ARCHIVED - Telecom - Commission Letter - 8661-C12-200303306 - Public Notice 2003-2 - Primary Inter-Exchange Charges Review- Requests for Disclosure of Confidential Information and Further Responses

File No: 8661-C12-200303306

Ottawa, 31 October 2003

BY TELECOPIER

To: Interested Parties to Public Notice CRTC 2003-2

Re: Public Notice 2003-2 - Primary Inter-Exchange Charges Review- Requests for Disclosure of Confidential Information and Further Responses

Pursuant to the procedure set out in Primary inter-exchange charges review, Public Notice CRTC 2003-2, 20 March 2003, by letter dated 14 July 2003, Call-Net Enterprises Inc. (Call-Net) on behalf of itself and Allstream Inc. (formerly AT&T Canada Corp.) and LondonConnect Inc. (collectively, the Competitors), requested the disclosure of certain information filed under claim of confidence and further responses to certain interrogatories. Responses to these requests were received on 24 July 2003 from Aliant Telecom Inc. (Aliant), Bell Canada, MTS Communications Inc. (MTS), Saskatchewan Telecommunications (SaskTel), (collectively, the Companies), and TELUS Communications Inc. (TELUS).

This letter reflects the Commission's objective that all parties have the benefit of the maximum amount of information placed on the public record at the earliest appropriate stage, in order to facilitate a more efficient and effective proceeding.

Part 1: Requests for Public Disclosure

The Competitors submitted that there were a number of factors that affected the balance of the public interest in disclosure against the specific direct harm likely to result from the disclosure of the information filed in confidence in this proceeding. The Competitors noted that in Regulatory Framework for Second Price Cap Period, Telecom Decision 2002-34, 30 May 2002 (Decision 2002-34), the Commission found that the Primary Inter-exchange Carrier (PIC) service was a Category I Competitor service. The Competitors argued that given the Commission's finding that the PIC service was in the nature of an essential service, the absence of competitive alternatives and given that the cost studies supporting the rates were filed in 1995 for the ILECs except SaskTel, the public interest in the disclosure of information related to the PIC processing service costs outweighed any specific harm which would result to the ILECs from such disclosure. The Competitors argued that the cost estimates for the provisioning of the same functionality to alternative providers of long distance service (APLDS) ranged from a low of $0.5046 per transaction to a high of $5.11. The Competitors submitted that, accordingly, the assumptions, inputs and results would need to be fully explored to ascertain the reasons for the significant cost differences. The Competitors noted that TELUS' PIC processing cost estimate was initially $2.38 per transaction, and subsequently revised to $0.84 in the 15 May 2003 filing, and $0.50 in the 8 July 2003 filing. The Competitors argued that this demonstrated the high level of sensitivity between the cost per transaction estimates and the varying assumptions and inputs.

In light of the above, the Competitors submitted that the release of the requested information would provide interested parties with a meaningful opportunity to participate and assist the Commission in generating the best possible record on which to make a decision regarding PIC processing service rates.

The Companies submitted that the Competitors' main arguments for disclosure of further information were based on: a) the Commission's finding that the PIC service was in the nature of an essential service, b) the absence of competitive alternatives, c) the importance of the PIC service to the APLDS for providing competitive alternatives, and d) the length of time since the last cost review.

The Companies submitted that the activities performed for the PIC functionality were in many cases the same as those activities for their competitive retail services. The Companies argued that knowledge of the detailed information requested could also provide insights regarding the underlying unit costs used to provide competitive retail services, which would in turn be used by the competitors to formulate more effective business strategies causing direct harm to the Companies.

The Companies argued that the significance of the PIC processing service was not as great as the Competitors claimed. The Companies submitted that in Bell Canada territory the money spent by competing carriers for PIC Processing service in 2002 was about one twenty-fourth of what was spent on Switching and Aggregation services, (i.e., Access Tandem, Direct Connection and the Equal Access services). The Companies concluded that this would at most represent 4% of the competitive carriers total cost to provide toll service which was an insignificant input to the total cost of providing toll service.

TELUS submitted that the Competitors had generally requested that all information filed in confidence with the Commission be placed on the public record because the PIC processing service was an essential service. TELUS argued that public disclosure of the detailed cost information that the competitors were seeking to have revealed such as loaded labour rates, were also used to develop costs for other services provided by TELUS with which the Competitors competed. TELUS noted that the Competitors had asked several interrogatories requesting highly disaggregated cost information for isolated components of the PIC processing service. TELUS argued that this would be particularly harmful to TELUS because the disaggregated information could be used by competitors to gain a better understanding of TELUS' costs for competitive services.

TELUS submitted that it had attempted to strike a balance between placing aggregated information on the public record for public scrutiny and filing detailed costing information in confidence with the Commission to protect the interest of the Company. TELUS argued that in its view it had placed sufficient cost information on the public record for the competitors to understand the components of the PIC processing charge, and to comment on the level of the PIC processing charge relative to the rates charged for this service in the past, and the rates charged for this service by other ILECs.

Requests for disclosure of information for which confidentiality has been claimed are assessed in light of sections 38 and 39 of the Telecommunications Act and section 19 of the CRTC Telecommunications Rules of Procedure (the Rules). In the case of each request, the public interest in disclosure is weighed against the specific direct harm, if any, likely to result from disclosure. In doing so, a number of factors are taken into account, including the following.

The degree of competition that exists in a particular market is an important consideration in assessing requests for disclosure. All things being equal, the greater the degree of competition in a particular market, the greater the specific harm that could be expected to result from disclosure.

Another factor in assessing the extent of harm is the expected usefulness of the information at issue to parties in furthering their competitive position. In this regard, an important consideration is the degree to which the information at issue is disaggregated. Generally speaking, the more aggregated the information, the less the likelihood that harm will flow from its disclosure.

The expectation that specific direct harm might result from disclosure is not, by itself, sufficient to justify maintaining a claim of confidentiality. In certain circumstances, substantial harm from disclosure may still be outweighed by the public interest in disclosure.

Further, the treatment of confidentiality requests should not be taken as an indication of the manner in which such matters would be dealt with in the future, in different circumstances.

Having regard to the above considerations, the Companies and TELUS, are to file on the public record of this proceeding by 21 November 2003, the information as set out in Attachment 1 for which a claim of confidentiality has been made. Unless otherwise indicated, these responses are to be placed on the public record. Request for disclosure for all other information for which confidentiality has been claimed are denied.

Part II: Requests for Further Responses

Section 18 of the Rules deals with responses to interrogatories and the adequacy of those responses. The Commission in past proceedings has looked at a number of different considerations.

A major consideration is the relevance of the information requested to the matter at issue. The availability of the information requested is also a factor, which is balanced against the relevance of the information. If the provision of the information sought would require an effort disproportionate to the probative value of the information itself, further responses will not be required.

Having regard to the above considerations, the Companies and TELUS , are to provide, by 21 November 2003, further responses to interrogatories as set out in Attachment 2. Unless otherwise indicated, these responses are to be placed on the public record. All other requests for further responses are denied.

Part III: Revised Process

The Companies and TELUS are to provide responses to the supplemental interrogatories as set out in Attachment 3. The responses to these supplementary interrogatories are to be filed with the Commission and copies served on all parties by 27 November 2003. Parties are reminded that all material is to be received, not merely sent, by the above date.
The process set out in the public notice is hereby amended by extending to 22 December 2003 the deadline by which parties may file comments and to 14 January 2004 the deadline by which parties may file reply comments. This schedule is being revised to take account of the additional time required to respond to the supplementary interrogatories set out in Attachment 3.

All documents and information to be filed with the Commission pursuant to this letter must be served on all parties by the filing dates provided herein. All documents must be received, and not merely sent, by the dates indicated.

Yours sincerely,

Original signed by Scott Hutton

Scott Hutton
Director General
Competition, Costing and Tariffs
Telecommunications

Attachments

Attachment 1
Requests for public disclosure

Aliant

1)  With reference to the 5 May 2003 Aliant submission "Report on the Economic Evaluation for the Tariff Revision of PIC Processing Service", disclose the following information provided in paragraph 21 of the submission:

a) CSG PIC/CARE team - annual time estimates for management and clerical,
b) IS/IT Business Office Support - annual time estimates for management and clerical,
c) Managing of PIC reports - annual time estimate,
d) Managing, investigating and resolving PIC dispute - annual time estimate
e) Annual cost estimate for system processing and support cost ; and
f) Collection and Account receivable management - annual time estimates for management and clerical.

2)  With reference to the response to interrogatory Aliant (CRTC)04Jun03-1 a) PN03-2, for each of the four Aliant regions, provide the percentages of Service Provisioning costs by sub-activity (e.g. CSG PIC/CARE Team, IS/IT Business Office Support, etc.). The percentages are to be determined based on the 2003 service provisioning costs by sub-activity (as provided in the Attachment to the above response) relative to the sum of the 2003 sub-activity costs.

Bell Canada

1)  With reference to the 4 July 2003 Bell Canada submission, "Report on the Economic Evaluation for the Tariff Revision of PIC Processing Service", disclose the following information provided in paragraphs 26 and 27 of the submission:

a) CSG PIC/CARE team - annual time estimate,
b) IS/IT Business Office Support - IS/IT Business Analyst and IS/IT New Methods and Procedures annual time estimates,
c) Managing of PIC reports -annual time estimate,
d) Annual cost estimate for CGI support for PIC/CARE,
e) Annual cost estimate for system processing and support costs; and
f) Collection and Accounts Receivable management - annual time estimate (provided in paragraph 27).

2)  With reference to the response to interrogatory Bell (CRTC)04Jun03 -1a) PN03-2, disclose the $Per PIC Transaction (Current $) for each sub-activity included in the Service Provisioning category.

3)  With reference to the response to interrogatory Bell(CRTC)04Jun03 -1b) PN03-2, disclose the 2001/2000 and 2002/2001 expense increase factors used to restate the costs for the CSG PIC/CARE team, and IS/IT Business Office.

MTS

1)  With reference to the 5 May 2003 MTS submission "Report on the Economic Evaluation for the Tariff Revision of PIC Processing Service", disclose the following information provided in paragraph 23 of the submission:

a) Service Provisioning - annual time estimate for CSG Clerk 8 and network engineering clerk 6; and
b) Training of client representatives on PIC/CARE - annual time estimate for CSG clerk 8

2)  With reference to the response to interrogatory MTS (CRTC)04Jun03-1 b) PN03-2, disclose the $Per PIC Transaction (Current $) for each sub-activity included in the Service Provisioning Category and for each sub-activity included in Expenses Causal to Service - Other.

SaskTel

1)  With reference to the 5 May 2003 SaskTel submission "Report on the Economic Evaluation for the Tariff Revision of PIC Processing", disclose the Hours per year for each job function identified in Table 6.4.5-2.

2)  With reference to the response to interrogatory SaskTel(CRTC)04Jun03-1 PN03-2 Attachment 1, disclose the PWAC per Transaction for each sub-activity included in the Service Provisioning Category and for each sub-activity included in the Expenses Causal to Service - Other.

TELUS

1)  With reference to the 8 July 2003 TELUS submission "Cost Study for the Primary Inter-exchange Carrier(PIC) Processing Charge" disclose the following information provided on page 4 of Appendix 1:

a) Manual processing cost - the estimated time per manual order,
b) Information Technology - minimum annual investment for system maintenance and enhancements,
c) Management support - number of managers and the percentage of their time supporting the PIC CARE process; and
d) Clerical support - number of customers service representatives supporting the PIC CARE process.

2)  With reference to the response to interrogatory TELUS(CRTC)04Jun03-1 a) PN03-2, disclose the cost per transaction for the Service Provisioning category and for each sub-activity included in the "Other" cost category (i.e. Systems Maintenance and Enhancements, Day-to-Day Support Analyst's time, Management support, Clerical support, and Billing Support).


Attachment 2
Requests for further responses

Aliant

1)  With reference to the response to interrogatory Aliant(Competitors)04Jun03 -100 c)PN03-2, provide an estimate of the total number of ILEC lines served to which PIC selections are possible based on the year 2003 forecast or the year 2002 actual.

Bell Canada

1)  With reference to the response to interrogatory Bell(Competitors)04Jun03 -100 c)PN03-2, provide an estimate of the total number of ILEC lines served to which PIC selections are possible based on the year 2003 forecast or the year 2002 actual.

MTS

1)  With reference to the response to interrogatory MTS(Competitors)04Jun03 -100 c) PN03-2, provide an estimate of the total number of ILEC lines served to which PIC selections are possible based on the year 2003 forecast or the year 2002 actual.


Attachment 3
Supplementary Interrogatories


Aliant, Bell Canada and MTS

1)  With reference to Aliant's, MTS', and Bell Canada's cost submissions, provide a revised Table 6.4.5-1- Summary of Phase II Cost Impacts for PIC Processing, and the corresponding revised rate, assuming that the PIC demand forecasts are increased by 10%. In the case of Aliant, provide the information for each of the four Aliant regions.

SaskTel

1)  With reference to the company's 5 May 2003 cost submission, provide a revised Table 6.4.5-1- Summary of Phase II Cost Impacts that includes the demand and costs associated with newly established telephone numbers defaulted to SaskTel and the corresponding rate, and a revised Table 5.2-1 Estimate of Demand Quantities.

2) Based on the information provided in response to question 1) above, provide a revised Table 6.4.5-1- Summary of Phase II Cost Impacts, and the corresponding revised rate, assuming that the PIC demand forecasts are increased by 10%.

TELUS

1)  With reference to TELUS' 8 July 2003 cost submission, provide a revised Appendix 1 -Summary of Revenue and Cost Impacts, and the corresponding revised rate, based on the following changes in the cost assumptions:

- Use of a 5-year study period; and
- Exclusion of the annual standard inflation factors and the 3.5 percentage per year productivity applied during the study period.

The response is to provide the annual demand estimates for the 5-year study period.

2)  Based on the information provided in response to question 1) above, provide a revised Appendix 1- Summary of Revenue and Cost Impacts, and the corresponding revised rate, assuming that the PIC demand forecasts are increased by 10%.

Date modified:

2003-10-31