Iristel suing Rogers for nearly $150M in traffic agreement dispute

Iristel Inc. is suing Rogers Communications Inc. to the tune of nearly $150 million for allegedly reneging on contract agreements governing telephone traffic exchange dating back five years. The suit was filed in Ontario Superior Court on May 23 and outlines two agreements that Iristel alleges Rogers eventually broke. The first was a peering agreement in 2013 to exchange traffic in Toronto, which Iristel claims Rogers agreed to orally. Subsequently, the claim states, Iristel moved to fulfill its end of the agreement by doing analysis, dedicating staff to the effort and purchasing equipment. In May 2016, around the time Iristel was in the final stages of testing, it learned that Rogers was backing out of the deal, court documents claim. “At all material times, Iristel was ready, willing and able to fulfill its obligation under the Peering Agreement and took steps to that effect, to its detriment,” court documents said. “Rogers had failed to honour its obligation under the Peering Agreement.” Later in 2016, the suit claims Iristel and Rogers struck a written deal for the former to manage the termination and routing of Rogers’ traffic to some international destinations, called outbound termination services (OTS). Under that agreement, the statement claims Rogers agreed to pay a traffic termination rate of $0.0590 per minute for Northwest Territories, Yukon and Nunavut 867 numbers. Traffic termination rates are the fees owed to a call recipient’s carrier when another carrier’s subscriber makes the call. Following this event, Rogers brought an application before the CRTC claiming Iristel was engaging in traffic stimulation, the act of increasing inbound call traffic to terminate at its facilities. Rogers claimed that its subscribers were using their unlimited Canada-wide calling to phone into an audio feed of a Toronto radio station that directed traffic to 867 numbers. Under CRTC rules, companies must compensate each other if incoming phone traffic to one company from a second company is higher than its outgoing traffic to the second company. The amount of compensation is determined in part by the regulator’s traffic termination rates. In December, the CRTC ordered Iristel to discontinue connecting 867 numbers to the radio station. But while Iristel agreed to the order, Rogers continued to terminate traffic through its network, the May 23 claim said, “all the while refusing to pay as contractually obligated.” To that end, in March of this year, Iristel sent three separate invoices from January, February and March each for amounts over $100,000, the claim said. But in April, the claim continued, Rogers said it would not be paying. Another roughly $62,000 claim sent in May also remains unpaid, Iristel said. “To date, Rogers has failed to enforce a reasonable usage policy and continues to terminate traffic through Iristel networks, while simultaneously maintaining its refusal to pay outstanding and future invoices,” the statement alleges. A Rogers spokesperson said in an emailed statement that the “allegations related to this commercial dispute are without merit but as the matter is before the courts, we cannot comment on the case.” Iristel claims that it spent $450,000 in equipment from Metaswitch Networks Ltd. for its peering agreement, $150,000 for personnel, and $587,266.97 for invoices related to the OTS agreement, and claims that because Rogers continues to terminate through Iristel, it suffers an ongoing loss of about $2 million per year, for a total of $10 million for five years. As a result of Rogers’ alleged breach of the peering agreement, Iristel claims it “began to experience choking points and congestion in its existing system with Bell and was forced to purchase new circuits to accommodate the increasing traffic.” The original idea behind the peering agreement was to avoid connecting with Bell to cut costs. Iristel said its cash flow and business operations have been restricted as a result of the alleged breaches. It claims it lost $135 million in “lost opportunities, future revenue and loss of current and future competitive advantage” and that it has been “forced to decrease and/or stop its marketing campaigns, has been unable to aggressively participate in Spectrum auctions, has been restricted in their ability to gain market share, and restricted Iristel’s entrance and expansion into customer markets.” All told, Iristel is looking for over $147 million in the suit, which claims Rogers is engaged in “corporate bullying” and is attempting to monopolize the telecom market to the detriment of smaller players. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Iristel suing Rogers for nearly $150M in traffic agreement dispute

News | June 11, 2018

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Iristel suing Rogers for nearly $150M in traffic agreement dispute

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