OTTAWA – A decision released this week by the Federal Court of Appeal (FCA) denying a Telus Corp. appeal of two CRTC rulings related to the ongoing Department of National Defence (DND) telecom contract dispute is only a minor setback, the company says.
“It’s a small part of the larger picture and in no way impedes, or in fact, affects in any way our larger concern which is frankly the state of, and the prognosis for, a competitive market in the enterprise segment,” Ted Woodhead, Telus’ VP of telecom policy and regulatory affairs, tells Cartt.ca in an interview. “We’ve got two other appeals on the burner so this [decision] is just one small aspect of it and it was largely a legal question of law and jurisdiction. We obviously felt that the CRTC process was flawed; the court disagreed, but we move on. There are far broader policies issues at stake here so we will continue to press on.”
In a decision released on July 19, the FCA said Telus failed to prove its three primary arguments: unfair treatment during the Bell Canada vs. Public Works and Government Services Canada contract dispute before the CRTC; the Commission’s use of a final offer arbitration (FOA); and whether the CRTC had appropriately issued the FOA Bulletin.
“In my view, Telus cannot succeed on any of these arguments. I would therefore dismiss the appeal,” Justice John Evans wrote in the FCA’s decision.
Telus hasn’t ruled out a Supreme Court appeal of the FCA decision.
“We are actually considering the decision and we could seek leave to appeal this to the Supreme Court, but we haven’t made a decision on that yet,” says Woodhead.
The FCA appeal decision is just another step in a process that started a few years ago after Telus won a contract to provide a number of telecom-related services for DND. Bell was the previous service provider.
After Telus was unable to migrate all DND services to its network by the transition deadline, Bell agreed to provide service for a period of time during which the migration could be completed. But it offered to do so at rates that were considerably higher than what DND was paying under its previous contract. According to Telus, the rates were 100% to 200% higher. As well, if the transition was complete ahead of schedule, Bell would still be paid for the entire period.
A dispute over the rates ensued with the CRTC ultimately deciding that an offer from Bell was reasonable. Unhappy with the result, Telus launched its assault on the CRTC and its process used in rendering its decisions.
Despite being on the losing end of the court ruling, Woodhead contends that the CRTC shouldn’t be using a final offer arbitration process to set just and reasonable rates. “When you’re rate setting we think that you should set rates, particularly in this context, in a way that’s different than Derek Jeter’s salary with the New York Yankees,” he says.
Bigger policy issues at play
Telus is using all options available to highlight the plight that will face enterprise telecom competitors if the CRTC’s decisions in the Bell vs. PWGSC case are allowed to stand. In April, it filed a Part VII and an appeal to the federal Cabinet.
Both the Part VII and the Cabinet appeal argue that the CRTC cast a pall over competition in the enterprise market. The message in the wake of the FCA decision is the same: it will put a chill on carriers and other competitors such as systems integrators seeking to competitively win business.
“The long and the short of it is that Bell has imposed an exit tariff on a customer by dramatically increasing the price as soon as they lost the RFP for this service,” says Woodhead. “And our position is that that’s just bad for customers, it’s bad for competition, it’s bad for the government, [and] it’s bad for tax payers because whether you’re a large federal government department purchasing services you’re going to pay more.”
The CRTC decisions allowing Bell to impose those higher rates sets a precedent for future instances. “I can’t imagine why Bell wouldn’t do the same thing with other large customers be they government or otherwise. They lost the business, they’ll impose an exit tariff,” Woodhead says.
The CRTC has said that it will issue a decision on the Part VII by October this year. The federal Cabinet has until April 2011 to render its judgment.
