ARCHIVED - Telecom Decision CRTC 2002-62

Telecom Decision CRTC 2002-62

Ottawa, 8 October 2002

Loop selection service

Reference: Stentor Resource Centre Inc. Tariff Notice 658 and TELUS Communications Inc. Tariff Notice 1038

In this decision, the Commission approves on a final basis, effective 1 January 2001, the terms, conditions and rates for loop selection service.

The Commission also directs the incumbent local exchange carriers (ILECs) to provide rebates to service providers for the difference between the interim and the final rates approved in this decision. The Commission further directs the ILECs to provide the Commission with information about the availability of databases and the provision of loop selection service to affiliates.

The applications

1.

The Commission received an application by the former Stentor Resource Centre Inc. (Stentor), on behalf of Bell Canada, BC TEL, Island Telecom Inc. (Island Tel), Maritime Tel & Tel Limited (MTT), MTS Communications Inc. (MTS), NBTel Inc. (NBTel), NewTel Communications Inc. (NewTel) and TELUS Communications Inc. (the former TCI), dated 23 April 1998 (Stentor Tariff Notice 658 (TN 658)), to introduce loop selection service. In addition, the former TCI filed its own tariff pages (TCI TN 1038). Stentor and the former TCI filed these applications pursuant to Telecom Order CRTC 98-108, 3 February 1998 (Order 98-108).

Loop selection service

2.

Loop selection service refers to the service provided by incumbent local exchange carriers (ILECs) whereby competitive service providers are given, upon request, a report identifying whether a loop that meets a specific loop profile is available in a given location. The report provides information regarding the loop make-up, including the loop length, the cable gauge, and the number of loading coils and bridge taps. In the event that a loop with the requested loop profile is not available in a given location, the service providers can request that the ILECs modify the loop in question by removing bridge taps and loading coils.

3.

The loop selection charge refers to the amount charged by ILECs to provide the requested report. A loop modification charge would apply when modifications are made and the charge is based on the amount of time and work involved.

The process

4.

Interventions regarding the tariff applications were received from Call-Net Enterprises Inc. (Call-Net) and Metronet Communications Group Inc. (Metronet). Call-Net and Metronet submitted that these tariffs were essential to the evolution of local competition and requested that the Commission initiate a formal procedure including interrogatories, to examine them. In reply, Stentor argued that its proposals were consistent with Order 98-108 and that the Commission had sufficient detail to make a decision without additional process.

5.

In a letter dated 29 May 1998, the Commission determined that an extended process to consider these applications was appropriate and set out a procedure to allow parties to ask interrogatories.

6.

In a letter dated 25 June 1998, Metronet submitted that the loop selection service was required in order to compete in the local market and requested that the Commission approve the tariff notices on an interim basis without any associated rate component. Call-Net filed comments in support of Metronet's request. In reply, Stentor argued that Metronet's request should be denied. Stentor stated, however, that it did not object to interim approval of the proposed rates.

7.

The Commission granted interim approval to the tariff notices, including the proposed rates, in Telecom Order CRTC 98-765, 31 July 1998 (Order 98-765).

8.

Call-Net, on behalf of itself, AT&T Canada Inc., Axxent Corp., C1.com Inc., Covad Canada Communications Inc., Gateway Telephone Limited, GT Group Telecom Services Corp., NorthPoint Canada Inc., PSINet Limited, Riptide Networks Inc., UUNet Canada Inc. and Wispra Networks Inc. (Call-Net et al.) filed an application on 10 July 2000, requesting that the Commission recommence the proceeding associated with Stentor TN 658 and TCI TN 1038. Specifically, Call Net et al. requested that they be permitted to address additional interrogatories. In reply, Bell Canada, on behalf of itself, Island Tel, MTT, MTS, NBTel, NewTel, and Saskatchewan Telecommunications, and the former TCI and TELUS Communications (B.C.) Inc. (TCBC) did not object to the re-commencement of the loop selection proceeding, but rather argued that Call-Net et al.'s request for additional interrogatories should be denied.

9.

In a letter decision dated 1 December 2000, the Commission stated that it considered that a re-examination of the costs for loop selection service was warranted and set out a procedure to recommence the proceeding.

10.

On 1 January 2001, the former TCI, TCBC and TELUS Mobility Cellular Inc. amalgamated to form TELUS Communications Inc. (TCI). Island Tel, MTT, NBTel, and NewTel merged to form Aliant Telecom Inc. (Aliant Telecom) on 1 January 2001.

11.

On 15 February 2001, Aliant Telecom, Bell Canada and MTS (collectively, the companies) and TCI filed revised loop selection cost studies and revisions to the interim rates approved in Order 98-765. MTS proposed a rate increase, whereas Bell Canada and TCI proposed rate decreases. Aliant Telecom proposed to move to a single rate throughout its serving territory.

12.

On 24 April 2001, Call-Net et al. submitted comments on the revised tariffs. The companies and TCI filed reply comments dated 8 and 9 May 2001, respectively.

General position of Call-Net et al.

13.

Call-Net et al. were of the view that information that is provided through the ILECs' loop selection service is readily available to the ILECs through databases. In particular, Call-Net et al. submitted that competitive service providers could avoid the costs associated with loop selection service if they had access to information based on design standards as well as the ILECs' databases. They further submitted that competitive service providers should be provided access to this information on the same terms and conditions as the ILECs' affiliates. Call-Net et al. argued that, therefore, competitive service providers should generally not be charged for loop selection service.

Information based on design standards

Position of Call-Net et al.

14.

Call-Net et al., in comments dated 24 April 2001, noted that loop selection service enables service providers to determine whether a loop capable of supporting digital subscriber loop (DSL) technology is available in a given location. They submitted that DSL technology has advanced to the point where it can be provided over copper loops as long as there are no loading coils and only a limited number of bridge taps.

15.

Call-Net et al. stated that the ILECs have adopted, to varying degrees, the Service Area Concept (SAC) and Carrier Service Area (CSA) standards in designing their copper loops. They noted that TCI had stated that approximately 60% of all urban loops in its network met CSA design standards and that 75% of all its urban loops were designed to SAC standards.

16.

They argued that copper loops designed to the SAC and the CSA standards would support DSL-based services since these standards, among other things, prohibit loading coils, place restrictions on bridge taps, and include specifications for copper gauges.

17.

Call-Net et al. requested that the Commission direct each of the ILECs to produce a list of all loops built to the SAC and the CSA standards and update the list as new areas are converted to meet these standards. Call-Net et al. submitted that the loop selection service and its associated charges should not apply to copper loops that have been built according to the SAC and the CSA design standards.

Reply comments

18.

The companies and TCI submitted that the adoption of the SAC and the CSA standards had not eliminated the requirement for loading coils and bridge taps.

19.

The companies noted that under the SAC, loading coils and bridge taps were placed as per the transmission design standards, to ensure proper transmission on the local exchange customer cable network. The companies further noted that customers in many areas designed according to the CSA concept are still served via copper loops from the central offices that require loading coils because of distance considerations.

20.

TCI submitted that its loop plant generally meets the CSA design parameters because of its close proximity to the company's central offices and not because it was specifically designed to meet the CSA design standards. TCI further submitted that this plant would not necessarily support DSL or related transmission schemes given that the design standards were based on transmission schemes for digital carrier technologies other than asynchronous digital subscriber line (ADSL), which has proven to be more susceptible to spectral interference and the presence of bridge taps.

21.

The companies and TCI submitted that a loop that meets the CSA standards would not necessarily support DSL technology. They argued that it would still be necessary for them to provide loop selection service to determine whether a loop that meets the SAC or the CSA standards would support DSL technology. They stated that, in responding to requests from competitive service providers, there continues to be a need to ensure that an unbundled loop in a specified location meets the required characteristics. They argued that the Call-Net et al.'s request for a list of loops built according to the SAC and the CSA standards should be denied.

Commission determination

22.

The Commission is not persuaded that a service provider could necessarily ascertain whether a specific loop will support DSL technology through a list that identifies loops that meet the SAC or the CSA design standards, as submitted by Call-Net et al. The Commission, therefore, concludes that the provision of such a list would not replace the need for more detailed information about the loop make-up that is provided through loop selection service.

23.

The Commission recognizes that in providing loop selection service, the companies and TCI must determine whether the loops requested are available and meet the particular transmission characteristics requested. The Commission finds that the costs incurred in providing such a service should be recovered from the service providers who cause the companies and TCI to incur these costs.

Access to the ILECs' databases

Position of Call-Net et al.

24.

Call-Net et al. submitted that access to the ILECs' databases would provide a means to identify the availability of specific types of copper loops without having to incur the cost and time delays associated with loop selection service. Call-Net et al. requested that the Commission direct Bell Canada to provide its competitors with access to its databases under the same terms and conditions that are available to Bell Canada's affiliates. In addition, Call-Net et al. requested that the Commission direct the remaining ILECs to make their databases available to competitive service providers.

Reply comments

25.

The companies noted that, in order to provide the complete loop make-up in a loop selection service report, they must extract and compile information from a variety of databases. They argued that these databases are not necessarily compatible with one another or capable of being configured for third-party access.

26.

TCI indicated that its tools for assessing whether a loop might support ADSL technology were available on its Internet web site for both Alberta and British Columbia. TCI noted that the information on this site is currently available to competitors and the general public in the same manner that it is available to the company.

Commission determination

27.

The Commission is of the view that, if an ILEC provides its affiliates with access to its databases, it must also provide access to competitive service providers under the same terms, conditions and rates. Accordingly, the Commission directs the ILECs to confirm, within 20 days of the date of this decision, whether or not access to the databases used in determining the loop make-up is provided to their affiliates. The Commission further directs those ILECs that provide access to their databases to their affiliates, to provide information about the terms, conditions and rates that apply to the affiliates' access to these databases and to file tariffs to ensure that access to competitive service providers is provided under the same terms, conditions and rates as those applicable to affiliates.

Loop selection charges

Position of Call-Net et al.

28.

Call-Net et al. submitted that the loop selection charges should be the same for all service providers. Call-Net et al. argued that the activities involved in providing loop selection service are the same for each of the ILECs. Call-Net et al. requested that the Commission order Bell Canada, Aliant Telecom and MTS to reduce their respective rates for loop selection service to a level no higher than the revised rates proposed by TCI on 15 February 2001. Call-Net et al. noted that TCI had updated its processes for handling requests for loop selection service, while Bell Canada had denied the need to do the same. They argued that competitors should not be obligated to compensate Bell Canada for inefficiencies in its processes.

29.

Call-Net et al. requested that the Commission direct the applicants to reduce their loop selection rates, effective 31 July 1998 and direct the ILECs to refund competitors for any over-payment made since that time. Call-Net et al. also requested that the Commission direct the ILECs to provide a report to each competitor detailing the calculation of the rebate. Call-Net et al. further requested that the Commission direct the ILECs to provide loop selection service to all service providers at a rate that is no higher than the rate they charge their affiliates or Internet service providers (ISPs).

Reply comments

30.

The companies submitted that loop selection service is a labour intensive activity and that labour costs vary significantly across the country. They noted that, as a result, loop selection costs could vary significantly between companies despite the fact that similar activities are performed by each of them. The companies further stated that, although the activities may be similar in aggregate, the underlying activities can vary dramatically across the country, depending on network topology. They argued that mandating a uniform rate for loop selection service would result in some of the companies failing to recover costs that they would legitimately incur to provide the service.

31.

With respect to rate rebates, the companies and TCI submitted that the revised costs filed on 15 February 2001 reflect a forward-looking update of their costs as of 1 January 2001. They argued that it would be incorrect to assume that the revised costs would be valid for the period prior to the revised loop selection service cost studies. The companies further argued that, should the Commission determine that it is appropriate to adjust the rates for loop selection service on a retroactive basis, the rates should be made effective no earlier than 1 January 2001.

32.

The companies submitted that they do not provide loop selection service to their retail operations on a preferential basis and that the loop selection charge is appropriately imputed to their retail operations.

33.

TCI stated that the loop selection and loop modification charges reflect the incremental costs of providing these services to competitive service providers. TCI noted that it does not provide affiliates or ISPs with loop selection service.

Commission determination

34.

The Commission has concerns with respect to the information filed by the companies and TCI in support of the proposed revised rates. The Commission notes that, in some cases, there were significant differences between their time estimates and labour unit costs. The Commission is of the view that the activities and the time required to provide loop selection service should be reasonably consistent between the companies. While the Commission acknowledges that there may be variations in the labour unit costs between the companies, significant variations resulting from the use of management-level employees with higher labour unit costs should not exist.

35.

In light of the above, the Commission has reduced certain time estimates submitted by Bell Canada and Aliant Telecom in order to make them consistent with those submitted by the other ILECs. The Commission has also reduced the labour rate associated with the loop make-up activity submitted by MTS in order to ensure that it is commensurate with that activity.

36.

Furthermore, the Commission finds that the revised cost studies for loop selection service filed by the companies and TCI reflect the costs of providing that service as of 1 January 2001.

37.

Accordingly, the Commission approves on a final basis the following loop selection charges, effective 1 January 2001:

Company

Rate

Aliant Telecom

$46.70

Bell Canada

$49.60

MTS

$50.30

TCI (in its British Columbia serving territory)

$46.27

TCI (in its Alberta serving territory)

$46.65

38.

The Commission directs the companies and TCI to provide rebates based on the revised rates, with a report detailing their calculations, to compensate any affected service provider for over-payment between 1 January 2001 and the date of this decision.

39.

The Commission further considers that the companies and TCI should provide loop selection service to competitive service providers at the same rates that they charge their affiliates. Accordingly, the Commission directs each of the companies and TCI to confirm, within 20 days of the date of this decision whether or not it provides its affiliates with loop selection services, and if so, whether its affiliates have been charged the approved rates for loop selection and loop modification.

Loop modification charges

Position of Call-Net et al.

40.

Call-Net et al. argued that they should not incur loop modification charges to upgrade outside plant to current industry standards when that outside plant is fully depreciated and beyond its useful life. They submitted that any loop that cannot support DSL technologies due to the presence of loading coils and excessive bridge taps should be considered to have expired its useful life. Furthermore, they argued that outside plant should be upgraded with plant that, at a minimum, satisfies the CSA design standards.

41.

Call-Net et al. argued that when a competitive service provider requests modifications to a loop that does not meet CSA standards, it would be logical for ILECs to modify all of the loops in a cable at the same time in view of the fact that increasing numbers of unloaded copper pairs are required by ILECs, their unregulated affiliates and the competitors. They argued, however, that the competitive service provider should bear only the cost that is associated with its request rather than the cost of modifying the entire cable.

Reply comments

42.

The companies and TCI submitted that the 21-year depreciation life for loops represents only an average life expectancy and that outside plant can often be expected to exist much longer. The companies and TCI stated that competitive service providers do not pay to upgrade or replace plant that is no longer serviceable but, rather, to compensate the ILECs for loop modifications that meet their specific needs.

43.

TCI stated that it replaces, during routine maintenance activities, any plant that has deteriorated due to age and that can no longer support plain old telephone service. The company argued that existing loops with loading coils and bridge taps meet standard design parameters, and should not be treated as a maintenance problem. TCI indicated that many areas would continue to be served on plant with loading coils and bridge taps for years to come.

44.

The companies stated that bridge taps and loading coils are generally found on longer loops and that the performance of ADSL on these loops is marginal at best. They submitted that the removal of all bridge taps and loading coils in a cable, as proposed by Call-Net et al., would not be of any benefit to the ILECs. The companies argued that requests for loop modification would likely be tailored to the particular needs of the service provider and that, therefore, the costs should be recovered from the service provider making the request. The companies argued that Call-Net et al.'s request to apportion the costs associated with removing loading coils and bridge taps from the full cable should be denied as it would not allow the ILECs to recover the full costs of the requested modification.

45.

TCI stated that its current standard is to remove loading coils and bridge taps from at least 25 copper pairs at a time in order to reduce construction, administration and plant record costs. TCI noted that approximately 90% of the loop modification costs are derived from activities other than the actual modification of the copper pairs. TCI stated that the resulting difference in costs between modifying 25 pairs or a single pair is negligible. TCI further argued that unloading more pairs than the service provider has specifically requested would likely benefit the service provider at a future date, as further loop modifications and additional charges would not be required for that location.

Commission determination

46.

In the Commission's view, the application of the SAC and the CSA design concepts does not preclude the use of bridge taps or loading coils. The Commission also recognizes that the depreciation life of outside plant simply reflects the average life expectancy of that plant and not its actual useful life. The Commission agrees that competitive service providers should not be responsible for the costs of upgrading or replacing plant that is no longer serviceable. However, competitive service providers should continue to compensate the companies and TCI for any modification made to a loop so as to meet their specific needs.

47.

The Commission considers that, while the companies and TCI have different approaches for modifying their plant in response to a loop modification request, the tasks associated with loop modification service under either approach should not differ substantially. In that regard, the Commission notes TCI's submission that the difference between the cost of modifying a single copper pair as opposed to a number of copper pairs is negligible. In the Commission's view, the proposal by Call-Net et al. to require that all the loops in a cable be modified at the same time, in response to a loop modification request, and that the associated costs be apportioned according to the number of loops in the request, would not allow the companies and TCI to fully recover the costs associated with that request. Accordingly, the Commission does not find it appropriate to require the companies and TCI to modify their current practices.

Disposition of the applications

48.

In light of the above, the Commission approves on a final basis Stentor TN 658 and TCI TN 1038 with the modifications specified in paragraphs 37 and 38 of this decision.

Secretary General

This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca