ARCHIVED - Telecom - Commission Letter - 8640-T42-01/00

Letter

Ottawa, 10 April 2001

TO: Interested Parties to Public Notice CRTC 2000-98

Reference: 8640-T42-01/00

Dear Sir / Madam:

Subject: Seeking comments on telcos' forbearance outside their traditional territories

On examination of the materials filed in the above-noted matter, further information is required. Accordingly, by 1 May 2001, TELUS Communications Inc. (TCI), Bell Canada, Island Telecom Inc., Maritime Tel & Tel Limited (MTT), MTS Communications Inc., NBTel Inc., NewTel Communications Inc. and Saskatchewan Telecommunications (SaskTel) are requested to respond to additional questions attached hereto, providing copies of their responses to other parties that had indicated their intention to participate in this proceeding. All parties may by 15 May 2001 file supplementary comments, if any, limited to dealing with the new information contained in the responses to these additional questions. All parties may file replies to the supplementary comments by 23 May 2001.

Where a document is to be filed or served by a specific date, the document must be actually received, not merely sent, by that date.

Parties wishing to file electronic versions of their submissions can do so by email or on diskette. The Commission email address is procedure@crtc.gc.ca

Yours truly,

Shirley Soehn
Executive Director,
Telecommunications

Attach.

c.c.: Mervin Grywacheski, CRTC, (819) 997-4676

Français

ATTACHMENT 1

Page 1 of 2

COMMISSION INTERROGATORIES

To TCI

Refer to the response to interrogatory TELUS(ARC et al.)04Aug00-1, page 2 of 5, where TCI stated that " . joint-use facilities and services would continue to be costed using Commission-approved Phase III costing methodologies, with investment, revenues and expenses tracked and apportioned or assigned to the appropriate segment". Also refer to page 23 of TCI's 17 April 2000 submission, where TCI stated that "[t]he costing safeguards that have been implemented to date (such as the split rate base) are sufficient to minimize the opportunity for, and will permit the detection of, anti-competitive cross-subsidies from regulated services to services provided by the TMCI Operating Division in the Non-ILEC Territory".

Provide a detailed list of the "joint-use facilities and services" used by out-of-territory affiliates cited in the above-noted reference.

For each of the joint-use facilities and services listed in the response to part a) above, indicate whether investment, and revenues and expenses are allocated or apportioned to the appropriate segment on the basis of Investment or Revenue/Cost studies, respectively.

Indicate the most recent date the Investment and Revenue/Cost studies referenced in the response to part (b) above were undertaken.

In light of the dates noted in the response to part (c) above, provide the company's views as to the reliability of the allocated or apportioned level of investment, revenues and expenses for the joint-use facilities and services listed in the response to part (a) above.

In light of the Commission's determination in Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000, to determine the amount of the subsidy requirement on a Phase II basis, provide the company's views on whether Phase III/Split Rate Base continues to act as a costing safeguard against cross-subsidization.

ATTACHMENT 1

Page 2 of 2

In paragraph 23 of its reply comments, TCI stated that current safeguards which include the price cap regime, the split rate base/Phase III, the existing bundling rules and imputation tests are sufficient to address anti-competitive cross-subsidies in the forborne environment contemplated in this proceeding. Specify the bundling rules referenced by TCI.

With reference to paragraph 34 of the reply comments submitted by TCI, explain why TCI considers the imputation of Phase II costs to be a more stringent requirement than the imputation of acquisition costs.

Identify by tariff item number any TCI local exchange services offered under special or customer-specific tariffs, either on a stand-alone or bundled basis.

In the event that the forbearance order were to be granted, would it be TCI's intention to bundle TCI's tariffed local exchange services with forborne out-of-territory local exchange services. If not, explain why not.

In the event that TCI's tariffed local exchange services were bundled with forborne out-of-territory local exchange services, indicate whether such bundling would be customer-specific, with the TCI service component costed at tariff rates.

Comment on whether granting the forbearance application would give rise to a greater frequency of customer specific pricing for local exchange services. If not, explain why not.

Does TCI currently jointly market Centrex services with toll services? If so, explain whether the pricing of both services is on a standalone basis such that the charges for either of the two services are not dependent on the commitment to or usage of the other. Identify by tariff number any TCI bundled tariffs for Centrex service and one or more toll services.

Does TCI expect that the costs of offering out-of-territory services, with approval of the requested forbearance, to be less than if the services were offered by its CLEC affiliate? If so, can this be attributed, at least in part, to lesser costs for the use of Utility segment systems, resources and facilities? If not, explain why not.

ATTACHMENT 2

Page 1 of 2

To Bell et al.

Refer to the Bell et al. letter of 25 May 2000, where they indicated that they supported TCI's request and submitted that the Commission's findings should be applied simultaneously to all telecommunications companies currently regulated by the Commission. Also refer to the response to interrogatory TELUS(ARC et al.)04Aug00-1, page 2 of 5, where TCI stated that " . joint-use facilities and services would continue to be costed using Commission-approved Phase III costing methodologies, with investment, revenues and expenses tracked and apportioned or assigned to the appropriate segment".

Confirm that Bell et al. are proposing that they treat joint-use facilities and services in the same manner as is being set out by TCI in its submission.

Refer to the response to interrogatory TELUS(ARC et al)04Aug00-1, page 2 of 5, where TCI stated that " . joint-use facilities and services would continue to be costed using Commission-approved Phase III costing methodologies, with investment, revenues and expenses tracked and apportioned or assigned to the appropriate segment". Also refer to page 23 of TCI's 17 April 2000 submission, where TCI stated that "[t]he costing safeguards that have been implemented to date (such as the split rate base) are sufficient to minimize the opportunity for, and will permit the detection of, anti-competitive cross-subsidies from regulated services to services provided by the TMCI Operating Division in the Non-ILEC Territory".

Assuming that Bell's et al.'s response to interrogatory 1 above is in the affirmative, provide answers to the following questions:

Provide, for each company, a detailed list of the "joint-use facilities and services" (that would be affected by the provision of out-of-territory services on an in-house basis).

For each of the joint-use facilities and services listed in the response to part a) above, indicate whether investment, and revenues and expenses are allocated or apportioned to the appropriate segment on the basis of Investment or Revenue/Cost studies, respectively.

Indicate the most recent date the Investment and Revenue/Cost studies referenced in the response to part b) above were undertaken.

ATTACHMENT 2

Page 2 of 2

In light of the dates noted in the response to part c) above, provide the companies' views as to the reliability of the allocated or apportioned level of investment, revenues and expenses for the joint-use facilities and services listed in the response to part a) above.

In light of the Commission's determination in Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000, to determine the amount of the subsidy requirement on a Phase II basis, comment on whether Phase III/Split Rate Base continues to act as a costing safeguard against cross-subsidization.

ATTACHMENT 3

Page 1 of 3

To TCI and Bell et al.

For each company affiliate, provide:

The total value of intercorporate transactions for the year 1999 between the out-of-territory affiliate(s) and the company's Utility segment;

The total value of intercorporate transactions that took place in 1999 between the company's Utility segment and its out-of-territory affiliates that did not meet the definition of significant transactions and were therefore not reported (i.e., the transactions were below the company's minimum threshold for reporting of intercorporate transactions); and

A brief description of the intercorporate transactions in (b) above.

From a Utility segment perspective, provide the company's position on the merits and rationale for bringing an affiliate's out-of-territory operations in-house. The company's reply should elaborate on the current inter-corporate safeguards and how these would be maintained once the out-of-territory operations are brought in-house. In its reply, the company should include, but not limit itself to, the following:

Would the safeguards of a mandated mark-up, as currently required for intercorporate transactions for both services provided and employees on loan be retained? If not, how would the company propose to address this issue?

How would the safeguards with respect to start-up costs be maintained?

The current practice for inter-corporate transactions requires that assets be transferred at market value or on a net asset basis for those assets for which a market value cannot be determined. How would this safeguard be maintained?

ATTACHMENT 3

Page 2 of 3

With regard to services provided by a company to its out-of-territory affiliates:

Provide a description of each service currently provided by the company to its out-of-territory affiliates and the charges applied for these services. The list should also include services that are provided without payment to the company. "Services" should include, but not be limited to, use by affiliates of corporate systems and resources for billing, ordering, forecasting of capital expenditures, scheduling of maintenance, accounting, and personnel development, as well as more "traditional" services.

Indicate the mark-up included in the charges, where the charges have been determined having regard to costs. For each of the applicable charges which are not determined on the basis of costs, explain in detail how the charges have been determined.

Indicate which of these services are tariffed telecommunications services and provide references to the relevant tariffs. Confirm that in all cases the service is provided in accordance with the rates, terms and conditions of the tariffs.

In the event that any services provided to the out-of-territory affiliates are tariffed for other customers, these services are to be identified.

Provide the information requested in the preceding interrogatory (i.e., 3 above) for services provided by the out-of-territory affiliates of the company to the Utility segment of the company.

Assuming that the application is granted, provide a description and the value of all services that the Utility segment of the company would potentially provide to entities that provide services outside the present service territories of the company. The list should include services that would be provided, with and without payment, to the company. 'Services' should include, but not be limited to, use by affiliates of corporate systems and resources for billing, ordering, forecasting of capital expenditures, scheduling of maintenance, accounting, and personnel development. Indicate which of these services would be telecommunications services subject to tariffing. Indicate which of the potential tariffed services would be essential / interconnection services.

ATTACHMENT 3

Page 3 of 3

Provide the information requested in the preceding interrogatory (i.e., 5 above) for services provided by the entities, that provide services outside the present service territories of the company, to the Utility segment of the company.

Provide examples of any bundled services offered by a company which include a retail service and an out-of-territory affiliate service. Provide the Tariff Notice Nos. under which the rates for these services were submitted for approval.

Do out-of-territory affiliates bundle any services with the company's services? If so, identify the company's services, which are included in such bundles.

In the event that out-of-territory affiliates bundle services with tariffed company services, explain whether the company's service is priced to reflect the tariffed rates for the service. Further, explain how this is accomplished.

Date Modified: 2001-04-10