ARCHIVED - Letter

Ottawa, 25 July 2011

Our Reference:  8652-B54-201109140

BY E-MAIL

Mr. Denis E. Henry
Vice President
Regulatory, Government and Public Law
Bell Aliant Regional Communications
160 Elgin Street
Ottawa, Ontario  K2P 2C4

Dear Sir:

Re: Part 1 application by Bell Aliant seeking updated costs for residential Primary Exchange Service for subsidy calculation purposes

The Commission is in receipt of a Part 1 application filed by Bell Aliant Regional Communications, Limited Partnership (Bell Aliant) on 2 June 2011 seeking updated residential Primary Exchange Service  (PES) costs for subsidy calculation purposes across its serving territory, comments from MTS Allstream Inc. (MTS Allstream) filed on 21 June 2011 and 6 July 2011, comments from Bragg Communications Inc., operating as EastLink, Cogeco Cable Inc., Rogers Communications Inc., Shaw Communications Inc., and Quebecor Media Inc., on behalf of its affiliate Vidéotron G.P. (collectively, the Cable Carriers); Saskatchewan Telecommunications (SaskTel); and TELUS Communications Company (TELUS) filed on 6 July 2011, and reply comments from Bell Aliant filed on 27 June 2011 and 18 July 2011.

Given the significant increases in Bell Aliant’s proposed residential PES costs and the initial evidence provided by Bell Aliant in its 2 June 2011 application and 18 July 2011 reply comments, Commission staff considers that it is necessary to validate the replacement cost new assumptions used by Bell Aliant to develop the proposed prospective incremental copper cable capital costs included in its cost submission.  Accordingly, Bell Aliant is to provide responses to the attached interrogatories by 2 September 2011.

Responses to interrogatories are to be filed with the Commission and served on all parties.

Documents to be filed and served in accordance with the above process are to be received, not merely sent, by the date indicated.  Copies of the documents should also be sent to thomas.hui@crtc.gc.ca.

Yours sincerely,

Original signed by

Lynne Fancy
Director General
Competition, Costing and Tariffs
Telecommunications

cc: Yvan Davidson, yvan.davidson@crtc.gc.ca
Thomas Hui, thomas.hui@crtc.gc.ca
Distribution List

Encl.

DISTRIBUTION LIST:

regulatory@bell.aliant.ca;
iworkstation@mtsallstream.com; 
regulatory.matters@corp.eastlink.ca;
yves.mayrand@cogeco.com;
regaffairs@quebecor.com;
ken.engelhart@rci.rogers.com;
jean.brazeau@sjrb.ca;
regulatory.affairs@telus.com; 
document.control@sasktel.sk.ca;
Attachment

1. Refer to the 2011 updated residential Primary Exchange Service (PES) costs provided in Appendix A of Bell Aliant’s 2 June 2011 cost submission.

For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central:

a) Provide a regulatory economic study report using the report format in Appendix D of Bell Aliant’s Regulatory Economic Studies Manual. 

b) For each study report provided in response to part a) above

i) Provide separate “Detailed Summary of Causal Cost” table for each of the High Cost Serving Area (HCSA) bands (bands E, F and G).  Costs associated with Land, Building, Power & Other should be included as a separate line item in each of the “Detailed Summary of Causal Cost” tables.

ii) Provide residential PES configuration diagrams reflecting the “growth routes and growth technologies” used to develop the residential PES costs. 

iii) For each of the major growth technologies provided in response to part b) ii) above, provide the percentage of residential PES demand that is assumed to be provisioned using that growth technology along with supporting assumptions, including the data sources and vintages of the data used to calculate the percentage.

2. For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each HCSA band, for each of the years 2005 to 2010, provide the actual total year-end residential PES demand and the actual total year-end unbundled loop demand.

3. Refer to paragraph 20 in Bell Aliant’s 18 July 2011 reply comments where Bell Aliant stated that “plant and equipment that is currently unused is not really spare, and is not available for other uses.”

For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each HCSA band, for each of copper feeder and copper distribution cable, indicate whether the unused copper facilities will have alternative uses, with supporting rationale, for each of the following scenarios:

a) If Bell Aliant is rolling out Fibre to the Node (FTTN) in its HCSAs.

b) If a competitor requests an unbundled loop in Bell Aliant’s HCSAs.

c) If a competitor requests a dry loop in Bell Aliant’s HCSAs.

d) If a competitor requests a low speed Competitive Digital Network (CDN) access service in Bell Aliant’s HCSAs.

4. Refer to paragraph 25 of Bell Aliant’s 18 July 2011 reply comments where Bell Aliant indicated that plant and equipment must be replaced when it wears out or is damaged.  With respect to the copper feeder cable plant, describe Bell Aliant’s replacement provisioning policy when a copper feeder cable needs to be replaced.  The response should include a description of conditions under which fibre feeder cable will be used as a replacement for a copper feeder cable.

5. Refer to paragraph 26 of Bell Aliant’s 18 July 2011 reply comments where Bell Aliant indicated that it must still invest in new plant and equipment in areas where demand is growing.

a) For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each HCSA band, for each of the years 2009 and 2010, provide a list of locations where new copper cable plant was installed to meet residential PES demand growth.

b) For each location identified in response to part a) above, provide:

i) the growth in residential PES demand.

ii) the dollar amount of new copper feeder cable investment, and

iii) the dollar amount of new copper distribution cable investment.

6. Refer to Appendix B of Bell Aliant’s 2 June 2011 cost submission where Bell Aliant generally forecasted a decline in residential PES demand between 2010 and 2015.  Further refer to the response to The Companies(CRTC)14Nov08-1 PN 2008-5 where Bell Aliant provided its latest company-specific measured copper feeder and distribution cable WFFs which indicate a significant amount of spare capacity in Bell Aliant’s existing copper facilities in each of the four Bell Aliant Atlantic regions and in Bell Aliant Central.

a) For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each HCSA band, confirm that Bell Aliant has determined the prospective incremental copper cable capital costs in its residential PES cost submission by using a capacity cost approach based on cost new as a proxy for cost of advancement for both the in-service residential PES demand at the beginning of the study and the incremental residential PES demand over the study period.

b) For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each HCSA band, for each of copper feeder and copper distribution cable plant, explain why Bell Aliant expects to incur significant incremental copper cable capital costs (cost of advancement) in light of the forecast decline in total demand for residential PES, the significant amount of spare capacity in Bell Aliant’s existing copper facilities and Bell Aliant’s responses to interrogatories 3), 4) and 5) above.

c) For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each HCSA band, provide the following:

i) an estimate of the percentage of Outside Plant Equipment Capital Causal to Demand identified as “Updated Costs” in Appendices E and F of Bell Aliant’s 2 June 2011 cost submission that is attributable to copper feeder cable capital costs and,

ii) an estimate of the percentage of Outside Plant Equipment Capital Causal to Demand identified as “Updated Costs” in Appendices E and F of Bell Aliant’s 2 June 2011 cost submission that is attributable to copper distribution cable capital costs.

d) For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each HCSA band, for each of copper feeder and copper distribution cable plant, for each copper cable type (i.e. aerial, underground, buried, submarine and building), provide the capital cash flows assumed for the in-service residential PES demand at the start of the study period.

7. For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each of the following copper cable asset accounts, provide the most current percentage breakdown of copper cable plant investment into Bell Aliant’s access and non-access (e.g. transport, inter-office) network, specifying the vintages of these percentages:

a) Copper aerial cable

b) Copper underground cable

c) Copper buried cable

d) Copper submarine cable

e) Copper building cable

The response should include the supporting assumptions, including the data sources and vintages of the data used to calculate these percentages.

8. For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, for each of Bell Aliant’s copper cable asset accounts (excluding the drop wire related asset accounts and non-access network copper cable plant investment), for each of the years 2005 to 2010,

a) provide the dollar amount of:

i) plant in service (PIS)

ii) plant additions

iii) plant retirements

iv) annual plant depreciation

v) plant adjustments (specify)

vi) net book value (NBV)

b) For each of the four Bell Aliant Atlantic regions and for Bell Aliant Central, provide a breakdown of each of the 2010 copper cable PIS and NBV provided in response to part a) above by HCSA band for the following asset classes:

i) Copper feeder aerial cable,

ii) Copper feeder buried cable,

iii) Copper feeder underground cable,

iv) Copper distribution aerial cable,

v) Copper distribution buried cable,

vi) Copper distribution building cable, and

vii) Copper distribution underground cable.

If the above breakdown of the 2010 copper cable PIS and NBV by HCSA band is not readily available, provide the above breakdown of the copper cable PIS and NBV using the copper cable pair-meter information provided in Appendices E and G of Bell Aliant’s 2 June 2011 cost submission or an alternative approach, specifying the methodology and assumptions used.

9. Refer to the copper cable plant additions provided in response to 8 a) above. Provide a breakdown of the copper cable plant additions (or estimates of the percentage breakdown) into those that are:

a) due to FTTN demand growth,

b) due to demand growth excluding FTTN

c) due to replacement, and

d) other (specify

Date modified:

2011-07-25