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Ottawa, 15 August 2012

File No.: 8678-C12-201107714


Parties to Telecom Notice of Consultation CRTC 2011-3021

RE: Follow-up to Northwestel Inc. – Review of regulatory framework, Telecom Regulatory Policy 2011-7712 – Northwestel Modernization Plan

On 6 July 2012, Commission staff issued a letter stating that it would notify parties as soon as possible of the process to comment on Northwestel Inc.’s (Northwestel’s) plan to modernize its network infrastructure, which was filed with the Commission on 3 July 2012 in accordance with Telecom Regulatory Policy 2011-771 (the Modernization Plan).

On 8 August 2012, the SSi Group of Companies (SSi) filed a letter with the Commission proposing a process for completing a holistic review of the communications needs in the North and Northwestel’s Modernization Plan. On 10 August 2012, the Commission received a letter from TELUS Communications Company supporting SSi’s proposed process.

Commission staff notes that Northwestel has divided its Modernization Plan into two main pieces (the “Astral Component” and the “Base Component”), and submitted that the plan does not easily separate into two distinct pieces and that the pieces are intended to form an integrated Modernization Plan.

Commission staff further notes that Northwestel has proposed to finance a portion of the Modernization Plan, described as the “Astral Component”, from tangible benefits3 funds that would result if the Commission were to approve this aspect of the application of Northwestel’s parent company, BCE Inc. (BCE), for authority to purchase Astral Media Inc. (Astral) (the BCE/Astral transaction).4 The Commission launched a proceeding to consider whether to approve the BCE/Astral transaction in Broadcasting Notice of Consultation 2012-370, and will review BCE’s tangible benefits proposal, including the appropriateness of using those monies to fund the “Astral Component”, in the context of that proceeding.

Given that Northwestel has made its Modernization Plan contingent on determinations in the BCE/Astral transaction proceeding, it would be premature to initiate a proceeding seeking comments on the proposed Modernization Plan before the BCE/Astral transaction proceeding is complete. A proceeding to review Northwestel’s Modernization Plan and regulatory framework will therefore be launched following the Commission’s decision on the BCE/Astral transaction.

Yours sincerely,

Original signed by

Chris Seidl,
Executive Director

cc: Christine Bailey, CRTC, (819) 997-4557,

Parties to Telecom Notice of Consultation CRTC 2011-302:;

[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.

[2] Northwestel Inc. – Review of regulatory framework, Telecom Regulatory Policy CRTC 2011-771, 14 December 2011.

[3] Under this policy, applicants requesting transfers of ownership and control in the broadcasting industry are required to propose financial commitments that will be made to support the industry (tangible benefits) amounting to at least 10 percent of the value of the transaction for all conventional and specialty television assets and 6 percent of the value of the transaction for all radio assets.

[4] On 16 March 2012, Northwestel’s parent company, BCE Inc., announced that it had signed a definitive agreement to acquire all of the assets and shares of Astral Media Inc. for a total consideration of approximately $3.38 billion. Consistent with the Commission’s tangible benefits policy, BCE proposed tangible benefits amounting to approximately $200 million (Astral tangible benefits proposal).

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