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Telecom Decision
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Ottawa, 16 January 1984
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Telecom Decision CRTC 1984-5
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Terra Nova Telecommunications Inc. - 1983 Construction Program Review
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I. Introduction
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In CRTC Telecom Public Notice 1982-47, dated 28 October 1982, the Commission announced that it would conduct a review of the construction program of Terra Nova Telecommunications Inc. (Terra Nova Tel, the Company). Terra Nova Tel filed the 1983 View of its construction program on 6 May 1983 with revisions filed on 28 June 1983.
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The Canadian Industrial Communications Assembly was the only other participant in the 1983 review.
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II. The 1983 View
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1. General
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In the five year period from 1983 to 1987, Terra Nova Tel estimates its construction expenditures will total $55.2 million. The forecast annual expenditures are as follows:
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$millions
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1983 9.6
1984 11.5
1985 10.8
1986 11.2
1987 12.1
55.2
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2. Usage Categories
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For the years 1984 and 1985, the Company divided the $22.3 million of forecast expenditures into four usage categories as follows:
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%
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Demand 49
Modernization 38
Replacement 6
Support 7
100
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3. Major Changes in the Company's Capital Plan
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The current capital plan incorporates some significant changes in expenditures relative to the 1982 View.
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The Company has adopted a policy of improving the overall capacity and efficiency of its toll network by replacing long sections of open wire pole lines with digital cable carrier systems and low capacity tube type radio systems with solid state radio and microwave equipment.
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Other changes relate to the acquisition of a new computer for customer service functions at Gander and a delay, to 1987 from 1985, in the projected completion date for the Company's telephone regrade program designed to provide single party service on demand.
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Due to a reduction in forecast demand, the Company has also reduced its capital expenditure forecasts in the areas of TELEX, teletype and data equipment.
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III. Single Party Service on Demand
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In CN Telecommunications, Increase in Telephone Rates in Newfoundland Telecom Decision CRTC 78-5, 5 July 1978 (Decision 78-5), the Commission directed Terra Nova Tel's predecessor, CN Telecommunications (CNT) to provide a complete plan to improve the availability of single party exchange service to subscribers in its serving area. In response, CNT set in motion a capital program to provide single party service on demand to 95% of its subscribers.
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As of 30 June 1983, single party service was available on demand to 84% of Terra Nova Tel's subscribers. The Company stated that the delay in implementation of this program in its current capital plan was caused by a reduced revenue forecast.
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The Commission has reviewed the Company's progress reports on this matter, focusing its attention on the number of exchanges converted to single party service on demand and the number of held regrades. The Commission is of the view that the Company's progress towards achieving 95% single party service on demand by 1987 is satisfactory at this time.
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IV. Construction Program Management System
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In Terra Nova Telecommunications Inc., General Increase in Rates, Telecom Decision CRTC 80-19 (Decision 80-19), 31 October 1980, the Commission stated at p. 15:
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. . . the Company is directed to file with the Commission within six months of the date of this
decision, a report on the methods it recommends for the analysis of its construction program.
This report is to include proposals for measuring the actual aggregate level of utilization, and
for establishing an optimal range for the level of utilization for each type of
telecommunications facility. The report is also to include proposals as to the categorization of
construction projects and the tracking of the related expenditures.
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In response to Decision 80-19, the Company filed a report entitled Construction Program Report in Compliance With Telecom Decision CRTC 80-19 (the Construction Program Re port) on 30 April 1981. This document has been reviewed as part of this proceeding.
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The Company is requested to update the Construction Program Report to reflect the Company's current capital planning and budgeting methods with regard to:
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1) the registration of specific category percentages on individual projects;
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2) measures and optimal ranges for the levels of utilization of each type of telecommunications
facility; and
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3) Company policy with respect to the use of the Serving Area Concept in its operating territory.
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The Commission requests the Company to file its updated Construction Program Report by 2 April 1984.
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V. Conclusion
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Having reviewed the evidence relating to Terra Nova Tel's construction program, the Commission is of the opinion that the Company's expenditure forecasts are consistent with its forecasts of demand for its services and reflect a reasonable rate of modernization of the Company's network. The Commission concludes that the proposed capital expenditures for the years 1983 to 1987 are reasonable.
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J.G. Patenaude
Secretary General
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