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Ottawa, 5 June 2014

Our reference: 8678-T66-201402891


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

Mr. Russ Friesen
Vice President Special Projects
MTS Inc.
333 Main Street, MP 18B
Winnipeg, Manitoba R3C 3V6

Mr. Ted Woodhead
Senior Vice-President
Federal Government & Regulatory Affairs
TELUS Communications Company
215 Slater St., 8th Floor
Ottawa, Ontario K1P 0A6

Distribution List (Attached)

RE: Process to consider regulatory measures regarding missed deadline for deferral-account-funded broadband rollout

Dear Sir or Madam:

In Telecom Decision 2006-9, the Commission determined that incumbent local exchange carriers (ILECs) should use the funds in their deferral accounts[1] to improve access to telecommunications services for persons with disabilities and to expand broadband services to rural and remote communities.

In Telecom Decisions 2007-50 and 2008-1, the Commission approved, among other things, proposals for Bell Aliant Regional Communications, Limited Partnership and Bell Canada (the Bell companies), MTS Allstream Inc. (MTS), and TELUS Communications Company (TCC) to expand broadband services to certain rural and remote communities using funds from each of their deferral accounts.

The implementation of the deferral account decisions was put on hold pending disposition of appeals before the Federal Court of Appeal and the Supreme Court of Canada related to the ILECs’ proposals. Following the dismissal of the appeals to the Supreme Court of Canada, the ILECs submitted revised plans to provide broadband service to the communities previously approved.

In Telecom Decisions 2010-637, 2010-638, and 2010-639[2] (the decisions), the Commission approved deferral account draw-downs by, respectively, the Bell companies, MTS, and TCC to fund the rollout of broadband service to the approved communities in each of the ILECs’ incumbent serving territories.

In the decisions, the Commission determined the accumulated balance, in each respective ILEC’s deferral account and accumulated interest,[3] up to 31 May 2010. Based on the ILECs’ cost estimates, the Commission fixed rollout amounts for approved communities and the amounts to be rebated to residential consumers.

The Commission approved the following deferral account draw-downs to expand broadband service: a) $306.3M by the Bell companies for 112 communities in Ontario and Québec; b). $12.8M by MTS Allstream for 16 communities in Manitoba; c) $102.8M by TCC for 159 communities in Alberta, British Columbia, and Québec.

In Telecom Decisions 2010-637 and 2010-639, the Commission noted that the interest that would accumulate between 1 June 2010 and the disposition of the funds in the deferral accounts would be available to the Bell companies and to TCC, respectively. Therefore, the Commission considered that there would be no requirement for a contingency fund to cover unforeseen broadband expansion expenses, as proposed by the Bell companies and TCC. [4] The Commission also considered that no further adjustments to the remaining balance needed to be made after 31 May 2010. The Commission directed that broadband service expansion to the approved communities should take place over no more than four years and should be completed by the end of August 2014 (the deadline).

Further, the Commission directed each ILEC to file an annual report containing a description of its previous year’s broadband rollout, the service introduction date for the communities in which broadband service was made available, and the ILEC’s proposed rollout plan for the remaining years of its broadband expansion program. The Commission required the ILECs to file their annual reports on 31 March of each year, beginning in 2011 and ending in 2015.

Not meeting the broadband expansion deadline is a serious matter

By letter dated 26 October 2012, the Commission expressed concern about the risk that the Bell companies’ rollout would not be completed by the deadline. Consequently, the Commission revised the reporting requirements for the Bell companies and directed them to provide more detailed quarterly reports.[5]

The Bell companies’ 15 April 2014 report indicated that they had rolled out service to 39 communities, with 73 communities remaining to be completed by the deadline. Although the Bell companies submitted that they expected to complete the rollout on time, given the number of communities remaining to be completed within such a short period, concerns remain that the Bell companies’ rollout may not be completed by the deadline.

In its 31 March 2014 annual report, TCC indicated that it would not be able to complete its broadband rollout by the August 2014 deadline. In the current Part 1 application, the company requested an extension to the deadline for completing its deferral-account-funded broadband rollout to the end of 2014 for 18 communities, and to the end of 2015 for the remaining 11 communities.[6]

In its 31 March 2014 annual report, MTS indicated that it expected to roll out broadband service to its remaining community, Sunset Bay, in June 2014.

The list of communities remaining to be completed as of April 2014 is included in Appendix 1 to this letter.

Commission staff considers that a failure by an ILEC to complete its broadband rollout plan by the established deadline is a serious matter because i) the draw-down amounts approved for broadband expansion are considerable ($421.9 M in total), ii) some of the remaining communities were approved as early as 2007 on the basis that they would not be served by a competitor in the near future, possibly causing some competitors to avoid these communities, and iii) the remaining communities have seen no benefits from the deferral account amounts. Accordingly, the scope of this Part 1 proceeding is expanded to include the following process.

Process to consider regulatory measures

In light of the above, a process is hereby initiated to examine whether, and if so, what, regulatory measures should be imposed on the Bell companies, MTS, and TCC if their respective broadband rollout plans are not completed by the 31 August 2014 deadline.

The regulatory measures in question could include: 

  1. the re-imposition of interest charges on deferral account amounts for communities where broadband service is not turned up by the deadline, with interest charged from 2010 to rollout completion;
  2. the suspension of subsidy payments from the National Contribution Fund,[7] to the extent that approved communities are in high-cost serving areas, until the rollout has been completed in the community in question; or
  3. ending broadband rollout after the deadline and rebating amounts to consumers.

Submissions are also invited on:

  1. How should any proposed measures be calculated?
  2. How should any interest accumulated as a result of the measures be disposed of?

The Bell companies, MTS, and TCC are to forward this letter, within 24 hours of its receipt, to the communities in their respective territories that are listed in Appendix 1, and provide confirmation to the Commission by end of the following business day that the letter has been forwarded.

Parties may file interventions by 16 June 2014, serving copies on all other parties.

Parties may file replies to interventions by 23 June 2014, serving copies on all other parties.

See Appendix 2 for additional procedural information.


Original signed by

Chris Seidl
Executive Director,
Telecommunications Sector

c.c.: Michel Murray, CRTC, (819) 997-9300,
Joseph Cabrera, CRTC, (819) 934-6352,

Distribution List

(Parties to the proceeding that led to Telecom Decisions 2010-637, 2010-638 and 2010-639);;;;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;; ; ; ; ; ;; ; ;; ; ;; ;;;;;; direction@municipalité;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;; ;;;;;;;

Appendix 1

Communities remaining to be completed as of April 2014

MTS ‒ Manitoba (1 of 12)

Sunset Bay

The Bell companies ‒ Ontario (52 of 79)

Barry's Bay
Cloud Bay
Eagle River
Echo Bay
Fort Erie
Parry Sound
Pelee Island
Pointe Au Baril
Sauble Beach
Sault Ste.Marie-Airport
South River
St. Joseph Island
Vermilion Bay

The Bell companies ‒ Quebec (21 of 33)

East Broughton
Franklin Centre
La Patrie
Rivière Bleue
Rock Island
St-Honoré De Témiscouata
Stratford Centre
Tring Jonction

TCC ‒ Alberta (8 of 50)

Chipewyan Lake
Peerless Lake
Trout Lake

TCC ‒ British Columbia (22 of 98)

Chilhil No. 6
Da'Naxda'Xw First Nation (Dead Point No. 5)
Ehatis 11
Hesquiaht (Refuge Cove 6)
Hope Island No. 1
Kluskus No. 1
Lake Babine Nation (Babine 6)
Lake Babine Nation (Pinkut Lake 23)
Lake Babine Nation Tachet Lake (Babine 25)
Marble Canyon No. 3
Nicola Lake IR#1
Oclucje No. 7
Oregan Jack Creek No. 3
Sachteen No. 2A
Skatin Nations (Skookumchuck 4)
Spuzzum (Spuzzum 1)
Tsawatanineuk (Quaee 7)
Tsimpsean No. 2
Upper Nicola (Douglas Lake 3)
Xeni Gwet'In First Nations Government (Chilco Lake No. 1A)
Smithers Landing (proposed replacement community)

Appendix 2

Additional procedural information

  1. The Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure (the Rules of Procedure) apply to this process. The Rules of Procedure set out, among other things, the rules for the content, format, filing, and service of interventions, replies, and requests for information; the procedure for filing confidential information and requesting its disclosure; and the conduct of public hearings, where applicable. Accordingly, the procedure set out below must be read in conjunction with the Rules of Procedure and their accompanying documents, which can be found on the Commission’s website at, under “Statutes and Regulations.” The Guidelines on the CRTC Rules of Practice and Procedure, as set out in Broadcasting and Telecom Information Bulletin 2010-959, provide information to help interested persons and parties understand the Rules of Procedure so that they can more effectively participate in Commission proceedings.
  2. Interventions must be filed in accordance with section 26 of the Rules of Procedure.
  3. Parties are permitted to coordinate, organize, and file, in a single submission, interventions by other interested persons who share their position. Information on how to file this type of submission, known as a joint supporting intervention, as well as a template for the accompanying cover letter to be filed by parties, can be found in Telecom Information Bulletin 2011-693.
  4. The Commission may request information, in the form of interrogatories, from any party to the process.
  5. All documents required to be served on parties to the process must be served using the contact information contained in the interventions.
  6. The Commission encourages interested persons and parties to monitor the record of this process, available on the Commission’s website, for additional information that they may find useful when preparing their submissions.
  7. Submissions longer than five pages should include a summary. Each paragraph of all submissions should be numbered, and the line ***End of document*** should follow the last paragraph. This will help the Commission verify that the document has not been damaged during electronic transmission.
  8. Submissions must be filed by sending them to the Secretary General of the Commission using only one of the following means:

by completing the
[Intervention form]
by mail to
CRTC, Ottawa, Ontario  K1A 0N2
by fax to

  1. Parties who send documents electronically must ensure that they will be able to prove, upon Commission request, that service/filing of a particular document was completed. Accordingly, parties must keep proof of the sending and receipt of each document for 180 days after the date on which the document is filed. The Commission advises parties who file and serve documents by electronic means to exercise caution when using email for the service of documents, as it may be difficult to establish that service has occurred.
  2. In accordance with the Rules of Procedure, a document must be received by the Commission and all relevant parties by 5 p.m. Vancouver time (8 p.m. Ottawa time) on the date it is due. Parties are responsible for ensuring the timely delivery of their submissions and will not be notified if their submissions are received after the deadline.
  3. The Commission will not formally acknowledge submissions. It will, however, fully consider all submissions, which will form part of the public record of the process, provided that the procedure for filing set out above has been followed.

Important notice

  1. All information that parties provide as part of this public process, except information designated confidential, whether sent by postal mail, facsimile, email, or through the Commission’s website at, becomes part of a publicly accessible file and will be posted on the Commission’s website. This includes all personal information, such as full names, email addresses, postal/street addresses, telephone and facsimile numbers, etc.
  2. The personal information that parties provide will be used and may be disclosed for the purpose for which the information was obtained or compiled by the Commission, or for a use consistent with that purpose.
  3. Documents received electronically or otherwise will be posted on the Commission’s website in their entirety exactly as received, including any personal information contained therein, in the official language and format in which they are received. Documents not received electronically will be available in PDF format.
  4. The information that parties provide to the Commission as part of this public process is entered into an unsearchable database dedicated to this specific public process. This database is accessible only from the web page of this particular public process. As a result, a general search of the Commission’s website with the help of either its search engine or a third-party search engine will not provide access to the information that was provided as part of this public process.

Availability of documents

  1. Electronic versions of the interventions and other documents referred to in this public process are available on the Commission’s website at by using the file number provided at the beginning of this document or by visiting the “Participate” section of the Commission’s website, selecting “Submit Ideas and Comments,” then selecting “our open processes.” Documents can then be accessed by clicking on the links in the “Subject” and “Related Documents” columns associated with this particular process.
  2. Documents are also available from Commission offices, upon request, during normal business hours.

Commission offices

Toll-free telephone: 1‑877‑249‑2782
Toll-free TDD: 1‑877‑909‑2782

Les Terrasses de la Chaudière
Central Building
1 Promenade du Portage, Room 206
Gatineau, Quebec  J8X 4B1
Tel.: 819-997‑2429
Fax: 819-994‑0218

Regional offices

Nova Scotia
Metropolitan Place
99 Wyse Road, Suite 1410
Dartmouth, Nova Scotia  B3A 4S5
Tel.: 902-426‑7997
Fax: 902-426‑2721

505 De Maisonneuve Boulevard West, Suite 205
Montréal, Quebec  H3A 3C2
Tel.: 514-283‑6607

55 St. Clair Avenue East, Suite 624
Toronto, Ontario  M4T 1M2
Tel.: 416-952‑9096

360 Main Street, Suite 970
Winnipeg, Manitoba  R3C 3Z3
Tel.: 204-983‑6306
Fax: 204-983‑6317

1975 Scarth Street, Suite 403
Regina, Saskatchewan  S4P 2H1
Tel.: 306-780-3422
Fax: 306-780-3319

100 – 4th Avenue Southwest, Suite 403
Calgary, Alberta  T2P 3N2
Tel.: 403-292-6660
Fax: 403-292-6686
After June 27 2014:
220-4 Avenue Southeast, Suite 574
Calgary, Alberta
T2G 4X3

British Columbia
858 Beatty Street, Suite 290
Vancouver, British Columbia  V6B 1C1
Tel.: 604-666‑2111
Fax: 604-666‑8322


[1] In 2002, the Commission set out a price cap framework, which included, among other things, rules governing the rates charged to residential customers of the ILECs. One of the elements of the price cap regime was the deferral account. ILECs were requested to place into their respective deferral account amounts equal to the revenue reductions that would otherwise have resulted from an application of the price cap formula.

[2] 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 its deferral account, Telecom Decision CRTC 2010-637, 31 August 2010
Follow-up to Telecom Decision 2008-1 – Proposal by MTS Allstream Inc. to dispose of the funds remaining in its deferral account, Telecom Decision CRTC 2010-638, 31 August 2010
Follow-up to Telecom Decision 2008-1 – Proposal by TELUS Communications Company to dispose of the funds remaining in its deferral account, Telecom Decision CRTC 2010-639, 31 August 2010

[3] Amounts related to accessibility initiatives were apportioned in Telecom Decision 2008-1 and their disposition was not delayed due to the legal actions. Accordingly, in its analysis the Commission did not include interest calculations related to those amounts after 17 January 2008, the date of Telecom Decision 2008-1.

[4] MTS did not request a contingency fund. The Commission, in Telecom Decision 2010-638, adjusted MTS’s deferral account balance to include interest up to 31 May 2010.

[5] In subsequent letters, dated 5 June 2013 and 16 December 2013, the Commission expressed continuing concern about the pace of the Bell companies’ broadband rollout.

[6] TCC has also requested approval to add Smithers Landing as a replacement community to be served by the end of 2015.

[7] The National Contribution Fund is the amounts collected from telecommunications companies to subsidize residential telephone service in rural and remote areas. The subsidy regime allows residential local telephone service rates to be just and reasonable, as required by subsection 27(1) of the Telecommunications Act.

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