response to a note sent to her by the CT SWG. She said:

    In my view, section 46.1 does not allow the Commission to delegate its

    powers to resolve disputes relating to customer transfers. Therefore, the

    general rule against delegation of powers would apply. In addition, the

    Commission is prohibited from fettering its discretion by adopting, without any

    consideration of the issue, a determination of a private Arbitrator. That is to

    say, the decision of a private Arbitrator cannot be a Commission decision and

    the Commission could not legally enforce the decision of an Arbitrator. The

    Commission must consider the dispute and render its own decision.

    While the Commission can encourage parties to resolve their dispute through

    arbitration, the Commission cannot refuse to exercise its jurisdiction to deal

    with any dispute.


    On the broadcasting side, the Commission has suspended the application of

    a condition of licence to those licensees that are members in good standing

    of an industry council. That council deals with disputes from the public. The

    Commission will forward complaints received to the council for resolution. If

    the complainant is not satisfied, it can ask the Commission to deal with it.

    You might be able to establish a similar regime for dealing with customer

    transfer disputes. A condition of service could be imposed requiring LECs to

    comply with the slamming guidelines. The condition could be suspended for

    a LEC that is a member of good standing of some LEC standards council that

    deals with complaints relating to slamming.

    The MALI could require that each LEC be a member of the LEC council.

    I doubt that the Commission would set up a new division to arbitrate disputes.

    While we will always exercise our jurisdiction to resolve such disputes, the

    Commission is encouraging self-regulation through industry-developed


    LECs will always have the opportunity to take disputes to the CRTC instead of the dispute Arbitrator. Although it may appear that this could undermine the effectiveness of a dispute Arbitrator, having the CRTC as “court of last resort” provides a significant benefit. LECs will be more amenable to dealing with a dispute Arbitrator knowing that recourse is available if the Arbitrator renders decisions which are questionable or unsatisfactory.

    In a CT SWG conference call David Colville, Vice-Chairman of the CRTC, explained that if a customer transfer dispute is brought to the Commission, the Commission may recommend that the matter first be taken to the dispute Arbitrator. In fact, the Commission refers broadcasting disputes to the Canadian Standards Broadcasting Council and cable disputes to the Canadian Cable Standards Council. Customer complaints about transfers between long distance companies are referred by the Commission to the Ombudsman for Telecommunications Services where the long distance company about which the complaint has been filed is a member of the Foundation. Similarly, the Department of Consumer and Corporate Affairs refers customer complaints about transfers between long distance companies to the Ombudsman. In his discussion with the CT SWG, David Colville indicated that the Commission could also be expected to refer customer transfer disputes between LECs to the Arbitrator.

    LECs will also find an advantage in dealing with an Arbitrator because it will expedite and simplify issues even when recourse to the CRTC is initiated. The Arbitrator can efficiently and effectively gather all the relevant information needed for the dispute and this, could in turn, could be forwarded to the CRTC if needed. Sanctions:


    An Arbitrator is viable only so long as the LECs voluntarily recognize the Arbitrator’s authority to resolve disputes. The authority of an Arbitrator to assign responsibility for inappropriate transfers between LECs or award costs to harmed LECs may require the use of sanctions if a LEC refuses to comply with the Arbitrator’s

    decisions. Sanctions can be direct and indirect:

    1. By signing the MALI, each LEC will be agreeing to take any disputes

    between themselves over the validity of a customer transfer to the

    Arbitrator. Disregard for the Arbitrator’s decisions could violate the MALI

    and ultimately result in termination of interconnection.

    2. The offending LEC could be excluded from the consortium, or similar

    organization. This would undermine the LEC’s credibility.

    3. Upon investigation the CRTC may sanction the LEC, by reprimand,

    ordering termination of interconnection, revocation of CLEC authorization

    or through an order to perform or cease performing an activity.

    4. Using publicity as a sanction - tracking and reporting slamming

    complaints (see TIF 19)

    In addition, publicity (i.e., reporting of slamming complaints by company, see TIF 19) could be used as a means of obtaining compliance and avoiding the need for intrusive regulatory sanctions.

    Sanctions are a last resort. For the reasons identified above, a LEC operating in a competitive market will realize a number of benefits. Alternatives, such as intrusive regulatory intervention, would be a last resort and may never be needed. Nevertheless, in extreme cases, where a LEC decides to ignore the Arbitrator, the threat of disconnection should be sufficient to comply with the Arbitrator.

    A company which is found to be in violation of the procedures set out in the Authorization and Dispute document could be ordered to pay costs to another LEC. An Arbitrator which has the authority to order cost recovery will provide LECs with added incentive to comply with the authorization and dispute procedures. Cost recovery is discussed in the next section.


Cost Recovery:

    The role of the Arbitrator in resolving customer transfer disputes between LECs could include the authority to award costs. A LEC which has wrongly transferred a customer could cause the previous LEC to incur;

    - costs associated with number portability

    - loss of revenue

    - costs of dispatching employees to complete disconnection

    - penalties associated with early lease terminations for leased loops or other


    The mechanism to determine and award costs could be accomplished a number of ways. Perhaps the most simple means is for each LEC to file tariffs, with the Commission, associated with each of the above. The charges would be invoked upon completion of the Arbitrator’s review and a finding that the tariffs should be paid.

    A disadvantage to the tariff approach is that the costs incurred by the previous LEC for a specific unauthorized transfer may not be accurately reflected in the approved tariff rates. If the tariffed rates are insufficient, the previous LEC will not recover the incurred costs. However, the determination of costs is often a difficult, time-consuming and contentious exercise. Outside of exception circumstances, the benefits may not be worth the effort.

    A schedule of charges could satisfy the trade-off between accuracy and simplicity. The schedule could include the following elements:

    i) LNP-related costs

    ii) local loop lease charges

    iii) customer premise visit costs

    iv) costs associated with billing changes


    Is it necessary to create an industry consortium to oversee the work of the Arbitrator? This question was posed to Steve Whitehead, Johnston & Buchan, who helped create the LNP consortium and the Central Fund consortium. His advice follows:

    I do not see any need for an incorporated entity to administer the dispute

    resolution process described in the “Authorization and Dispute Procedures

    for Customer Transfers between LECs”. As I understand it, these procedures

    will be set forth in a schedule to the interconnection agreement between


    LECs which is being prepared by the Master Agreements SWG. They are

    thus implemented by agreement of the parties.

The complete text of S. Whitehead’s recommendation is attached as an appendix.

Next Steps:

    The CT SWG has agreed on the creation of an independent dispute arbitrator to resolve disputes between LECs on customer transfer issues. David Colville has suggested to the CT SWG that the Ombudsman may be a good Arbitrator for LEC to LEC disputes. Carman Baggaley has also expressed an interest to the CT SWG to perform this function. In order to proceed quickly with the creation of an Arbitrator we could ask Carman Baggaley to prepare a formal proposal to perform this role. This would provide us with better information to more precisely define the Arbitrator’s role.





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