ARCHIVED - Letter

Ottawa, 20 August 2009

File Nos.: 8740-B2-200904989

8740-B54-200904971

BY E-MAIL

Distribution

Dear Madams, Sirs: 

Re:  Bell Aliant Tariff Notice 242 and Bell Canada Tariff Notice 7181

In TN 242 and TN 7181 dated 13 March 2009, Bell Aliant Regional Communications, Limited Partnership (Bell Aliant) and Bell Canada (the Bell companies) proposed changes to their Gateway Access Services ( GAS ) in Ontario and Quebec.

In Telecom Order CRTC 2009-484, the Commission approved on an interim basis the Bell companies’ proposed two new GAS speed options and rates, their proposal to introduce usage-based billing (UBB) for GAS, effective 90 days from the date of the order, and their proposal to introduce an excessive usage charge for GAS, effective the date the Bell companies notify the Commission that they apply an excessive usage charge to all their retail customers on UBB plans. The Commission further indicated its intent to issue interrogatories to the Bell companies and establish further process.

In a letter dated 24 July 2009, MTS Allstream submitted that GAS is the only means that competitive Internet service providers (ISPs) have of providing high-speed Internet accesses to all of the end-customers that Bell Canada serves and that it is essential that the competitor ISPs be able to challenge Bell Canada’s cost studies. MTS Allstream thus argued that the Commission should require Bell Canada to provide sufficient information on the public record to allow interested parties to make meaningful comments.

The Bell companies are requested to respond to the interrogatories provided in the annex.

In order to streamline the process, interested parties will be able to request public disclosure of confidential information only after the Bell companies provide their responses to the interrogatories, and the requests for public disclosure will apply both to the Bell companies’ economic evaluation report of 16 July 2009 and their responses to the interrogatories.

In light of the above, the Commission establishes the following process:

Responses to interrogatories                                                 11 September 2009

Requests for public disclosure                                                18 September 2009

Replies for requests for public disclosure                               28 September 2009

Service of information, if any to be provided                          07 October 2009
pursuant to determination with respect to
requests for public disclosure

Comments                                                                             21 October 2009

Reply comments                                                                    30 October 2009          

The Commission notes that the comments and reply comments identified in the process above are restricted to the Bell companies’ economic evaluation report of 16 July 2009 and their responses to the interrogatories.

A copy of each interrogatory response, comment or other submission to be filed in accordance with the above process must be served on all other parties by the applicable filing date. When a document is to be filed or served by a specific date, the document must actually be received, not sent, by that date.

Yours truly,

Original signed by

Paul Godin
Director General
Competition, Costing & Tariffs

c.c.:  Daphne Fry, CRTC 819-953-5373 daphne.fry@crtc.gc.ca 

Richard Pagé, CRTC 819-997-4298 richard.page@crtc.gc.ca 

Distribution List

Annex (1)

Distribution list

Bell Aliant, regulatory@bell.aliant.ca 

Bell Canada, bell.regulatory@bell.ca   

Canadian Association of Internet Providers, tom.copeland@caip.ca  
Union des consommateurs, union@consommateur.qc.ca 
The Coalition of Internet Service, regulatory@cfai.cisp.ca 
Vaxination Informatique, jfmezei@vaxination.ca 
EGATE Networks Inc., info@egate.net 
Primus Telecommunications Canada Inc., regulatory@primustel.ca 
Ontario Telecommunications Association, jonathan.holmes@ota.on.ca 
Execulink Telecom, kstevens@execulink.com 
Distributel Communications Limited, regulatory@distributel.ca 
Aventures en Excellence Inc (AEI Internet), info@aei.net 
MTS Allstream Inc., iworkstation@mtsallstream.com 
Cybersurf Corp., marcel.mercia@cybersurf.com 
Managed Network Systems, Inc., clayton@MNSi.Net 
Yak Communications, lisagoetz@globalive.com 
TekSavvy Solutions Inc., info@teksavvy.com 
Acanac Inc., paul@acanac.ca 
Electronic Box Inc., regulatory@electronicbox.net 
Accelerated Connections, mgarbe@dsl4u.ca 
Telnet Communications, regulatory@telnetcommunications.com 
AOL Canada Inc., regulatory@aol.com 

Annex

1. Refer to paragraph 15 of the Bell companies’ reply comments dated 5 June 2009, where they state, among other things, that their applications are intended to implement a price structure which encourages end-users to match their usage levels to their willingness to pay for such usage:

a. For each of the Bell companies’ Residence-Lite and Residence-Basic services, using the most recently available data, provide the average monthly utilization per end-user.

b. For each of the Bell companies’ Residence-Lite and Residence-Basic services, using the most recently available data, provide the percentage of end-users that have usage in GB greater than each of (i) 2 GB, (ii) 20 GB and (iii) 60 GB; further provide the average monthly utilization of these end-users.

c. For each of the Bell companies’ Residence-Lite and Residence-Basic services, using the most recently available data, provide the percentage of end-users that have usage in GB greater than 300 GB; further provide the average monthly utilization of these end-users.

d. For each of the Bell companies’ Residence-Lite and Residence-Basic services, using the most recently available data, provide the percentage of end-users that have uncorrelated usage; further provide the average monthly utilization of these end-users.

e. Discuss the bases on which the Bell companies have proposed monthly usage allowances of 2 GB, 20 GB and 60 GB respectively for Residence-Lite, Residence-Lite Plus, and Residence-Basic.

f. Discuss the bases on which the Bell companies have proposed a UBB rate structure for GAS where, as the speed option increases, the companies’ associated proposed monthly overage usage charge per GB decreases.

g. Discuss the bases on which the Bell companies have proposed a maximum monthly overage usage charge which is the same amount for each speed option i.e. $22.50 per month; further explain why this encourages end-users to match their usage levels to their willingness to pay for such usage.

h. Refer to paragraph 26 of Primus’ submission of 14 April 2009. Provide, with reasons, the Bell companies’ views on Primus’ submission that all overage, uncorrelated and excessive overage usage charges should be on a standard per GB basis.

i. Refer to paragraph 10 of the Bell companies’ application where they describe their UBB proposal as one prong of a three-prong approach to managing capacity on their networks in light of a dramatic increase in internet usage. Provide the Bell companies’ reasons for proposing an excessive overage usage charge that is less, on a per GB basis, than the monthly overage usage charge.

j. Provide the Bell companies’ views on the extent to which the UBB rates are expected to impact the overage usage in excess of the monthly usage allowances of 2 GB, 20 GB and 60 GB.

k. Identify the Bell companies’ peak period and provide, with reasons, the Bell companies’ views on the effectiveness of the proposed UBB rates in reducing peak period congestion; further provide the Bell companies’ views on possible alternative pricing approaches which targets overage usage during the peak period.

2. Refer to paragraph 25 of CAIP’s submission of 14 April 2009 where CAIP claims that ISPs are reporting differences between Bell’s data and the ISP’s own data of as much as 800% and that in one case, Bell has provided data indicating a residential end user consumed 1 TB (terabyte) of data over 20 hours of use. Provide Bell Canada’s views on CAIP’s submission that Bell’s sample UBB data is flawed.

3. Refer to paragraph 22 of the Bell companies’ application of 13 March 2009, which addresses the proposed excessive overage usage charge:

a. Provide a copy of the Bell companies’ Acceptable Use Policies (AUP), cited in that paragraph.

b. Refer to the Bell companies’ submission that “both retail and wholesale end-users will also be subject to the service being restricted, suspended or disconnected if further instances of excessive usage occur, in accordance with the Bell companies’ AUP”. Define “restricted” and provide examples.

c. Provide and describe fully, illustrating with examples, all criteria used by the Bell companies to decide whether to restrict, suspend or disconnect the end-customer of a GAS customer in the event of excessive overage usage.

d. Describe the procedures the Bell companies propose to follow after determining that the service of an end-user of its GAS customer should be restricted, suspended or disconnected (e.g. consultation with the relevant wholesale customer, whether the Bell companies or their wholesale customer notifies the end-user).  Include a full discussion of the role of the Bell companies and their wholesale customer vis-à-vis that wholesale customer’s end-user.

e. Explain the bases for the Bell companies’ proposal to restrict, suspend or disconnect an end-user’s service given that the associated costs should be recovered through the excessive overage usage charge.

f. Explain the relationship between the Bell companies’ Terms of Service for wholesale customers and their proposal to apply their Bell companies’ AUP to the end-users of their wholesale customers as it relates to restriction, suspension and disconnection.

4. Refer to paragraph 24 and 25 of the Bell companies’ application and to 32 to 35 of their reply comments, which address the proposed uncorrelated usage charge:

a. Identify all situations in which uncorrelated usage arises: e.g. when an end-user:  (i) reconfigures the modem, (ii) uses a low-cost ID provided by a second ISP, (iii) uses modems from more than one ISP, or (iv) when an end-user moves to a new home.

For each situation, identify whether the retail services involved are (i) Bell Aliant’s or Bell Canada’s and a GAS customer’s services, or (ii) the services of two GAS customers.

b. For each situation identified in response to (a) above: identify and describe each step in the series of events that lead to uncorrelated usage, including a discussion of the associated operational processes. Include examples as appropriate.

c. In paragraph 25, the Bell companies submit that “When uncorrelated usage occurs in any given month, the Companies’ systems will determine which ISPs are responsible for that usage.  That information will be confirmed by the Companies …”. Explain the confirmation process; including whether it involves contact between the Bell companies and a GAS customer.

d. Refer to paragraph 26 of Vaxination Informatique’s submission of 14 April 2009. Provide the Bell companies’ views on Vaxination Informatique’s submission that the Bell companies can identify the end-user associated with uncorrelated usage. Further provide the Bell companies’ views on whether they can identify the end-user associated with uncorrelated usage.

e. For each situation identified in response to (a) above, identify and describe actions that, in the Bell companies’ view, the ISPs in question could take to avoid uncorrelated usage.

5. Refer to paragraph 35 of the Bell companies’ reply comments in which they describe the rate proposed as a premium usage rate and to paragraph 27 of their 16 July 2009 economic evaluation report where they state that the intended purpose of the uncorrelated usage charge is to discourage uncorrelated usage:

a. Discuss the bases on which the Bell companies have concluded that the rate proposed for the uncorrelated usage charge is at a level that will adequately deter uncorrelated usage.

b. Refer to paragraph 27 of Primus’ submission of 14 April 2009. Provide, with reasons, the Bell companies’ views on the proposition that not all uncorrelated usage is attributable to intentional measures to evade payments.

c. Provide the Bell companies’ views on why its rate for uncorrelated usage would be appropriate in cases where it can be confirmed that the uncorrelated usage is not intentional.

d. Refer to the paragraphs 12 and 13 of the Ontario Telecommunications Association’s submission of 14 April 2009. Provide, with reasons, the Bell companies’ views on whether the Terms of Service for GAS and/or the companies’ Acceptable Use Policies such as restriction, suspension or disconnection could be applied to address uncorrelated usage on a per-end user basis.

e. Provide the Bell companies’ views on remedies, other than charging on a per GB basis, they could use to address uncorrelated usage.

6. Explain whether the traffic for the Bell companies’ retail VOIP (digital voice) services runs on the Bell companies’ public Internet network or is carried over a separate managed network. If the Bell companies’ retail VOIP services traffic runs on their public Internet network, explain whether the Bell companies include the VOIP services’ usage by their retail end-users when calculating the retail overage usage charges and if not, why not.

7. At paragraph 25 of their economic evaluation report the Bell companies identify that the GAS cost study does not include any access costs associated with their primary exchange services, unbundled local loops or dry loops, nor does it include any costs for FTTN:

a. Provide a technical diagram which clearly identifies the resource cost components that are included in the study.

b. Identify the major switching and transmission components included in the GAS cost studies.

c. For each of the major switching and transmission components, provide the following:

i. unit cost (Installed First Cost) specifying the vintage of the data;

ii. explanations regarding the application of retrospective PIFs and CIFs to restate each unit cost from the vintage year to the year 2009, with supporting rationale;

iii. average working fill factor, if any; and

iv. life estimate.

8. Explain:  (i) if and how peak period usage impacts the switching and transmission costs and if so, for which cost components, and (ii) how peak period usage is taken into consideration in the cost study (including how demand is forecast to reflect peak usage). If peak period usage is not taken into consideration in the cost study, explain why not.

9. At paragraph 31 of their economic evaluation report, the Bell companies identify ongoing product management as one of the major activities under expenses causal to the service. The Bell companies also identify that the costing method was based on labour unit costs. Provide the time estimates, labour unit cost values and vintages associated with these ongoing product management expenses.

10. At paragraph 32 of their economic evaluation report, the Bell companies identify the software cost components included in the costs causal to the service:

a. Provide a breakdown of the software cost by major component.

b. For each component identified in response to part (a) above that is based on explicit time estimates, provide the following:

i. labour unit cost values and vintages; and

ii. methodology and assumptions used in developing the time estimates.

11. Refer to tables 5a, 5b, and 5c of the Bell companies’ economic evaluation report:

a. For each table, provide a breakdown of the Maintenance Expenses Causal to Demand into the major sub-activities of maintenance expenses.

b. for each major sub-activity of maintenance expenses that are developed based on explicit time estimates, provide the following:

i. labour unit cost values and vintages; and

ii. methodology and assumptions used in developing the time estimates.

c. for each major sub-activity of maintenance expenses that are developed based on maintenance and repair factors, provide the following:

i. maintenance and repair factor specifying the vintage of the data; and

ii.explanations regarding the application of retrospective PIFs, EIFs and CIFs to restate each unit cost from the vintage year to the year 2009, with supporting rationale.

d. Explain why the Present Worth of End of Study Value as a percentage of the PWAC for Capital causal to demand for Residence-Lite Plus is significantly different from those for Residence-Lite and Residence-Basic.

12. With respect to table 5d of the Bell companies’ economic evaluation report, explain why the Service Provisioning Expenses Causal to Demand per access per month for Business-Lite Plus is significantly different than that of the three Residence speed offerings.

13. With respect to tables 5e and 5f of the Bell companies’ economic evaluation report, for each of Expenses Causal to the Service and Capital Causal to the Service, explain why the associated cost per access per month for Business-Lite Plus is significantly different from those of the three Residence speed offerings.

14. Identify whether or not the revenues and costs associated with the GAS service charges are included in the Bell companies’ cost study:

a. If included in the cost study, identify the expense line item that contains the service charge costs; further provide revised economic evaluation report tables which separately identify the service charge revenues and costs.

b. If not included in the cost study, explain why not; further provide revised economic evaluation report tables which separately identify the service charge revenues and costs.

15. Confirm that the Bell companies’ cost studies include the incremental revenues and incremental costs (i.e. those costs which would not be incurred if UBB was not introduced) related to each of (i) the introduction of an overage usage charge per GB per month and (ii) the introduction of an excessive overage usage charge per GB in excess of 300 GB. If so, for each of Residence-Lite, Residence-Lite Plus, and Residence-Basic, provide the following information:

a. In the format of tables 5, provide separately the incremental costs (i.e. those costs which would not be incurred if UBB was not introduced) associated with each of (i) the introduction of overage usage charge per GB per month and (ii) the introduction of excessive overage usage charge per GB in excess of 300 GB. Further provide the costing methodology and assumptions.

b. Provide the average monthly usage per end-user assumed in the Bell companies’ cost studies.

c. For each of (i) overage usage charge per GB per month and (ii) excessive overage usage charge per GB in excess of 300 GB, provide the assumed percentage of end-users for which the usage charge will apply and the average monthly usage for these end-users.

d. In the format of table 2, provide the incremental revenues and incremental costs per access per month associated with (i) the introduction of overage usage charge per GB per month and (ii) the introduction of excessive overage usage charge per GB in excess of 300 GB.

If the Bell companies’ cost studies do not include incremental revenues and incremental costs related to each of (i) the introduction of an overage usage charge per GB per month and (ii) the introduction of excessive overage usage charge per GB in excess of 300 GB, provide revised cost studies which include these incremental revenues and costs. Further provide, for each of Residence-Lite, Residence-Lite Plus, and Residence-Basic, the information requested in a), b), c) and d) above.

16. At paragraph 27 of their economic evaluation report, the Bell companies identify that revenues and costs causal to the demand for uncorrelated usage charges have not been included in the study since the Bell companies have insufficient information to forecast future volumes of uncorrelated usage:

a. Provide the estimated incremental monthly equivalent cost (MEC) per GB of uncorrelated usage for each of Residence-Lite, Residence-Lite Plus, and Residence-Basic.

b. Provide the Bell companies’ estimate of the annual revenue and cost impacts of introducing uncorrelated usage charges should the Commission approve the proposed rate of $1.875 per GB. Further provide the assumed percentage of end-users that cause uncorrelated usage and the average monthly usage for these end-users

17. With respect to table 2 of the Bell companies’ economic evaluation report, confirm that the mark-ups associated with the proposed rates represent a significant increase relative to the mark-ups that can be derived from costs previously filed with the Commission for other GAS speeds:

a. For residence GAS, provide a table which shows the per access cost, revenue and associated mark-up for each of the following speed options:

i. 128 Kbps based on study filed 5 July 2004;

ii. 512 Kbps based on study filed 16 July 2009;

iii. 2 Mbps based on study filed 16 July 2009;

iv. 3 Mbps based on study filed 18 Feb 2004;

v. 4 Mbps based on study filed 18 Feb 2004; and

vi. 5 Mbps based on study filed 16 July 2009

b. Refer to Telecom Decision 2008-17 where the Commission has continued to mandate the provision of GAS on the basis that it is the only cost-effective means to provide transport to, and access from an ILEC’s central office to the competitor’s customer, and that its rates are based on service costs. Provide, with reasons, the Bell companies’ views as to whether, to the extent that GAS service costs have changed significantly since the Bell companies’ 2004 filings, service rates should take account of changes in the costs of provisioning the services.

Date modified:

2009-08-20