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Ottawa, 29 August 2012

Our Reference: 8663-C12-201108754

BY EMAIL

To: Distribution List

Dear Madam / Sir:

RE: Review of regulatory framework for the small incumbent local exchange carriers and related matters, Telecom Notice of Consultation CRTC 2011-348-4 - Requests for information

Pursuant to the procedure set out in paragraph 42 of Review of regulatory framework for the small incumbent local exchange carriers and related matters, Telecom Notice of Consultation CRTC 2011-348-4, 30 July 2012, attached are requests for information addressed to the small incumbent local exchange carriers (small ILECs) that are members of l’Association des Compagnies de Téléphone du Québec inc. (ACTQ) and the Ontario Telecommunications Association (OTA).

Reponses to the interrogatories are to be filed with the Commission and served on all parties by 19 September 2012.  Responses are to be received, and not merely sent, by this date.

Appendix 1 contains the names of the small ILECs to whom these requests for information are addressed.  Appendix 2 contains the interrogatories.

Yours sincerely,

‘Original signed by J. Macri’

John Macri
Director
Telecommunications Policy

c.c.: William Lloyd, CRTC, (819) 997-4654, william.lloyd@crtc.gc.ca

Attachments (2)

Distribution List

grubb@hurontel.on.ca;
wagrier@1000island.net;
rbanks@mornington.ca;
steve@wtccommunications.ca;
roxboro@ontarioeast.net;
sachuter@tcc.on.ca;
jpatry@telcourcelles.qc.ca;
nantel@tellambton.net;
telstep@telstep.net;
pdowns@nexicom.net;
pwightman@wightman.ca;
a.schneider@hay.net;
vp.finances@sogetel.com;
j-fmathieu@telupton.qc.ca;
gcordeau@maskatel.qc.ca;
lisa.marogna@cwct.ca;
nfrontenac@kw.igs.net;
tracy.cant@ontera.ca;
regulatory@execulink.com;
telvic@telvic.net;
scoffey@dryden.ca;
m.baron@brktel.on.ca;
pallard@cooptel.qc.ca;
nicolet@puc.net;
jdowns@nexicomgroup.net;
regulatory@brucetelecom.com;
dave.baxter@quadro.net;
gosfield@gosfieldtel.com;
rroy@telwarwick.qc.ca;
paul.frappier@telmilot.com;
nantel@tellambton.net;
jonathan.holmes@ota.on.ca;
admin@cochranetel.ca;
sdesy@actq.qc.ca;

Appendix 1

ACTQ Member Companies

CoopTel
La Compagnie de Téléphone de Courcelles Inc.
La Compagnie de Téléphone de Lambton Inc.
La Compagnie de Téléphone de St- Victor
La Compagnie de Téléphone Upton Inc.
Le Téléphone de St- Ephrem inc.
Sogetel inc.
Téléphone Guèvremont inc.
Téléphone Milot inc.
OTA Member Companies

Brooke Telecom Co-operative Limited
Bruce Telecom
CityWest Telephone and Cable Corp.
Cochrane Telecom Services
Dryden Municipal Telephone System
Execulink Telecom Inc.
Gosfield North Communications Co-operative Limited
Hay Communications Co-operative Limited
Huron Telecommunications Co-operative Limited
The Lansdowne Rural Telephone Company Limited
Mornington Communications Co-operative Limited
Nexicom Telecommunications Inc.
Nexicom Telephones Inc.
North Frontenac Telephone Corporation Limited
North Renfrew Telephone Company Limited
Ontera
Quadro Communications Co-operative Inc.
Roxborough Telephone Company Limited
Tuckersmith Communications Co-operative Limited
Westport Telephone Company Limited
Wightman Telecom Limited 

Appendix 2

Interrogatories

401  Paragraph 58 of the JTF Proposal1 states the following:

...forbearance should be an option for carriers and not be forced on any carrier.

In light of Telecom Decision 2012-3372, specifically paragraphs 5 and 6, explain with supporting rationale how the JTF’s statement is consistent with the discharge of the Commission’s duties under section 34 of the Telecommunications Act.

402  Paragraph 93 of the JTF Proposal provides an estimate of the reduction in toll interconnection revenues for the small ILECs represented by the JTF under the proposed toll interconnection rates.  For each of the years 2011 and 2012, for each small ILEC represented by the JTF, provide estimates of toll interconnection revenues, separately for direct connection (DC) services and toll trunk interconnection services, with and without the reductions under the JTF Proposal.  Provide all data, methodologies and assumptions used in developing the estimates, including trunk mileages.

403  Paragraph 89 of the JTF Proposal states the following:

…the difference between the SILEC DC and toll trunk rates and the Bell DC and toll trunk rates subsidizes the provision of residential basic service in SILEC operating territories…

  1. Provide quantitative evidence, such as costing studies or other relevant data, that demonstrates that revenues from residential basic service plus subsidies from the National Contribution Fund do not cover the costs for residential basic service.  Provide all data, methodologies and assumptions used to develop this evidence.
  2. Provide all references to Commission decisions or orders that indicate that small ILEC DC and trunk revenues are intended to subsidize the provision of residential basic service in small ILEC operating territories under a price cap regime.

404  In paragraph 88 of its submission, the JTF proposes that the small ILEC DC and toll trunk rates be set at the Bell Companies’ 31 December 2010 rates for DC and Competitor Digital Network Services metropolitan IX channels respectively,

  1. Does the JTF proposal assume that if small ILEC DC and toll trunk rates were set at the Bell Companies’ levels, these rates would be able to recover the small ILECs’ costs related to the provision of these services?
  2. If the response in (a) is yes, provide all supporting cost evidence, including any cost studies.
  3. If the response in (a) is no, explain, with supporting rationale, why all telecommunications service providers should subsidize the provision of toll services in small ILEC territories.
  4. If the response in (a) is no, provide small ILEC DC and toll trunk rates based on costs plus a reasonable mark-up, identifying and justifying the mark-up.  Provide all cost evidence, including any cost studies, in support of these rates.

405  Paragraph 87 of the JTF Proposal states the following:

...it is proposed that the difference between prevailing industry rates for DC and toll trunks and the currently approved rates for these two elements be consolidated into a pool of funds separate from the local contribution subsidy, yet administered by the National Contribution Fund, and paid to the SILECs on a fixed monthly basis.  Telecommunications Service Providers (“TSPs”) would continue to contribute to the National Contribution Fund on the same basis as they do currently.  The difference between SILEC revenues generated by using the SILECs' most recent rates and volumes for these services and SILEC revenues that would have been generated using the Bell Companies' rates would be added to the SILEC subsidy pool and distributed among the SILECs on a pro rata basis.

  1. Provide, using an illustrative numerical example, a detailed description of how this proposal would work.  Indicate whether any adjustments in future years would be needed (for example to reflect variations in toll minutes).  Provide a detailed description of any new information required by the Central Fund Administrator for its operations and the sources and timing of that information.
  2. With reference to paragraph 182 of Telecom Regulatory Policy 2011-2913, under the JTF proposal would a small ILEC continue to receive amounts from the searate pool of funds once the competitor presence in a forborne exchange has reached 75 percent?  Explain with supporting rationale.
  3. Comment, with supporting rationale, on the appropriateness of recovering this difference through a per-residential network access service (NAS) subsidy.  Provide an illustrative numerical example of how the per-residential NAS subsidy amounts would be calculated.

406  Paragraph 67 of the JTF Proposal states that the small ILEC toll interconnection rates have motivated some industry players to bypass the small ILEC toll regime.

For each small ILEC represented by the JTF, provide estimates of the amount of minutes associated with such bypass and the associated toll interconnection revenues lost to the small ILECs.  Provide all assumptions, data, and methodologies used in the development of these estimates.

407  At paragraph 33 of its submission, the JTF proposes that the small ILECs be permitted to price services in the Fourth Basket up to any Commission-approved rate or any forborne rate in Canada, in consideration of the extensive amount of local forbearance in Ontario and Quebec.  Under this proposal, the JTF stated that the small ILECs would provide objective and verifiable evidence of forborne prices to the Commission in support of their tariff applications.

  1. Provide a list of services for which small ILECs have had difficulty in finding a Commission-approved tariff rate due to forbearance.
  2. Provide examples of what would constitute objective and verifiable evidence for a forborne rate.

408  At paragraph 34 of its submission, the JTF proposes for competitor access services in the Fourth Basket that small ILECs be permitted to either file a Phase II economic evaluation study or choose a rate that suits their specific market situation and set their prices for these services up to any Commission-approved rate for similar services across the country.

Propose criteria on which the Commission could rely to assess whether a small ILEC competitor access service rate should be priced up to a similar competitor access service rate.  Provide examples on how to apply these proposed criteria.

409  At paragraph 37 of its submission, the JTF proposes that the small ILECs be permitted to establish rate ranges and de-average rates within their serving territory or local exchange, for both residential and business local exchange services.  At paragraph 38 of its submission, the JTF proposes to use the lowest demonstrable rate available in the market as the price floor of a rate range.

  1. For each small ILEC, provide the list of services for which rate ranges and rate de-averaging should be permitted.
  2. If the lowest demonstrable rate in a given market for one of the services cited above is not regulated by the Commission (because it is forborne or because it is a service offered by a competitor), comment on how the lowest demonstrable rate would be determined.  Provide examples of what supporting information, including Phase II costs and related costing information, could be provided to the Commission, in support of a proposed price floor of a rate range.
  3. With respect to the services in the Fourth Basket, if the JTF proposes that small ILECs be permitted to establish rate ranges and to de-average rates for only retail services in this basket, comment on whether a separate basket should be established for competitor services given that the pricing principles for retail and competitor services in the Fourth Basket would be different.

410  Paragraph 29 of the JTF Proposal states the following:

The SILECs propose to retain the current basket definition [for Basket Three] but in light of the fact that most SILECs do not provision their own 9-1-1 and MRS services and instead purchase these services from the ILECs, SILECs should be permitted to pass any cost increases they incur through to their end customers for these services.

Provide a detailed description of the costs incurred by small ILECs for 9-1-1 service and MRS when those services are purchased from a large ILEC.  Describe circumstances envisioned by the JTF under which those costs might increase.

411  The current small ILEC regulatory framework permits an exogenous factor adjustment for events that satisfy the following criteria:

  1. they are legislative, judicial or administrative actions which are beyond the control of the company;
  2. they are addressed specifically to the telecommunications industry; and
  3. they have a material impact on the company.

    For the next small ILEC regulatory framework, does the JTF propose any changes to these criteria?

412  Under the current small ILEC regulatory framework, the maximum permissible cumulative increase to monthly rates in any 12 month period for services in the First Basket is $4.

For the next small ILEC regulatory framework, what changes, if any, does the JTF propose to this maximum permissible increase?

413  Paragraphs 82 and 83 of the JTF Proposal state as follows:

...the JTF is proposing that the Commission should, pursuant to section 24 of the Telecommunications Act, impose a condition of service on Canadian carriers that terminate toll traffic in SILEC operating territories.  In the absence of direct interconnection with the SILEC for toll termination purposes, the Canadian carrier should be required to present toll traffic to the ILEC in such a way that the ILEC would be able to distinguish between toll and local traffic and enable it to route the traffic in accordance with the SILEC toll interconnection regime.

...Following the implementation of this section 24 order, SILECs or ILECs will, after reasonable notice, block these calls consistent with the order.

Telecom Decision 2011-4164 denied Bell Canada’s request to block calls to enforce the requirement that CLECs route all long distance calls to small ILECs’ customers via toll interconnection trunks.  In that decision, the Commission expressed the view that in determining whether calls are local or long distance, the geographic points of origination and termination of a call are the relevant factors to consider.  The Commission noted that Bell Canada’s call-blocking approach would screen calls based on the telephone number of the caller, which could be assigned to a distant exchange but placed locally using VoIP or wireless services.  The Commission therefore considered that there is a risk that certain customers using VoIP or wireless services could have their local calls improperly blocked under Bell Canada’s call-blocking approach.

  1. In light of the Commission’s considerations and determinations in Telecom Decision 2011-416,
    1. provide a description of how, under the JTF Proposal, a Canadian carrier would “present toll traffic to the ILEC in such a way that the ILEC would be able to distinguish between toll and local traffic”.  The description should include details regarding what traffic information, e.g., information from call records and/or network routing information, would be used in this determination and whether, and if so to what extent, current traffic information structures and/or network routing systems would have to be modified; and
    2. provide a description of how, under the JTF proposal, a small ILEC or an ILEC would determine whether calls should be blocked.  The description should include details of what traffic information would be used in this determination.
  2. For each small ILEC represented by the JTF, provide an estimate of the start-up and ongoing costs involved in implementing the JTF proposal.  Provide all data, methodologies and assumptions used to develop these estimates.
  3. Provide suggested wording for the condition of service proposed by the JTF.

[1] Regulatory Framework Proposal, Canadian Independent Telephone Company Joint Task Force,
8 August 2012.

[2] TELUS Communications Company - Application for forbearance from the regulation of residential local exchange services, Telecom Decision CRTC 2012-337, 20 June 2012.

[3] Obligation to serve and other matters, Telecom Regulatory Policy CRTC 2011-291, 3 May 2011, as amended by Telecom Regulatory Policy CRTC 2011-291-1, 12 May 2011.

[4] TELUS Communications Company - Application for clarification and expedited relief concerning the manner in which Bell Canada intends to implement Telecom Decision 2010-908, Telecom Decision CRTC 2011-416, 11 July 2011.

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