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Ottawa, 28 May 1991
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Telecom Decision CRTC 91-7
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BRITISH COLUMBIA TELEPHONE COMPANY -1990 CONSTRUCTION PROGRAM REVIEW
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Table of Contents
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I INTRODUCTION
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II THE CAPITAL PLAN - PLANNING AND METHODS DOCUMENT
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III CAPITAL PLAN 1991-1995
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A. Usage Categories
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B. Service to Remote and Rural Areas - Extension Program (SEP)
C. Integrated Services Digital Network (ISDN) Economic Evaluation Study
D. Provisioning and Application of Lightguide Facilities in the Access Network
E. Utilization Measurements for Lightguide Facilities
F. Local Switching Replacement Program
G. Demand Forecasting Process
H. Elimination of Multi-Party Service
I. Planned Expenditure for the Purchase of a Replacement Aircraft
J. Support Structures and Ownership of Strand Facilities
K. Revisions to the Company's List of Local and Toll Switches
L. Development of Additional Indicators for Assessing the Construction Program
M. The CPR Process
N. Payment of Subscriber Bills
O. Conclusions
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I INTRODUCTION
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In CRTC Telecom Public Notice 1990-65, 17 July 1990 (Public Notice 1990-65), the Commission announced that it would conduct a review of the construction program (CPR) of British Columbia Telephone Company (B.C. Tel). On 14 September 1990, B.C. Tel filed its 1991-1995 capital plan (1990 View) along with other relevant information that the Commission had requested. The review meeting was held on 27 and 28 November 1990 in Vancouver, British Columbia.
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Participants in this review included the Association of Competitive Telecommunications Suppliers (ACTS); the Government of British Columbia (BCG); the group comprising B.C. Old Age Pensioners' Organization, Council of Senior Citizens' Organization, Senior Citizens' Association, Federated Anti-Poverty Groups of B.C., West End Seniors' Network and Local 1-217 IWA Seniors (collectively referred to as BCOAPO); Rogers Cable TV Ltd. (RCTV); and Unitel Communications Inc. (Unitel). On 4 January 1991, BCG, BCOAPO, RCTV and Unitel filed comments on the reasonableness of the company's construction program. B.C. Tel replied to these comments on 1 February 1991.
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On 4 January 1991, B.C. Tel filed the results of an economic evaluation with respect to capital expenditures related to the provision of services based on Integrated Services Digital Network (ISDN) technology. On 8 February 1991, ACTS and BCG filed comments addressing the validity of this economic study. On 20 February and 6 March 1991, B.C. Tel replied to the comments of ACTS and BCG, respectively.
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II THE CAPITAL PLAN - PLANNING AND METHODS DOCUMENT
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The document entitled Capital Plan -Planning and Methods describes (1) how the five-year capital plan is developed, analyzed and monitored, (2) the forecasting and plant provisioning processes, and (3) the relationship between the capital plan and efficiency and quality of service. In response to the Commission's request in Public Notice 1990-65, B.C. Tel submitted with its 1991-1995 five-year capital plan an update, dated September 1990, to its September 1989 revision of this document. The update comprised various additions, deletions and revisions. The Commission has reviewed these changes and finds them acceptable.
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III CAPITAL PLAN 1991-1995
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A. Usage Categories
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The following table summarizes B.C. Tel's capital program by usage category.
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1991 1992 1993 1994 1995
($ millions/millions de dollars)
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Usage Category/
Catégorie d'utilisation
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Primary Telephone Service/ 242.0 287.7 248.1 260.4 244.6
Service téléphonique de base
Modernization/ 93.7 60.6 68.0 73.0 80.7
Modernisation
Service Improvement/ 11.7 17.7 20.3 15.5 11.9
Amélioration du service
Operating Improvement/ 24.7 22.3 9.2 5.1 4.7
Amélioration opérationnelle
Administrative Support/ 49.3 46.5 37.9 39.4 46.0
Soutien administratif
Total/Total 421.4 434.8 383.5 393.4 387.9
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1. Primary Telephone Service
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The primary telephone service category comprises programs that are necessary to provide and maintain network plant or equipment to meet present and projected demand for existing telecommunications services. The 1989 View and 1990 View forecasts of capital expenditures for the years 1991 and 1992 are as follows:
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1991 1992 Total
($ millions/ millions de dollars)
1989 View/Aperçu de 1989 190.3 202.8 393.1
1990 View/Aperçu de 1990 242.0 287.7 529.7
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For the years 1991 and 1992, the expenditures forecast in the current 1990 View are 37.4% greater than those forecast in the 1989 View. This increase is in accord with the increases in the company's current demand forecasts for this two-year period (in the 1990 View, the customer access line growth forecast is 35.9% greater than that in the 1989 View, and the billed long distance message volume forecast is 6.8% greater).
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Compared to the 1989 View, expenditures forecast in the 1990 View for the local growth program are approximately $18.1 million higher in 1991 and $20.2 million higher in 1992. These expenditure increases are entirely attributable to the higher forecast of customer access lines, and would be even higher but for forecast reductions due to slower than anticipated implementation of ISDN-based services. B.C. Tel stated that the substantial forecast increase in access line gain is due to expected strong economic growth and to the impact of facsimile service demand.
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The 1990 View forecast expenditures for the toll growth program are approximately $13.9 million higher in 1991 and $28.2 million higher in 1992, in relation to the 1989 View. These expenditure increases are associated with the company's portion of the Telecom Canada second high density route, the Vancouver Island - Lower Mainland lightguide (the company's term for fibre optic) system, the north coast digital radio system, northern British Columbia lightguide systems, additions to the Vancouver toll switch, and traffic operator position system (TOPS) facilities in Vancouver.
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Forecast expenditures for the station activity program are increased by approximately $16.3 million in 1991 and $23.9 million in 1992, primarily because of increased requirements for single line sets and connections, as well as other station equipment and connections.
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In the 1990 View, the service extension program (SEP) has been included in the primary telephone service category. SEP contains forecast expenditures previously allocated to the remote communities and rural service programs, which have been deleted from the service improvement category. The 1991 and 1992 forecast expenditures for SEP are $6.6 million and $8.3 million, respectively.
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2. Modernization
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The modernization category comprises programs for the replacement of obsolete plant or equipment with modern technology. The 1989 View and 1990 View forecasts of capital expenditures for the years 1991 and 1992 are as follows:
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1991 1992 Total
($ millions/ millions de dollars)
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1989 View/Aperçu de 1989 108.0 92.6 200.6
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1990 View/Aperçu de 1990 93.7 60.6 154.3
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For the years 1991 and 1992, the expenditures forecast in the 1990 View are 23.1% less than those forecast in the 1989 View. This decrease is mainly due to substantial reductions in the local switching replacement program. Compared to the 1989 View, expenditures for this program are decreased by approximately $16.5 million in 1991 and $35.9 million in 1992, as a result of deferral of the analogue/digital switch conversion schedule from the years 1991 to 1993 to later in the current forecast period.
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Forecast expenditures for the toll switching system replacement program are decreased by approximately $7.5 million in 1991 and $1 million in 1992, mainly as a result of the deferral of toll switch and switchboard replacements. Forecast expenditures for the special services replacement program are increased by approximately $6.2 million in 1991 and $1.8 million in 1992, mainly because of acceleration of the planned conversion of existing special services circuits to the digital services network. Forecast expenditures for the facility grooming program are increased by approximately $2.8 million in 1991 as a result of serving area concept work deferred from 1990.
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3. Service Improvement
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The service improvement category comprises programs undertaken to provide new or improved customer services. The 1989 View and 1990 View forecasts of capital expenditures for the years 1991 and 1992 are as follows:
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1991 1992 Total
($ millions/millions de dollars)
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1989 View/Aperçu de 1989 18.3 20.8 39.1
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1990 View/Aperçu de 1990 11.7 17.7 29.4
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For the years 1991 and 1992, the expenditures forecast in the 1990 View are 24.8% less than those forecast in the 1989 View. Expenditures for the rural upgrading, custom calling services, computer communication services and radiotelephone automation programs are higher than forecast in the 1989 View, while expenditures for the voice/data circuit services program are lower. Further reductions in the expenditures allocated to service improvement are caused by the removal from the capital plan of the remote communities and rural service programs.
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4. Operating Improvement
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The operating improvement category comprises programs undertaken to improve the operating efficiency of the company. The 1989 View and 1990 View forecasts of capital expenditures for the years 1991 and 1992 are as follows:
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1991 1992 Total
($ millions/millions de dollars)
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1989 View/Aperçu de 1989 23.7 15.2 38.9
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1990 View/Aperçu de 1990 24.7 22.3 47.0
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For the years 1991 and 1992, the expenditures forecast in the 1990 View are 20.8% greater than those forecast in the 1989 View. This increase is mainly due to higher expenditures for the directory assistance information system (DAISY) and operator service enhancements, common channel signalling (CCS7) and network support systems programs. These increases are partly offset by reduced allocations for the automatic remote line testing and regional network control centres programs. The 1992 allocation for the DAISY and operator service enhancements program is increased by approximately $1.5 million to provide an operator reference database, replacing the card index file currently used by operators to reference routing codes. It is intended to integrate DAISY with TOPS, rather than maintaining and improving DAISY as a stand-alone system. The 1991 expenditures for the CCS7 program are increased by approximately $4.3 million due to planned implementation on class 5 switches, as well as on toll switches. Expenditures for the network support systems program are increased by approximately $8.3 million in 1992 because of increased requirements for the customer access and integrated network management systems.
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5. Administrative Support
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The administrative support category comprises programs required to provide and maintain the plant or equipment necessary to support the company's operational needs. The 1989 View and 1990 View forecasts of capital expenditures for the years
1991 and 1992 are as follows:
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1991 1992 Total
($ millions/millions de dollars)
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1989 View/Aperçu de 1989 46.7 41.6 88.3
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1990 View/Aperçu de 1990 49.3 46.5 95.8
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For the years 1991 and 1992, expenditures forecast in the 1990 View are 8.5% greater than those forecast in the 1989 View. Planned expenditures for administrative buildings are approximately $5.7 million higher in 1992, mainly due to an increase of $5 million in expenditures for the Supply, Transportation & Buildings major renovations project. This particular increase results from the deferral of $3.5 million from 1990 to 1992 and 1993 and from an increase of $2 million for broadening the scope of the project to include a review of the operations effectiveness of the total company supply and distribution function. The other major variance in the administrative support category is an increase of approximately $4.7 million in planned 1991 expenditures for computer equipment, mainly due to increased requirements for mini-computers and outside plant engineering graphics.
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B. Service to Remote and Rural Areas - Service Extension Program (SEP)
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The Commission gave approval to B.C. Tel's SEP in British Columbia Telephone Company - Extension of Service to Remote Communities, Telecom Decision CRTC 90-11, 6 June 1990 (Decision 90-11). In that Decision, the Commission noted that, in British Columbia Telephone Company - Revenue Requirement for the Years 1988 and 1989 and Revised Criteria for Extended Area Service, Telecom Decision CRTC 88-21, 19 December 1988, it began an examination of the extension of service to unserved and underserved locations in remote areas of the company's operating territory. That examination was continued in the 1988 and 1989 CPRs. Following the 1988 CPR, B.C. Tel was directed to identify all remote and underserved communities in its operating territory and to propose, for consideration in the 1989 CPR, a means to extend or improve service to these locations. In response to the Commission's direction, B.C. Tel proposed SEP prior to the 1989 CPR meeting.
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SEP eliminates criteria that relate eligibility for service to community size, density, population and location, and replaces them with a universally applicable per-subscriber cost allowance. As stated above, the Commission approved SEP in Decision 90-11, and directed B.C. Tel to file proposed tariff revisions to implement the program. However, the Commission also directed B.C. Tel to explore other options, such as toll station line (TSL) service, for extending service to locations that are unable to afford the costs of full exchange service under SEP and that are not currently included in the conversion program for Exchange Area Radiotelephone Service (EARS). B.C. Tel was also directed to file, in the 1990 CPR, a report proposing serving options for such locations, including (1) geographic and demographic community profiles, (2) estimated costs of alternative serving arrangements, and (3) an assessment of the feasibility of providing at least a 24-hour publicly available TSL or coin telephone service under a program resembling the original remote communities program.
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In the 1991-1995 capital plan, SEP has been introduced as a new program (CPMS 10600) in the primary telephone service category. The forecast SEP expenditures are as follows:
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1991 1992 1993 1994 1995 Total
($ millions/millions de dollars)
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6.64 8.32 8.04 7.99 8.89 39.88
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At the review meeting, B.C. Tel provided a presentation entitled Service Extension Program Update - Options for High Cost Locations. B.C. Tel pointed out that TSL is manually switched to the network and is now considered a temporary measure that provides only low capacity, while requiring high maintenance. Communities originally identified under the remote communities program have been requesting higher levels of service that are not consistent with TSL service. B.C. Tel was of the view that it would be premature to consider a new program, since SEP will meet the needs of the majority of applicant communities and since the most effective approach for providing service to high cost locations would be to reduce per-subscriber costs under SEP. In its presentation, B.C. Tel discussed the three technical initiatives currently being evaluated as possible serving arrangements to reduce costs and facilitate the extension of service to remote locations.
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The first initiative is the Satellite/PBX/Redcom approach. It is based on the use of existing Spacetel facilities, in conjunction with PBX or other small switches, to provide full exchange service to well-defined communities in remote locations, particularly where both distance and terrain present significant constraints. B.C. Tel noted that potential sites for this serving technology would include Fort Babine and Takla Landing and the target for implementation would be 1993.
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The second initiative is the Rural Radiotelephone/Spread Spectrum arrangement, based on the use of low capacity radiotelephone systems to reduce the cost of expansion beyond EARS coverage areas and of EARS subscriber premises equipment. This approach would address concentrations of between one and thirty subscribers and, particularly, of between one and ten subscribers. Targets for this initiative are locations outside VHF coverage patterns and areas with relatively low population density. B.C. Tel views this approach as a long term solution requiring research and development and several years for full implementation.
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Finally, the EARS/Autotel arrangement is considered by the company to be the most promising initiative, since it would accelerate the implementation of both the EARS conversion and SEP programs. Implementation of this arrangement could reduce the capital cost of an EARS installation, making it more feasible to extend service beyond existing EARS coverage areas. The technology would be based on the use of existing radiotelephone backbone facilities for back-hauling EARS traffic. B.C. Tel is investigating the possibility of using elements of the existing Autotel infrastructure. All locations would be targets for the use of the technology. Anticipated benefits include the advantages of VHF propagation and the use of a well-established technology.
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B.C. Tel noted that withdrawal of Mobiltel service is a major prerequisite for implementation of this arrangement. In some cases, a frequency might be shared by EARS and Autotel subscribers, but the process would be transparent to them. B.C. Tel stated that the major constraint for implementing the EARS/Autotel arrangement would be congestion on portions of the Autotel network, which could not be reduced unless the existing Mobiltel channels are turned down. B.C. Tel noted that the cost of a Mobiltel/Autotel channel conversion would be far less than the cost of constructing a UHF EARS facility. Also, the channel conversion could be completed very quickly, since the infrastructure would already be in place. Construction of an EARS facility, on the other hand, would require several months. B.C. Tel was of the view that this approach would provide a feasible solution that could commence in 1991 and be fully implemented in two to three years.
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BCG was concerned that the SEP implementation schedule might be delayed pending the evaluation of new serving proposals and that a referendum procedure is not planned. BCG also expressed specific concerns with respect to the appropriateness of the EARS/Autotel proposal as a response to the directives set out in Decision 90-11, the issue of EARS/Autotel as the preferred serving arrangement, and the need for separation of EARS and Autotel costs.
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BCOAPO submitted that the Commission should require the company to provide and improve service to underserved communities as quickly as possible and to develop an extension program that would substantially reduce, if not eliminate, the requirement for subscriber contribution.
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B.C. Tel asserted that its serving proposals are intended to reduce costs and advance implementation, not to restructure SEP objectives and priorities or to delay the program pending evaluation and resolution of the proposals. B.C. Tel explained the liaison process for assessing the needs and priorities of the various communities. In addressing BCG's concerns, B.C. Tel asserted that there will be appropriate mechanisms in place to ensure proper separation of EARS and Autotel costs. In response to BCOAPO's concern, B.C. Tel stated that the general body of subscribers should not fully subsidize the extension of service to high cost locations.
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B.C. Tel's report assessing other options for extending service to high cost locations, filed on 1 March 1991, reaffirmed the company's position that TSL service would not provide an adequate solution. While B.C. Tel plans to continue exploration of the Satellite/PBX/Redcom and Radiotelephone/Spread Spectrum technologies as possible serving arrangements, it still considers EARS/Autotel the most promising initiative because of much quicker implementation and reductions in the capital costs of EARS. The report did not include revised costs for EARS/Autotel since cost separation issues and agreements between B.C. Tel and B.C. Mobile have not yet been resolved. B.C. Tel stated that cost estimates will be filed with the Commission by 31 May 1991.
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The Commission notes the company's intention to ensure that, if the EARS/Autotel proposal is implemented, appropriate mechanisms will be in place to ensure that EARS subscribers are not assessed any charges relating to Autotel network costs and that ongoing maintenance costs and further investments in infrastructure are properly separated between EARS and Autotel.
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B.C. Tel was directed to file and serve on the parties additional information pertaining to specific locations to which service could be extended by means of the EARS/Autotel technology. This information was filed on 22 March 1991, and a process was established whereby, parties filed comments on it and B.C. Tel filed a reply. B.C. Tel is to file its revised EARS/Autotel cost information by 31 May 1991, and to serve copies on parties to both this and last year's CPR. Parties may file comments on that information by 2 July 1991. B.C. Tel may file a reply, serving copies on those who commented, by 15 July 1991. Following receipt of these submissions, the Commission will review all of the information pertaining to the directives in Decision 90-11and will evaluate the company's proposed serving arrangements for high cost locations presently not included in the EARS conversion program. The Commission will issue a separate decision following that evaluation.
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