ARCHIVED - Letter

Ottawa, 5 April 2011

Our Reference: 8638-C12-201014620

BY E-MAIL

To Distribution List

Re: Follow up to Telecom Regulatory Policy CRTC 2010-632, Wholesale high-speed access services proceeding – Request for disclosure of costing information filed in confidence

This letter addresses requests for disclosure of information for which a claim of confidentiality has been made by Cogeco Cable Inc., Quebecor Media Inc., on behalf of its affiliate Videotron Ltd., Rogers Communications Inc., and Shaw Communications Inc. (collectively, the cable carriers).

On 18 March 2011, the Canadian Network Operators Consortium Inc. (CNOC) filed a request for disclosure of information for which confidentiality had been claimed.

On 25 March 2011, the cable carriers filed with the Commission their response to the above request for disclosure.

Disclosure

Requests for disclosure of information for which confidentiality has been claimed are addressed in light of sections 38 and 39 of the Telecommunications Act and section 33[1] of the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure (the Rules of Procedure).  In evaluating a request, an assessment is made as to whether there is any specific direct harm likely to result from the disclosure of the information in question.  Further, in order to justify a claim of confidence, any such harm must be sufficient as to outweigh the public interest in disclosure. In making this evaluation, a number of factors are taken into consideration, including the following:

The degree of competition that exists in a particular market or that is expected to occur is an important consideration in assessing requests for disclosure.  All things being equal, the greater the degree of actual or expected competition, 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 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; and

It should be noted that 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.

In addition, in the circumstances of this case, the extent to which similar information was disclosed on the public record of the proceeding leading to Cogeco, Rogers, Shaw, and Videotron - Third-party Internet access service rates, Telecom Decision CRTC 2006-77, 21 December 2006, was considered. 

Having regard to all of the considerations set out above, the information filed under a claim of confidentiality in response to the interrogatories and cost studies listed in Attachment 1 is, to the extent set out in the Attachment, to be placed on the public record of this proceeding. In each case where full or partial disclosure is to occur, it is considered that the specific direct harm, if any, likely to be caused by disclosure would not outweigh the public interest in disclosure.

Other Matters

It should be noted that in several interrogatory responses, certain requested information was either not provided or was incomplete. Accordingly, the cable carriers are to revise their responses to 15 September 2010 and 4 February 2011 interrogatories, as specified in Attachment 2.

In addition, certain information is being requested which is considered to be important to the record of this proceeding. The cable carriers are requested to respond to the interrogatories included in Attachment 3.

In their responses to Attachments 3, the cable carriers are to provide information on the public record consistent with the disclosure requirements above.

Filing Requirement

It is to be noted that additional questions are required to assess the additional information provided in response to the 4 February 2011 interrogatories. Accordingly the process is modified to allow additional time to provide responses to the additional questions identified in Attachment 3. The cable carriers are accordingly required to provide the information sought in Attachments 1, 2 and 3 by 20 April 2011.

The information to be disclosed by the cable carriers, as set out in Attachment 1, or to be provided, as set out in Attachment 2 and 3, is to be filed with the Commission and served on all interested parties, by 20 April 2011. The above material must be received, not merely sent, by this date. Copies of the documents should also be sent to mohammed.omar@crtc.gc.ca.

Yours sincerely,

Original signed by

Yvan Davidson / for
Lynne Fancy
Director General
Competition, Costing and Tariffs
Telecommunications

cc: Yvan Davidson, yvan.davidson@crtc.gc.ca
Mohammed Omar, mohammed.omar@crtc.gc.ca

DISTRIBUTION LIST:

regulatoryaffairs@nwtel.ca; bell.regulatory@bell.ca; reglementa@telebec.com; iworkstation@mtsallstream.com; regulatory@bell.aliant.ca; Regulatory.Matters@corp.eastlink.ca; Regulatory@sjrb.ca; marcel.mercia@cybersurf.com; reglementation@xittel.net ; regulatory@distributel.ca; lisagoetz@globalive.com; regulatory@primustel.ca; telecom.regulatory@cogeco.com; regaffairs@quebecor.com; ken.engelhart@rci.rogers.com; regulatory.affairs@telus.com; crtc@mhgoldberg.com; eric@rothschildco.com; gfletcher@incentre.net; berzins@nucleus.com; babramson@mccarthy.ca; regulatory@execulink.com; ctacit@tacitlaw.com; abriggs@cogeco.ca; slavalevin@ethnicchannels.com; crtc@les.net; LBC_Consulting@live.ca; andre.labrie@mcccf.gouv.qc.ca; bob.Allen@abccomm.com; ghariton@sympatico.ca; lefebvre@rogers.com; kirsten.embree@fmc-law.com; bruce@brucebuchanan.net; jonathan.holmes@ota.on.ca; cataylor@cyberus.ca; chris.allen@abccomm.com; regulatory@vianet.ca; piac@piac.ca; tom.copeland@caip.ca ; hemond@consommateur.qc.ca; blackwell@giganomics.ca; jhpratt@msn.com; crtc@paul.ca; regulatory@lya.com; regulatory@teksavvy.com; dmckeown@viewcom.ca; David.Wilkie@tbaytel.com; regulatory@fibernetics.ca; jfmezei@vaxination.ca; stephen.scofich@tbaytel.com; regulatory@bcba.ca; crtcmail@gmail.com; telecom@gov.bc.ca; regulatory@telnetcommunications.com; apilon@acninc.com; regulatory@cnoc.ca; jp@electronicbox.net; pris@pris.ca; michelle.duguay@telus.com; document.control@sasktel.sk.ca

Attachment 1

Disclosure of Confidential Information

The cable carriers are to provide on the public record the information filed with the Commission in confidence, as set out below:

Cogeco(CRTC)4Feb11-107 b)

Provide the year over year percentage growth, based on the combined (total of upstream and downstream traffic) average monthly Internet usage levels per end-user for each of the years 2006 to 2010, on the public record.

Cogeco(CNOC)11Feb11-1

Disclose the forecasted growth in traffic levels as requested.

Cogeco(CNOC)11Feb11-4 b)

Disclose the average working fill factors (AWFF) as requested.

Rogers(CRTC)4Feb11-106 b)

Provide the year over year percentage growth, based on the combined (total of upstream and downstream traffic) average monthly Internet usage levels per end-user for each of the years 2006 to 2010, on the public record.

Rogers(CNOC)11Feb11-2 b)

Disclose the average working fill factors (AWFF) as requested.

Rogers(CNOC)11Feb11-3 e)

Disclose the forecasted growth in traffic levels as requested.

Shaw(CRTC)4Feb11-105 b)

Provide the year over year percentage growth, based on the combined (total of upstream and downstream traffic) average monthly Internet usage levels per end-user for each of the years 2006 to 2010, on the public record.

Shaw(CNOC)11Feb11-3 b)

Disclose the average working fill factors (AWFF) as requested.

Shaw(CNOC)11Feb11-4 e)

Disclose the forecasted growth in traffic levels as requested.

QMI(CRTC)4Feb11-106 b)

Provide the year over year percentage growth, based on the combined (total of upstream and downstream traffic) average monthly Internet usage levels per end-user for each of the years 2006 to 2010, on the public record.

QMI(CRTC)4Feb11-111 b)

Refer to the response to QMI(CRTC)15Sept10-101. For each of the TPIA services, provide the ratio of the present worth of annual costs (PWAC) associated with equipment maintenance to the Total PWAC costs on the public record.

QMI(CRTC)4Feb11-116

Refer to the response to QMI(CRTC)15Sept10-101. Provide the productivity factors for CMTS, routers and others used in the Economic Study on the public record.

QMI(CNOC)11Feb11-3 b)

Disclose the average working fill factors (AWFF) and life estimates as requested.

QMI(CNOC)11Feb11-4 e)

Disclose the forecasted growth in traffic levels as requested.

Attachment 2

Further responses to Interrogatories

Cogeco is to provide further response to the interrogatory identified below to the extent set out below:

Cogeco(CRTC)15Sept10-108.

Provide a complete response to parts e) and f) and place an abridged version on the public record.

Attachment 3

Interrogatories for Rogers Communications Inc.

1001. Refer to the Economic Study provided by the company in response to the Commission interrogatories dated 15 September 2010.  For each of the TPIA services, derive the ratio of the present worth of annual costs (PWAC) associated with equipment maintenance to the Total cost impacts and place the ratio on the public record.

1002. a) Using the format of Tables 1 to 18 in the company’s 10 December 2010 Economic Evaluation, provide revised proposed costs and rates per end-user, for each of the following change in assumptions:

i. For each year of the study period, apply a productivity factor of 10 percent for traffic driven components (e.g. CMTS, Transport and Router).

ii. For each year of the study period, apply a productivity factor of 15 percent for traffic driven components.

iii. the growth in traffic levels, provided on page 3 of the response to Rogers(CRTC)15Sept10-107 is 20% per year, except for the first two years where the annual growth is assumed to equal the actual annual traffic growth experienced in 2010 over 2009.

iv. combine parts i) and iii) above.

v. combine parts ii) and iii) above.

b) Provide the average annual change in the combined Segmentation and CMTS costs per end-user from 2006 to 2010 provided in the response to Rogers(CRTC)4Feb11-108. Further explain how the average annual change in the combined segmentation and CMTS cost per end-user was derived from the information, with supporting rationale.

c) With respect to the response to parts a) i) and a) ii) above, comment on the extent to which equipment capacity for traffic-driven cost components are increased over time to satisfy higher traffic demand without significantly increasing the overall provisioning costs per end-user and thereby causing significant unit cost decreases per peak period bandwidth for this category of costs.

1003. Refer to Rogers(CRTC)4Feb11-103b) where the company has stated that the relationship between traffic speed and volume is derived from the sampling of speed. Explain the relationship between traffic speed and volume that has been assumed in the study with supporting rationale. Provide the ratio(s) between volume (monthly average traffic volumes in MB per end-user) and traffic speed (peak period traffic in Mbps) that have been derived from the sample data, including all supporting assumptions, with rationale.

1004. Refer to the response to Rogers(CRTC)15Sept10-105a)(iii). For each of DOCSIS 2.0 and DOCSIS 3.0 services, provide a step-by-step calculation in an Excel spreadsheet to derive the CMTS per-downstream channel cost.

Interrogatories for Quebecor Media Inc., on behalf of its affiliate Videotron Ltd.

1001. Refer to Tab “Annex 1” of the Attachment to QMI(CRTC)04Feb2011-107.

a) Provide the costing methodology and assumptions used to estimate cost per node - modernization in Rows 31, and cost per node - regular decongestion and pre-modernization deployment in Row 32.  Further, provide the changes in costing methodology and assumptions, if any, from those used in the cost study submitted in the proceeding leading to Decision 2006-77 to estimate these costs, with supporting rationale.

b) Explain the purpose of using a multiplicative factor in the calculation of “modernization cash flows- gross value” in Row 49, with supporting rationale. Further, confirm that the same multiplicative factor was used in the cost study submitted in the proceeding leading to Decision 2006-77 to estimate these costs.  If not, explain the changes in this calculation, with supporting rationale.

c) Identify all the cash flows that are included in Row 55 titled “Economic study disclosed cash flows (gross of 90% attribution)”.  Further, for each of these cash flows, provide the calculation and all relevant data (such as capital unit costs /factors) used to estimate these cash flows by updating Annex 1 and providing the capital unit costs and the associated drivers used.

d) Confirm that the ”Estimated cash flows - IP Layer” calculated in Row 59 are to replace the “Total IP Layer – Variable” cash flows provided in Row 101  in tab “Model ING” in Attachment 1 to the response to QMI(CRTC)15Sept10-101. If yes, provide an update of Attachment 1 to the response to QMI(CRTC)15Sept10-101 reflecting this change.  If no, identify which IP Layer cash flows are excluded in Row 59 and for each of the IP Layer cash flows that are excluded, provide the calculation and all relevant data (such as capital unit costs /factors) used to estimate these cash flows; further provide a revised Annex 1 that exclude the IP Layer cash flows.

1002. a) Using the format of Tables 1 to 8 in the company’s revised 14 December 2010 Economic Evaluation report, provide revised proposed costs and rates per end-user, for each of the following change in assumptions:

i. For each year of the study period, apply a productivity factor of 10 percent for traffic driven components (e.g. CMTS, Transport and Router).

ii. For each year of the study period, apply a productivity factor of 15 percent for traffic driven components.

iii. the growth in traffic levels, provided on page 3 of the response to QMI(CRTC)15Sept10-107 for each year is 20% per year, except for the first two years where the annual growth is assumed to equal the actual annual traffic growth experienced in 2010 over 2009.

iv. combine parts i) and iii) above.

v. combine parts ii) and iii) above.

b) Provide the annualized productivity factor for CMTS-related costs per kbps provided in QMI(CRTC)4Feb11-116 b) from 2006 to 2010 and explain how this productivity factor was derived from the information, with supporting rationale.

c) With respect to the response to parts a) i) and a) ii) above, comment on the extent to which equipment capacity for traffic-driven cost components are increased over time to satisfy higher traffic demand without significantly increasing the overall provisioning costs per end-user and thereby causing significant unit cost decreases per peak period bandwidth for this category of costs.

1003. Refer to the tab “Model ING” in Attachment 1 of the response to QMI(CRTC)15Sept10-101. For each of Basic and High Speed service and for each of IP layer costs and Node segmentation costs, provide the changes, if any, in costing methodology and assumptions from those used in the cost study submitted in the proceeding leading to Decision 2006-77.

1004. Refer to Head-ends –IP Layer related (Head-end Infrastructure) costs on page 7 of the response to QMI(CRTC)04Feb2011-107. Explain with supporting rationale why these costs are causal to the TPIA service. Further explain with supporting rationale how the percentage used to attribute these costs to TPIA was estimated. Additionally, provide any changes in costing methodology and assumptions from those used in the cost study submitted in the proceeding leading to Decision 2006-77.

1005. Refer to the response to QMI(CRTC)15Sept2010-107 where the company provided average monthly downstream per end-user (GB) per speed tier, average peak downstream traffic per end-user (kbps) per speed tier based on one-day sample (last Monday of October 2010) and peak traffic estimate per end-user based on the average measured traffic per end-user for the week of 11-18 October 2010.

a. Provide revised average monthly downstream per end-user (GB) per speed tier and average peak downstream traffic per end-user (kbps) per speed tier based on a period longer than one day (e.g. three or four days).

b. Provide revised peak traffic per end-user based on the average of the sample data for the week of 11-18 October 2010, and 19-26 October 2010 with an adjustment for traffic growth, if applicable.

c. Further comment on the use of above revised data to update Tables 1 through 8 of the company’s TPIA Updated economic evaluation revised 14 December 2010.

1006. Refer to Attachment 1 of the response to QMI(CRTC)15Sept10-101.  Provide a copy of Attachment 1 along with all the associated excel spreadsheets that are linked.

1007. Refer to the excel spreadsheet – section “cost drivers and volumes” referred to in part (b) (iii), item 5 of the response to QMI(CRTC)04Feb2011-107. 

a) Confirm that the downstream peak traffic per end-user provided in Row 8 is the average for all speeds. If not, explain what it represents.

b) Provide the peak-to-average ratio used that was used in the cost study filed in the proceeding leading to Decision 2006-77.

Interrogatories for Cogeco Cable Inc.

1001. Refer to the Economic Study provided by the company in response to the Commission interrogatories dated 15 September 2010.  For each of the TPIA services, derive the ratio of the present worth of annual costs (PWAC) associated with equipment maintenance to the Total cost impacts and place the ratio on the public record.

1002. a) Using the format of Tables 3.1 to 3.5 in the company’s 10 December 2010 Economic Evaluation report, provide revised proposed costs and rates per end-user, for each of the following change in assumptions:

i. For each year of the study period, apply a productivity factor of 10 percent for traffic driven components (e.g. CMTS, Transport and Router).

ii. For each year of the study period, apply a productivity factor of 15 percent for traffic driven components.

iii. the growth in traffic levels, provided on page 2 of attachment 3 in response to Cogeco(CRTC)15Sept10-101 is 20% per year, except for the first two years where the annual growth is assumed to equal the actual annual traffic growth experienced in 2010 over 2009.

iv. combine parts i) and iii) above.

v. combine parts ii) and iii) above.

b) Provide the average annual change in the DOCSIS Equipment costs per kbps from 2006 to 2010 as provided in the response to Cogeco(CRTC)4Feb11-119 a). Further explain how the average annual change in the DOCSIS Equipment costs per kbps was derived from the information, with supporting rationale.

c) With respect to the response to parts a) i) and a) ii) above, comment on the extent to which equipment capacity for traffic-driven cost components are increased over time to satisfy higher traffic demand without significantly increasing the overall provisioning costs per end-user and thereby causing significant unit cost decreases per peak period bandwidth for this category of costs.

1003. Refer to the table below which provides a comparison of the monthly rate per end-user for each speed tier provided in response to interrogatory Cogeco(CRTC)4Feb11-120 and in TPIA Economic Evaluation filed in response to CRTC’s 15 September 2010 interrogatories.

a. Explain why Speed Tiers 4 and 5 monthly rate per end-user have increased significantly between the two above-noted cost studies relative to other lower speed Tiers, specifying any change in cost methodology and assumptions between the two cost study responses, with supporting rationale.

b. For speed Tier 4 for each of the bandwidth sensitive cost component (e.g. segmentation, IP layer, traffic aggregation) provided in response to interrogatory Cogeco(CRTC)4Feb11-120, explain why the ratio of speed Tier 4 to speed Tier 3 bandwidth sensitive cost components is significantly higher than the ratio of speed Tier 4 to speed Tier 3 average bandwidth allocations (i.e. equivalence factor), provided in response to interrogatory Cogeco(CRTC)15Sep10-107, with supporting rationale.

c. For speed Tier 5 for each of the bandwidth sensitive cost component (e.g. segmentation, IP layer, traffic aggregation) provided in response to interrogatory Cogeco(CRTC)4Feb11-120, explain why the ratio of speed Tier 5 to speed Tier 3 bandwidth sensitive cost components is significantly higher than the ratio of speed Tier 5 to speed Tier 3 average bandwidth allocations (i.e. equivalence factor), provided in response to interrogatory Cogeco(CRTC)15Sep10-107, with supporting rationale.

d. For each speed Tier 4 and Tier 5, provide the company and ISP end-user forecast, their respective year over year growth rates, and overall uniform growth rate.  Also, provide the methodology and assumptions used to develop these end-user forecasts.  Further, explain with supporting rationale, any significant changes (in excess of 20%) in the company’s and ISPs’ year over year growth rates.

1004. Provide the revised attachment 1 and attachment 2 of response to Cogeco(CRTC)15Sept10-101 that incorporates all the changes made to these spreadsheets in response to Cogeco(CRTC)4Feb11-120 and Cogeco(CRTC)4Feb11-121.

Interrogatories for Shaw Communications Inc

1001. Refer to the Economic Study provided by the company in response to the Commission interrogatories dated 15 September 2010.  For each of the TPIA services, derive the ratio of the present worth of annual costs (PWAC) associated with equipment maintenance to the Total cost impacts and place the ratio on the public record.

1002. a) Using the format of Tables 1 to 15 in the company’s 10 December 2010 TPIA Economic Evaluation, provide revised proposed costs and rates per end-user, for each of the following change in assumptions:

i. For each year of the study period, apply a productivity factor of 10 percent for traffic driven components (e.g. CMTS, Transport and Router).

ii. For each year of the study period, apply a productivity factor of 15 percent for traffic driven components.

iii. the growth in traffic levels, provided in part (b) (ii) in the response to Shaw(CRTC)15Sept10-107 is 20% per year, except for the first two years where the annual growth is assumed to equal the actual annual traffic growth experienced in 2010 over 2009.

iv. combine parts i) and iii) above.

v. combine parts ii) and iii) above.

b) Provide the average annual change for each of CMTS cost per kbps, Transport cost per kbps and Router costs from 2006 to 2010 as provided in the response to Shaw(CRTC)4Feb11-114 a). Further explain how the average annual change for each of CMTS cost per kbps, Transport cost per kbps and Router costs was derived from the information, with supporting rationale.

c) With respect to the response to parts a) i) and a) ii) above, comment on the extent to which equipment capacity for traffic-driven cost components are increased over time to satisfy higher traffic demand without significantly increasing the overall provisioning costs per end-user and thereby causing significant unit cost decreases per peak period bandwidth for this category of costs.

1003. For each expense item (e.g. service call, trouble reporting and assistance) that is common to TPIA and the company’s retail high speed Internet Service and included in the Economic Evaluation filed in support of TPIA dated 10 December 2010, provide a comparison of the estimate of the per end-user unit cost associated with the company’s expenses to provide its own high speed Internet Service and to provide the TPIA Service.

[1] The new Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure (the Rules of Procedure) came into force on 1 April 2011; section 33 of the new Rules of Procedure replaces section 19 of the old CRTC Telecommunications Rules of Procedure.

Date modified:

2011-04-05