Telecommunications carriers and the 'duty to serve'.

AuthorRyan, Michael H.
PositionCanada

Telephone companies share with other public utilities a common law duty to provide their services on demand, at a reasonable price, and without unreasonable discrimination. In Canada, this common law duty exists alongside statutory service obligations imposed on telecommunications carriers and regulatory policies promoting universal access to basic telecommunications services. Some argue that in the modern environment, where a wide range of telecommunications services is available on a near-universal basis from a profusion of suppliers, the duty to serve has become an anachronism and that carriers should now be relieved of such obligations. There are others, however, who caution that the elimination of the duty to serve might jeopardize the continuation of service to geographically remote areas and should therefore be retained. Still others advocate expanding the duty to include broadband in order to facilitate wider access to high-speed Internet services. The debates surrounding these issues reveal that there is no consensus about the scope of the duty to serve. This article seeks to clarify the parameters of the common law duty to serve and discusses how that duty interrelates with carriers' statutory service obligations and regulatory policies promoting universal service.

Les compagnies de telephone, comme d'autres entreprises de services publics, ont une obligation en common law de fournir leurs services sur demande, a un prix raisonnable et sans discrimination deraisonnable. Au Canada, cette obligation en common law coexiste avec les obligations de service prevues par la loi imposees aux entreprises de telecommunication et les politiques reglementaires faisant la promotion d'un acces universel aux services de telecommunication de base. Certains soutiennent que dans un environnement moderne, ou de facon quasi universelle une profusion de fournisseurs rend disponible une vaste gamme de services de telecommunication, l'obligation de service est devenue anachronique et que les fournisseurs devraient etre liberes de cette obligation. D'autres soutiennent cependant que l'elimination de l'obligation de service menacerait l'acces aux services dans les regions isolees et qu'il faut donc la maintenir. D'autres encore reclament d'etendre cette obligation pour inclure les services a large bande, qui faciliteraient l'acces Internet haute vitesse. Les debats qui entourent ces enjeux revelent qu'il n'y a pas de consensus sur la portee de l'obligation de service. Cet article vise d'abord a clarifier les parametres de l'obligation de service en common law. Ensuite, nous analyserons quels sont les liens entre cette obligation et les obligations prevues par la loi pour les fournisseurs de service, ainsi qu'avec les politiques reglementaires faisant la promotion d'un acces universel.

Introduction

  1. The Origins of the Common Law Duty II. The Scope of the Common Law Duty A. To Which Services Does the Duty Attach? B. Is There a Duty to Extend Service? C. Is There a Duty to Serve Where There Are Multiple Suppliers? III. The Common Law Duty to Serve and Regulation A. The Regulatory Framework B. Universal Service C. The Impact of Competition Conclusions Introduction

    Telephone companies share with other public utilities a common law duty to provide their services on demand, at a reasonable price, and without unreasonable discrimination. This duty to serve places public utilities on a different footing than other commercial enterprises, which are for the most part free to contract with whom they choose on terms that are freely negotiated. In the case of telecommunications carriers, the common law duty to serve exists alongside statutory service obligations imposed on carriers by the Telecommunications Act (1) and regulatory policies promoting universal access to basic telecommunications services articulated by the Canadian Radio-television and Telecommunications Commission (CRTC or Commission).

    In Canada, basic telecommunications services are now available on a near-universal basis, (2) through a range of technologies (wireline, wireless, broadband, satellite, and cable) and from a large number of suppliers. (3) In light of the ubiquity of service and the profusion of suppliers, some now argue that the duty to serve--which evolved in an age when telecommunications was limited to basic telephone and telegraph services that were generally available only from a single supplier--is now an anachronism and should be abolished, or at least confined to situations where competition does not provide alternative sources of supply. Others, concerned that the elimination of the duty to serve might jeopardize the continuation of service to geographically remote areas, have argued that the duty should be preserved. A third group has advocated that the CRTC should expand the scope of the duty by requiring telecommunications carriers to extend their broadband networks to unserved areas to facilitate wider public access to high-speed Internet services.

    The CRTC recently conducted a comprehensive review of the issues surrounding the duty to serve and the obligations telecommunications carriers bear, or should bear, to address these issues of anachronistic obligations, remote areas, and access to high-speed Internet. (4) The debate that took place among parties to that review made it apparent that there is no consensus about the scope of the common law duty to serve, or how common law requirements interrelate with the service obligations imposed by the Telecommunications Act and CRTC-mandated policies promoting universal service. Does the duty apply outside of the monopoly paradigm in which it arose and therefore continue to impose an obligation to provide service where there are multiple competing suppliers? If so, does the duty apply equally to all suppliers, or only to the traditional incumbent? Does the duty, which originally attached to basic telephone services, also embrace advanced services such as Internet access? Does it require a carrier to build facilities in locations it does not serve? The CRTC's decision did little to clarify these issues. Answers to these questions are important to an understanding of carriers' service obligations and the evolution of policy in this domain.

    The purpose of this article is to consider the parameters of the duty to serve. This will involve an appraisal of the common law, statutory requirements, and the policies and decisions of the CRTC. I begin by discussing the origins of the common law duty to serve in Canadian law in Part I. This is followed by a consideration of issues related to the scope of the duty in Part II. I then review the impact of regulation in Part III, before concluding with a summary of the points that emerge from the preceding analysis.

  2. The Origins of the Common Law Duty

    Canadian common law has imposed a duty to serve on suppliers of water, gas, and other public-utility services from the earliest days, and, despite the paucity of case law relating to telephone services, the same duty undoubtedly extends to telephone companies. (5) The term "public utility" is not easily defined, but the enterprises that traditionally bear this label have certain features in common: they hold themselves out to the public as suppliers of a service or commodity that is essential and that is typically provided on a monopoly or quasi-monopoly basis. (6) Another distinguishing feature is the right public utilities normally enjoy to construct their facilities along, under, or above public streets. (7)

    There have been notable scholarly attempts to find the source of the public utility's duty to serve in the ancient laws of England governing "common callings", such as common carriers and innkeepers, (8) which bear similar common law service obligations. The concept of the public utility is, however, a North American invention, and the term itself dates back no more than a century. (9) In the United States and Canada, the emergence of the public utility is very closely associated with the rise of regulation. The function of controlling utilities was first exercised by the common law courts, which intervened to prevent abuses of monopoly power such as denial of access to essential public services and excessive pricing. But in the case of telecommunications services, this responsibility was transferred in the early nineteen hundreds to specialized regulatory agencies invested with broad public interest mandates, such as the Interstate Commerce Commission in the United States and the Board of Railway Commissioners of Canada. (10) The issues addressed in North America through regulation were addressed differently in the United Kingdom. For example, in the United Kingdom many of the services in question were taken into public ownership. This was the case for telecommunications, which became a post office monopoly in 1911. (11) As a consequence, while a coherent body of public-utility law had begun to emerge in the United States and Canada (12) by the end of the nineteenth century, England did not go through the same evolution, and there is no distinctive body of English law applicable to public utilities. The duty of public utilities to serve that has become entrenched in American and Canadian law is unknown in English law. (13)

    The divergent approaches of the English common law and the Canadian common law to public utilities and their duty to serve is well illustrated by a pair of cases decided on opposite sides of the Atlantic 150 years ago. Hoddesdon Gas and Coke Co (Limited) v. Haselwood (14) was decided by the Court of Queen's Bench in England in 1859. Haselwood was a proprietor of a school that was supplied with gas by Hoddesdon. Haselwood fell into arrears in the payment of its account, and after giving notice, Hoddesdon cut off supply to the school. Haselwood sued for damages sustained by reason of the disconnection. A jury returned a verdict in favour of the school. The gas company appealed...

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