ARCHIVED - Telecom Commission Letter - 8678-C12-200615578

Letter

Ottawa, 5 December 2006

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

BY E-MAIL

Mr. Mirko Bibic
Chief, Regulatory Affairs
Bell Canada
110 O'Connor St. , 14 th Floor
Ottawa , Ontario
K1P 1H1

Bell.regulatory@bell.ca

Dear Mr. Bibic:

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 associated with this proceeding.   These interrogatories are in reference to Bell Canada 's broadband expansion and accessibility proposals, submitted to the Commission on 1 September 2006 , with respect to the operating territories of Bell Canada and Bell Aliant Regional Communications, Limited Partnership, in Ontario and Quebec .

Bell Canada 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 r esponses are to be received, and not merely sent, by this date.   In providing responses, Bell Canada 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

INTERROGATORIES TO BELL CANADA
5 December 2006

A.           BROADBAND EXPANSION PROPOSAL

Consultation/community selection

101    Refer to page 3, paragraph E-8.   Provide a detailed explanation for the phrase "other considerations".

102    Refer to paragraphs 31 to 43, and 85 of Bell Canada 's proposal.   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 Bell Canada's broadband expansion proposal on the basis of:

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

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

c)   they contain 75 lines or less and cannot be served by fixed wireless technology; and

d)   any other reason (specify the reason).

Roll-out plan

201    Refer to paragraph 18, where Bell Canada indicates that its proposed five-year program is expected to increase the percentage of homes and businesses with access to broadband services in its Ontario and Quebec territories to 87.5 percent.   In each of its Ontario and Quebec territories, provide Bell Canada 's estimate of the total percentage of homes and businesses that will not have access to Bell Canada 's broadband services, but will have access to the broadband services of other providers, assuming that its broadband expansion proposal is implemented as proposed.

202    Refer to Bell Canada's proposed broadband roll-out plan and to the Commission's 10 March 2006 letter setting out the requirements for the filing of broadband expansion proposals, which prescribed that if an incumbent local exchange carrier (ILEC) requires more than four years to roll out its plan, the company is to provide justification.   Explain why Bell Canada requires five years to roll out its broadband expansion program.

Technology/financial information

301    With respect to the estimated upfront capital expenditures (capex) per subscriber identified in Appendix 5, Tables 3a and 3b, and Appendix 6, Tables 3A and 3B, of Bell Canada'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 those communities where the capex per subscriber would be higher than in other unserved communities; and

c)   the costs and advantages/disadvantages of providing services to the highest cost communities using other technologies that are not part of Bell Canada 's proposal (e.g. satellite or any other available technology).

302    With respect to the estimates of the number of premises passed in each community included in Bell Canada 's broadband expansion proposal:

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

b)   identify the number of subscribers in these communities that have been excluded from Bell Canada '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 its broadband expansion proposal submitted on 1 September 2006 , Bell Canada describes the following alternative least-cost access technology solutions for deployment of broadband access to the proposed communities:

Fixed wireless (refer to section 5.2.1.1)
T1-fed digital subscriber line (DSL) (refer to section 5.2.1.2)
Fibre-fed DSL (refer to section 5.2.1.3)

a)   Identify all major resource components required for the provisioning of fixed wireless access from customer premises to the serving central office (CO), 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. In addition, provide the life estimate and survivor curve for each resource component.   Provide the information for the scenario in which fibre feeder is used to connect the base transceiver station and the serving CO (Figure 1), and the scenario in which microwave backhaul is used to connect the base transceiver station (BTS) and the serving CO (Figure 4);

b)   Identify all major resource components required for the provisioning of TI-fed DSL access from customer premises to the serving CO, 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. In addition, provide the life estimate and survivor curve for each resource component; and

c)   Identify all major resource components required for the provisioning of fibre-fed DSL access from customer premises to the serving CO, 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.   In addition, provide the life estimate and survivor curve for each resource component.

304    In section 5.2.2 of its proposal, Bell Canada describes its backbone network for carriage of traffic between serving COs and hub COs.   In addition Bell Canada indicates in section 5.2 of its proposal that it used both an Internet Protocol (IP) platform and an asynchronous transfer mode (ATM) platform for its backbone network.   For each of the platforms (IP and ATM), identify all major resource components required for provisioning of bandwidth between a serving CO that is providing broadband access to a community and a hub CO and specify the unit costs and the associated 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.   In addition, provide the life estimate and survivor curve for each resource component.

305    With reference to Figure 5 in Section 5.2.2 provide the requested information for each of the two scenarios listed below:

Provide details of the costs to backhaul a unit of bandwidth from a serving CO to a hub CO. Specify the resources and their unit costs required for a customer demand passing through the first serving CO, any intermediate CO, and the hub CO.   Describe any differences in the resources and costs associated with nodes used for Level 1 transport and Level 2 transport.   Provide the information for both ATM and IP backbone solutions.

306    Provide the requested information for each of the following components included in Bell Canada 's broadband expansion proposal:

1. fibre facilities and structures in the access network; and
2. fibre facilities and structures in the backbone network,

a)   Describe in detail how the costs of each of 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, life estimates, 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 Bell Canada 's broadband expansion proposal.

307    Refer to Appendix 5, Table 4:

a)   Identify the major resource components that are included in each of the categories listed below. In addition, provide the unit cost and cost driver associated with each identified component in the category.   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.   In addition, provide the life estimates for each resource component;

1. Backbone Electronics;
2. Backbone fibre including associated structures; and
3. Backbone allocated costs.

b)   For the Maintenance and other expenses, identify and describe each included component, provide the associated costing methodology and assumptions, outlining the activities included.   Each explanation should also include cost factors, labour rates, time estimates, and rationalization as appropriate.   Identify the vintage of the data used to develop expense unit cost inputs and explain the methods used to express each of the unit costs in current dollars; and

c)   For the IP cloud, describe in detail how the capacity costing is done.   Provide the unit costs for each resource component that is included in the IP cloud category along with its associated cost driver.   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.   In addition, provide the life estimate, average working fill factor and survivor curve for each resource component.   Provide the assumed bandwidth per user and the overbooking factor used for this study and used for other Bell Canada retail and wholesale services.   If there are major differences in the assumptions, provide an explanation.

308    Provide the details requested below related to the cost studies for Bell Canada 's proposed broadband expansion program.

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 the cost studies for Bell Canada 's proposed broadband expansion program.   If any expense or capital items fall under the category "Other", provide a breakdown of the present worth of annual costs (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 allocated cost, Backbone fibre including associated structures, Access, and IP cloud;

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.

309    Bell Canada proposes 54 communities in which broadband access is to be rolled out in the first year of the program, and 210 communities where broadband access could be rolled out in the remaining four years of the program.   In Appendix 5, Economic Study Associated with Bell Canada's Propose Broadband Expansion Program and the Calculation of the Uneconomic Cost , Bell Canada submitted in paragraph 10:   " The Company notes that the precise construction year and the specific least-cost technology that will be used to expand broadband to these communities cannot be determined at this time."   Tables 3a and 3b provide detail on the estimated upfront capital expenditures for Ontario and Québec, respectively, associated with the 264 qualifying communities.

a)   Provide a Detailed Summary of Phase II Costs table, assuming the upfront capital expenditures (and associated ongoing expenses starting at the appropriate time), for the communities in the remaining four years of the program are spread evenly over years two to five.   Note that the upfront capital expenditures for the communities for the first year are still to be included.   Capital expenditures for years one to five should be treated as ongoing;

b)   Provide a list of the communities in each of the years two to five that were chosen in the answer to part a);

c)   If the construction year and the specific least-cost technology cannot be determined at this time, specify in what year Bell Canada assumed the upfront capital expenditures for the remaining four years of the program for the remaining communities to occur and how capital costs were estimated; and

d)   Indicate whether Bell Canada assumed that capital expenditures were one-time expenditures in the cost study for its broadband expansion proposal.   If Bell Canada has used this assumption in its proposal, provide a revised cost study with capital expenditures treated as ongoing.   Provide a Detailed Summary of Phase II Costs table for the study.

310    In reference to paragraph 90 of Bell Canada's submission, provide, for each year of its broadband expansion cost study, the estimated monthly revenue and cost per end-user for dial-up Internet that were used in the calculation of the net revenue loss.

311    With reference to the cost studies for Bell Canada's proposed broadband expansion program summarized in Table 1 of Appendix 5, provide a revised Table 1 (Summary of results associated with the five-year roll-out plan) and a separate Detailed Summary of Phase II Costs table 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)   Use of asset life estimates specified in Implementation of price cap regulation and related issues , Telecom Decision CRTC 98-2, 5 March 1998, as amended by Telecom Decision CRTC 98-2-1, 20 March 1998 (Decision 98-2), except for equipment for which no asset category existed in the proceeding leading up to Decision 98-2.   Identify which equipment life estimates are not based on Decision 98-2 lives, specifying each life estimate used;

e)   If Bell Canada has assumed any equipment to be non-fungible, assume that all equipment is fungible.   Further, identify which, if any, of the equipment Bell Canada has assumed to be non-fungible in its proposal;

f)   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

g)    If Bell Canada included non-zero productivity increase factors (PIF), capital increase factors (CIF), or expense increase factors (EIF) in its broadband proposal, assume that PIF, CIF, and EIF are all zero for the study period.   Further, specify the assumptions Bell Canada has made for non-zero PIF, CIF, and EIF in its proposal.

Retail and competitor services and rates

401    Bell Canada states in paragraph 20 of its proposal, and in paragraph 5 of Appendix 5, that "retail broadband services offered to end-customers in these areas will be comparable, in terms of rates, terms and conditions, and service quality, to those provided by the Companies via their commercial broadband expansion programs within Ontario and Québec.   Subscribers to the Companies' retail broadband services in these areas would pay the same rates as those paid by the Companies' subscribers in other areas within Ontario and Québec for the same services." [1]   Provide, in chart format to the extent possible, details of the retail services, including rates and charges, terms and conditions, upload and download speed and reliability that the companies would make available in the deferral account funded communities.

402    In paragraph 20 of its proposal, Bell Canada indicates that upon specific requests from alternate broadband providers it will introduce a new wholesale broadband service that will offer such providers usage of the backbone facilities that connect the deferral account funded communities and are constructed and funded by the deferral account as part of its proposal.

a)   Provide Bell Canada's views with respect to establishing a tariff for this service prior to receiving specific requests from alternate broadband service providers; and

b)   Refer to Appendix 3 of TELUS Communications Company's (TCC) Broadband Expansion Proposal, dated 1 September 2006, outlining TCC' proposals for the provision of Competitor Services.   Provide Bell Canada ' views with respect to the use of a similar service approach.

403    Refer to section 8.0, paragraphs 97 to 104, and to section 8.1, paragraphs 105 to 109, which relate to Bell Canada 's proposed Broadband Expansion Service (BES).

a)   Bell Canada proposes to limit BES subscription to a maximum of two broadband service providers. [2]   Provide Bell Canada's analysis and views as to how this proposed arrangement is consistent with subsection 27(2) of the Telecommunications Act ; and

b)   Bell Canada indicates that it would provide its BES in locations where the backbone network facilities would have to be augmented in order to support competitor demand.   For locations where backbone facilities do not need to be augmented, provide details with respect to how Bell Canada proposes to provide service to alternate service providers that require broadband traffic transport.

B.           ACCESSIBILITY PROPOSAL

Consultation

501    Refer to paragraph 14 in which Bell Canada states that ".the Company sought input on improving accessibility in relation to all of the telecommunications services provided by Bell Canada and its affiliates which are subject to Commission oversight, either through a regulatory framework or licensing conditions", and to section 3.3.   To the extent that Bell Canada's accessibility proposals involve accessibility to telecommunications services offered by Bell Canada affiliates:

a)   provide a list of those affiliates and telecommunications services; and

b)   discuss the appropriateness of using the funds in Bell Canada 's deferral account for services offered by Bell Canada affiliates, including the proposal in paragraph 53 related to Bell Distribution Inc. magnet store designation.

Proposed accessibility initiatives

601    Refer to paragraph 34 in which Bell Canada provides an estimate of the funds that would be required from its deferral account to cover the start-up costs associated with the implementation of the proposed Internet Protocol relay (IPR) service and Video Relay Service (VRS) within its territories and those of Bell Aliant in Ontario and Quebec, subject to successful negotiation with Bell Aliant.   Provide details regarding the negotiation with Bell Aliant, including the scope, the objectives, and when it will be completed.

602    In paragraph 39, Bell Canada indicates that it has performed a high-level assessment of the ongoing costs of introducing IPR service and VRS and anticipates that an increase in Bell Canada 's existing general tariff for Bell Relay Service (BRS) will be required to cover the ongoing costs of the services.   Provide an overview of the results of this assessment, identifying the estimated ongoing annual costs, including all of the supporting information and assumptions used to develop the cost estimates, and the associated PWAC.

603    Refer to paragraph 41, in which Bell Canada states that " (a)t this early stage Bell Canada 's intention is to target an implementation in Q3 of 2007 (.) Given the greater challenges of offering VRS, priority would be given to IPR service, followed by VRS.   There may be benefit to incorporating a technical trial and market trial into the project timelines to roll this service out."   Also refer to paragraph 42, where Bell Canada indicates that it may be necessary to introduce VRS in phases, mainly due to the limited availability of qualified American Sign Language (ASL) and particularly langue des signes québécoise (LSQ) interpreters, and that staffing a 7/24 hour call centre with interpreters may impose some challenges, necessitating restricted call centre hours initially.

a)   Provide Bell Canada 's analysis and views of the benefits of incorporating technical and market trials;

b)   Assuming that Bell Canada conducts trials to roll these services out, describe the proposed scope of the IPR service and VRS technical and market trials in terms of the configurations 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;

c)   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 ASL or LSQ to communicate;

d)   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; and

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

604    Refer to paragraph 43 in which Bell Canada states that VRS must be delivered in a manner that will protect against potential fraudulent use, which is a known problem within the United States delivery model today.

a)   Elaborate on what constitutes the fraudulent use of VRS in the United States , and specify whether IPR service is also subject to potential fraudulent use; and

b)   Indicate how Bell Canada would propose to protect against such fraudulent use.

605    Refer to paragraph 44 in which Bell Canada states that during its consultations, interested parties expressed concerns over monitoring the quality of the service for IPR service and VRS.   Provide Bell Canada 's views as to what would constitute the appropriate way to monitor the quality of service for both services.

606    Refer to section 3.2 related to the Bell.ca Special Needs Centre initiative.

a)   Indicate whether customers with disabilities have access to all of the same information and functionalities (e.g. subscribing to service, accessing account information, etc.) through the Special Needs Centre as other customers have through the main Bell Canada website.   Identify and provide the rationale for any information and/or functionalities that are not available through the Special Needs Centre; and

b)   Describe what procedures have been put in place to update the Special Needs section on an ongoing basis.

607    Refer to paragraph 26, in which Bell Canada indicates that it posted information on its Special Needs website informing the general public of the deferral account and invited comments/proposals on needs/products and services to improve accessibility.   Bell Canada states that "(i)n July and August 2006, there were several thousand unique visits to the Bell.ca Special Needs website each month, and the e-mail address received approximately 30 messages per month."   Provide a summary of the comments received.

608    Refer to paragraph 51 in which Bell Canada states, in reference to the proposed Enhanced Special Needs Business Office Centre of Excellence, that the proposal involves a dedicated virtual 310-BELL team with live answer access and which would cover information on the products and services of Bell Canada and its affiliates.

a)   Provide a detailed description of the proposed service (including description, size and composition of the proposed virtual 310-BELL team), and explain how it would be delivered;

b)   List all of the information that would be accessible to persons with disabilities under this proposal.   For each of the listed items, the company's answer should include a description of the products and services and specify the name of the service provider; and

c)    Describe how the proposed centre would differ from Bell Canada 's existing contact and assistance provisions for persons with disabilities.

609    Refer to section 3.4 related to Voice Activated Dialing (VAD).

a)   Describe the challenges that some persons with disabilities might have in accessing the service (e.g. persons with speech impairments and/or slower or atypical speech patterns).   Indicate how Bell Canada proposes to address such challenges to ensure that the service is as widely available as possible; and

b)   Describe how the proposed service would operate, including the mechanisms for registering and charging customers for use of the service.

610    Refer to section 3.6, in which Bell Canada proposes to assign the entire amount remaining from its total allocation to disability initiatives, after having accounted for funding of the initiatives proposed in its accessibility proposal, to a Bell Accessibility Fund.   This Fund would be used to implement additional initiatives, to be identified at a later date, over a period of up to four years.   These initiatives would be submitted for the Commission's approval.   Explain and justify how it would be consistent with Decision 2006-9, particularly the Commission's determinations in paragraph 116, to retain deferral account funds for future initiatives that have not been specifically identified as part of Bell Canada 's proposal.

611    Refer to paragraph 62, point 3, paragraph 63, and paragraph 72, point 1.   Explain in greater detail and contrast the suggested roles of each of the Disability Panel, the Bell Internal Task Force, and the Board (in relation to the Bell Accessibility Fund), identifying any overlap in either the membership or the mandate of each.

[1]       The wording is slightly different at paragraph 20 of Bell Canada 's submission, where the company states that "...[s]ubscribers to the Companies' retail broadband services in these areas would pay similar rates to those paid by the Companies' subscribers in other areas..."

[2]       Except in cases where a carrier and a DSL service provider are partially or fully-owned by the same parent company, then these providers would be considered by Bell Canada as one BES customer.