ARCHIVED -  Telecom Decision CRTC 97-15

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Ottawa, 16 June 1997

Telecom Decision CRTC 97-15



Paragraph Numbers

I. Introduction 1

II. Access to Central Offices

A. Co-location Access

1. Types of Access 5

2. Jurisdiction 11

3. Conclusion 19

B. Qualifications to Obtain or Resell Co-location Access 27

C. Types of Equipment and Cross-connection 32

D. Co-location Sites 49

E. Treatment of Existing Transmission Arrangements 56

III. Co-location Rates

A. Specific Tariffed Rates 59

1. Rates for Floor Space 60

2. Rates for Entrance Conduit Space 67

3. Rates for Other Co-location Services and SOC
Labour-Related Services 72

B. Other Charges 80

C. Inclusion of Co-location Rates in the Imputation Test 86

IV. Central Office Lease Agreement (COLA)

A. General Application of the COLA 90

B. Provisions of the COLA

1. Confidentiality 92

2. Termination 97

3. Limitation of Liability 102

4. Dispute Resolution 110

5. Other COLA Issues 112

C. Procedure to Obtain Co-location 118

V. Disposition of Applications 123

Appendix 1 - Co-location Rate Elements

Appendix 2 - Co-location Rates

I. Introduction

1. In Review of Regulatory Framework, Telecom Decision CRTC 94-19 (Decision 94-19), 16 September 1994, the Commission found that the development of effective competition in telecommunications markets requires, among other things, the option of co-locating competitors' transmission facilities at the telephone companies' central offices (COs) without the need to lease transmission lines from the telephone company.

2. In response to a call in Decision 94-19 for the Stentor-owner companies (SOCs) to file co-location tariffs, Stentor Resource Centre Inc. (Stentor) filed physical co-location tariffs and a Central Office Lease Agreement (COLA) under Tariff Notice 100, dated 16 January 1995. The filing was made on behalf of BC TEL, Bell Canada (Bell), The Island Telephone Company Limited (Island Tel), Manitoba Telephone System, now MTS NetCom Inc. (MTS), Maritime Tel & Tel Limited (MT&T), The New Brunswick Telephone Company, Limited (NBTel), and Newfoundland Telephone Company Limited, now NewTel Communications Inc. (NewTel). Stentor later filed revisions under Tariff Notices 100A, dated 30 January 1995, and 100B, dated 23 June 1995. AGT Limited, now TELUS Communications Inc. (TCI), separately filed a virtual co-location tariff and a COLA under Tariff Notice 584, dated 16 January 1995.

3. A physical co-location arrangement generally allows interconnecting carriers (ICs) to physically locate transmission facilities owned by the IC in the telephone company's CO. The IC may in some cases install the equipment and is generally responsible for its maintenance. Virtual co-location allows ICs to exchange traffic at a point outside the CO, but provides for dedicated facilities of the IC's choice to be located in the CO to complete the IC's transmission system. Under a virtual co-location arrangement, the telephone company is responsible for the installation and maintenance of the co-located equipment, which is generally supplied by the IC.

4. On 20 March 1995, the Commission issued Implementation of Regulatory Framework - Co-location, Telecom Public Notice CRTC 95-13 (PN 95-13) which established a procedure for interrogatories, comments by parties and replies to comments by Stentor and TCI. The following parties participated in the interrogatory and/or comment process: Canadian Cable Television Association, CF Cable TV Inc., London Telecom Network, MFS Communications Company Inc. (MFS), MicroCell Telecommunications Inc., Northline Telecommunications Inc. (Northline), Canadian Wireless Telecommunications Association (formerly RadioComm Association of Canada), Rogers Network Services (RNS), Sprint Canada Inc. (Sprint) and AT&T Canada Long Distance Services (formerly Unitel Communications Inc.) (AT&T Canada LDS).

II. Access to Central Offices

A. Co-location Access

1. Types of Access

5. Stentor proposed two types of physical co-location arrangements (Type 1 and Type 2) whereby the IC would own and bear responsibility for the equipment to be co-located in the CO. TCI proposed a virtual co-location arrangement whereby the IC would specify and generally supply the equipment to be co-located, but where TCI would be responsible for its installation and maintenance.

6. Each of these proposals provides for transmission facilities of the IC's choice to be located in the CO. Stentor's preferred Type 1 co-location would provide physically segregated floor space and separated access to the CO where feasible. Where segregated floor space is not practical, Stentor proposed, under its Type 2 arrangement, to co-locate a carrier's transmission equipment in an unsegregated area and to escort the IC's personnel for installation and maintenance of the equipment. BC TEL, due to concerns with possible labour disputes, proposed to provide maintenance service for Type 2 co-location rather than allowing IC's personnel to have access to its COs. TCI's virtual co-location proposal would require an IC to acquire the fibre-optic cable and terminal equipment necessary to complete its transmission system and to lease the equipment to TCI for a nominal amount. The leased equipment would consist of terminal equipment in TCI's CO and connecting fibre to a point of interconnection close to the CO such as a man-hole. TCI would be responsible for the installation and maintenance of the leased equipment. The IC would not normally have access to the CO or to the co-located equipment.

7. Each approach to co-location has specific characteristics. Stentor's proposed Type 1 segregated co-location arrangement provides the IC with access to the CO and direct control of its equipment, but requires the construction of segregated access and floor space, and the direct recovery of those expenses from the IC. TCI's virtual co-location avoids the construction costs but limits access and control by the IC of its co-located equipment.

8. Stentor noted that its proposed Type 2 co-location tariff provided an option which is similar to virtual co-location.

9. In addition to its proposed virtual co-location tariff, TCI proposed to provide physical co-location on a negotiated basis.

10. Parties argued against such an approach, submitting that it would not assure non-discriminatory access to physical co-location.

2. Jurisdiction

11. TCI submitted that physical co-location is not a "telecommunications service" as defined in the Telecommunications Act (the Act) because a CO is in itself merely real estate and, as such, is incapable of being used for telecommunications and is not incidental to the business of providing telephone service. TCI submitted that its CO therefore cannot be construed as a "telecommunications facility" and lease of space in the CO should not be viewed as a "telecommunications service".

12. In response, several parties argued that physical co-location is a telecommunications service, either within the meaning of section 2 or section 23 of the Act and that the Commission should order TCI to file tariffs.

13. The Commission notes that while TCI objected to the Commission's jurisdiction to mandate the provision of physical co-location, it filed a proposed tariff for virtual co-location. In addition, TCI has previously filed a Special Facilities Tariff (SFT) for the provision of co-location. The essential difference between TCI's virtual co-location and the other SOCs' physical co-location is that the customer leases its equipment to TCI who, in turn, is responsible for maintaining the equipment. In this manner, a separate and secured space is not required for the customer's equipment. In the Commission's view, the determination of whether co-location is a telecommunications service should not depend on where or how the equipment is placed, and whether the customer is responsible for maintenance of the equipment. The determination as to whether the provision of physical co-location is a telecommunications service must be based on the definitions provided in sections 2 and 23 of the Act.

14. The Commission considers that the CO is much more than a building which houses equipment. It is a facility built to provide for a central "meeting place" for transmission facilities. The Commission thus considers a telephone company's CO to be a fundamental component of its telecommunications network.

15. The provision of co-location allows a competitor to connect its transmission facilities directly in the CO of the telephone company. Without this service, competitors are obliged to lease trunks from the telephone company to connect their facilities, located in their own offices, to those of the telephone company located in its CO. Physical co-location allows the competitor not only to achieve the most efficient network structure, but also to give the competitor control over the quality of the interconnection by enabling it to monitor, manage and operate the interconnecting facilities.

16. In light of the foregoing, the Commission finds that the CO is a "telecommunications facility" in that it is a facility or thing "used for telecommunications or for any operation directly connected with telecommunications" and that the provision of physical co-location is a "telecommunications service" within the meaning of the definition set out in section 2 of the Act.

17. In the alternative, the Commission considers that physical co-location is a "telecommunications service" within the meaning of section 23 of the Act in that it is a "service that is incidental to the business of providing telecommunications services."

18. Finally, as stated above, in Decision 94-19, the Commission found that the provision of co-location is required to foster effective telecommunications markets. To that end, the Commission finds that the SOCs must allow for the interconnection of their facilities to those of the ICs in their COs in the manner set out below.

3. Conclusion

19. Most parties argued that a consistent approach for co-location access, in terms of the types of co-location arrangements to be offered, would be desirable. Parties noted the varied circumstances at individual COs and asked that both physical and virtual co-location be made available so that ICs can choose an option that is practical for each situation. For example, where construction costs are high to provide Type 1 segregated co-location, and where there would not likely be many co-location customers to share the cost, then virtual co-location might be the only feasible option. Alternatively, where an IC employs a proprietary transmission system, it might prefer to maintain its own equipment in a Type 1 segregated co-location arrangement.

20. Parties also expressed concern that Stentor's Type 2 co-location, offered as an alternative to virtual co-location, would only be available where Type 1 segregated co-location could not be provided and would require escorts for maintenance personnel to be available at all times in all locations.

21. In Decision 94-19, the Commission referred to co-location as facilitating competition by giving competitors options for the delivery of traffic to the CO based on cost and efficiency considerations. The Commission shares the views of parties that a consistent approach which provides the flexibility to ICs to determine the most efficient method for delivering traffic, while reasonably compensating the telephone company, would best contribute to the attainment of the objectives for co-location.

22. The Commission concludes that co-location customers of the SOCs, including TCI, should have the option of choosing physical co-location where floor space is available and should have access to a virtual co-location tariff option.

23. The Commission finds Stentor's proposed Type 1 and Type 2 co-location tariffs and TCI's proposed virtual co-location tariff to be generally acceptable, as modified by this Decision.

24. The Commission does not consider Stentor's proposed Type 2 co-location to provide an acceptable virtual co-location option, due to its limited availability and requirement for escorted access.

25. The Commission directs Stentor to file a virtual co-location tariff similar to TCI's virtual co-location arrangement, as modified by this Decision.

26. The Commission directs TCI to file a physical co-location tariff similar to Stentor's proposed Type 1 co-location arrangement, as modified by this Decision.

B. Qualifications to Obtain or Resell Co-location Access

27. Stentor and TCI proposed to offer co-location to facilities-based carriers who have an interconnection agreement with the SOC and who are registered with the Commission. Some parties argued that the proposed requirement for an interconnection agreement would prevent them from having access to co-location.

28. The Commission is of the view that the requirement that co-location be available only to Canadian carriers, as defined in the Act, who interconnect either through terms and conditions defined in a tariff, such as for interexchange carriers (IXCs), or through an interconnection agreement with the SOC, provides a reasonable level of control over access to co-location.

29. The Commission notes that while the requirement that co-location customers be Canadian carriers will exclude other telecommunications service providers, such as resellers, from access to mandated co-location, Canadian carriers who have co-location access at a CO will be able to resell their transmission capacity and, in so doing, will create a competitive market for transmission capacity for connection at the CO.

30. Several parties argued that it should be permissible to sub-lease floor space, conduit or any other facilities obtained through co-location tariffs. Stentor argued that this would undermine the control that a SOC must maintain on the co-located equipment and the personnel working in its COs. Stentor further argued that the sub-lease of co-location facilities was not necessary, since any qualifying party could obtain co-location directly from the SOC under the terms of the co-location tariff.

31. The Commission shares Stentor's concern for the need to control access to the CO. The Commission notes further in this regard that the provision in the co-location tariffs for the sharing of construction costs among co-location customers would not operate as intended if access through sub-lease were to be allowed. The Commission therefore concludes that the SOCs should not be required to permit ICs to sub-lease facilities obtained through co-location tariffs.

C. Types of Equipment and Cross-connection

32. In Decision 94-19, the Commission noted that determinations in that Decision with respect to co-location pertained only to competitors' transmission equipment.

33. Stentor's proposed co-location tariff does not apply to switching (which it defines as the ability to switch the path or content of a communication in real time) and processing equipment. Stentor indicated that equipment such as multiplexing equipment, channel banks, Sonet terminals, echo cancellation equipment, amplifiers, transmission compression technology, diagnostic equipment, modems without switching and digital cross-connect equipment were considered to be related to transmission capability and would be acceptable for co-location. Examples of equipment that Stentor proposed not to accept for co-location include: transcoders with processing capability, Asynchronous Transfer Mode (ATM) switches, Frame Relay nodes and Local Area Network/Wide Area Network routers and bridges.

34. Stentor's proposed tariff also excluded cross-connect arrangements which would enable one co-located IC to connect to the facilities of a second IC co-located at the same CO. Stentor argued that cross-connect arrangements between co-located ICs would unnecessarily complicate its CO operations and that such cross-connection arrangements could be made outside its CO.

35. Stentor's proposed co-location tariff would permit only fibre optic cable for access to the CO. Stentor noted that fibre optic transmission systems are now an industry standard. Stentor argued that termination of transmission systems by copper cable, coaxial cable or wireless technologies could result in an inefficient use of limited conduit space and may cause radio frequency congestion in the case of wireless transmission.

36. Stentor also proposed that all co-located transmission equipment comply with a series of generic Bellcore and Canadian Standards Association (CSA) standards in order to ensure a safe operating environment for sensitive equipment operating in close proximity. Stentor indicated that ICs should be required to provide written assurance that equipment meets pre-determined industry standards. Stentor proposed that it be provided with the unilateral right to inspect all co-located facilities. Stentor noted that, in emergency conditions, the SOC must have the authority to take action to protect all parties operating in the CO.

37. Stentor indicated that if the selection of equipment became contentious it could develop a list of acceptable equipment and that disputes concerning the selection of acceptable equipment could be referred to the Commission if they could not be resolved.

38. Other parties argued that ICs should be able to co-locate equipment with capabilities similar to that available to the SOCs. Generally, these parties argued that switching and processing equipment should not be prohibited. It was also argued that equipment necessary to support an ATM network should be allowed.

39. Some parties were of the view that ICs should not be required to obtain the SOC's approval for equipment commonly accepted for use in the telecommunications industry and submitted that a prohibition on some types of equipment which may provide switching capability does not take into account the convergence of transmission, switching and processing technologies.

40. Several parties argued that cross-connection arrangements between co-located ICs in a CO should be permitted for the development of efficient networks. It was noted that competitive equity would be served if an IC had the ability to interconnect with any other carrier located at a CO, similar to the interconnection options available to the SOC at the CO.

41. The Commission concludes that co-location requirements should not extend to accommodating ICs' switching and processing equipment.

42. The Commission also concludes that SOCs should be permitted to require ICs to provide written assurance that all co-located equipment complies with CSA and Bellcore generic standards as necessary to ensure a safe and reliable environment within the CO. In the event of a dispute concerning the acceptance of equipment for co-location which cannot be resolved, the matter may be referred to the Commission.

43. The Commission shares the concerns of parties that the evolution and integration of transmission, switching and processing equipment will make the definition of suitable transmission equipment for the purpose of co-location more difficult. The Commission generally accepts the Stentor description of equipment suitable for co-location but notes that technologies should not be excluded as efficient transmission methods merely because they have the potential also to provide switching or other functions. The Commission accepts Stentor's proposal that a list of equipment suitable for co-location should be developed and maintained through consultation with ICs to reduce uncertainty with respect to the approval of equipment proposed for co-location.

44. The Commission concurs with the position of the Stentor member companies that to mandate co-location access for transmission technologies other than fibre optic systems could create a scarcity of conduit space, radio frequency congestion, and operating complexity. However, where feasible, the Commission encourages the SOCs to provide access to ICs for transmission technologies, other than fibre optic systems, under negotiated terms consistent with the co-location principles approved in this Decision. In the event of a dispute concerning co-location access using other technologies which cannot be resolved, the matter may be referred to the Commission.

45. With respect to cross-connection arrangements between co-located ICs, the Commission is of the view that the objective of fostering competition in telecommunications markets would be advanced by the ability of co-located ICs to cross-connect their transmission systems and therefore finds such cross-connection to be appropriate. Accordingly, the Commission directs that restrictions in the proposed co-location tariffs and agreements prohibiting IC to IC cross-connection arrangements be removed, subject to the following conditions for cross-connection.

46. To address the concern that cross-connection arrangements could be primarily used to create a network hub for competitive carriers, the Commission concludes that it would be reasonable and appropriate for the SOCs to restrict access to co-location for equipment which is not of the type used for interconnection with the SOC facilities at the CO. The Commission also concludes that IC to IC cross-connection is to be a secondary function of the co-located transmission equipment and that the SOC may require the IC to demonstrate that the capacity dedicated to interconnection with the SOC facilities is greater than that dedicated to IC to IC cross-connection.

47. The Commission directs that tariffs applicable to co-location installation and maintenance activities should also apply to work done for cross-connections between ICs where such service is provided by the SOC.

48. The Commission notes that some parties to the co-location proceeding proposed that mutually designated exchange meet-points should be permitted for the exchange of traffic. The Commission also notes that certain meet-point arrangements are prescribed in Local Competition, Telecom Decision CRTC 97-8, 1 May 1997, and that other interconnection and traffic exchange agreements have been approved by the Commission. These are examples of options other than co-location which will continue to be available for the exchange of traffic.

D. Co-location Sites

49. Some parties expressed concern that the full potential inherent with co-location access would not be achieved unless co-location was made available at all COs with routing capabilities and at those that provide access to unbundled facilities.

50. The Commission agrees that the co-location tariffs should ensure that, subject to other provisions of the tariffs, co-location will be provided at all COs, excluding enclosures designed to house remote line concentration equipment. For further clarity, co-location is to be provided at all COs that provide switching capability, including tandem and toll offices that house local or toll switches, and COs that provide a wire centre.

51. Some parties also expressed concern that under the proposed tariffs, the SOCs reserve the right to refuse access to CO locations on the basis that "future requirements" limit the availability of space, and that such "future requirements" are not clearly defined.

52. The Commission accepts Stentor's assertion that in the vast majority of cases, applications for co-location will be accommodated and that the scarcity of CO floor space is not a concern. The Commission notes that most parties agreed that the general availability of floor space is not likely to be a concern.

53. The Commission is of the view that it would not be appropriate to mandate physical co-location regardless of space constraints or to otherwise guarantee access to physical co-location space other than on a first come, first served basis as proposed by Stentor. The Commission notes that virtual co-location would serve to meet co-location requirements where physical co-location space is not available at a particular CO. The Commission further notes that in the event that co-location access is denied, such denials could be the subject of a complaint to the Commission.

54. Several parties requested, for planning purposes, that the tariff or COLA be modified to include a CO co-location availability list.

55. As noted, the Commission expects, in the vast majority of cases, that requests for co-location space will be accommodated and is, therefore, of the view that a comprehensive list is not necessary. The Commission directs the SOCs, including TCI, to compile a list of sites offering co-location, as co-location site studies are requested by ICs, allowing ICs to identify where co-location, access can be shared in order to reduce co-location costs.

E. Treatment of Existing Transmission Arrangements

56. Sprint argued that the SOCs should allow ICs an opportunity to migrate from their existing access arrangements to the co-location tariffs.

57. In the event that an IC currently has an existing transmission arrangement under a SFT for access to the CO, the Commission determines that the IC is to have the opportunity to migrate from such an access arrangement to the co-location general tariffs. The SOC may, however, impose a charge in order to recover the present worth of the remaining capital costs in the contract period. If such a charge is applied, it should be applicable to all customers who so migrate to the co-location general tariffs.

58. Where an IC currently uses general tariff services for access to the CO, the Commission concludes that the termination provisions of those general tariffs are to apply without exception.

III. Co-location Rates

A. Specific Tariffed Rates

59. The proposed tariffs include rates for various monthly co-location services such as floor space, entrance conduit space, power consumption, SOC labour-related charges and certain non-recurring charges. Stentor submitted that the monthly co-location rates and non-recurring charges were designed to recover Phase II costs of the various service elements and, for floor space and entrance conduit, to provide a contribution towards the recovery of embedded costs of land and buildings, where applicable. In addition, the rates were developed to recover the service costs which are not specifically demand-related, such as costs to modify operating methods and procedures, and to provide a contribution towards the SOCs' fixed costs.

1. Rates for Floor Space

60. Several parties argued that since Stentor and TCI have indicated that there are no incremental costs associated with floor space required for co-location, there should be no charge for floor space.

61. Stentor indicated that, in general, there is vacant CO floor space for which the company has no alternative uses and, accordingly, the incremental costs associated with the use of this floor space for co-location are zero. Where Phase II costs are below embedded costs, Stentor submitted that, at a minimum, rates should recover the embedded costs of the floor space along with an appropriate mark-up. Embedded costs were identified as those associated with land and buildings, including financial costs related to the sunk investment. Stentor submitted that, in the absence of a demand forecast, the service costs which are not specifically demand-related and pre-introductory costs, amounting to some $1.5 million, were not unitized and were excluded from the individual co-location service costs. Accordingly, mark-ups were applied to recover these costs. Stentor also indicated that it was appropriate for the ICs to contribute toward the shared and common costs of the SOCs, since the embedded costs associated with land and buildings only reflect the financial costs associated with this investment.

62. MTS indicated that in contrast with other SOCs, the company has a long standing space plan objective and practice of terminating leases and moving personnel into vacant CO space. Accordingly, MTS considers that the use of currently available CO floor space for co-location will cause additional rental space costs to be incurred elsewhere in the company, as the opportunity to locate some of its own functions in that CO space will be lost. MTS submitted that its estimated MTS rental space rate reflects rates which are comparable to that charged for similar quality space and includes the associated operating expenses.

63. The Commission concludes that, with the exception of MTS, SOCs generally have vacant CO floor space with no alternative uses and, accordingly, the Phase II costs associated with the use of this floor space for co-location purposes are zero. The Commission concurs with Stentor's view that under the co-location proposal, the competing ICs will be deriving value from the SOCs' floor space and should contribute towards the recovery of the associated investment. The Commission is therefore of the view that floor space rates should, at a minimum, recover the associated embedded costs.

64. The Commission considers that the rates for co-location should also attempt to recover pre-introductory costs and costs which are specific to the provision of co-location but which are not demand-related. The Commission notes that there is no assurance that there will be sufficient demand for co-location to ensure full recovery of these costs. Since the floor space element is considered to be the primary service component of co-location, the Commission has taken the recovery of these costs into consideration in establishing floor space rates.

65. With respect to MTS's proposed floor space rate, the Commission considers that, given MTS's practice of moving personnel into vacant CO space, the company would incur incremental costs in providing floor space for co-location. The Commission therefore considers MTS's floor space rate, which recovers Phase II costs and a 25% mark-up, to be appropriate. The Commission notes that parties did not object to MTS's claim that incremental floor space costs would be incurred as a result of co-location. Also, examples of comparable real estate market rates suggest that MTS' proposed rate, which also includes operational costs, is not excessive.

66. In determining individual floor space rates, the Commission has considered MTS's floor space rate as a bench-mark along with the differences among the SOCs' embedded land and building costs, and approves the per square metre floor space rates for individual SOCs as set out in Appendix 2. With respect to the TCI proposal, the Commission approves floor space rates, as set out in Appendix 2, which further include use of the required bay space and which is rated on a per half-bay basis.

2. Rates for Entrance Conduit Space

67. Several parties submitted that Stentor did not produce any new reasons why conduit used for co-location should be costed or priced differently than other support structure conduit. Accordingly, these parties recommended that the uniform national rate of $2.25 per 30 metres for conduit, prescribed by the Commission in Access to Telephone Company Support Structures, Telecom Decision CRTC 95-13 (Decision 95-13), 22 June 1995, be applied for the entrance conduit tariff.

68. Stentor indicated that the proposed entrance conduit cost estimates were based on the information submitted in the proceeding leading to Decision 95-13, reflecting a cost recovery method using embedded costs for fixed structure costs and Phase II costs for administration. NBTel indicated that it has no spare entrance duct capacity but will provide new clear duct to the building entrance. Under Stentor's proposal, the effective entrance conduit rate would range from $0.136 per metre to $0.33 per metre.

69. The Commission notes that, with the exception of NBTel, spare capacity for entrance conduit will generally be available and accordingly the Phase II costs are expected to be negligible. In the case of NBTel, the Commission accepts the company's view that construction costs will be incurred and that rates should be designed to recover the associated Phase II costs. Contrary to NBTel's assumption, the entrance duct is assumed to be shared and the associated Phase II cost is estimated at $0.15 per metre per cable per month. The embedded entrance conduit costs submitted by the SOCs generally vary between $0.12 and $0.16 per metre per cable per month.

70. Several parties suggested that the costs for entrance conduit are distance sensitive and that this rate should be established on a per metre basis rather than per 30 metres as proposed by Stentor. The Commission notes that TCI's entrance conduit rate was proposed on a per metre basis. The Commission agrees that entrance conduit costs are distance sensitive and that, accordingly, an entrance conduit rate which is established on a per metre basis would be appropriate.

71. The Commission approves a uniform national monthly rate for entrance conduit of $0.16 per metre per cable. The Commission notes that this rate is higher than the current equivalent per metre rate for support structure conduit but considers it to be appropriate since relatively shorter conduit lengths are expected for co-location applications.

3. Rates for Other Co-location Services and SOC Labour-Related Services

72. Co-location rates were proposed for several other co-location elements, including the Service Order Charge, the Application Charge, Riser Space, various power consumption services, Access to Synchronization Clock and Transition Cabinet per Cable. In addition, hourly labour rates were proposed for the Installation, Maintenance and Escort Service associated with the various co-location activities. These services are further described in Appendix 1.

73. Several parties argued that co-location is an essential service and, as a result, the price of these facilities should recover the direct costs of co-location and should not include any mark-up. Sprint argued that pursuant to several past decisions, the Commission established that rates for equal access facilities and services shall not include a mark-up and that consequently the proposed mark-up of 25% should be disallowed.

74. Stentor claimed that the Commission's findings in Competition in the Provision of Public Long Distance Voice Telephone Services and Related Resale and Sharing Issues, Telecom Decision CRTC 92-12, 12 June 1992, do not preclude the use of a mark-up over prospective incremental costs as a means of contributing towards the recovery of the fixed and common costs of the SOCs. Stentor noted that the Commission has permitted the SOCs to apply a mark-up of 25% over Phase II current costs.

75. The Commission notes that the parties did not specifically object to any of the proposed Phase II costs for the above-mentioned services. The Commission further notes that the proposed individual service costs reflect the costs which are causal to demand only and exclude the service costs which are not specifically demand-related. The Commission is of the view that a mark-up should be allowed as a means of contributing towards the recovery of these latter costs and the SOCs' fixed costs. In light of the foregoing, the Commission approves the proposed rates for the above-mentioned services which are based on Phase II costs plus a 25% mark-up, as presented in Appendix 2.

76. Some parties indicated that information with respect to specific SOC labour-related charges such as maintenance, engineering and other labour activities must be made available through tariffs and that the price of these facilities should be established to recover the direct costs only and include no mark-up.

77. Stentor did not object to the filing of labour rates but requested that both the unit costs and associated mark-up be maintained in confidence due to ongoing and future labour negotiations and competition in telecommunications markets.

78. The Commission notes that in the example of typical labour charges proposed by Stentor, the hourly labour charges are based on costs plus a 25% mark-up and reflect the use of SOC-specific labour unit costs. The Commission further notes that for Bell, a rate of $80 per hour currently exists for miscellaneous labour other than repair and maintenance associated with partial cable systems.

79. The Commission considers that where SOC labour is provided in the provision of Power Delivery, Project Management Fee, Cable Pulling/Splicing, Construction Fee, Site Preparation Fee, Maintenance/Installation, Hourly Escort services and Project Fee for TCI, labour charges are to be calculated based on the application of the following labour rates to the number of hours worked. For the first hour or fraction thereof of work, charges shall be applied in the amount of $80 for Bell, $55 for MTS, MT&T, Island Tel and NewTel, and $70 for NBTel, TCI and BC TEL. For each additional 15 minutes or fraction thereof, charges shall be applied in the amount of $20 for Bell, $13.75 for MTS, MT&T, Island Tel and NewTel, and $17.50 for NBTel, TCI and BC TEL. With respect to applicable labour charges for work done on a call-out basis entirely outside of normal working hours, the Commission concludes that, consistent with Bell's existing tariffs for miscellaneous labour other than repair and maintenance associated with partial cable systems, the SOCs are to apply a minimum charge of two hours of time at $115.00 per hour plus one hour of regular time as prescribed above.

B. Other Charges

80. Proposed services used to establish co-location include Construction Fees, Project Management, Site Preparation, Cable Pulling/Splicing and Power Delivery services. These services are further described in Appendix 1. Charges for these services were proposed to be based on costs incurred.

81. Several parties argued that the construction and other costs associated with the work to establish co-location at a specific CO building should be tariffed. These parties were concerned that the requirement to pay a large lump sum in the initial stages of co-location will serve as a deterrent to effective co-location access and compromise the benefits of co-location. Parties also argued that the first applicant for co-location should not bear all the costs of building modifications.

82. The Commission agrees with Stentor's position that it would be difficult to estimate co-location demand or non-recurring costs at each CO to any degree of certainty. Therefore, any rate developed using such data will likely be unreliable and would increase the SOCs' likelihood of under-recovering or over-recovering the associated costs when compared to the current proposal. The Commission therefore considers that Stentor's proposed approach to charge ICs on the basis of costs incurred is appropriate.

83. Although it has not stated the specific mark-up level that it intends to include in the charges for the above service elements, Stentor has utilized a 25% mark-up in its numerical example of typical charges associated with the Project Management Fee, Power Delivery Fee and Site Preparation Fee. The Commission considers that this level of mark-up is generally appropriate for SOC-specific activities since it is designed to provide a contribution towards the SOC's fixed costs. The Commission notes that implicitly, the mark-up is used to recognize the use of fixed resources such as overhead support costs which do not vary with the offering of a particular service. However, with respect to costs such as material costs and costs for work sub-contracted to outside companies, the Commission expects a minimum use of overhead support and of the SOC's fixed resources and, accordingly, finds the use of a 25% mark-up level to be inappropriate in such circumstances. The Commission further notes that sub-contracted work will usually involve SOC personnel supervision, for which a charge would be further assessed under the proposed Escort tariff.

84. In light of the foregoing, the Commission approves an approach whereby the charges associated with Power Delivery, Project Management Fee, Cable Pulling/Splicing, Construction Fee, Site Preparation Fee and TCI's Project Fee services resulting from sub-contracted work are based on costs incurred without mark-up. With respect to the associated SOC labour-related work, the Commission notes that separate SOC labour-related charges are to be calculated on a time and charge basis, using the approved rates as set out in section III A.3 above.

85. The Commission further approves Stentor's proposed approach to reimburse a proportionate share of the Construction Fee (Building Modifications). The reimbursement approach provides for the initial construction costs to be charged in whole to the initial subscriber or subscribers making a request for Type 1 co-location and provides for subscribers to receive a proportionate rebate if additional customers use Type 1 co-location service in that same CO within a period of 60 months. The Commission notes that this particular fee reimbursement approach is consistent with current tariffs for network extensions, ensures full recovery of the initial construction costs and provides for costs to be shared equitably by all ICs obtaining Type 1 co-location. Regarding Sprint's concerns about the disincentive of high initial costs for physical co-location, the Commission notes that no mark-ups will apply for most construction work and that virtual co-location will be available as an alternative.

C. Inclusion of Co-location Rates in the Imputation Test

86. Some parties submitted that co-location is a bottleneck service and that the SOCs should include in their imputation tests the co-location rates wherever co-location services are employed by the SOC's Competitive Segment.

87. Stentor and TCI submitted that it would be inappropriate to attribute the proposed co-location tariffs to the Competitive Segment for split rate base purposes since equivalent co-location costs are already being assigned to the Competitive Segment under existing Phase III costing procedures. With regard to the imputation test, Stentor submitted that, accordingly, the SOCs' competitive services should reflect the Phase II costs of the relevant resources and facilities.

88. The Commission finds acceptable Stentor's approach to charge the SOCs' Competitive Segment by way of the existing Phase III costing procedures and to include for imputation test purposes the Phase II costs for these services.

89. The Commission further considers that the requirement for the SOCs to include the co-location rates instead of Phase II costs in their imputation tests would not materially affect imputation test results.

IV. Central Office Lease Agreement (COLA)

A. General Application of the COLA

90. TCI argued that the COLA does not require the Commission's approval since it does not specify the terms and conditions with respect to the proposed virtual co-location tariff, but rather, the terms and conditions relating to the lease and maintenance of the equipment. RNS submitted that all rates and conditions should be contained in a tariff and not in a COLA.

91. The Commission does not agree with TCI's view. The Commission considers that the COLA contains the terms and conditions of the telecommunications service being offered which, pursuant to sections 24 and 25 of the Act, require the Commission's approval. Moreover, it contains limitation of liability provisions which specifically require the Commission's approval. With regard to RNS's concern, the Commission also notes that the COLA is expressly incorporated by reference into the tariff.

B. Provisions of the COLA

1. Confidentiality

92. Parties raised concerns that the confidentiality provisions of the COLA were not sufficient to ensure that any IC information provided to the SOC will only be used for the purpose of fulfilling obligations under the agreement. TCI stated that it would set up a Carrier Services Group (CSG) like that which has been established for dealing with IXCs.

93. The Commission finds that Stentor has not justified why the confidentiality provisions in its proposed COLA regarding the protection of IC information by Stentor should contain different wording than the provision protecting Stentor's confidential information.

94. The Commission also notes that the issue of the appropriate treatment of confidential information for ICs as customers of the SOCs will be considered in the context of an upcoming review of the terms of service as they apply to SOC customers that are service providers.

95. The Commission directs Stentor and TCI to amend their COLAs to ensure that the SOCs will treat the IC's competitively sensitive information, at the least, in a manner similar to that in which an IC must treat SOC confidential information and in a manner that is consistent with the SOC's general terms of service, as amended from time to time.

96. The Commission also considers that the SOCs should process co-location applications through each company's CSG.

2. Termination

97. In its COLA, Stentor has proposed that upon termination, the IC be liable to the SOC for an amount equal to the charges payable by the IC for the 12 months preceding the date of termination. The Commission considers that it is not reasonable for the SOC to collect 12 months of charges for termination of the agreement. The Commission notes that the IC will have invested a considerable amount of money in start-up costs to co-locate its equipment, which costs would likely serve as a disincentive to early termination of the agreement. The Commission notes, as an example of comparable termination conditions, that in a Bell proposed SFT for a co-location service, the customer would be liable for up to 3 months charges on termination.

98. The Commission concludes that, upon early termination, the termination amount charged to the IC shall not exceed 6 months of charges.

99. Stentor also proposed to retain the right to terminate the agreement in a number of situations such as the IC becoming bankrupt, the IC ceasing to carry on business, a receiver being appointed or any proceeding for liquidation being instituted.

100. The Commission considers that it is not reasonable to permit a SOC to terminate the agreement upon the institution of proceedings for the liquidation or winding up of the IC's business and directs that this provision be removed.

101. Concerning the requirement to notify the SOC of anticipated or actual bankruptcy or related events, the Commission concludes that Stentor has not justified the requirement for 120 days notice and that the COLA should be modified to provide that the IC shall give notice of any such events related to termination when the IC first obtains knowledge thereof or 90 days prior to the occurrence of the event, whichever is the later date.

3. Limitation of Liability

102. Several parties raised numerous concerns with regard to the proposed wide ranging exclusions of SOC liability and indemnification provisions in favour of the SOC. In effect, these provisions attempt to protect the SOC from responsibility for any loss or damage except to the extent of the amount of the IC's recurring payments in the 12 preceding months in cases involving a claim relating to personal injury, death or damage to the IC resulting from the SOC's negligence.

103. Stentor argued that the terms and conditions regarding the SOC's liability should appropriately reflect those which would be found in a comparable real estate agreement for commercial industrial or warehouse type space. Elsewhere on the record, Stentor stated that the COLA is more appropriately described as a licence rather than as a lease as it does not grant exclusive use of the SOC's property to the IC. Several parties argued that the SOC is, unlike a typical lessor, very involved in providing the service on an ongoing basis and has the authority to access and potentially interfere with IC facilities.

104. Stentor noted that the terms and conditions of the COLA were drafted on the basis of the expectation that the licensee will obtain appropriate insurance coverage adequate to cover all risks associated with its occupation of the licensed premises. In addition, Stentor argued that the liability allocation reflected in the COLA was designed to ensure that ICs assume similar risks with respect to the operation of equipment they have located in the SOC's COs, as the SOCs assume in relation to the operation of their own equipment.

105. The Commission does not consider that the COLA is appropriately characterized as a real estate lease; rather, the COLA sets out the terms and conditions of a telecommunications service.

106. The Commission concludes that the SOC's liability should not be limited in cases of death, physical injury or damage to property where the damages are caused by the company's negligence.

107. In cases that involve other types of damages resulting from the SOC's negligence, the Commission considers that the SOC should be permitted to limit, but not exclude, its liability.

108. The Commission further concludes that:

1) the limitation of liability proposed by the SOC for changes in its facilities is to be modified to be conditional upon adequate notice having been given to the IC;

2) the liability of the IC to pay recurring charges, when the co-location arrangement is not in place on the effective date, is to be amended to make the IC liable only where the delay is due to the IC's negligence; and

3) the IC should not be liable for third party claims where the claims arise out of the negligence or deliberate fault of the SOC or its employees.

109. The Commission notes that the limitation of liability provision generally applicable to customers that are carriers will be examined in a future proceeding. Accordingly, the COLA is to state that the limitations of liability contained therein are subject to those in the terms of service to be developed for SOC customer-carriers, and that where they are inconsistent, the general Terms of Service will prevail.

4. Dispute Resolution

110. TCI's COLA provides that the Alberta courts shall have exclusive jurisdiction over all matters arising in relation to the Agreement.

111. The Commission finds that the COLA, which contains terms and conditions of a telecommunications service, falls within the Commission's jurisdiction. Accordingly, the Commission directs TCI to amend the COLA to state that the Alberta court's jurisdiction is for matters that are not otherwise within the jurisdiction of the Commission pursuant to the Act.

5. Other COLA Issues

112. The Commission is of the view that the provision in TCI's COLA requiring the IC to provide the SOC with software, documentation and data for the maintenance of equipment under its proposed virtual co-location tariff is reasonable, contrary to the view expressed by Northline. The Commission notes, however, that TCI has been directed in this Decision to provide a physical co-location option which gives ICs an alternative which would not require the provision of such information.

113. With respect to the provisions in Stentor's proposed COLA regarding late payment charges and indemnification for downtime, the Commission is of the view that the general Terms of Service apply to co-location customers of the SOCs.

114. Concerning the proposed requirement that ICs obtain prior written consent of the SOC for a change of control, the Commission concludes that no prior written consent is to be required.

115. Some parties objected to the provision prohibiting an IC from granting a security interest and licence rights in its co-located equipment. The Commission concludes that the IC should be permitted to grant a security interest in its co-located equipment and that adequate provisions can be made in the COLA to address Stentor's concerns regarding security of its COs.

116. Some parties argued that the requirement in section 2.02 of Stentor's proposed COLA that co-located equipment meet certain technical and network standards could be used by the SOC to restrict access to co-location. The Commission considers it reasonable to require compliance with generic standards to safeguard the secure operation of the CO. The Commission accepts the period of 15 days, or such other period that the SOC may reasonably specify, for compliance with equipment standards as specified in this Decision and with network standards.

117. With respect to section 14 of Stentor's COLA, some parties objected to the liability of an IC for costs resulting from a SOC-initiated relocation. The Commission accepts as reasonable that parties are to pay their own costs where a relocation or rearrangement of co-located equipment is necessary for Utility Segment service requirements.

C. Procedure to Obtain Co-location

118. Parties objected to the cumbersome nature of the co-location application procedures proposed by Stentor in the COLA. Parties' primary concern centred on the absence of specificity regarding the time frames for the delivery of the various reports and for the availability of the service itself.

119. The Commission notes that, in themselves, the procedures proposed by Stentor are reasonable, in view of the nature of the service and in view of physical modification of CO facilities that are necessary to provide physical co-location. However, the Commission agrees that the absence of specific time frames, and the lack of commitment towards the effective date of co-location arrangements by the SOCs, subject ICs to considerable uncertainty throughout the process.

120. The Commission is of the view that 6 months is a reasonable estimate of the maximum time that should elapse between the date of a completed application and the availability of the service. The Commission therefore imposes a 6-month maximum on the procedures leading to physical co-location and directs that the SOCs include a mechanism that would provide for virtual co-location, at the option of the IC, where the SOC will not meet this maximum period. For virtual co-location, the Commission imposes a maximum time frame of 3 months on the procedures to obtain service.

121. The Commission directs Stentor to modify the COLA to clarify that the Interim Report will be provided with the SOC's acceptance of the co-location application within 15 days.

122. Parties took issue with Stentor's proposal to impose a new application fee every time an IC wishes to modify its existing co-location arrangements. The Commission is of the view that the SOCs should not apply a new application fee and new procedures in the case of equipment replacement or upgrades or of any displacement of equipment within the co-location space that does not involve a reconfiguration on the SOC's part. The IC should, however, provide reasonable advance notification to the SOC of equipment replacements or upgrades.

V. Disposition of Applications

123. The Commission approves Stentor Tariff Notices 100, 100A and 100B, and TCI Tariff Notice 584 as modified by this Decision. Stentor and TCI are to issue, by 2 July 1997, tariff pages and COLAs which incorporate the determinations made in this Decision.

124. Stentor and TCI are to file, by 11 August 1997, proposed tariff pages and agreements, incorporating the determinations made in this Decision, to reflect the additional physical and virtual co-location options to be offered. Copies are to be served on parties to PN 95-13.

125. Parties may file comments, by 8 September 1997, and serve copies thereof on Stentor and TCI.

126. Stentor and TCI may file reply comments, by 18 September 1997, and serve copies on parties who filed comments pursuant to the previous paragraph.

127. The Commission also notes that several SOCs have SFT for the provision of co-location service to customers. Some of those customers are Canadian carriers for which co-location service should, in general, be provided in accordance with approved general tariffs for co-location pursuant to this Decision. Stentor and TCI are to identify, by 11 August 1997, existing co-location SFT for service to Canadian carriers and to indicate how these services will be migrated to the general tariff provisions for co-location.

Allan J. Darling
Secretary general

This document is available in alternative format upon request.


Co-location Rate Elements

A. Specific Tariffed Rates

Access to Synchronization Clock - for access to a synchronization clock for an IC fibre equipment terminal;

Application Charge - for a search by the SOC of available space within CO;

Entrance Conduit Space - for the IC's cable to enter the CO;

Escort - hourly labour rate for escort of IC personnel visits to CO;

Floor Space (Unsegregated/Segregated) - for CO floor space associated with segregated or unsegregated co-location, including associated operations such as maintenance, lighting, environmental controls; for TCI, CO floor space is proposed for unsegregated co-location only and includes use of a half-bay;

Installation/Maintenance - hourly labour rate for SOC installation/maintenance of IC's equipment;

Power Consumption - for electrical power for the IC's equipment;

Riser Space - for CO space and racks to run the IC's cable to its transmission equipment;

Service Order Charge - for issuance of a service order to proceed with the installation for both segregated and unsegregated co-location arrangements; for TCI, the charge is applied for any request that generates a service order (e.g., billing changes, equipment modifications);

Transition Cabinet per Cable - for housing the splice between outside fibre cable and inside fibre cable.

B. Other Charges

Cable Pulling/Splicing - for installation of the IC's cable at the CO by the SOC;

Construction Fee (Building Modifications) - for building modifications (walls, additional changes);

Construction Fee (Enclosure) - for installation of a secured enclosure (cage);

Power Delivery - for rearrangement costs to provide power to IC's equipment;

Project Management Fee - for design of construction site, power delivery, other work;

Site Preparation Fee - for pre-conditioning of the CO (additional riser/cable holes);

TCI's Project Fee - for provisioning of unsegregated co-location.


48V DC / fused amp$ 9.85$ 7.60$ 16.00$ 13.25$ 9.45$ 9.45$ 13.75
120V AC / fused amp$ 9.25$ 7.40$ 10.00$ 9.65$ 8.35$ 8.35$ 11.85
120V AC with Backup / fused amp$ 12.30$ 9.25$ 11.15$ 10.50$ 9.50$ 9.50$ 23.50
Riser / Cable Metre$ 0.40$ 0.32$ 0.40 $ 0.25$ 0.32$ 0.32$ 0.30
Entrance Conduit / Cable Metre$ 0.16$0.16$ 0.16$ 0.16$ 0.16$ 0.16$0.16
Floor Space / Square Metre$ 17.80$ 16.20$ 29.50$ 15.80$ 21.90$ 21.90$ 25.30
Service Order Charge$ 145.00$185.00$ 185.00$117.00$ 135.00$ 135.00$ 190.00
Application Fee$1090.00$940.00$1270.00$900.00$1660.00$1410.00$1620.00

Tariff ElementsTCI
48V DC / fused amp $26.00
Riser / Cable Metre * $1.30
Entrance Conduit / Cable Metre $ 0.16
Floor Space, Cat.I / 1/2 bay $20.50
Floor Space, Cat.II / 1/2 bay$16.40
Floor Space, Cat.III / 1/2 bay $10.25
Access to Synchron. Clock $14.00
Transition Cabinet / Cable$14.00
Service Order ChargeTCI Rate Item 1700.4.a
Pre-Engineering Fee$1,200.00

* includes fibre optic cable.
All rates are monthly recurring except Service Order Charge, Application Fee and Pre-
Engineering Fee.


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