ARCHIVED - Telecom Commission Letter Addressed to the Distribution List

Ottawa, 22 October 2015

Our references: 8740-N24-201506586, 8740-N23-201506594, 8740-N7-201506503, 8740-N10-201506742, 8740-U2-201506536, 8740-W3-201506578, 8740-B6-201506643, 8740-C1-201506627, 8740-C4-201506701, 8740-G2-201506635, 8740-H3-201506552, 8740-H4-201506495, 8740-L2-201506718, 8740-L3-201506528, 8740-M4-201506693, 8740-M5-201506510, 8740-Q2-201506544, 8740-R3-201506669, 8740-S4-201506726, 8740-S6-201506677, 8740-S7-201506651, 8740-T7-201506619

BY EMAIL

Distribution List

RE: Small incumbent local exchange carriers (small ILECs) Various Tariffs Notices (TN) for direct connect (DC) – Request for Information & Establishment of Additional Process

Dear Madams, Sirs:

On 22 June 2015, Brooke Telecom Co-operative Ltd., Cochrane Telecom Services, Téléphone de Courcelles, Gosfield North Communications Co-operative Limited, Hay Communications Co-operative Limited, HuronTel, Téléphone de Lambton, The Lansdowne Rural Telephone Company Ltd., Téléphone Milot inc., Mornington Communications Co-op Ltd., Nexicom Telecommunications, Nexicom Telephones, North Frontenac Telephone Corp., North Renfrew Telephone Company Limited o/a NRTC Communications, Quadro Communications Co-operative Inc., Roxborough Telephone Company Limited, Sogetel inc., Téléphone de St-Ephrem, La Compagnie de Téléphone de St-Victor, Tuckersmith Communications Co-operative Limited, La Compagnie de Téléphone Upton Inc., and WTC Communications (collectively, the small ILECs) filed for Commission approval tariff pages for direct connect (DC) service in which the proposed rates were supported by cost studies.

The Commission has received comments from Bell Canada (Bell) and Allstream Inc. (Allstream) related to the applications.

Commission staff is seeking supporting information from the small ILECs in the above-noted files and is setting out additional process related to these applications. The small ILECs are to provide their responses to the attached all small ILEC questions, unless directed otherwise, as well as provide responses to company specific questions by no later than 23 November 2015. Parties are reminded that these submissions must be actually received, not merely sent, by that date.

Further, Commission staff is of the view that the other interested parties in the above-noted files proceeding should be given the opportunity to comment on the responses of the small ILECs to this request for information. Accordingly, any party that has already submitted comments on the above-noted files may comment on the small ILECs response by no later than 3 December 2015. Thereafter, the small ILECs may reply to the points raised by the interveners by no later than 14 December 2015.

Commission staff is continuing its analysis of the above-noted files. Owing to this ongoing analysis and the interrogatory process, the Commission was not able to dispose of these files within 45 business days following their receipt. However, the Commission intends to dispose of these applications within the second quarter of 2016.

This letter and all subsequent correspondence will be added to the public record of the above-noted files. Confidential treatment of designated information must be requested in accordance with sections 38 and 39 of the Telecommunications Act and sections 30 – 34 of the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure. Confidential submissions must be accompanied by abridged versions of any related documents, along with detailed rationale to explain why disclosure of the redacted information is not in the public interest. Parties are encouraged to consult Broadcasting and Telecom Information Bulletin 2010-961 (as amended by Broadcasting and Telecom Information Bulletin 2010-961-1), Procedures for filing confidential information and requesting its disclosure in Commission proceedings, for further guidance in this regard.

Sincerely

Original signed by

Lyne Renaud
Director, Competitor Services and Costing Implementation
Telecommunications sector

c.c.: Greg Milosek, CRTC, 819-953-4720, gregory.milosek@crtc.gc.ca
Matthew Alexander, CRTC, 819-934-1511, matthew.alexander@crtc.gc.ca
Martin Brazeau, CRTC, 819-997-1028, martin.brazeau@crtc.gc.ca

Attach.(3)
Distribution List
Questions
Excel document attached to email

ATTACHMENT 1/3

Distribution List

• Angela Lawrence, a.lawrence@hay.net
• Dave Smith, davesmith@frontenac.net
• Glenn Grubb, grubb@hurontel.on.ca
• Jean Bélanger, Telvic@telvic.net
• Jean-Francois Mathieu, j-fmathieu@telupton.qc.ca
• Jim Janssens, jim@brooketel.ca
• John DeHeer, john.deheer@quadro.net
• John E. Downs, jdowns@nexicomgroup.net
• Lyne Rodrigue, telstep@telstep.net
• Pauline Jessome, iworkstation@mtsallstream.com
• Philippe Gauvin, bell.regulatory@bell.ca
• R. Paul Downs, pdowns@nexicomgroup.net
• Richard Banks, rbanks@mornington.ca
• Rob Van Aaken, rob@tccmail.ca
• Robert Petruk, regulatory@gosfieldtel.ca
• Scott Mitchell, smitch@cochranetel.ca
• Steve Lynn, steve@wtccommunications.ca
• Sylvie Neault, sylvie.neault@sogetel.com
• Tim J W Beach, tjwbeach@ontarioeast.net
• William Grier, wagrier@1000island.net

ATTACHEMENT 2/3

For all questions that follow, please refer to the cost model filed on 22 June 2015 in support of your company’s proposed DC service rate.

Requests for information to all small ILECS

1. Provide a revised cost study and model for the period 1 January 2015 – 31 December 2019. The cost study should include current cost data. Further ensure that the cost model does not contain circular reference or other errors. Consistent with Section 32 of the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure, file an abridged version of this cost study and model, complete with all formulas and cell references used to calculate costs, to be made available on the public record of this proceeding, or provide reasons why an abridged version cannot be filed.
   1. Provide the company’s views on using the 1 January 2015 – 31 December 2019 study period, as opposed to the study period the company used in the cost study submitted on 22 June 2015.
2. Refer to the “DEMAND COMPANY” tab.
   1. For each year of the study period, justify with evidence and rationale the magnitude of the Network Access Services (NAS) growth figure.
   2. Confirm that the total toll minutes forecasted in each of the years 2013-2017 occur continuously throughout the year (i.e. are spread throughout the year).
   3. If the response to b) above is yes,
      1. explain why the company has assumed the minutes to be discrete year-end amounts in the calculation of the present worth of demand forecast, and
      2. update the cost study and model that was requested in Question 1 to reflect the revised estimate of present worth of demand forecast assuming the forecast of minutes is continuous throughout the year. (Note: Appendix A of the ILEC’s Regulatory Economic Studies Manual, which is available on the Commission’s website at www.crtc.gc.ca by searching for file number 8638-C12-200805906, provides the formulae for calculating the present worth of continuous cash flows).
3. Refer to the Billing Expenses in “ECON EVAL DC COMPANY” tab.
   1. Explain how the “One Time Billing Systems Upgrade” cost was estimated (e.g. quote from a company, actual expenditure).
   2. Explain what added functionality (e.g. DC billing, other billing services) the upgrade would provide.
   3. If the upgrade is used by the company to bill for other services, provide an estimate of the one-time cost that should be assigned to DC service only, with supporting rationale.
   4. Confirm whether the company is currently billing its DC service customers itself, and when it started. Provide the number of customers that the company currently bills for DC traffic.
   5. If the company is not currently billing its DC service customers itself, provide an estimate of when the company intends to begin.
   6. Complete Table 1 of the Attachment by filing the requested information in cells highlighted in green. Provide the proposed DC rate assuming that 1) another company does the billing, and 2) the company does its own billing.
   7. If in response to f) above, the proposed DC Rate is higher because the company chooses to do its own billing, justify why the higher rate associated with the company’s choice to do its own billing is acceptable.
   8. Explain in detail how the company’s annual billing labour costs have been estimated, for both when the company does its own billing and when another company is responsible for billing.
4. In Telecom Decision 96-6, the Commission directed the small ILECs to implement equal access by 1 January 1998. The Commission recognized that, in order to implement equal access, the small ILECs will have to modify their networks, systems, and procedures which will cause additional costs to be incurred. Accordingly, the small ILECs were directed to recover the start-up costs of equal access over a ten-year period, ending on 31 December 2007.

   In their 4 August 2015 reply comments, the small ILECs submitted that costs related to the “One Time Billing Systems Upgrade” are causal to the DC service given that small ILECs are required to provide equal access to all interexchange toll carriers and must accordingly have the capability to bill them individually.

   1. Have equal access start up costs been recovered consistent with the Commission’s directives in Telecom Decision 96-6? If so, explain how.
   2. Were costs related to billing system upgrades (e.g. upgrades that enabled small ILECs to bill interexchange toll carriers individually) included in the recovered equal access start up costs?
      1. If so, explain why the company has included costs related to a “One Time Billing Systems Upgrade” in its DC cost study.
      2. If not, explain why costs related to billing system upgrades should not be recovered through an equal access charge that is separate from the DC rate.
5. Complete Table 2 of the Attachment by filing the requested information in cells highlighted in green. Provide the company’s monthly traffic data for each of the years 2012, 2013 and 2014.
6. Refer to the “TRAFFIC COMPANY” tab.
   1. In their 4 August 2015 reply comments, the small ILECs indicated that they undertake a traffic study as part of the overall DC cost study in order to measure "Toll Usage per NAS" in the busy hour. Provide a detailed explanation of how frequently busy hour traffic and toll traffic are measured and how the busy hour is estimated.
   2. Explain why the company did not use the methodology that was approved for the large ILECs in Telecom Decision 2006-23 for computing the “CCS in busy hour” figure. Further comment on whether or not the methodology that was approved in Telecom Decision 2006-23 would be appropriate for establishing the small ILECs’ DC rates.
7. Refer to the “Max Attainable Capacity COE” tab (also referred to as the “Capacity Cost COE” tab).
   1. Update the table (columns A to M and rows 1-17) by providing the breakdown of the COE Switching Core (switch) cost into its major components (i.e. Chassis, Power, Interface cards, etc.). Further, ensure that the make and model of the switch is included in the table. The supplier price should reflect any discounts provided to the company.
   2. Explain how the costs of the switch were developed, with supporting rationale.
   3. Provide a detailed explanation of the methodology, assumptions with supporting rationale, source, and vintage of data used to compute the maximum capacity of the switch. The response should include maximum capacity of the switch in number of DS-0s as well as the P01 capacity Erlangs.
   4. Provide a detailed description of the transmission equipment between each remote and the switch and identify the make and model. Further, submit supporting information detailing the configuration and specifications of this equipment. This information should include; number and type of line cards, a list of all attachments per transmission equipment, and the description of all port types supported on line cards. The response should include justification for the equipment included in the cost study.
   5. Submit a block diagram identifying all of the specific switching equipment, transmission equipment, and the connecting links between equipment included in the DC cost study. The block diagram should identify:
      1. the manufacturer, series, line, model and location of the equipment (i.e. whether it is in a host central office or remote); and
      2. the type and associated speed (e.g. gigabit Ethernet) of each connecting link.
8. Identify all data that was used in the company’s cost study that is not specific to it (i.e. cost inputs or estimates that were sourced from another company) and identify its source and vintage. Explain why these cost inputs are reflective of the company’s costs.
9. Refer to the “ECON EVAL DC COMPANY” tab. If the life estimates used in the cost model represent the remaining life estimates of the assets, provide asset life estimates reflecting life estimates of new assets and update the cost study and model that was requested in Question 1 accordingly.
10. Refer to the “COST FACTORS” tab where the company estimates various cost factors using historical data.
    1. Confirm whether adjustments to historical costs (i.e. from financial statements) have been made to reflect forward-looking costs as outlined in paragraph 52 of CRTC Decision 2008-14. If not explain why not.  If yes, update the cost study and model requested in Question 1 to reflect cost factors that are based on three years of historical data.
    2.  If the response to a) above is no, update the cost study and model requested in Question 1 to reflect the adjustments outlined in paragraph 52 of CRTC Decision 2008-14. Also update the cost study and model requested in Question 1 to reflect cost factors that are based on three years of historical data.
    3. Refer to the network maintenance factor calculated on the “EXPENSES” tab.
    4. Explain how costs that are shared between your company’s voice, Internet, and TV services (if applicable) were treated in calculating the network maintenance factor. The response should include a detailed explanation of how the company assigned the cost of shared equipment to each voice, internet, and TV services.
11. Refer to the “COE COMPANY” tab (also referred to as the “COMPANY COE” tab).
    1. Explain how the costs of the generator, power, and batteries were developed, providing the methodology, assumptions with supporting rationale, source and vintage of data used. Further, provide the make and model of the equipment.
    2. Confirm whether the company has included all transmission equipment and switching equipment to remotes in the calculation of COE Common Factor and provide a breakdown of the calculation components for the COE Common Factor. If not, update the cost study and model requested in Question 1 to reflect the cost of all transmission equipment and switching equipment to the remotes in the COE Common Factor.
12. Explain how the company estimates the costs of plant and equipment for DC traffic only when this equipment carries local, toll, wireless, and other traffic (such as 9-1-1 and special services).

Request for information to all small ILECs except Téléphone de Courcelles, La Compagnie de Téléphone de St-Victor, Téléphone de St-Ephrem

13. Refer to the “Remote Fibre Link Costs” table on the “Max Attainable Capacity O.P.” tab (also referred to as the “Capacity Cost O.P.” tab) and to the “Network Diagram Map” tab of the attachment for an illustration of terms used in the questions. In the diagram, the solid lines (A, B, C, D, E, F, G, H, and I) connecting remote and host sites represent physical path segments.
    1. Similar to the diagram included on the “Network Diagram Map” tab of the attachment, provide a schematic network diagram that is superimposed over a road map of your entire serving territory clearly identifying:
       1. the name and physical location of each remote and host;
       2. the physical path segments on which fibre cables are routed to connect remotes to their associated host switch, and to connect one host to another host as appropriate;
       3. the length of each path segment;
       4. the number of fibre cables in each path segment; and
       5. the number of fibre strands in each path segment.
    2. Explain which physical segments each remote uses to connect to a host.
    3. If the company has more than one host switch, specify at which switches an interexchange carrier can interconnect to obtain the DC service.
    4. Complete Table 3 of the attachment for each path segment identified in response to 13.a) above by filing requested information in cells highlighted in green. For your convenience, an Illustrative Table 3 has been provided based on the “Network Diagram Map”.
       1. If the Total “Length of Path Segment in km” in Cell O15 in Table 3 is different from the total km of fibre links in “Table 2: Development of Fibre link costs” on the “Max Attainable Capacity O.P.” tab, explain why.
       2. If the Total “Installed First Cost of Path Segment” in Cell O16 in Table 3 is different from the total weighted cost of fibre links in “Table 2: Development of Fibre link costs” on the “Max Attainable Capacity O.P.” tab, explain why.
       3. Explain how the “Installed First Cost of Path Segment” in Cells E16 to M16 in Table 3 should be allocated to the company’s DC cost study.
       4. If the “Number of strands in path segment” in Cells E17 to M17 in Table 3 is different from the “Cable Size # fibres for voice/Internet” in the “Remote Fibre Link Costs” table on the “Max Attainable Capacity O.P.” tab, explain why.
       5. Update the cost study and model requested in Question 1 to include the following:
          • Total “Length of Path Segment in km” in Cell O15 in Table 3;
          • Total “Installed First Cost of Path Segment” in Cell O16 in Table 3;
          • Allocation of “Installed First Cost of Path Segment” in Cells E16 to M16 in Table 3 consistent with the response provided in iii) above; and
          • “Number of strands in path segment” in Cells E17 to M17 in Table 3.
14. Refer to the “Max Attainable Capacity O.P.” tab (also referred to as the “Capacity Cost O.P.” tab).
    1. Further, refer to the tables titled “Internet Traffic BH” and “Internet Growth”. Explain why the company used Execulink’s Internet traffic study and growth rates and also explain why this third-party information is applicable to the company.
    2. Update the tables titled “Internet Traffic BH” and “Internet Growth” in the same format with information that is specific to the company, and include them in the revised cost study and model requested in Question 1. Provide rationale for all of the company-specific numbers. Further, update the cost study and model requested in Question 1 to reflect the use of the “Ave Mbps per user BH” in 2019 in determining the “Internet Traffic BH Usage Mbps per link”, as opposed to using the “EAD” over the five years.
    3. If the company offers IPTV, explain how Internet Protocol Television (IPTV) traffic is sent to end users. The response should identify the switching equipment, transmission equipment and the connecting fibre links included in the DC cost study that are used to carry the IPTV traffic. Update the “Traffic on Fibre Remotes” table in the model requested in Question 1 as follows:
       1. Add a section with columns containing “Ave Mbps per user in BH” and “BH Usage Mbps per link” for IPTV traffic (similar to the two columns for Internet Traffic); and
       2. Include IPTV traffic in the “Max Capacity Needed BH in Mbps – Total Capacity Mbps Voice plus Internet” calculation
    4. In their 1 October 2015 reply comments, the small ILECs submitted that it is appropriate to double the number of trunks for voice traffic because the small ILECs use a full-duplex configuration in which voice over Internet Protocol (VoIP) traffic must be sent in both directions simultaneously in order to eliminate the possibility of traffic collisions and their associated delays.
       1. Explain what the role of each of the 4 strands allocated for connection of remotes and used to transmit and receive voice and internet traffic is. The response is to specify whether voice and Internet data received by an end user is carried on one strand and voice and Internet data sent by an end user is carried on a second separate strand. In addition the response is to describe if and how redundancy is implemented.
       2. If one strand is used for transmitting all voice and internet data, another is used for receiving all voice and internet data, and two strands are used for redundancy, explain with supporting rationale why it is appropriate to double the number of trunks.

Request for information to North Frontenac Telephone Corp.

15. Refer to the “EXPENSES” tab. It appears that management bonuses were recorded as part of repairs and maintenance expense. If so, justify the inclusion of the bonuses in the computation of the maintenance factor.

Request for information to North Renfrew Telephone Company Limited o/a NRTC Communications

16. Refer to the “Max Attainable Capacity O.P.” tab.
    1. Explain why the cost of the fibre link between the Pembrooke and Beachurg, and Pembrooke and Westmeath host central offices was included in the “Remote Fibre Link Costs” table as opposed to the “Host-Host Link Costs” table.
       1. Update the cost study and model requested in Question 1 to reflect the fibre links between the Pembrooke and Beachurg, and Pembrooke and Westmeath host central offices in the “Host-Host Link Costs” table.
17. Refer to the “EXPENSES” tab which shows the computation of the insurance factor. Cells D96 and C298 contain two different amounts for insurance expense.
    1. Explain why the insurance expense in cell D96 was used as the numerator in computing the insurance factor as opposed to the insurance expense in cell C298.

The Lansdowne Rural Telephone Company Ltd.

1. Refer to the “EXPENSES” tab. It appears that management bonuses were recorded as part of repairs and maintenance expense. If so, justify the inclusion of the bonuses in the computation of the maintenance factor.

Requests for information to Nexicom Telephones

19. Refer to the “EXPENSES” tab. It appears that management bonuses were recorded as part of repairs and maintenance expense. If so, justify the inclusion of the bonuses in the computation of the maintenance factor.
20. Refer to “COMPANY COE” tab. Explain why the host to host transport equipment refers to Milbrook to Cavan, when Cavan is not stated on Figure 2 in the company’s economic evaluation report or included in the “Host-Host Link Costs” table in “Max Attainable Capacity O.P.” tab. Indicate if Cavan is a host central office for Nexicom Telephone.
    1. If yes, update the cost study and model requested in Question 1 to reflect the outcome that Cavan is a host central office for Nexicom Telephone.
    2. If not, update the cost study and model requested in Question 1 to reflect the outcome that Cavan is not a host central office for Nexicom Telephone.
21. Refer to the “Max Attainable Capacity O.P.” tab.
    1. Refer to fibre link costs per km. Provide the methodology, assumptions with supporting rationale, source and vintage of data used to estimate the installation costs per km.
    2. Explain why the cost of the fibre link between the Keene and Milbrook host central offices was included in the “Remote Fibre Link Costs” table as opposed to included in the “Host-Host Link Costs” table.
       1. Update the cost study and model requested in Question 1 to reflect the fibre link between the Keene and Milbrook is included in the “Host-Host Link Costs” table.

Requests for information to Nexicom Telecommunications

22. Refer to the “EXPENSES” tab. It appears that management bonuses were recorded as part of building and grounds maintenance expense. If so, justify the inclusion of the bonuses in the computation of the maintenance factor.
23. Refer to the “Max Attainable Capacity O.P.” tab.
    1. Refer to fibre link costs per km. Provide the methodology, assumptions with supporting rationale, source and vintage of data used to estimate the installation costs per km.
    2. Explain why the cost of the fibre link between the Keene and Milbrook host central offices was included with the “Remote Fibre Link Costs” table as opposed to included in the “Host-Host Link Costs” table.
       1. Further, provide rationale to support the inclusion of host to host connection of Keene to Milbrook, in the cost study, as this cost connection was documented in Nexicom Telephones TN 40.
       2. If the inclusion of host to host connection of Keene to Milbrook should be revised, update the cost study and model requested in Question 1 to reflect the responses to 23 b) and 23 b) i.
    3. Explain why the cost of the fibre link between the Cavan and Milbrook host central offices was included with the “Remote Fibre Link Costs” table as opposed to included in the “Host-Host Link Costs” table.
       1. Update the cost study and model requested in Question 1 to reflect the fibre link between Milbrook and Cavan is included in the “Host-Host Link Costs” table.

Requests for information to Quadro Communications Co-operative Inc.

24. Refer to the “Max Attainable Capacity O.P.” tab.
    1. Confirm whether or not the calculation total in Cell Q82 is correct. If so, justify the calculation with supporting rationale. If not, update the cost study and model requested in Question 1 to reflect the correction.

Requests for information to Tuckersmith Communications Co-operative Limited

25. Refer to the “EXPENSES” tab.
    1. Please explain with supporting rationale why you did not develop a utilities expenses cost factor and a buildings maintenance expenses cost factor separately.

Requests for information to Cochrane Telecom Services

26. Refer to the “Capacity Cost O.P.” tab
    1. Further, refer to the “Traffic on Fibre Remotes” table. Confirm whether or not the calculation of the “Unit Cost per Mbps” in Column “Z” per remote is correct. If so, justify the calculation with supporting rationale. If not, update the cost study and model requested in Question 1 to reflect the correction.
    2. Confirm whether or not the calculation in Cell S65 is correct. If so, explain why the formula in Cell S65 differs from the formula in other cells in Column “S”. If not, update the cost study and model requested in Question 1 to reflect the correction.

ATTACHMENT 3

Table 1

Table 2 - 2012

Table 2 - 2013

Table 2 - 2014

Table 3

Illustrative Table 3

Network Diagram Map

Long Description

The Network Diagram Map provides a hypothetical illustration of the telephone network elements depicted in the Illustrative Table 3 on a geographic map and identifies the Direct Connect provider point of interconnection and all Host and Remote locations included in the cost study.

In the hypothetical illustration, Embrun, ON is in the center of the map, with Limoges to the North, Moose Creek to the East, Morewood to the South, and Ficko to the West.

Each of the hypothetical network’s two Hosts and seven Remotes locations are identified and connected by one or more segments that connect to other Host or Remote locations. The diagram displays segments A, B, C, D, E, F, G, H, and I.

These segments provide a visualization of the physical path segments that connect the Direct Connect Provider, the hypothetical network Hosts and Remotes and are described by text boxes that provide the segment lengths in Km, the number of cables in the segment, and the total number of strands.

Date modified:

2015-10-22