ARCHIVED - Telecom Decision CRTC 2003-43

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Telecom Decision CRTC 2003-43

  Ottawa, 27 June 2003

Bell Canada - Revised service improvement plan

  Reference: 8638-C12-72/02
  The Commission approves Bell Canada's revised service improvement plan of $127.8 million.


The Commission received an application dated 18 September 2002 by Bell Canada, pursuant to Regulatory framework for second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34) proposing a revised service improvement plan (SIP). Bell Canada estimated that its revised SIP would now cost $127.8 million over a revised four-year roll-out plan. Bell Canada also provided an estimate of the revised 2002 total subsidy requirement (TSR) that reflected its revised SIP.



In Telephone service to high-cost serving areas, Telecom Decision CRTC 99-16, 19 October 1999 (Decision 99-16), the Commission defined the basic service objective (BSO) as, among other things, an individual line with privacy protection features and the capability to connect via low-speed data transmission to the Internet at local rates. The Commission set three goals: (i) to extend service to the few areas that were unserved; (ii) to upgrade service levels in those areas where customers did not have access to telecommunications services that met the BSO; and (iii) to maintain service levels. In order to achieve these goals, the Commission directed incumbent local exchange carriers to file SIPs. In Decision 99-16, the Commission also determined that SIPs should incorporate least-cost technology, target larger communities or areas first, serve unserved areas prior to providing upgrades, and serve permanent dwellings before seasonal ones.


In the proceeding leading to Decision 2002-34, Bell Canada filed a SIP proposal on 14 September 2001. In Decision 2002-34, the Commission approved a SIP for Bell Canada that could vary between $75.3 million and $137.2 million, directed Bell Canada to refile the SIP and established a framework that should be applied when extending service to unserved premises. Specifically, the Commission approved, among other things, the following: (i) a maximum capital cost criteria of $25,000 for both permanent and seasonal premises, including a $1,000 customer contribution; and (ii) use of a 100% take rate in each locality for calculating the total capital cost of the SIP.

Bell Canada's revised SIP


Bell Canada submitted a revised SIP roll-out plan spanning a period of four years from 2002 to 2005. Under this plan, Bell Canada would provide service to all qualifying localities provided that at least one customer within the locality requested service and was willing to contribute a maximum of $1,000. Localities would qualify for the SIP when the average capital cost per premises in a particular locality, whether permanent or seasonal, did not exceed $25,000, including a $1,000 customer contribution. The aggregate capital cost allowance in each locality was calculated using a 100% take rate, for all premises within the locality.


Bell Canada submitted that the localities listed in its SIP were classed as permanent or seasonal based on the information it had collected to date. Bell Canada stated that it would make any necessary amendments to the classification at the time that it conducted visits to the sites and completed its customer canvass to determine demand for service in each locality.


Bell Canada noted that it had made some modifications to the inventory of localities and capital costs since it submitted its SIP proposal on 14 September 2001, in the proceeding that led to Decision 2002-34. Those modifications that have had an impact include the addition of new localities, the removal of others and the development of revised capital cost estimates based on more current information. Based on this updated information and the criteria set out in Decision 2002-34, Bell Canada submitted that its total SIP capital cost was now estimated at $127.8 million.


Bell Canada submitted that some progress had been made in the area of code division multiple access (CDMA) technology, and that existing CDMA customers were now able to access the Internet at very low speeds. Bell Canada submitted that it expected that CDMA Internet access speed would improve in the future, as the technology was further refined. Bell Canada also submitted that existing CDMA technology would be improved with the addition of the Call Trace functionality, which is necessary to meet the BSO.


As directed in Decision 2002-34, Bell Canada undertook to provide customers in the exchanges of Pickle Lake, Gull Bay and Armstrong local access to the Internet through the establishment of extended area service (EAS) to a neighbouring exchange where at least one Internet service provider was located. In early 2003, the following exchanges would have EAS: Pickle Lake with the independent company exchange of Dryden, Gull Bay with Nipigon and Armstrong with Nipigon. Bell Canada stated that it would notify customers in the affected exchanges through a short informational message on their bills at least 30 days prior to the effective date of the new EAS link.


Bell Canada submitted a revised Phase II cost study for residential primary exchange service in both high-cost serving areas (HCSAs) and non-HCSAs to support the recovery of the costs from its $127.8 million SIP. Bell Canada submitted that its 2002 TSR would be $56.6 million including the impact of the SIP.

Commission analysis and determinations


The Commission notes that Bell Canada's revised SIP is based on the capital cost criteria and take rates established in Decision 2002-34, and a four-year dynamic roll-out plan commencing in 2002. The Commission also notes that Bell Canada has started to upgrade its CDMA technology and plans to provide local access to the Internet as directed in Decision 2002-34. Accordingly, the Commission findsthat Bell Canada has filed a SIP that fully complies with Commission directives. Accordingly, the Commission approves Bell Canada's revised and updated $127.8 million SIP.


The Commission has reviewed Bell Canada's Phase II cost study accompanying the $127.8 million SIP and finds that the methodology complies with the directives in Decision 2002-34.


The Commission directs Bell Canada to re-file its 31 March 2003 TSR and corresponding monthly subsidy per residential network access service by band calculations, within 30 days from the date of this decision to reflect the SIP approved in this decision.
  Secretary General
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Date Modified: 2003-06-27

Date modified: