ARCHIVED - Telecom Commission Letter Addressed to Distributioin List

Ottawa, 17 June 2016

Our references: 8740-T66-201513028, 8740-R28-201513010, 8740-B38-201507849, 8740-B38-201600023

BY EMAIL

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RE: Telecom Regulatory Policy CRTC 2015-177 – Regulatory framework for wholesale mobile wireless services – Follow-up process to finalize GSM-based wholesale roaming services proposed tariffs for the National Wireless Carriers – Requests for Information - First Round

In Telecom Regulatory Policy CRTC 2015-177, dated 5 May 2015, the Commission directed Bell Mobility, TELUS Communications Company (TCC) and Rogers Communications Partnership (Rogers), collectively the National Wireless Carriers,  to submit their proposed cost-based tariffs for domestic Global System for Mobile (GSM) communications based wholesale roaming services for voice, text message and data, supported by regulatory economic studies consistent with the Commission’s Phase II costing approach^Footnote1.

Commission staff has reviewed the 23 November 2015 regulatory economic studies filed by the National Wireless Carriers, the interventions and comments from parties, and the reply to comments dated 31 May 2016.

Commission staff acknowledges that the regulatory economic studies filed by the national wireless carriers in support of the proposed tariffs present many issues and challenges. This round of requests for information addresses primarily important issues such as the cost of spectrum and the costing approach used by the national wireless carriers.

In order to effectively assess these issues and to assist the Commission in reviewing the proposed tariffs consistent with Commission staff procedural letter dated 13 May 2016, the national wireless carriers and arties identified in the attachment are requested to respond to the requests for information in the attachment to this letter. The attachment specifies which parties should respond to which requests

Responses to the Commission staff requests for information as well as any requests for information from other parties including the national wireless carriers are to be filed with the Commission and served on all other parties by 8 July 2016.

In addition, disclosure of information in the responses should be consistent with the guidelines established in Telecom Regulatory Policy CRTC 2012-592, Confidentiality of information used to establish wholesale service rates, 26 October 2012.

All parties may request for further information or public disclosure of information designated confidential by 15 July 2016.

Parties are to file their responses to requests for further information and for public disclosure by 22 July 2016.

Commission staff expects that after the request for further information and public disclosure are completed, further process will be set out to allow parties an opportunity for further comment and reply.

Parties are asked to serve all other parties with any documents filed in this proceeding, and to send an electronic copy directly to the following Commission staff:

Lyne Renaud, lyne.renaud@crtc.gc.ca
Abderrahman El Fatihi, abderrahman.elfatihi@crtc.gc.ca
Lloyd, William,William.lloyd@crtc.gc.ca
Sincerely,

Original signed by

Lyne Renaud
Director, Competitor Services and Costing Implementation
Telecommunication Sector
c.c.:  Abderrahman El Fatihi, CRTC, (819) 953-3662, abderrahman.elfatihi@crtc.gc.ca

Attach. (2)

Distribution List
Bell Mobility Inc., bell.regulatory@bell.ca
Rogers Communications Partnership, rwi_gr@rci.rogers.com
TELUS Communications Company, regulatory.affairs@telus.com
Videotron G.P., regaffairs@quebecor.com
Bragg Communications Incorporated (Eastlink), regulatory.matters@corp.eastlink.ca
Globalive Wireless Management Corp. (WIND), lisajackson@globalive.com
Ed Antecol EAntecol@WINDMobile.ca
TBayTel, rob.olenick@tbaytel.com
MTS Inc., iworkstation@mtsallstream.com
Saskatchewan Telecommunications, document.control@sasktel.com
Ice Wireless Inc., regulatory@icewireless.ca
Canadian Network Operators Consortium Inc. regulatory@cnoc.ca
Public Interest Advocacy Centre (PIAC) lawford@piac.ca
Corridor Communications, Inc. amirb@corp.cciwireless.ca
Benjamin Klass, benjiklass@hotmail.com
Vaxination Informatique, jfmezei@vaxination.ca.

Interrogatories to Rogers

1. Refer to Rogers Communications Report on the Economic Evaluation for Wholesale Wireless Roaming Service Rates, filed 23 November 2015, Attachment, 2.2 Key Components to the Service, page 4, where the company submitted that Spectrum cost is:
   • Included on a replacement value-based recent competitive auction valuations for licence of similar spectral qualities.
   • Assumed to have a useful life equal to its licence term and licence terms are assumed to begin at the start of the cost study.
   1. Explain with supporting rationale, why the company has assumed in the cost study that the Spectrum amount is a capital expenditure. The response should address the following issues that arise with that assumption: (i) it implies that the company has purchased the Spectrum as a capital asset, whereas it could be argued that the company has acquired only the right to use the Spectrum for a fixed time period. In view of this, for the purpose of the cost study, is it reasonable to assume the Spectrum amount to be an expense cash flows, and (ii) it implies that the Spectrum asset is a depreciable asset with a finite economic life whereas it could be argued that Spectrum asset is an intangible asset that does not depreciate, but appreciates and has an indefinite life.
   2. Confirm that as per the ILEC’s Regulatory Economic Studies Manual, (i) the cost associated with the use of existing plant that is fungible^Footnote2 is replacement cost new of that plant and (ii) the cost associated with the use of existing plant that is non-fungible is the lost opportunity of salvage value net of removal costs.  If not, provide the company’s interpretation of paragraphs 1-27 to 1-31 of the ILEC’s Regulatory Economic Studies Manual.
   3. Further to the response to b) above confirm whether the company considers Spectrum to be a fungible asset.
      1. If so, provide the names of services (other than the wireless services that being evaluated) that use the Spectrum asset. If there are no other services other that being evaluated, explain with supporting rationale why the company assumes the Spectrum asset to be fungible.
      2. If not, explain with supporting rationale why the company has assumed the cost of existing Spectrum asset to be equal to the replacement cost new of Spectrum asset.
   4. For each Spectrum band included in the cost study, complete Table 1 in Attachment 2.
   5. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumptions.
      1. Replace the replacement cost new of each Spectrum band included in the original cost study with the amount provided in the column titled “Present Worth of Remaining Value of Spectrum Asset” and replace the life estimate with the amount provided in the column titled “Number of years remaining for the company to use of Spectrum asset” provided in Table 1 of Attachment 2.
      2. For Spectrum for which the company pays an ongoing annual payment, replace the annual expenses included in the cost study with the Spectrum amount provided in the column titled “Annual payment” provided in Table 1 of Attachment 2.
2. Refer to the ILEC Regulatory Economic Studies Manual, paragraph 1-14, confirm that LTE (also referred to as 4G) is the growth technology^Footnote3. If yes, explain why the company has chosen to estimate the capital costs associated with 2G and 3G equipment to be replacement cost new. If not, explain why not with supporting rationale.
3. Confirm whether the Radio Access Network (RAN) components (such as antennae, Radio Base Stations (RBS) and towers), excluding Spectrum, are used by other company services or third party services. If yes:
   1. Provide the names of services (other than the wireless services that are being evaluated) that use the RAN components and the associated revenues for each of the years 2013, 2014 and 2015 and the forecast from 2016 to 2020. Also provide any third party revenues.
   2. Confirm whether the company has taken into consideration that other services also use RAN facilities in the estimation of the RAN costs.
      1. If yes, explain with supporting rationale how the company has estimated the RAN costs associated with the wireless services.
      2. If not, explain why not with supporting rationale and recalculate the RAN costs assuming that other services also use the RAN. Provide the methodology and the assumptions including the step by step calculations used to estimate the revised RAN cost.

         Using the revised RAN costs, update the tables:  (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report for data, voice, and SMS.

4. Refer to the ILEC Regulatory Economic Studies Manual, Section 1 and Appendix B – Capacity Method and Appendix F - Glossary of Commonly Used Terms which states that:

   The capacity cost method is a method for estimating the causal cost associated with the use of a shared facility. A shared facility is defined as a facility with finite capacity that can be shared among services or units of demand. In Appendix B, the capacity cost is defined as the total costs of the shared facility divided by the maximum capacity of the shared facility adjusted for the working fill.

   1. Explain why the company has used actual demand instead of maximum capacity in the estimation of the capital costs of RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   2. Complete Table 3 in Attachment 2 for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   3. Using the maximum capacity of Table 3 in Attachment 2, provide revised capital cash flows for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   4. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumption:

      Replace the capital cash flows associated with RAN components (excluding Spectrum, towers and civils) in the cost study with the capital cash flows for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components provided in response to c) above.

5. Refer to paragraph 3-43 of the Regulatory Economic Studies Manual, where it indicates that when certain shared facilities have unlimited capacity (e.g. fibre cable in the inter‑office network), capacity costing is not an appropriate method for estimating these costs. For the estimation of Civil Structure component of the RAN:
   1. Explain, with supporting rationale, why the company has chosen the capacity costing method which is not appropriate when shared facilities have unlimited capacity.
   2. Explain, with supporting rationale, why the company should not use the cost factor method documented in paragraph 3-43 of the Regulatory Economic Studies Manual, where the company states that this method is appropriate when shared facilities have unlimited capacity.

      Provide the cost factors consistent with the methodology as described in Appendix K of the Regulatory Studies Manual, applicable to the Civil Structure component of the RAN including the methodology, assumptions and calculations.

   3. Provide revised RAN capital costs using the cost factors provided in 5.c) above and the revised RAN component costs (excluding Spectrum, towers and civils) calculated in question 4 above.
   4. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumption:

      Replace the RAN capital cash flows in the cost study with the revised RAN capital cash flows provided in response to d) above.

6. The table below shows the conversion factors (i.e. equivalent factors to translate voice and SMS to MB) by wireless technology used by the national wireless carriers in support of the proposed cost-based rates:

   	Voice (MB per min)			SMS (MB per text)
   	Rogers	Bell	TCC	Rogers	Bell	TCC
   GSM	0.3521			0.0003
   HSPA	0.6729	0.74		0.0004	0.0263
   LTE	0.2925	0.57		0.0006	0.0104
   Average			0.47			0.00055

   1. Given the similarities in wireless technologies used to provide wholesale wireless roaming services, explain with supporting rationale why a common conversion factor for each of voice and SMS should not be applied consistently across the national wireless carriers in their respective cost studies.
   2. If the conversion factors should be applied consistently for the costing of wholesale wireless roaming services, what should the conversion factors be by technology?
7. Provide the following information, in an Excel format:
   1. For each service (data, voice, SMS) and for each of the years 2011 to 2015, provide the actual traffic (i.e. MB, minutes and texts).
   2. For wireless service and for each of the years 2011 to 2015, provide the actual subscribers, including a breakdown of types of subscribers (e.g., retail wireless subscribers, machine-to-machine wireless subscribers).
8. Refer to the Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast, 2015-2020^Footnote4. Provide comments on the appropriateness of using 42% compound annual growth rate (CAGR) for 2015 to 2020 for data in the wholesale wireless roaming cost studies.
9. Refer to Rogers’ Wireless Phase 2 Costing model filed on 23 November 2015, worksheet “Tariff”, Section 3. Wholesale Roamer Demand Based Costs:
1. Provide a detailed breakdown and description of the main activities of Billing Expenses Causal to Demand and associated annual expenses with supporting costing methodologies and assumptions;
2. For any major activity of Billing Expenses Causal to Demand, that is developed based on explicit time estimates, provide the time estimates in time increments of no more than 15 minutes and labour unit cost values; further provide the associated vintages and sources of information; and
3. For any major activity of Billing Expenses Causal to Demand, that is developed based on unit costs or factors, provide the values, specifying the vintage of the data. Further explain, if and how retrospective PIFs and EIFs were applied to restate each unit cost from the vintage year to the year 2016, with supporting rationale.
10. Refer to Rogers Communications Report on the Economic Evaluation for Wholesale Wireless Roaming Service Rates, filed on 23 November 2015, Attachment 4.3 titled Conversion factors found on page 6. Provide the technical parameters and detailed methodology used to develop the voice and SMS conversion factors
11. For the provisioning of wireless mobile services, specify if the company relies on any form of network sharing agreement. If, yes:
    1. Provide a description of the agreement(s).
    2. Provide a wireless network diagram that identifies the components shared and the components owned by each company.
    3. Provide a summary of how the wireless traffic for all wireless services and for other partner companies are managed.
    4. Explain how the Rogers’ costing model captures and reflect the network sharing agreement(s) in terms of capital and operational expenditures.
12. Refer to Rogers’ Wireless Phase 2 Costing model filed on 23 November 2015, worksheet “Model”. Explain with supporting rationale the inclusion of the amount in cell F209 titled “Site Builds – Civils.”
13. Explain with supporting rationale, how the company allocates the costs associated with shared services among the three wireless services (i.e. data, voice, and SMS).

Interrogatories to TCC

1. Refer to Dr. Dippon’s Report on behalf of TCC Communications Company, filed on 23 November 2015, paragraph 14 and paragraph 33, where it submitted respectively that:
   • Spectrum asset lives of 16.9 years, consistent with the Spectrum tax life required by the Canada Revenue Agency
   • The Phase II costing methodology values TCC’ plant and Spectrum used to provide domestic wholesale roaming services at its forward-looking replacement costs.
   1. Explain with supporting rationale, why the company has assumed in the cost study that the Spectrum amount is a capital expenditure.  The response should address the following issues that arise with that assumption: (i) it implies that the company has purchased the Spectrum as capital asset, whereas it could be argued that the company has acquired only the right to use the Spectrum for a fixed time period. In view of this, for the purpose of the cost study, is it reasonable to assume the Spectrum amount to be an expense cash flows, and (ii) it implies that the Spectrum asset is a depreciable asset with a finite economic life whereas it could be argued that Spectrum asset is an intangible asset that does not depreciate, but appreciates and has an indefinite life.
   2. Confirm that as per the ILEC’s Regulatory Economic Studies Manual, (i) the cost associated with the use of existing plant that is fungible^Footnote5 is replacement cost new of that plant and (ii) the cost associated with the use of existing plant that is non-fungible is the lost opportunity of salvage value net of removal costs. If not, provide the company’s interpretation of paragraphs 1-27 to 1-31 of the ILEC’s Regulatory Economic Studies Manual.
   3. Further to the response to b) above confirm whether the company considers Spectrum to be a fungible asset.
      1. If so, provide the names of services (other than the wireless services that being evaluated) that use the Spectrum asset. If there are no other services other that being evaluated, explain with supporting rationale why the company assumes the Spectrum asset to be fungible.
      2. If not, explain with supporting rationale why the company has assumed the cost of existing Spectrum asset to be equal to the replacement cost new of Spectrum asset.
   4. For each Spectrum band included in the cost study, complete Table 1 in Attachment 2.
   5. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumptions.
      1. Replace the cost new of each Spectrum band included in the original cost study with the amount provided in column titled “Present Worth of Remaining Value of Spectrum Asset” and replace the life estimate with the amount provided in column titled “Number of years remaining for the company to use of Spectrum asset” provided in Table 1 of Attachment 2.
      2. For Spectrum for which the company pays an ongoing annual payment, replace the annual expenses included in the cost study with the Spectrum amount provided in the column titled “Annual payment” provided in Table 1 of Attachment 2.
2. Refer to the ILEC Regulatory Economic Studies Manual, paragraph 1-14, confirm that LTE (also referred to as 4G) is the growth technology^Footnote6. If yes, explain why the company has chosen to estimate the capital costs associated with 3G equipment to be replacement cost new. If not, explain why not with supporting rationale.
3. Confirm whether the Radio Access Network (RAN) components (such as antennae, Radio Base Stations (RBS) and towers), excluding Spectrum, are used by other company services or third party services. If yes:
   1. Provide the names of services (other than the wireless services that are being evaluated) that use the RAN components and the associated revenues for each of the years 2013, 2014 and 2015 and the forecast from 2016 to 2020. Also provide any third party revenues.
   2. Confirm whether the company has taken into consideration that other services also use RAN facilities in the estimation of the RAN costs.
      1. If yes, explain with supporting rationale how the company has estimated the RAN costs associated with the wireless services.
      2. If not, explain why not with supporting rationale and recalculate the RAN costs assuming that other services also use the RAN. Provide the methodology and the assumptions including the step by step calculations used to estimate the revised RAN cost.

      Using the revised RAN costs, update the tables:  (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report for data, voice, and SMS.

4. Refer to the ILEC Regulatory Economic Studies Manual, Section 1 and Appendix B – Capacity Method and Appendix F - Glossary of Commonly Used Terms which states that:

   The capacity cost method is a method for estimating the causal cost associated with the use of a shared facility. A shared facility is defined as a facility with finite capacity that can be shared among services or units of demand. In Appendix B, the capacity cost is defined as the total costs of the shared facility divided by the maximum capacity of the shared facility adjusted for the working fill.

   1. Explain why the company has used actual demand instead of maximum capacity in the estimation of the capital costs of RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   2. Complete Table 3 in Attachment 2 for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   3. Using the maximum capacity of Table 3 in Attachment 2, provide revised capital cash flows for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   4. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumption:

      Replace the capital cash flows associated with RAN components (excluding Spectrum, towers and civils) in the cost study with the capital cash flows for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components provided in response to c) above.

5. Refer to paragraph 3-43 of the Regulatory Economic Studies Manual, where it indicates that when certain shared facilities have unlimited capacity (e.g. fibre cable in the inter‑office network), capacity costing is not an appropriate method for estimating these costs. For the estimation of Civil Structure component of the RAN:
   1. Explain, with supporting rationale, why the company has chosen the capacity costing method which is not appropriate when shared facilities have unlimited capacity.
   2. Explain, with supporting rationale, why the company should not use the cost factor method documented in paragraph 3-43 of the Regulatory Economic Studies Manual, where the company states that this method is appropriate when shared facilities have unlimited capacity.
   3. Provide the cost factors consistent with methodology as described in Appendix K of the Regulatory Studies Manual, applicable to the Civil Structure component of the RAN including the methodology, assumptions and calculations.
   4. Provide revised RAN capital costs using the cost factors provided in 5.c) above and the revised RAN component costs (excluding Spectrum, towers and civils) calculated in question 4 above.
   5. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumption:

      Replace the RAN capital cash flows in the cost study with the revised RAN capital cash flows provided in response to d) above.

6. The table below shows the conversion factors (i.e. equivalent factors to translate voice and SMS to MB) by wireless technology used by the national wireless carriers in support of the proposed cost-based rates:

   	Voice (MB per min)			SMS (MB per text)
   	Rogers	Bell	TCC	Rogers	Bell	TCC
   GSM	0.3521			0.0003
   HSPA	0.6729	0.74		0.0004	0.0263
   LTE	0.2925	0.57		0.0006	0.0104
   Average			0.47			0.00055

   1. Given the similarities in wireless technologies used to provide wholesale wireless roaming services, explain with supporting rationale why a common conversion factor for each of voice and SMS should not be applied consistently across the national wireless carriers in their respective cost studies.
   2. If the conversion factors should be applied consistently for the costing of wholesale wireless roaming services, what should the conversion factors be by technology?
7. Provide the following information, in an Excel format:
   1. For each service (data, voice, SMS) and for each of the years 2011 to 2015, provide the actual traffic (i.e. MB, minutes and texts).
   2. For wireless service and for each of the years 2011 to 2015, provide the actual subscribers, including a breakdown of types of subscribers (e.g., retail wireless subscribers, machine-to-machine wireless subscribers).
8. Refer to the Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast, 2015-2020^Footnote7. Provide comments on the appropriateness of using 42% compound annual growth rate (CAGR) for 2015 to 2020 for data in the wholesale wireless roaming cost studies.
9. Confirm whether the companies assume in their respective cost studies the deployment of Voice over LTE (VoLTE) technology. If yes, explain how this has been reflected in the cost study. If not, explain why not.
10. Refer to Dr. Dippon’s Report on behalf of TCC Communications Company, filed on 23 November 2015, paragraph 68, where the company submitted that the all-carrier capex includes the traffic demand caused by TCC subscribers using the TCC network, and Bell subscribers using the TCC network as part of the next generation reciprocity (NGR) agreement between TCC and Bell.
    1. Provide a description of the wireless network sharing agreement between TCC and Bell Mobility
    2. Provide a wireless network diagram that identifies the components shared and the components that are not shared.
    3. Provide a summary of how the wireless traffic for all wireless services and for both companies are managed.
    4. Explain in detail how the proposed cost models for TCC and Bell Mobility capture and reflect the network sharing in terms of capital and operational expenditures
11. Refer to Dr. Dippon’s Report on behalf of TCC Communications Company, filed on 23 November 2015, paragraph 104, Table 11 untitled Data Equivalency Rates. Explain with supporting rationale why the company has used one blended data equivalency rate for HSPA and LTE technologies instead of separate equivalency factors for each technology.
12. Refer to Dr. Dippon’s Report on behalf of TCC Communications Company, filed on 23 November 2015, paragraph 57, where the company submitted that the service cost allocations determine the percentage of a production factor’s costs caused by voice, SMS, and data.
    1. Provide the methodology, assumptions and supporting rationale associated with the development of these service cost allocation factors.
    2. Explain how the services cost allocation factors are used in the costing model.
13. Refer to TCC Report on the Evaluation for Wholesale Mobile Wireless Services for GSM-Based Domestic Wholesale Roaming, filed on 23 November 2015, Appendix, Table 4 - Financial Parameters and Tax rates, where the company submitted new economic parameters.

    Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumption:

    Replace the new economic parameters with the economic parameters provided in current Appendix V of the ILECs Regulatory Economic Studies Manual.

14. Refer to the reply comments TCC, filed on 31 May 2016 page 25, paragraph 79, where the company stated that the Regulatory Economic Studies Manual does not reflect mobile services equipment asset classes and therefore to reflect the new asset classes for mobile services, an inflation rate of 5% was utilized for capital expenditure.
    1. Provide supporting rationale as to how the 5% inflation rate was determined and explain why this rate is applicable.
    2. Further provide all other parameters associated with these new asset classes.

Interrogatories to Bell Mobility

1. Refer to Attachment 1 - Bell Mobility Report on the Economic Evaluation for the tariff revision of national wireless roaming services filed on 23 November 2015, paragraph 36, Appendix 1 titled Radio Spectrum, paragraph 5 and 37, where the company submitted that:
   • It follows that, like any other resource (or input) that is being added, radio Spectrum should be valued at opportunity cost, in this case replacement cost.  The fact that Spectrum is added only infrequently, and in most cases involve large quantities when it is added, should not obscure this conclusion.
   • The Spectrum opportunity cost is treated as a capital asset with finite life in the study, since the amount paid gives the right to use the Spectrum for a limited time period. In our case, the time period is 20 years, as we are using auction prices for 20 year licenses in our calculations.
   1. Explain with supporting rationale, why the company has assumed in the cost study that the Spectrum amount is a capital expenditure.  The response should address the following issues that arise with that assumption: (i) it implies that the company has purchased the Spectrum as capital asset, whereas it could be argued that the company has acquired only the right to use the Spectrum for a fixed time period. In view of this, for the purpose of the cost study, is it reasonable to assume the Spectrum amount to be an expense cash flows, and (ii) it implies that the Spectrum asset is a depreciable asset with a finite economic life whereas it could be argued that Spectrum asset is an intangible asset that does not depreciate, but appreciates and has an indefinite life.
   2. Confirm that as per the ILEC’s Regulatory Economic Studies Manual, (i) the cost associated with the use of existing plant that is fungible^Footnote8 is replacement cost new of that plant and (ii) the cost associated with the use of existing plant that is non-fungible is the lost opportunity of salvage value net of removal costs.  If not, provide the company’s interpretation of paragraphs 1-27 to 1-31 of the ILEC’s Regulatory Economic Studies Manual.
   3. Further to the response to b) above confirm whether the company considers Spectrum to be a fungible asset.
      1. If so, provide the names of services (other than the wireless services that being evaluated) that use the Spectrum asset.  If there are no other services other that being evaluated, explain with supporting rationale why the company assumes the Spectrum asset to be fungible.
      2.   If not, explain with supporting rationale why the company has assumed the cost of existing Spectrum asset to be equal to the replacement cost new of Spectrum asset.
   4. For each Spectrum band included in the cost study, complete Table 1 in Attachment 2.
   5. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumptions:
      1. Replace the cost new of each Spectrum band included in the original cost study with the amount provided in column titled “Present Worth of Remaining Value of Spectrum Asset” and replace the life estimate with the amount provided in column titled “Number of years remaining for the company to use of Spectrum asset” provided in Table 1 of Attachment 2.
      2. For Spectrum for which the company pays an ongoing annual payment, replace the annual expenses included in the cost study with the Spectrum amount provided in the column titled “Annual payment” provided in Table 1 of Attachment 2.
2. Refer to the ILEC Regulatory Economic Studies Manual, paragraph 1-14, and confirm that LTE (also referred to as 4G) is the growth technology^Footnote9. If yes, explain why the company has chosen to estimate the capital costs associated with 3G equipment to be replacement cost new. If not, explain why not with supporting rationale.
3. Confirm whether the Radio Access Network (RAN) components (such as antennae, Radio Base Stations (RBS) and towers), excluding Spectrum, are used by other company services or third party services. If yes:
   1. Provide the names of services (other than the wireless services that are being evaluated) that use the RAN components and the associated revenues for each of the years 2013, 2014 and 2015 and the forecast from 2016 to 2020. Also provide any third party revenues.
   2. Confirm whether the company has taken into consideration that other services also use RAN facilities in the estimation of the RAN costs.
      1. If yes, explain with supporting rationale how the company has estimated the RAN costs associated with the wireless services.
      2. If not, explain why not with supporting rationale and recalculate the RAN costs assuming that other services also use the RAN. Provide the methodology and the assumptions including the step by step calculations used to estimate the revised RAN cost.

         Using the revised RAN costs, update the tables:  (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report for data, voice, and SMS.

4. Refer to the ILEC Regulatory Economic Studies Manual, Section 1 and Appendix B – Capacity Method and Appendix F - Glossary of Commonly Used Terms which states that:

   The capacity cost method is a method for estimating the causal cost associated with the use of a shared facility. A shared facility is defined as a facility with finite capacity that can be shared among services or units of demand. In Appendix B, the capacity cost is defined as the total costs of the shared facility divided by the maximum capacity of the shared facility adjusted for the working fill.

   1. Explain why the company has used actual demand instead of maximum capacity in the estimation of the capital costs of RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   2. Complete Table 3 in Attachment 2 for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   3. Using the maximum capacity of Table 3 in Attachment 2, provide revised capital cash flows for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components.
   4. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumption:

      Replace the capital cash flows associated with RAN components (excluding Spectrum, towers and civils) in the cost study with the capital cash flows for all RAN components (excluding Spectrum, towers and civils), backhaul and core network components provided in response to c) above.

5. Refer to paragraph 3-43 of the Regulatory Economic Studies Manual, where it indicates that when certain shared facilities have unlimited capacity (e.g. fibre cable in the inter‑office network), capacity costing is not an appropriate method for estimating these costs. For the estimation of Civil Structure component of the RAN:
   1. Explain, with supporting rationale, why the company has chosen the capacity costing method which is not appropriate when shared facilities have unlimited capacity.
   2. Explain, with supporting rationale, why the company should not use the cost factor method documented in paragraph 3-43 of the Regulatory Economic Studies Manual, where the company states that this method is appropriate when shared facilities have unlimited capacity.
   3. Provide the cost factors consistent with methodology as described in Appendix K of the Regulatory Studies Manual, applicable to the Civil Structure component of the RAN including the methodology, assumptions and calculations.
   4. Provide revised RAN capital costs using the cost factors provided in 5.c) above and the revised RAN component costs (excluding Spectrum, towers and civils) calculated in question 4 above.
   5. Using the format of the tables used to provide (i) Price Floor Test - Total Present Worth of Revenues and Cost within Study Period, (ii) Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message, (iii) Demand Estimate over the study period including the start study demand and (iv) Detailed Summary of Costs Causal to Service and Demand respectively, in the company’s 23 November 2015 economic evaluation report, provide revised $/MB for data, $/minute for voice, and $/text for SMS for each of the following change in assumption:

      Replace the RAN capital cash flows in the cost study with the revised RAN capital cash flows provided in response to d) above.

6. Provide the following information, in an Excel format:
   1. For each service (data, voice, SMS) and for each of the years 2011 to 2015, provide the actual traffic (i.e. MB, minutes and texts).
   2. For wireless service and for each of the years 2011 to 2015, provide the actual subscribers, including a breakdown of types of subscribers (e.g., retail wireless subscribers, machine-to-machine wireless subscribers).
7. Refer to the Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast, 2015-2020^Footnote10. Provide comments on the appropriateness of using 42% compound annual growth rate (CAGR) for 2015 to 2020 for data in the wholesale wireless roaming cost studies.
8. Explain with supporting rationale, how the company allocates the costs associated with shared services among the three wireless services (i.e. date, voice, and SMS).
9. Refer to Bell Mobility Report on the Economic Evaluation for the Tariff Revision of National Wireless Roaming Service, filed on 23 November 2015, section 6.4.3 Capital Causal to Demand, page 12 paragraph titled Cost Inclusion: RAN, where the company submitted that National Wireless Roaming Service Only provides roaming on Bell Mobility’s share of Bell/TCC network and therefore only Bell Mobility’s network costs have been included in the study.
   1. Provide a description of the wireless network sharing agreement between TCC and Bell Mobility.
   2. Provide a wireless network diagram that identifies the components shared and the components that are not shared.
   3. Provide a summary of how the wireless traffic for all wireless services and for both companies are managed.
   4. Explain in detail how the proposed cost models for TCC and Bell Mobility capture and reflect the network sharing in terms of capital and operational expenditures.
10. Confirm whether the companies assume in their respective cost studies the deployment of Voice over LTE (VoLTE) technology. If yes, explain how this has been reflected in the cost study. If not, explain why not.
11. Refer to Attachment 1 - Bell Mobility Report on the Economic Evaluation for the Tariff Revision of National Wireless Roaming Services filed on 23 November 2015, Section 5.1 Forecast Assumptions and Methodology, paragraph 15 and 16. Complete Table 2 provided in Attachment 2.
12.  Refer to Attachment 1, Bell Mobility Report on the Economic Evaluation, page 11, paragraph 3, in particular where the company stated that: “Bell Mobility notes that this approach assumes that, in the future, additional network capacity will be provisioned by adding both Spectrum and other equipment, as future demand needs are met in the same manner that the network is built today to meet historical demand today using replacement costs”.

    Explain with supporting rationale how the company determined that additional Spectrum is required. The response should provide the company’s current Spectrum holdings and demand forecasts to demonstrate how the company needs additional Spectrum.

13. Refer to Attachment 1 – Bell Mobility Report on the Economic Evaluation for the Tariff Revision of National wireless Roaming Services, filed on 23 November 2015, Appendix 1 – Radio Spectrum:
    1. Confirm that Bell Mobility has estimated the Spectrum costs associated with roaming demand by multiplying the Spectrum Unit Cost and the wholesale roaming tariffed demand, and that the Spectrum Unit Cost is calculated as a ratio of fair market value of Bell Mobility's Spectrum, expressed in 2015 dollars, and the Bell Mobility’s 2015 total demand (including both retail and roaming demand).
       1. If yes, justify how the company’s approach ensures that an appropriate amount of Spectrum costs is allocated to the Roaming demand taking into considering that the allocated amount would vary if a different year of Bell Mobility’s total demand is used.
       2. If no, explain in detail how the company has estimated the Spectrum costs associated with the Roaming demand and justify how the company’s approach ensures that an appropriate amount of Spectrum costs is allocated to the Roaming demand.
    2. Provide revised estimates of the Spectrum costs for tariff roaming for each of the data, voice and SMS services by using the following formula:

       (PW of Spectrum Costs) / (PW of Retail and Roaming Demand over Study Period) X PW of Roaming Demand (data, voice or SMS) over study period

    3. Provide a revised Bell Table 1 – Total Service Cost Summary of Appendices 6, 7, and 8 initially filed using the Spectrum costs calculated in b) above.
14. Refer to Bell Mobility TN 1B  Attachment 1 - Appendix 1 - Radio Spectrum:
    1. Identify the spectrum bands for which Bell Mobility pays an annual license fee to Industry Canada.
    2. Confirm whether the annual expense identified in a) above are included in the cost study as expense cash flows. If not, explain why not, with supporting rationale.
15. The table below shows the conversion factors (i.e. equivalent factors to translate voice and SMS to MB) by wireless technology used by the national wireless carriers in support of the proposed cost-based rates:

    	Voice (MB per min)			SMS (MB per text)
    	Rogers	Bell	TCC	Rogers	Bell	TCC
    GSM	0.3521			0.0003
    HSPA	0.6729	0.74		0.0004	0.0263
    LTE	0.2925	0.57		0.0006	0.0104
    Average			0.47			0.00055

    1. Given the similarities in wireless technologies used to provide wholesale wireless roaming services, explain with supporting rationale why a common conversion factor for each of voice and SMS should not be applied consistently across the national wireless carriers in their respective cost studies.
    2. If the conversion factors should be applied consistently for the costing of wholesale wireless roaming services, what should the conversion factors be by technology?
16. Refer to Bell Mobility TN 1B – Attachment 1 – Appendix 2 – Conversion Factors,  pages 1 and 2, paragraphs 2 and 7 where:

    Bell Mobility calculated for HSPA that one SMS message is equivalent to 0.0260 MB of data which represent 27,262 bytes of data which translates into 3,895 words assuming 7 bits per character and 8 characters per word.

    Bell Mobility calculated for LTE that one SMS message is equivalent to 0.01036 MB of data which is equivalent to 10,863 bytes which translates into 1,552 words assuming 7 bits per character and 8 characters per word.

    Explain with supporting rationale the length of the implied SMS message text using the proposed Bell Mobility conversion factors, when according to technical standards^Footnote11 the maximum size of a message text is 140 bytes (160 characters) and according to industry standards, the average message length is 80 to 90 bytes including header and using the assumptions above, the equivalent of a maximum of 13 words.

17. Refer to Bell Mobility TN 1B – Attachment 1 – Appendix 2 – Conversion Factors for the LTE network:
    1. Describe how the empirical measurements for the conversion factors were taken in terms of time of day, day of the week, specific dates, switches, sample size, etc.
    2. Refer to paragraph 9 and provide the source for the following statement at paragraph 9: ‘typical LTE radio can support xxx# MB/hour of data for each MHz of deployed Spectrum’.
    3. Refer to paragraph 10 where Bell Mobility stated that LTE can also support xxx# minutes of voice traffic during the busy hour for each MHz of deployed Spectrum, based on a theoretical analysis. Provide the theoretical analysis and the source of this statement.
18. Refer to Bell Mobility TN 1B – Attachment 1 – Appendix 2,  page 2, paragraph 6, where the company states:

    ‘Third, SMS messages use much of the same radio resources as a voice call.  The radio resources used to support an SMS message will deny the UMTS radio to support a voice call for the duration of the time it takes to send the SMS message.  Thus the amount of resources required to support the transmission of an SMS message can be modelled as the amount of resources required to support a voice call with the duration equal to the length of time it takes to send an SMS message.’

    1. Explain with supporting rationale why the company assumes that the SMS message will deny the UMTS radio to support a voice call considering that the technical standard states that SMS messages are transported on the signalling network.
    2. If the assumption is incorrect, provide revised conversion factors for SMS.
19. Refer to Bell Mobility Attachment 1 - Report on the Economic Evaluation for the Tariff Revision of the National Wireless Roaming Service, page 11, paragraph 36: ‘’Bell Mobility leases backhaul and other transport services from Bell Canada, and the corresponding expenses are treated as expenses causal to demand.’’

    Provide a detailed breakdown of the backhaul costs including:

    1. Rates at which backhaul was provided.
    2. Annual expense and PWAC.
    3. Indicate whether a mark-up on the Bell Canada backhaul rate was included. If yes, identify the mark-up and provide supporting for why a mark-up is appropriate.
20. Refer to Bell Mobility Attachment 1- Report on the Economic Evaluation for the Tariff Revision of the National Wireless Roaming Service, Section 6.4.3, page 11 of 15 and 1.1 Bell National Wireless Roaming Service – Capital - Excel - RAN COST and RAN Capital Unit Cost sheets.

    Provide the associated models used for calculating the RAN costs used to derive the average cost by territory by type of site.

21. Refer to Bell Mobility Attachment 1- Report on the Economic Evaluation for the Tariff Revision of the National Wireless Roaming Service, Section 6.4.3 page 10, paragraph 34 and to Table 6a – Expenses in Bell Mobility TN 1B – Attachment 1 – Appendices 6, 7 and 8:
    1. Provide a detailed breakdown and description of the main activities of the Wholesale Product Manager for Data and Voice in terms of number of hours per year.
    2. Explain how the number of wholesale product manager and associated hours per year were estimated, providing all evidence and supporting rationale.
22. Refer to Bell Mobility Attachment 1- Report on the Economic Evaluation for the Tariff Revision of the National Wireless Roaming Service, Section 6.4.3, page 10, paragraph 34 and to Table 6a- Expenses in Bell Mobility TN 1B – Attachment 1 – Appendices 6, 7 and 8 – External Signalling & Billing activity.
    1. Provide a breakdown of the main activities and annual costs associated with External Signalling and Billing and the associated expenses per year.
    2. Provide a description of the services provided by Syniverse and the annual value of the contract for both retail and wholesale.
    3. For each of the contracts or agreements associated with external signalling, explain how the costs are allocated between retail and wholesale.
23. Refer to Bell Mobility Attachment 1- Report on the Economic Evaluation, Section 6.4.4 pages 14-15, paragraph 39. Provide a detailed breakdown of the Other expenses causal to demand, including a description, rates and annual expenses, associated with:
    1. Backhaul trunking leasing fees
    2. Wireless network equipment warehouse and distribution costs
    3. Microwave Spectrum fees paid to Industry Canada
    4. Imbalance costs (as per Bell Canada's and other LECs' relevant tariffs)
24. Refer to 1.5 Bell - National Wireless Roaming Service - Appendix V – worksheet 8 ‘Les SCs’, and IVA Causal to Demand – Roaming Data-Defaults worksheet where the company provided a life estimate of 12 years for RAN Civil Structures. Further refer to Appendix V of the Regulatory Economic Studies Manual where the company has provided the life estimate of Bell Canada Atlantic Region the life estimate for Radio Towers is 30 years and the life estimate of 28 years used by TCC with whom the company shares the wireless network.
    1. Explain the significant discrepancy between the Bell Mobility life estimates for RAN Civil Structures which includes Towers and tower foundations and shelters of 12 years used in the IVA and the life estimate of 30 years for Radio Towers for Bell Mobility in the Atlantic region provided in Appendix V and the life estimate of 28 years used by TCC with whom the company shares the wireless network
    2. Provide depreciation studies and any other evidence to support the company’s life estimate of 12 years.

Interrogatories to Videotron G.P, Bragg Communications Incorporated (Eastlink), Globalive Wireless Management Corp. (WIND), Ice Wireless Inc. , TBayTel, MTS Inc. and Saskatchewan Telecommunications

1. The table below shows the conversion factors (i.e. equivalent factors to translate voice and SMS to MB) by wireless technology used by the national wireless carriers in support of the proposed cost-based rates:

   	Voice (MB per min)			SMS (MB per text)
   	Rogers	Bell	TCC	Rogers	Bell	TCC
   GSM	0.3521			0.0003
   HSPA	0.6729	0.74		0.0004	0.0263
   LTE	0.2925	0.57		0.0006	0.0104
   Average			0.47			0.00055

   1. Given the similarities in wireless technologies used to provide wholesale wireless roaming services, explain with supporting rationale why a common conversion factor for each of voice and SMS should not be applied consistently across the national wireless carriers in their respective cost studies.
   2. If the conversion factors should be applied consistently for the costing of wholesale wireless roaming services, what should the conversion factors be by technology?
2. Refer to the Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast, 2015-2020^Footnote12. Provide comments on the appropriateness of using 42% compound annual growth rate (CAGR) for 2015 to 2020 for data in the wholesale wireless roaming cost studies.
3. Provide the following information, in an Excel format:
   1. For each service (data, voice, SMS) and for each of the years 2011 to 2015, provide the actual traffic (i.e. MB, minutes and texts).
   2. For wireless service and for each of the years 2011 to 2015, provide the actual subscribers, including a breakdown of types of subscribers (e.g. retail wireless subscribers, machine-to-machine wireless subscribers).
4. Provide the following information, in an Excel format:
   1. For each service (data, voice, SMS) and for each of the years 2016 to 2021, provide the forecasted traffic (i.e. MB, minutes and texts). Provide all supporting rationale, including any external reports, used to prepare the forecast.
   2. For wireless service and for each of the years 2016 to 2021, provide the forecasted subscribers, including a breakdown of types of subscribers (e.g., retail wireless subscribers, machine-to-machine wireless subscribers).

Date modified:

2016-06-17