ARCHIVED - Telecom Commission Letter - 8678-C12-200615578

Letter

Ottawa, 5 December 2006

File No.: 8638-C12-200602708
             8678-C12-200615578

BY E-MAIL

Mr. Willie Grieve
Vice President, Telecom Policy & Regulatory Affairs
TELUS Communications Company
21 - 10020 100 Street NW
Edmonton , Alberta
T5J 0N5

Regulatory.affairs@telus.com

Dear Mr. Grieve:

Re:   Review of proposals to dispose of the funds accumulated in the deferral accounts, Telecom Public Notice CRTC 2006-15

Pursuant to the procedure specified at paragraph 20 of Review of proposals to dispose of the funds accumulated in the deferral accounts , Telecom Public Notice CRTC 2006-15, 30 November 2006 , attached are interrogatories related to this proceeding.   These interrogatories are in reference to TELUS Communication Company's (TCC) proposals to expand broadband services to rural and remote communities and to improve accessibility to telecommunications services for persons with disabilities, submitted to the Commission on 1 September 2006 .

TCC is requested to file its responses to these interrogatories with the Commission, and serve them on the interested parties to this proceeding, by 19 January 2007 .   These responses are to be received, and not merely sent, by this date.   In providing responses, TCC is requested to provide separate responses for each sub-part of each question.

Yours sincerely,

'Original signed by P. Godin'

Paul Godin
A/Director General
Competition, costing and tariffs
Telecommunications

cc:   Michel Murray, CRTC   (819) 997-9300
       Interested Parties to PN 2006-15

ATTACHMENT

A.           BROADBAND EXPANSION PROPOSAL

Consultation/community selection

101    With respect to communities that would otherwise have been eligible for funding from the deferral account pursuant to the determinations in Disposition of funds in the deferral accounts , Telecom Decision CRTC 2006-9, 16 February 2006 (Decision 2006-9), provide the information in the table below for communities that were excluded from TELUS Communications Company's (TCC) broadband expansion proposal on the basis of:

a)   funding received or to be received from the government at any level - federal, provincial, municipal (for each community, specify the name of the government funding program);

b)   the company's assessment that broadband is likely already available (provide details); and

c)   any other reason (specify the reason) .

102     In Tables 2a and 2b of its broadband proposal , TCC lists several communities without identifying the rate band. Submit revised tables including the missing rate bands.

Roll-out plan 

201      For each of TCC's territories in Alberta , B ritish Columbia and Quebec, provide the following:

a)   the percentage of total homes and businesses that currently have access to TCC's broadband services;

b)   the estimated percentage of total homes and businesses that will have access to TCC's broadband services, assuming that TCC's broadband expansion plan is completed as proposed; and

c)    TCC' s estimate of the percentage of total homes and businesses that will not have access to TCC's broadband services, but will have access to the broadband services of other service providers, as suming that TCC's broadband expansion plan is completed as proposed.

Technology/financial information

301         With respect to the estimated upfront capital expenditures (capex) per subscriber identified in Tables 3a, 3b , and 3c of TCC ' s submission , provide the company's views on :

a)   the implementation of an upper limit on capex per subscriber, or of a guideline that would give preference for service implementation to those communities where the capex per subscriber would be lower than in other unserved communities;

b)   the implementation of a guideline that would give preference for service implementation to t hose communities where the capex per subscriber would be higher than in other unserved communities;

c)   the costs and advantages/disadvantages of providing services to the highest cost communi ties using other technologies that are not part of T CC ' s proposal (e.g. satellite, fixed wireless , and any other available technology); and

d)   explain why the average upfront capex per subscriber is notably higher in British Columbia than in Alberta or Quebec .

302     With respect to the estimates of the number of premises passed in each community included in T CC ' s broadband e xpansion proposal:

a)   describe the process used or records accessed to estimate the number of premises passed; and

b)   identify the number of subscribers in the se communities t hat have been excluded from T CC ' s proposal , indicating the reason for exclusion, such as technology limitations related to the long length of access loops, access loops loaded with a loading coil, line-of-sight restrictions, etc.

303     In Appendix I, TCC provide s schematic configuration diagrams for two alternative technology solutions that it plans to use for its broadband expansion program.

a)   Indicate whether the two technology solutions are the only ones that TCC plans to use for its program.   If TCC plans to use any other technology solutions, provide the schematic configuration diagrams for those solutions ;

b)   Identify, with supporting rationale, the criteria that TCC proposes to use to determine which of the technology solutions it will select to provide broadband access to a particular community ; and

c)   For the schematic configuration with the (i) 7300 digital subscriber line access multiplexer ( DSLAM ) , and (ii) 7330 DSLAM, and any additional configurations identified above, identify all major resource components used for provisioning of digital subscriber line ( DSL ) access from the customer premises to the existing backbone, and specify the unit costs and the associated cost drivers for each of these resource components.   Identify the vintage of the data used to develop each unit cost and explain the methods used to express each of the unit costs in current dollars.

304    Refer to Appendix 4, paragraph 8.   For each year of T CC ' s cost study, provide the estimated monthly revenue and cost per subscriber for dial-up Internet that were used to calculate the net revenue loss.

305    In Appendix 4, paragraph 11, TCC indicate s that it w ill install sufficient equipment at start-up to support the forecasted demand at each community for the entire study period.   With reference to the schematic diagrams in Appendix 1, explain why it would be appropriate to include line cards at the beginning of the study to support the forecasted end-user demand at the end of the study rather than to add line cards as the demand grows at each site.   Compare this provisioning approach with the approach that TCC uses for provisioning broadband access in an urban area.   Describe any differences and provide supporting rationale.

306    Refer to Appendix 4, paragraph 11.   TCC indicate s that additional capacity costs are added to the main network as customer subscriptions increase, and that these costs are included in the "Backbone" category of Tables 1 and 4.   Specify the major resource components that are included in the "Backbone" category, and provide the unit cost , the associated cost driver , and average working fill factor for each of these resource components.   Identify the vintage of the data used to develop each unit cost and explain the methods used to express each of the unit costs in current dollars.

307         For each of TCC's three territories ( Alberta , British Columbia and Quebec ), p rovide the requested information for each of the following components included in T CC ' s broadband roll-out plan:

a)   Describe in detail how the costs of each of the existing in-place fibre facilities and related support structures and newly-deployed fibre facilities and related support structures are determined and attributed to broadband access costs associated with a particular community. Provide details on the unit costs, vintages of costs, structural cost factors, and cost drivers as appropriate. Further, provide the average working fill factors assumed for the in-place fibre facilities with supporting rationale; and

b)   Specify the percentage of overall fibre -related present worth of annual costs ( PWAC ) that is associated with in-place fibre in T CC ' s broadband roll-out plan.

308    Refer to Appendix 4, paragraphs 15 and 16a.   With respect to the operating costs per subscriber (paragraph 15) and the direct service maintenance and basic shared network maintenance costs (paragraph 16a), provide the associated costing methodology and assumptions, outlining the activities included for each expense item.   Each explanation should also include cost factors, labour rates, time estimates and rationalization as appropriate.   Identify the vintage of the data used to develop the expense unit cost inputs and explain the methods used to express each of the unit costs in current dollars

309    Refer to Appendix 4, paragraph 16b.   TCC provide s a loading factor for determining additional annual maintenance costs for the communities targeted for broadband expansion.   TCC applies this factor to capital in excess of what would be required in an urban setting to determine the additional maintenance costs.   Explain how this maintenance factor was calculated and explain why the application of a second factor would not lead to double counting of maintenance expenses.

310    With reference to Appendix 4, paragraph 17, explain with supporting rationale how the portfolio factor that TCC applie s in its broadband expansion analysis was determined.   Specify all contributors to this factor and provide the numerical calculations to arrive at the specified value.

311    With reference to Appendix 4, paragraph 18, explain with supporting rationale why TCC include s in its costing analysis a contribution towards fixed common costs that is determined as a percentage of its total monthly equivalent cost (MEC) per subscriber in an urban setting.   Provide an explanation of how TCC determine s the value of the factor that it has applied in its calculation of the contribution to fixed common costs.   In addition, elaborate on what is included in the MEC described in the phrase "total MEC per subscriber would have been in the urban setting".

312    In Tables 3a, 3b , and 3c, TCC provide s community-specific capacity and capex information in which it has distributed the capital costs over the following three categories: Outside Plant, Central Office and Access.   Provide a detailed description of the major resource components that are included in each of the three categories with supporting rationale. Where a resource component differs for any of the three TCC territories, provide separate resource descriptions.

313    In Tables 4a, 4b, and 4c, TCC provide s community-specific sample present worth of costs, revenues , and recovery information.   In its costs, TCC provide s costs for the following categories:   Backbone and Access.

a)   Provide a detailed description of the major resource components included in each of the two categories.   Where the resource components differ for any of the three TCC territories , provide separate equipment descriptions; and

b)   Describe how the resource components specified for the Backbone and Access categories of Tables 4a, 4b , and 4c relate to the resource components specified for the Outside Plant, Central Office and Access categories of Tables 3a, 3b, and 3c in the previous question.

314    For each of T CC ' s three territories (Alberta, British Columbia and Quebec), provide the details requested below related to the cost studies for T CC ' s proposed broadband roll-out plan summarized in Table 1 of T CC ' s proposal.

a)   Provide a Detailed Summary of Phase II Costs table, using the format specified in the General Tariff Economic Study Report Guidelines of 13 May 2005 (Detailed Summary of Phase II Costs table) for each of the three Broadband roll-out cost studies.   If any expense or capital items falls under the category "Other", provide a breakdown of the PWAC into the major resource components and a brief description of each component ;

b)   Provide the cash flows for each year of the study period for the following:

i)   capital expenditures broken down into the following categories:   Backbone and Access.   In addition, provide details of how each of the above capital cash flows are distributed over the capital categories in the Detailed Summary of Phase II Costs table ;

ii)   revenues broken down into the following categories:   retail broadband access, wholesale broadband access, wholesale backhaul ; and

iii)   expenses broken down into the following categories: pre-introduction costs (if any), maintenance, service provisioning, and any other expense categories .

c)   If any of the capital expenditure categories in part b) above have End of study value of zero dollars in the cost study, explain why the value is zero for each affected category;

d)   Provide the demand for each year of the study period for retail broadband access, wholesale broadband access, and wholesale backhaul for alternate providers of service; and

e)   For each year of the study period, provide the projected retail revenue per end-user (broken down by business and residential end-user), and wholesale broadband access and wholesale backhaul revenue per alternative broadband service provider and explain changes in the assumed revenue per end-user over the study period.

315    With reference to the cost studies for T CC ' s broadband roll-out, for each of T CC ' s three regions (Alberta, British Columbia and Quebec) summarized in Table 1 of Appendix 4, provide a revised Table 1 (T CC ' s broadband roll-out plan) and separate Detailed Summary of Phase II Costs tables by region for each of the changes in assumptions specified below.   If any expense or capital items fall under the category "Other", provide a breakdown of the PWAC into the major resource components and a brief description of each component .

a)   20 percent increase in take rates for wholesale and retail services for each year of the study period;

b)   20 percent increase in wholesale and retail average revenue per year for each year of the study period;

c)   20 percent reduction in operating expenses;

d)   Assume a working fill factor of 60 percent for existing in-place fibre backbone and access facilities and for any other capital cost that relied on the capacity cost approach; and

e)   If TCC has assumed that capital expenditures are ongoing expenditures in the cost study for its broadband expansion proposal, assume that capital expenditures are one-time in nature

Retail and competitor services and r ates

401    In paragraph 23 , TCC indicates that "[t]he monthly subscriber rates, terms and conditions, upload and download speeds and reliability between similar services provided by TCC in urban areas and the services to be provided by TCC in the deferral account communities where TCC will be the retail provider of broadband services are designed to be equivalent."

a)   Provide, in chart form to the extent possible, details of the retail services, including the rates and charges, terms and conditions, upload and download speed s and reliability that TCC would make available to the communities included in its broadband expansion proposal; and

b)   Describe, if applicable, how the services and rates available to subscribers of TCC's retail broadband services in deferral account funded communities would differ from the services and rates offered to TCC's subscribers in urban areas.

402    In Appendix 3, TCC provides details of the proposed Competitor Services that would be available to the first alternative Internet service provider ( ISP ) to enter and extend broadband services in a community included in its broadband expansion proposal .   TCC states that "[s]ubsequent ISPs would be subject to standard services available under TCC Tariff or commercial rates."

a)   Explain the reasons for making the proposed Deferral Account Competitor Services and corresponding rates and charges available only to the first ISP to enter a community;

b)   Provide T CC ' s analysis and views as to whether this proposed arrangement is consistent with subs ection 27(2) of the Telecomm unications Act ;

c)   Provide the tariffs and/or commercial rates for the standard competitor broadband services that TCC w ould make available to subsequent ISPs, in chart format ; and

d)   TCC proposed Deferral Account Competitor Services rates that are lower than its tariffed or commercial rates for standard services .   Explain whether TCC is proposing to recover the difference between the proposed competitor service rates and the rates for standard services from the deferral account .

B.        ACCESSIBILITY PROPOSAL

Proposed accessibility initiatives

6 01    In section 3.1, paragraph 47, TCC proposes to implement I nternet P rotocol relay (IPR) service on a trial basis in each of its Alberta , British Columbia and Quebec serving territories.

a)   Describe the proposed scope of these trials in terms of the trial configuration and length, the number of operators, the anticipated number of users and the criteria to measure and evaluate the results ;

b)   Provide TCC ' s views regarding the appropriate ongoing funding mechanism for IPR service , should the trials be successful and the service be implemented ; and

c)   Describe the anticipated challenges in the implementation and ongoing operation of IPR service (e.g. staffing issues, evaluation of quality of service, etc.)

602    Refer to section 3.2, in which TCC proposes to implement Video Relay Service (VRS) on a 12-month trial basis in Alberta and British Columbia .

a)   Describe the proposed scope of the internal and external trials in terms of the configuration and length of the trials, the number of operators and their required qualifications, the anticipated number of users , and the criteria to measure and evaluate the results ;

b)   Describe how VRS would operate when a hearing party wants to initiate a call to someone who is deaf, deafened , or hearing impaired and uses American S ign L anguage (ASL) or L angue des signes québécoise (LSQ) ;

c)   Describe how VRS would operate when a deaf, deafened, or hearing impaired person who uses ASL or LSQ wants to initiate a call to a hearing party;

d)   Provide T CC ' s views regarding the appropriate ongoing funding mechanism for VRS, should the trials be successful and the service be implemented ; and

e)   Describe the anticipated challenges in the implementation and ongoing operation of VRS (e.g. staffing issues, evaluation of quality of service, etc.).

603    Refer to sections 3.1 and 3.2.   For each of T CC ' s serving territories, specify the languages in which IPR service and VRS w ould be implemented.   Provide a rationale.

604    Refer to section 3.3, where TCC proposes to enhance its Enhanced Directory Assistance (EDA) service .  

a)   Describe in detail the features and function s of the proposed EDA service ;

b)   Further describe how the proposed enhancement to EDA will improve accessibility to telecommunications services for persons with disabilities ;

c)   Discuss the appropriateness of using deferral account funds for this proposed enhancement to T CC ' s EDA service in light of the Commission's determinations in Decision 2006-9, including those in paragraph 97, where the Commission determined that proposals to fund discretionary services at no charge should not be funded from the deferral accounts ; and

d)   Describe the training and/or any special qualifications that will be required to work as an EDA operator.

605    Refer to section 3.4 related to T CC ' s proposed S pecial Needs Centre .   

a)   Indicate whether the proposed Special Needs Centre would be a stand-alone website or a section on T CC ' s regular website ;

b)   Indicate whether all the information and functionalities (e.g. ordering service, accessing account information, etc.) on T CC ' s regular website will be made accessible to persons with disabilities in conformance with World Wide Web Consortium (W3C) standards in the Special Needs Centre .   Identify and provide the rationale for any information and/or functionalities that will not be accessible through the Special Needs Centre ;

c)   Describe wh at procedures would be put in place to update the Special Needs Centre on an ongoing basis ; and

d)   Refer to paragraph 65, where TCC indicates that its proposed Special Needs Centre will also provide links to other sites on TCC ' s portal containing information regarding TCC ' s Internet, wireless , and TV services.   Specify whether any deferral account funds will be used to make information on TCC ' s non-telecommunications services accessible to persons with disabilities and/or to create the Special Needs links to such information.   If yes, provide TCC ' s views as to how it would be consistent with the Commission's determinations in Decision 2006-9 to use funds from the deferral accounts to make information related to non-telecommunications services accessible.

606    Refer to section 3.5 in which TCC proposes to allocate funds for future service accessibility.

a)   Explain and justify how it would be consistent with Decision 2006-9 , particularly the determinations in paragraph 116, to retain deferral account funds for future initiatives not specifically identified a s part of TCC ' s proposal ; and

b)   If funds are to be retained for future initiatives, explain whether TCC proposes to return to the Commission to seek approval of these initiatives.

607    Refer to section 4.1.   Explain whether TCC would seek to recover the costs associated with incorporating inclusive design considerations into its planning and development of new services from the deferral accounts.

608    Refer to section 4.3.   Describe the composition of the TCC Accessibility Committee

Financial information

701    In Attachment 1, Table 1, TCC provides summaries of the costs associated with its proposed IPR service.   With respect to the cost summaries, provide the information requested in a), b), c) , and d) below:

a)   The cost study assumptions, including:

i)   financial parameters ;
ii)   portfolio loading factor ;
iii)   annual productivity increase factor ; and
iv)   annual expense and capital increase factors .

b)   Having regard to the proposed capital costs that are causal to demand and to service, provide the following information for each major type of capital equipment:

i)   associated costing methodology and assumptions ;

ii)   life estimates ;

iii)   fill factor values ; and

iv)   the vintage date of the raw data used to develop the unit cost inputs, an explanation of the methods and assumptions used to express each of the capital unit costs in 2006 dollars as appropriate, and retrospective cost increase factors, if any were used .

c)   Having regard to the proposed expenses that are causal to demand and to the service, provide explanations of how each of the expense estimates were developed, including a listing of all activities and associated costing assumptions (e.g. time estimates, labour unit costs) ; and

d)   Provide the annual demand by major demand drivers, if applicable .

702    In Attachment 1, Table 2, TCC provides summaries of the costs associated with its proposed VRS trial .   With respect to the summaries, provide the information requested in question 701  a), b), c) , a nd d) above.