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Ottawa, June 5, 2013

Our reference: 8638-C12-200817505 - 8678-C12-200905557

BY EMAIL

Mr. Mirko Bibic
Executive Vice President
and Chief Legal & Regulatory Officer
Bell Canada and BCE Inc.
160 Elgin Street, Floor 19
Ottawa, Ontario K2P 2C4
bell.regulatory@bell.ca

RE: Bell Canada’s and Bell Aliant’s Deferral Account-Funded Broadband Expansion

Dear Sir:

In Follow-up to Telecom Decision 2008-1 – Proposal by Bell Aliant Regional Communications, Limited Partnership and Bell Canada to dispose of the funds remaining in their deferral account, Telecom Decision 2010-637, 31 August 2010 (Telecom Decision 2010-637), the Commission approved the drawdown of $306.3 million from the deferral account funds of Bell Aliant and Bell Canada (the Bell companies) to expand broadband services to 112 communities (the approved communities) in Ontario and Quebec. The Commission noted that service expansion should take place over no more than four years and should be completed by the end of August 2014.

In response to the Bell companies’ deferral account report filed in July 2012, the Commission issued a letter dated 26 October 2012, in which it expressed concern that the Bell companies’ rollout plans would not be completed by the end of the rollout period. As a result, the Commission modified the Bell companies’ reporting requirements by requiring more detailed quarterly, rather than annual, reports. The Commission indicated that if it continued to be concerned by the pace of the rollout activities, it would consider
initiating a proceeding to determine whether stricter timelines needed to be imposed, and what consequences, if any (such as reapplying interest charges), should apply if the rollout was not completed by the established timelines.

The Commission received the Bell companies’ first two quarterly reports on 15 January 2013 and 15 April 2013. The Bell companies reiterated that work was on target and that they were fully committed to ensuring that the rollout program would be completed by 31 August 2014.

However, the Commission does not share the Bell companies’ confidence in the rollout plan. The April 2013 report shows that service is currently available in only 12 of the 112 Commission-approved communities with no advancement in broadband rollout since the July 2012 report. Consequently, the Bell companies do not plan to turn up broadband services to any of the remaining 100 communities over the course of 2013.

In addition, the April 2013 report indicates that construction of wireline transport backbone to 23 communities must be both started and finished during the first eight months of 2014, and that the negotiations for the placement of a large number of new cell towers still remain to be completed in a significant number of communities.

In the Commission’s view, the rollout plan is significantly back-end loaded, jeopardizing the timely rollout of service to consumers. There are a large number of activities remaining to be completed in just over a year, and the Commission expects that unanticipated delays will occur, as reflected in the broadband rollout reports filed by both MTS Allstream and TELUS Communications Company. Ultimately, it is the Canadians who live in those communities who will be impacted.

Consequently, the Commission directs the Bell companies to identify, by 17 June 2013, a) the major risks associated with its rollout plan, and b) its mitigation strategies to address each risk such as, for example, accelerating the rollout to specific communities.

Yours sincerely,

Original signed by

John Traversy
Secretary General

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