ARCHIVED - Letter

Ottawa, 5 May 2011

File numbers: 8663-B7-200905052, 8663-C41-200813800, 8663-G1-200813776, 8663-K1-200809494, 8663-L2-200813742, 8663-M5-200907199, 8663-S4-200813833, 8663-S6-200813726, 8663-S7-200813718, 8663-M4-200813841, 8663-T7-200909640, 8663-U2-200813784, 8663-W36-200910225, 8620-A2-200906836, 8620-B7-200905599, 8620-C141-200906042, 8620-K1-200905607

BY E-MAIL

TO: Distribution List (attached)

RE: Local competition and wireless number portability in small ILEC territories

Dear Madam or Sir:

In Proceeding to review access to basic telecommunications services and other matters, Telecom Notice of Consultation CRTC 2010-43, 28 January 2010,[1] the Commission determined that it was appropriate to re-examine the local competition and wireless number portability (WNP) frameworks that apply in the territories of the small incumbent local exchange carriers (ILECs).  As a result, the Commission suspended consideration of applications that had been submitted to introduce either local competition or WNP in the small ILECs’ territories until the review initiated in that notice had concluded.  A complete list of files that were suspended as a result of the notice of consultation is provided in Appendix 1 to this letter.

On 3 May 2011, the Commission issued Obligation to serve and other matters, Telecom Regulatory Policy CRTC 2011-291.  In that decision, the Commission concluded that local competition (including local number portability) and WNP should continue to be introduced in all of the small ILECs’ territories based on existing frameworks, subject to modifications set out in that decision.

In particular,

• the local competition and WNP start-up costs of the small ILECs serving 3,000 or fewer total residential and business network access services (NAS), including the total residential and business NAS of all their affiliates and/or their parent company, will be reimbursed by the new entrant(s) over a period of three years;
• small ILECs not meeting the above-noted condition may apply for an exogenous adjustment to recover their local competition and WNP start-up costs; and
• all small ILECs may apply to recover their ongoing costs of local competition and WNP through either an exogenous factor or a subsidy from the National Contribution Fund, or a combination of the two.  The amount of the subsidy will be determined by reducing the rate used for subsidy calculation purposes by up to a maximum of $2.

Note that residential rates may not increase by more than $4 in any one year.[2]  This amount would include any rate increases to recover exogenous adjustments for local competition and/or WNP costs, as well as any rate increases to recover subsidy lost due to the Commission’s determinations in Telecom Regulatory Policy 2011-291.

Given that the terms and conditions for the implementation of local competition and WNP in the small ILECs’ territories have changed, the following process will apply for dealing with requests for either local competition or WNP that have been suspended:

1) Competitive local exchange carriers (CLECs) or wireless service providers (WSPs) that have previously expressed interest in competing for the provision of local service in specific small ILECs’ territories or have requested the implementation of WNP in those territories are requested to indicate by 20 May 2011, by way of a letter addressed to the Commission and to the affected small ILEC, whether or not they are still interested in expanding their operations to offer local service or obtaining WNP in the small ILEC’s territory.  CLECs and WSPs must also specify in their letter the name(s) of the exchange(s) in which they wish to compete.

Note: Given that competitors will be required to reimburse certain small ILECs for local competition and/or number portability start-up costs, competitors may wish to consult with the small ILEC in question to establish whether this would be the case in the territory in question.  The competitor may withdraw its intention to compete within 10 days of the date of the decision in which the Commission approves the small ILEC’s costs for which the competitor would be liable.

2) Where a CLEC or a WSP reaffirms its interest in pursuing competition or implementing WNP in a small ILEC’s territory, the small ILEC in question is to file an updated implementation plan with the Commission, serving a copy to the CLEC and/or WSP, no later than 30 days from the date the CLEC’s or WSP’s letter of confirmation of interest is posted on the Commission’s website.  Each small ILEC’s updated implementation plan plan must contain

• all information required by Revised regulatory framework for the small incumbent local exchange carriers, Telecom Decision CRTC 2006-14, 29 March 2006, and Regulatory framework for the implementation of wireless number portability within the serving territories of the small incumbent local exchange carriers, Telecom Decision CRTC 2008-122, 18 December 2008; and
• detailed information about costs and cost recovery (see Appendix 2 for questions and Appendix 3 for a table to be completed).

In conjunction with filing its implementation plan, the small ILEC is to file any required tariffs.

Where a CLEC or a WSP indicates that it is no longer interested in pursuing local competition or WNP, the related file will be closed.

3)The small ILECs’ updated implementation plans will be treated as applications pursuant to section 22 of the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure (Rules of Procedure).  Please note, however, that the existing file numbers will not change.

The Commission will post each application on its website.  Pursuant to the Rules of Procedure, each CLEC or WSP (the respondent) that has requested either local competition or WNP in the applicant’s territory may file an answer with the Commission within 30 days of the date that the application is posted on the Commission’s website and serve that answer on the small ILEC (the applicant).  Any interested person may file an intervention with respect to the application within 30 days of the date the application is posted on the Commission’s website and serve that intervention on the applicant.  The applicant may file, with the Commission, a reply to any answer or intervention within 10 days after the deadline for intervening in the proceeding and serve that reply on the respondent and the interveners to whom the applicant is responding.

Yours sincerely,

Original signed by S. Bédard

Suzanne Bédard
Senior Manager, Tariffs
Telecommunications

cc: Laurie Ventura, CRTC, 819-997-4589, laurie.ventura@crtc.gc.ca  

Attach.

Distribution List

sgander@kmts.biz; lisa.marogna@cwct.ca; regulatory@brucetelecom.com; paul.frappier@telmilot.com; vp.finances@sogetel.com; pallard@cooptel.qc.ca; j-fmathieu@telupton.qc.ca; gcordeau@maskatel.qc.ca; nantel@tellambton.net; telstep@telstep.net; telvic@telvic.net; kgugan@wightman.ca; sachuter@tcc.on.ca; rbanks@mornington.ca; rwi_gr@rci.rogers.com; ted.woodhead@telus.com; michel.messier@cogeco.com; Regulatory@sjrb.ca; Regulatory.Matters@corp.eastlink.ca

APPENDIX 1

Local competition and WNP applications suspended pending the outcome

of the Telecom Notice of Consultation 2010-43 proceeding

APPENDIX 2

Small ILECs are to include the following cost and cost recovery elements as part of their implementation plans:

1. The company’s total number of residential and business NAS, as of 1 June 2011.

2. The company’s ownership and affiliate structure, including the total residential and business NAS of all the small ILEC’s affiliates and/or its parent company as of 1 June 2011.

3. A 10-year demand forecast using Table 1 in Appendix 3.

4. The names of the exchanges where local competition, LNP, and/or WNP will be implemented.

5. A list of all tariffs required by competitors, including:

a) a description of the service;
b) whether it is a new or an existing tariffed service;
c) a description of the required tariff changes, as applicable; and
d) the proposed effective date for the service introduction or tariff changes.

Note: proposed tariffs are to be filed with the implementation plan.

6. The following costing information:

a) Using Table 2 in Appendix 3, provide details of the cost cash flows associated with implementing local competition, LNP, and/or WNP in the company’s operating territory. The cost cash flows are to be broken down into start-up and ongoing costs, and also expressed as present worth of annual costs (PWAC) and annual equivalent cost (AEC), using a 5-year study period.  Small ILECs with over 3,000 total NAS should also include a sensitivity that reflects a 10-year study period.

Further, provide a breakdown of the start-up and ongoing costs into major capital and expense components.  The response should also provide details on the functionality and activities associated with each of the major components, and the associated costing methodology and all assumptions ‒ including the source and vintage of data used, the cost increase factor(s), expense increase factor(s), and productivity increase factor(s) applied in the study period.

b) Further to the information required in 6. a) above, provide

i) the general cost study parameters and assumptions, such as cost of capital, cost of debt, debt equity ratio, tax rate, labour unit cost(s), and the study period used to derive the costs provided in Table 2; and

ii) details as to the schedule for the various elements of your plan.

7. A plan for cost recovery.  As noted above, residential rates may not increase by more than $4 in any one year.  This amount would include any rate increases to recover exogenous adjustments for local competition and/or WNP costs, as well as any rate increases to recover subsidy lost due to the Commission’s determinations in Telecom Regulatory Policy 2011-291.

[1] As amended by Obligation to serve and other matters, Telecom Notice of Consultation CRTC 2010‑43-1, 5 March 2010; Telecom Notice of Consultation CRTC 2010-43-2, 30 March 2010; and Telecom Notice of Consultation CRTC 2010-43-3, 23 July 2010.

[2] See Regulatory framework for the small incumbent telephone companies, Decision CRTC 2001-756, 14 December 2001, and Revised regulatory framework for the small incumbent local exchange carriers, Telecom Decision CRTC 2006-14, 29 March 2006.

Date modified:

2011-05-05