ARCHIVED - Letter

Ottawa, 22 August 2011

File No.: 8678-C12-201107714

ABRIDGED

BY E-MAIL

To: Distribution List

RE: Review of price cap regulatory framework for Northwestel Inc. and related matters, Telecom Notice of Consultation 2011-302, as amended by Telecom Notice of Consultation 2011-302-1 – Requests for disclosure and for further responses to interrogatories

This letter addresses requests for disclosure of information designated as confidential and for further responses to certain interrogatories filed in the above-noted proceeding.

On 8 August 2011, the following parties filed requests for disclosure of information designated as confidential and/or for further responses to interrogatories: SSi Micro Ltd. (SSi Micro), TELUS Communications Company (TELUS), the Public Interest Advocacy Centre (PIAC) and the Consumer Association of Canada (collectively PIAC/CAC), and the Yukon Government.

On 17 August 2011, Northwestel Inc. (Northwestel) responded to the above requests.

Requests for disclosure of information designated as confidential are addressed in Part I below, while requests for further responses to interrogatories are addressed in Part II and Attachment 1.

This letter reflects the Commission’s objective of ensuring that all parties have the benefit of the maximum amount of information placed on the public record at the earliest appropriate stage, in order to facilitate a more efficient and effective proceeding.

Part I - Requests for Disclosure

Requests for disclosure of information designated as confidential are assessed in light of sections 38 and 39 of the Telecommunications Act (the Act) and sections 30 and following 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 the information falls into a category of information that can be designated confidential pursuant to section 39 of the Act. In the case of each request, the Commission then considers whether the public interest in disclosure outweighs the specific direct harm, if any, likely to result from disclosure. In doing so, a number of factors are taken into account, including the degree of competition and the importance of the information to the ability of the Commission to obtain a full and complete record. The factors considered by the Commission are discussed in more detail in Procedures for filing confidential information and requesting its disclosure in Commission proceedings, Broadcasting and Telecom Information Bulletin CRTC 2010-961, 23 December 2010.

Having regard to the considerations set out above, requests for disclosure of the information designated by Northwestel as confidential are denied.

Part II - Requests for Further Responses

With regard to requests for further responses to interrogatories, the requirements of section 76 of the Rules of Procedure apply. The merits of arguments both for and against the filing of further responses are taken into account, as well as the general principles enunciated by the Commission in past proceedings.

The major consideration is the relevance of the information requested to the matter at issue.

The availability of the information requested is also a factor, which is balanced against the relevance of the information. If the provision of the information sought would require an effort disproportionate to the probative value of the information itself, further responses will not be required.

Another factor considered is the extent to which an interrogatory answer is responsive to the interrogatory as it was originally asked. Generally, parties are not required to provide further responses to requests for further information from a party that did not ask the original interrogatory.

Having regard to all of the above considerations, Northwestel is to provide further responses to the extent set out in Attachment 1 to this letter. Unless otherwise indicated, these responses are to be provided on the public record.

Pursuant to the deadlines set out in Telecom Notices of Consultation 2011-302 and 2011-302-11, further responses with respect to the interrogatories set out in Attachment 1 below are to be filed with the Commission and served on all parties by 26 August 2011. The material must be received and not merely sent by this date.

In addition, requests for information addressed to Northwestel and SSi Micro are set out in Attachments 2 and 3, respectively. Certain requests for information in Attachment 2 are confidential as they refer to information filed in confidence with the Commission. An abridged version is provided for the public record. This further information is considered to be important to the record of this proceeding. In their responses, Northwestel and SSi Micro are to provide information on the public record consistent with the disclosure requirements above. Responses to these requests for information are to be filed with the Commission and served on all parties by 2 September 2011.

_________________________
1 Review of price cap regulatory framework for Northwestel Inc. and related matters, Telecom Notice of Consultation CRTC 2011-302, 6 May 2011, as amended by Telecom Notice of Consultation CRTC 2011-302-1, 22 June 2011.

Yours sincerely,

Original signed by:
C.Bailey for:

John Macri,
Director, Telecommunications Policy

cc: Christine Bailey, CRTC, (819) 997-4557, christine.bailey@crtc.gc.ca

Distribution List:

regulatoryaffairs@nwtel.ca; regulatory.affairs@telus.com; regulatory@ssimicro.com; linda_maljan@gov.nt.ca, lisa.badenhorst@gov.yk.ca; mhollis@gov.nu.ca;
jhpratt@msn.com; rrondeau@northwestel.net; piac@piac.ca; regulatory@bell.aliant.ca

Attachment 1

FURTHER RESPONSES TO INTERROGATORIES

NWTel(YG)07Jul11-17 c)

Northwestel is to provide a complete list of potential new features or services, including Internet Protocol (IP) based services that could be provided once CCS7 is introduced.

Attachment 2

Northwestel

Services, Baskets, Constraints and Rates

2201 Refer to the response to interrogatory NWTel(CRTC)06May11-204, Attachment 1, for i) Business individual line, and for ii) Business multi-line, provide an estimate of the Phase II Cost plus a mark-up of 25 percent for each of the services instead of a weighted average.

Local competition

2401 Refer to the CLEC obligations (http://www.crtc.gc.ca/eng/comm/telecom/eslcclec.htm). Indicate whether it would be appropriate to modify these obligations to reflect specific conditions of Northwestel’s operating territory, and if so, how they should be modified.

Service Improvement Plan (SIP)

2501 Refer to the response to interrogatory NWTel(CRTC)07Jul11-1501. Explain why the DMS-10 switches serving Gjoa Haven, Faro, and Aklavik cannot be upgraded to enable enhanced calling features and CCS7 capabilities.

2502 Refer to the response to interrogatory NWTel(CRTC)07Jul11-1504, wherein the company notes that the network in place was initially funded through a one-time government grant/contribution. Explain how the assets of this network were valued, including dollar amounts where known, and how these assets were subsequently recorded on the books of Northwestel.

2503 Refer to the response to interrogatory NWTel(PIAC)07Jul11-3, Attachment 1. For Indicator 2.1B, Out-of Service Trouble Reports Cleared within 24 hours – Rural, for the period of June 2009 – December 2009, confirm that the results for this indicator reflect the 48-hour standard implemented as a result of Telecom Regulatory Policy 2009-3042. If not, provide the estimated or actual results for this indicator based on the 48-hour standard.

2504 Refer to Appendix 4(d) of the company’s submission dated 13 June 2011 entitled “Residential Loop Study”, line item “Outside Plant Equipment” and provide an estimate of the SIP costs included in this line item.

Costing

2601 Refer to the response to interrogatories NWTel(CRTC)07Jul11-1601 a) and NWTel(CRTC)07Jul11-1604 b), relating to Expenses causal to Demand – Maintenance. The response indicates that annual expense cash flows for each of outside plant and central office equipment (COE) maintenance activities were developed based on the ratio of the number of hours for the specific type of work to the total hours worked by technical forces applied to the operating costs from the accounting system. These annual cash flows for the activities were further used to develop unit costs.

a. Explain if the operating costs from the accounting system were reviewed to ensure that fixed common costs, variable common costs and one-time costs were excluded before annual expense cash flows and unit cost(s) were developed. If yes, indicate the methodology used to exclude the above. If not, explain why not, and provide revised maintenance costs that exclude the above components on a per month per network access service (NAS) basis as provided in Appendix 4(e) of the company’s 13 June 2011 submission.

b. Provide details of the costs included in the operating costs such as, salaries of personnel performing the work (e.g. technical forces), pension and benefits, floor space, computers, motor vehicles, support personnel and management. The response should also indicate the level of management costs included (e.g. two levels above the personnel doing work).

2602 Refer to the response to interrogatory NWTel(CRTC)07Jul11-1601 d), Attachment B relating to the 2010 H1 Band Residential PES model.

a.

i.

ii.

iii.

iv.

v.

b.

i.

ii.

iii.

iv.

c.

2603 Refer to the response to interrogatory NWTel(CRTC)07Jul-1604 b) i), Expenses causal to Demand - Maintenance on pages 4 and 5 of 10, wherein the methodology change from the 2006 study and 2010 study and hours reported was explained.

a. The response indicates that “preventative maintenance is causal to the residential PES and is included in the 2010 study and was inadvertently excluded from the 2006 study”. Identify the tab name and cost centre(s)3 associated with preventive maintenance activities/expenses. Provide the total percentage of preventive maintenance activities/expenses that apply to other services offered by the company, identifying to which major services preventive maintenance applies.

b. The response indicates that “there was a significant increase in the hours and hence cost attributed to maintenance of access plant”. Identify the cost centre(s) that had additional hours reported for access maintenance for each of the years 2008, 2009 and 2010 identifying the additional hours reported. Further, explain with supporting rationale the year-over-year variations in the hours reported to these costs centres for access maintenance when the variation is greater than 5 percent. In addition, explain if there was a corresponding increase in hours and costs attributed to access maintenance for the company’s other access services such as business access. If not, explain why not.

2604 Refer to the response to interrogatory NWTel(CRTC)07Jul11-1604 b) ii). Expenses Causal to Demand – Advertising , sales management and billing wherein it specifies that there was a significant increase in collecting payments, investigating and correcting billing errors and bad debt expenses.

a. Provide a breakdown of this expense into the following components: collecting payments, investigating and correcting billing errors, bad debt and other (identifying the activity).

b. Provide the bad debt expenses/factor for residential PES service for each of the years 2008, 2009 and 2010. Also provide the bad debt factor as a percentage of revenues for each of the years 2009 and 2010 on a company-wide basis.

c. Explain if there was a significant increase in collection activities and bad debt expenses associated with the other services offered by the company, identifying the services. If not, explain why not.

2605 Refer to the response to interrogatory NWTel(CRTC)07Jul11-1604 d), Expenses causal to Demand – “Other Drop” and to the response to interrogatory NWTel(CRTC)07Jul-1601, Attachment B, tab(s) “loop drop Install” and “loop drop maintenance”.

a. Explain the activities included in “loop drop install” and “loop drop maintenance”.

b. Provide the “loop drop install” and “loop drop maintenance” expenses for each of the years 2008, 2009 and 2010 for Band H1 and explain the year- over-year variations in each of these cost when the variation is greater than of 5 percent.

c. Provide the loop installations and loop drop maintenance unit cost for each of the years 2008, 2009 and 2010. The response should include the total costs and the number of applicable loops used to calculate the unit costs.

2606 Refer to the response to interrogatory NWTel(CRTC)07Jul11-1601, Attachment E, relating to the 2010 H1 Band Residential PES model.

a.

b.

_____________________________

2 Follow-up to Telecom Decision 2008-105 – Retail quality of service regime in non-forborne markets for ILECs with over 25,000 NAS, Telecom Regulatory Policy CRTC 2009-304, 25 May 2009

____________________________

3 In Attachment B of the response to interrogatory NWTel(CRTC)07Jul-1604 D

Attachment 3

SSi Micro

1. Refer to the CLEC obligations (http://www.crtc.gc.ca/eng/comm/telecom/eslcclec.htm). Indicate whether it would be appropriate to modify these obligations to reflect specific conditions of Northwestel’s operating territory, and if so, how they should be modified.

2. Provide the total number of SSi Micro’s residential internet subscribers broken down by community.

3.      a) Provide a detailed description of the local telecom services that SSi Micro intends to            offer in Northwestel’s territory if local competition is approved.

b) For each local voice service you intend to offer, provide a network diagram detailing how the service would be provisioned highlighting where the company would interconnect with other carriers’ networks.

Date modified:

2011-08-22