ARCHIVED -  Letter

Ottawa, 13 September 2013

Our reference: 8638-C12-200805906

BY EMAIL

Distribution

RE: Information to be provided in support of wholesale service tariff applications

Dear Madam, Sir:

In a letter dated 12 July 2013, Commission staff notified the Incumbent local exchange carriers ^{Footnote 1} and cable carriers ^{Footnote 2} (collectively incumbents) that they are required to file detailed cost information at the time of filing a wholesale service tariff application, as outlined in the attachments to that letter.

Based on the comments we have received, Commission staff have made changes to the detailed cost information directives and associated tables, highlighted in red, in Attachments 1 and 2 of this letter. Please note that in Table 6b –Capital Equipment, a new section has been added for the capital cash flows that are estimated based on labour unit costs.

All incumbents are to include the cost information identified in the revised Attachments 1 and 2 of this letter at the time of filing a wholesale service tariff application.

Yours sincerely,

Original signed by

Lyne Renaud
Director, Competitor Services & Costing
Telecommunications

c.c.: Mohammed Omar, CRTC, 819-934-6378, mohammed.omar@crtc.gc.ca

Distribution List

Mr. Denis E. Henry
Vice-President, Regulatory, Government Affairs and Public Law
Bell Aliant Regional Communications, Limited Partnership
160 Elgin Street, 19th Floor
Ottawa, Ontario K2P 2C4
regulatory@bell.aliant.ca

Mr. Philippe Gauvin
Senior Counsel, Regulatory Law & Policy
Bell Canada
160 Elgin Street, 19th Floor
Ottawa, Ontario K2P 2C4
bell.regulatory@bell.ca

Ms. Teresa Griffin-Muir
Vice President, Regulatory Affairs
MTS Inc.
45 O’Connor Street, Suite 1400
Ottawa, Ontario K1P 1A4
iworkstation@mtsallstream.com

Mr. John C Meldrum
Vice President, Corporate Council & Regulatory Affairs
Saskatchewan Telecommunications
2121 Saskatchewan Drive, 12th Floor
Regina, Saskatchewan S4P 3Y2
document.control@sasktel.sk.ca

Mr. Ted Woodhead
Vice-president, Telecom Policy & Regulatory Affairs
TELUS Communications Company
215 Slater Street, 8th Floor
Ottawa, Ontario K1P 0A6
regulatory.affairs@telus.com

Mr. Allen Mercier
Director, Regulatory Research
Télébec Limited Partnership (from one of Bell Aliant’s Division)
87 Ontario Street, West, 5th Floor, St-Urbain
Montreal, Quebec H2X 1Y8
reglementa@telebec.com

Mr. Dallas C. Yeulett
Senior Manager, Regulatory Compliance
NorthwesTel
PO Box 2727
Whitehorse, Yukon Y1A 4Y4
regulatoryaffairs@nwtel.ca

Mr. Michel Messier
Director, Regulatory Affairs, Telecommunications
Cogeco Cable Inc.
5 Place Ville Marie, Suite 1700
Montreal, Quebec H3B 0B3
telecom.regulatory@cogeco.com

Mr. Dennis Béland
Director, Regulatory Affairs
Telecommunications
Videotron S.E.N.C.
612 St-Jacques Street, 15th Floor, South Tower
Montreal, Quebec H3C 4M8
regaffairs@quebecor.com

Mr. David Watt
Vice President, Regulatory Telecommunications
Rogers Communications Partnership
333 Bloor Street, East
Toronto, Ontario M4W 1G9
david.watt@rci.rogers.com

Mr. Jean Brazeau
Senior Vice President, Regulatory Affairs
Shaw Telecom G.P.
630 - 3rd Avenue, South West, Suite 900
Calgary, Alberta T2P 4L4
regulatory@sjrb.ca

Attachment 1

Detailed Cost Information Requirements

The detailed information required is summarized below and is to be included in the regulatory economic study report that is filed in support of wholesale service tariff(s). The values are to be provided in the Tables (Microsoft Excel Format) provided in Attachment 2.

Detailed cost information is required for key reporting cost categories only, i.e. for:

• Cost categories ^{Footnote 3} whose cost is equal to or greater than 20 percent of the total service cost (i.e. present worth of annual costs (PWAC)), and
• “Other” cost categories ^{Footnote 4} whose cost is equal to or higher than 10 percent of the total service cost.

1. Detailed information required on expenses in key reporting cost categories:
   1. Identify and describe major expense items ^{Footnote 5} included in the key reporting cost category.
   2. For each major expense item identified in response to part a) above, provide the expense unit cost (i.e. operating expense unit cost/factor, unit cost based on labour unit cost (LUC)), associated cost driver demand forecast used to estimate the expense cash flow, the associated PWAC and $ per billing unit ^{Footnote 6} in Sections A and B in Table 6a. Further, provide the methodology and assumptions, with supporting rationale, used to estimate the associated cost driver demand forecast(s).
      1. If the expenses are estimated using unit costs based on LUC (i.e. based on activities and labour unit cost(s)), provide a detailed description of each major activity and each task within the major activity. Each major activity should be broken down into tasks such that the time estimate for each task does not exceed 15 minutes in duration ^{Footnote 7}.Provide the methodology and assumptions, with supporting rationale, used to determine the occurrence rate (percentage of time that a task is expected to occur) and the time estimate for each task. If the occurrence rates or time estimates are based on inputs other than from a subject matter expert (SME), describe the source and vintage of the data used. Complete the table provided in Section B1 in Table 6a.
      2. If the expenses are estimated explicitly, provide the methodology and assumptions, with supporting rationale used to estimate the expenses. Further provide the associated PWAC and $ per billing unit in Section C in Table 6a.
   3. Provide expense increase factors (EIFs), productivity improvement factors (PIFs), retrospective EIFs and PIFs used to restate costs (specify vintage) to the first year of the study period in Sections A and B in Table 6c.
2. Detailed information required on capital expenditures in key reporting cost categories:
   1. Identify and describe major capital items^{Footnote 8} included in the key reporting cost category. The description should include the name of the manufacturer and the model / part numbers, if applicable. Further, for each major component, identify and describe the sub-components (e.g. chassis, line cards, I/O cards, etc), if any.
   2. For each of the major capital item identified in response to part a) above, provide the capital unit cost and the associated incremental cost driver demand forecast used to estimate the capital cash flow along with the associated PWAC and $ per billing unit. Further, provide the methodology and assumptions, with supporting rationale, used to estimate the associated incremental cost driver demand forecast(s).
      1. If the capital cash flows are estimated based on supplier prices complete Section A in Table 6b. Also, provide the breakdown of the capital unit cost into sub-component (e.g. chassis, line cards, I/O cards, etc) and complete Section A1 of Table 6b.
      2. If the capital cash flows are estimated using unit costs based on LUC (i.e. based on activities and labour unit cost(s)), complete Section B in Table 6b and provide a detailed description of each major activity and each task within the major activity. Provide the methodology and assumptions, with supporting rationale, used to determine the occurrence rate (percentage of time that a task is expected to occur) and the time estimate for each task. If the occurrence rates or time estimates are based on inputs other than from a subject matter expert (SME), describe the source and vintage of the data used. Complete the table provided in Section B1 in Table 6b.
      3. If the capital cash flows are estimated explicitly complete Section C in Table 6b. Further, provide the methodology and assumptions, with supporting rationale used to estimate the capital cash flows.
   3. Provide the PWAC and $ per billing unit for all cash flows combined together that are derived using Structure / Technology cost factors in Section D in Table 6b.
   4. Provide life estimates and the survivor curve name for each asset class used, capital increase factors (CIFs), productivity improvement factors (PIFs), retrospective CIFs and PIFs used to restate costs (specify vintage) to the first year of the study period and structure / technology factors in Sections C, D and E in Table 6c.
3. Detailed information required on key Third-Party cost category:
   1. Identify whether the third-party service provider is an affiliate company. If so, identify any affiliate’s mark-up included in the prices used to estimate third-party costs, and provide supporting rationale.
   2. Identify and describe the services provided by the third-party and for each service provided, provide the following information:
      1. Third-party price (i.e. based on either activity or hourly) and the associated cost driver demand forecast to estimate the third-party cash flow along with the associated PWAC and $ per billing unit in Sections A and B in Table 8c. Further, provide the methodology and assumptions, with supporting rationale used to estimate the associated cost driver demand forecast(s).
      2. If the third-party costs are estimated explicitly (e.g. based on fixed price contract), explain whether all the services provided by the third-party are causal to the provisioning of this wholesale service. Further provide the associated PWAC and $ per billing unit in Section C in Table 8c.
   3. Provide expense increase factors (EIFs) and productivity improvement factors (PIFs) in section D in Table 8c.
4. Detailed information required on key wholesale service component^{Footnote 9} cost category:

   Provide the tariff and mark-up of each wholesale service component used to calculate the unit cost in Table 8d. Also provide in Table 8d, the cost driver demand forecast and the (I-X) ^{Footnote 10}factors or net increase factors (i.e. increase factors offset by productivity improvement factors), as applicable.

5. Other detailed information required is:
   1. Provide schematic diagram(s) identifying the equipment and interconnections required to provide service in the regulatory economic evaluation report. If there is more than one configuration diagram, provide the associated occurrence rate. Further, provide a detailed description of each equipment identified in each of the schematic diagram(s) provided in response to part a) above.
   2. If the current cost study is an update of an existing cost study, provide a comparison of current and previous costs and identify all current costs that have increased by 20 percent or more. Further, provide supporting rationale for the increase in current costs.
   3. Provide the annual revenue forecast and the proposed rate in Section A in Table 6d. Also, if applicable, provide for the last three historical years, the existing rate(s) and average annual revenue based on existing rates in Section B in Table 6d.

Attachments available on request

Date modified:

2013-09-13