ARCHIVED - Telecom Commission Letter Addressed to Distribution List

Ottawa, 20 December 2016

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

BY EMAIL

Distribution

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 – Interrogatories Second 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 regulatory economic studies filed by the National Wireless Carriers, the interventions and comments from parties, the reply to comments, as well the responses and interventions following the Commission staff first round of interrogatories.

In order for the Commission to continue its analysis of the proposed tariffs for GSM-based wholesale wireless roaming services, the National Wireless Carriers are requested to respond to the interrogatories included in the attachments to this letter.

In addition, the National Wireless Carriers are requested to submit an electronic copy of the updated economic model that incorporates the responses to all requested interrogatories, where applicable, along with all associated files required to run the model.

When setting the procedural timelines associated with the review of the wholesale wireless roaming tariff applications, the Commission staff has taken into consideration the various current telecom proceedings, and consequently set out the following timelines:

Responses to the Commission staff requests for information are to be filed with the Commission and served on all other parties by 20 March 2017.

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 30 March 2017.

The National Wireless Carriers are to file their responses to requests for further information and public disclosure by 10 April 2017.

Commission staff anticipates a further round of comment and reply after the interrogatory process is complete, to ensure that all parties have sufficient opportunity to comment.

The National Wireless Carriers 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
William Lloyd, CRTC, (819) 997-4654, william.lloyd@crtc.gc.ca

Attach. (2)

ATTACHEMENT 1

Interrogatories to Bell Mobility

1. 1. Provide revised cost and rates in $/Megabytes (MB) for data, $/minute for voice, and $/text for SMS that incorporates the responses to all requested interrogatories, where applicable, using the format of the tables used to provide:
      1. Price Floor Test - Total Present Worth of Revenues and Cost within Study Period,
      2. Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message,
      3. Demand Estimate over the study period including the start study demand and
      4. Detailed Summary of Costs Causal to Service and Demand respectively.
   2. Provide, for each year of the revised cost study in response to a) above, the capital cash flows for all wireless facilities associated with the RAN, Backhaul, and Core Network.
   3. Provide a copy of the updated economic model (including all associated files required to run the model) that incorporates the responses to all requested interrogatories, where applicable.
   4. Any deviation from the revisions required by the interrogatories below in assumptions should be provided in a separate cost study (and updated economic model where applicable) that highlights these deviations, including a supporting rationale for why these deviations are justified.
2. With respect to the approach used by the National Wireless Carriers to develop their proposed cost-based rates for GSM-based roaming services and with reference to the reply comments of TELUS Communications Company, dated 31 May 2016, where it stated that:

   “GSM-based roaming is similar to any other mobile service, which requires a network. Therefore, the long-run incremental cost is the difference between providing these services for the totality of demand, including GSM-based roaming, and not providing these services at all.”

   1. Confirm that company estimates the cost of Mobile Wholesale Wireless Roaming service as follows:

      Cost of Mobile Wholesale Wireless Roaming Service =

      Cost of Mobile Wireless Service (based on all-carrier wireless demand forecast) +

      Cost specific to Wholesale Wireless Roaming Service (based on wholesale wireless roaming demand forecast)

      If not, explain with supporting rationale how the company estimates the cost of Mobile Wholesale Wireless Roaming Service.

   2. Does the company estimate the cost of Mobile Wireless Voice ($/minute), Mobile Wireless Short Message Service ($/Text), and Mobile Wireless Data ($/megabyte) by allocating the Cost of Mobile Wholesale Wireless Roaming Service Cost (from a) above) between these three wireless services?

      If not, explain with supporting rationale how the company estimates the cost of each of the relevant roaming services.

3. Refer to the company’s response to request for information (CRTC)1Jun16-3 a) and b), dated 5 August 2016, where the company submitted that the Radio Access Network (RAN) components, including antennae, base stations and towers are almost entirely used for the purpose of provisioning wireless service to their respective users and to the roaming partners.

   Further refer to paragraph 1-31 in ILECs’ Regulatory Economic Studies Manual (the Manual) which states that the cost of an existing discrete facility that is non-fungible is the lost opportunity^Footnote2 of salvage value net of removal costs.

   1. In view of the above, explain with supporting rationale why the company has not estimated the cost of these existing wireless facilities at the start of the study in accordance with the methodology described in paragraph 1-31 of the Manual for existing discrete facilities that are non-fungible.
   2. Similar to RAN components, confirm whether Backhaul and Core Network facilities are also almost entirely used for the purpose of provisioning wireless service. If this is the case, explain with supporting rationale why the company has not estimated the cost of existing Backhaul and Core Network costs at the start of the study in accordance with the methodology described in paragraph 1-31 of the Manual for existing discrete facilities that are non-fungible. If not, explain why not with supporting rationale
   3. For all existing wireless facilities included in the cost study, provide the Net Book Value (NBV) and the corresponding depreciation and amortization at end-of-year 2015, and associated remaining life estimates (this should not be the proposed life estimate for wireless facilities) in Table 1 in Attachment 2 (add lines as necessary to include all existing wireless facilities). Further, provide the supporting documentation that explains how the NBV, the corresponding depreciation and amortization, and the associated remaining life estimates were estimated. If the requested information is not available on individual wireless equipment basis, provide the same information on an aggregated basis, as available.
   4. Provide the company’s views, with supporting rationale, on the appropriateness of using an annual capital unit cost change of minus 26.04% for traffic-driven wireless switching and transmission equipment approved by the Commission in Telecom Decision CRTC 2016-117^Footnote3 .
   5. The revised cost study requested in Question 1) above, should reflect the following changes in assumptions:
      1. Replace the capital cash flow and the associated life estimate at the start of the cost study for each of the existing facilities in the cost model with the associated NBV value and remaining life estimate provided in Table 2 in Attachment 2.
      2. Replace the Spectrum capital cash flow at the start of the cost study with the value provided in the column titled “Present Worth of the remaining value of spectrum asset” in the table provided in the response to CRTC 17Jun16-1. With respect to capital characteristics assume rectangular survivor curve patterns, and no capital increase factors (CIFs) and productivity improvement factors (PIFs).
      3. Replace the CIFs for all switching and transmission wireless equipment in the cost study with minus 26.4% approved by the Commission in Telecom Decision CRTC 2016-117.
   6. Further to response to c) above, if the company considers that additional changes are necessary as a result of the use of NBV then propose those additional changes with supporting rationale. Alternately, if the company does not agree with the use of the NBV, provide a reasonable proxy value other than the replacement cost new, along with the associated life estimates, etc., with supporting rationale, that can be used in the cost study in lieu of the lost opportunity of salvage value net of removal costs by completing Table 2 in Attachment 2. The company’s proposed proxy value along with the associated average life estimates should be provided for all existing wireless facilities in Table 2 in Attachment 2 (add lines as necessary to include all existing wireless facilities). If the requested information is not available on individual wireless equipment basis, provide the same information on an aggregated basis, as available.
4. Provide a copy of Bell Canada Enterprises document titled “BCE 2015 Annual Report” for the public record.
5. Refer to the Bell Canada Enterprises document titled “BCE 2015 Annual Report”^Footnote4 .
   1. Refer to section “Notes to consolidated financial statements”, and to the associated notes, “Note 13, Property, plant, and equipment”, page 136, and “Note 14, Intangible assets”, page 137. Provide note 13 and note 14 information that presents the results for only Bell’s wireless segment for end-of-year 2015.
   2. Explain, with supporting rationale, why the total amounts of the NBV and depreciation and amortization from the response provided to question 3.c) above should not be identical with the total amounts of the Net Carrying Amount, and Depreciation and Amortization provided in 5.a) above.
6. Refer to the response to TELUS(CRTC)17June-16-4, Attachment 1, Rogers(CRTC)17June-16-4 b) Attachment, and Bell Mobility(CRTC)17Jun16-4 TN1B-TN2, Attachment 1, dated 5 August 2016, as well as Table 3 in Attachment 2 of this letter, which is staff’s attempt to compare the life estimates provided in these questions.
   1. Complete Table 3 in Attachment 2 and correct any life estimates if they are incorrect (add lines as necessary to include all existing wireless facilities and their associated life estimates).
   2. In Table 3 in Attachment 2, staff has indicated with an asterisk those instances where there is a significant variation in the assumed life estimates provided by each of the National Wireless Carriers. For each instance where your company life estimate is significantly lower, provide supporting rationale for why this may be the case.
   3. Indicate whether the proposed life estimates are Economic life estimates or Accounting life estimates. If the proposed life estimates are Economic then provide accounting life estimates and if there is a significant difference between the two life estimates, explain why with supporting rationale.
7. Refer to Quebecor’s response to Quebecor Media(CRTC)17June2016-1, dated 5 August 2016, which states the following:

   “In our view, conversion factors should be based on more straightforward and objective bitrate calculations.  We offer the following sample calculations, which we believe accurately reflect the characteristics of current technologies:

   LTE Voice

   Typical coder-decoder (CODEC) bit rate range = 12.65 kbps* to 23.85 kbps**
   Corresponding packet size range*** = 33 B to 61 B
   Packet transmission rate = 1 per 20 ms
   33 B per 20 ms = 33 /1024 /1024 / 20 x 1000 x 60 MB per minute = 0.0944 MB per minute
   61 B per 20 ms = 61 /1024 /1024 / 20 x 1000 x 60 MB per minute = 0.1745 MB per minute
   Conversion factor range = 0.0944 MB per minute to 0.1745 MB per minute
   * 3GPP standard AMR-WB_12.65
   ** 3GPP standard AMR-WB_23.85
   *** Based on 3GPP conversion tables

   HSPA Voice

   The HSPA Voice conversion factor can be based on the LTE Voice calculation, adjusted for the fact that an HSPA voice conversation (unlike an LTE voice conversation) continues to occupy a channel even during moments of conversational silence.  As conversational silence typically occupies 50% of a conversation, a factor of two can be used.
   Conversion factor range = 0.0944x2 MB per minute to 0.1745x2 MB per minute
   = 0.1888 MB per minute to 0.3490 MB per minute

   SMS

   Standard message length = 140 characters = 140 B
   140 B = 140 / 1024 / 1024 MB = 0.0001335 MB
   Conversion factor = 0.0001335 MB per message”

   1. Explain with supporting rationale why the approach proposed by Quebecor should not be adopted by the national wireless carriers to derive the conversion factors used to translate the forecasted traffic for mobile wireless voice in minutes and mobile wireless text messages into megabytes (MB).
   2. The cost study requested in Question 1) should also reflect the following change in assumptions for the conversion factors:

   Replace the company’s conversion factors in the cost model with the following conversion factors.

   Conversion Factor

   	Voice	Text
   HSPA	0.3490 MB per minute	0.0001335 MB per SMS
   LTE	0.1745 MB per minute	0.0001335 MB per SMS

8.  With respect to proposed network interconnection with the company’s wireless network.
   1. Confirm that the mode of network interconnection included in the cost study is indirect interconnection.
   2. Describe in detail all technical and operational steps required for a wholesale roaming partner to interconnect with the company for the purpose of the wholesale roaming service using indirect interconnection. In doing so, list all required facilities and services required for interconnection from the company’s facilities to those of the wholesale roaming customer, whether provided by the company, a third party or the roaming partner and include a diagram showing this path of interconnection.
   3. Identify in the diagram and list provided in b) the following:
      1. all those facilities and services that are included in the proposed wholesale wireless roaming tariff and included in the proposed rate;
      2. any facilities or services not included in the wholesale roaming services rate that would need to be purchased by the wholesale roaming customer from the company in order for interconnection to occur.
      3. indicate whether the purchase of these facilities or services not included in the wholesale roaming service tariff from the company is subject to a tariff (and provide a copy of the relevant tariff pages) or forborne, and provide for the record a copy of the tariffed rate or an estimate of the rate that would apply in a forborne environment. Provide rationale for why these facilities and services should not be included as part of the wholesale wireless services tariff.
      4. Any services that would need to be self-provisioned by the wholesale roaming customer or purchased from a third party.
9. Refer to response to request for information Bell(CRTC)17Jun16-11, where the company provided all-carrier traffic demand forecasts for data, voice and SMS and response to Bell(CRTC)17Jun16-6, where the company provided historical traffic demand for data, voice and SMS.
   1. Explain with supporting rationale how the company estimated the growth rate for data demand for years 2016 to 2020. The response should include all assumptions and should also compare the 2016-2020 growth rate with the historical 2011-2015 growth rate. Further, if the 2016-2020 growth rate trend is not similar to the historical trend, provide the reasons the company has chosen to deviate from the historical trend.
   2. The cost study requested in Question 1) above, should also to reflect the following change in assumptions:

      Assume for the first two years of the cost study period that the all-carrier wireless data traffic growth rates per end-user are consistent with the historic (2014-2015) growth rate, followed by a constant growth rate of 42%^Footnote5 for each of the remaining years of the study period.

10. Refer to the response to Bell Mobility(CRTC)17Jun16-21 TN 1B & TN 2 dated 5 August 2016.
    1. Provide a further breakdown of the ongoing annual activities and associated hours provided in part a) in response to the interrogatory referred to above, into one hour increments with a detailed description of the associated activities.
    2. With respect to including the cost associated with product managers associated with tariffed wholesale roaming service included in the cost study (Bell_Mobility_TN_1B_-_ATT_1-APP_6_-_REVISED_CONF (Data), and Bell_Mobility_TN_1B_-_ATT_1-APP_7_-_REVISED_CONF (Voice), Worksheet “Table 6a – Expenses”, Cells J19 to n19).
       1. Confirm whether all product managers are dedicated to tariffed wholesale wireless roaming service. If so explain with supporting rationale why all these dedicated product managers are required. The response should justify the number of wholesale wireless roaming customers managed by each dedicated product manager.
       2. Provide the number of product managers dedicated to what is now the tariffed wholesale wireless service in each of the historical years 2013 to 2015.
       3. Refer to the response “The Companies(CRTC)15Sep10-109 TRP 2010-632 Update”, submitted 10 December 2010, page 2 of 5, where the company provided the number of product managers and the amount of time each product manager is dedicated to activities related to support of the companies’ Wholesale DSL services. Compare the number of product managers required for DSL services and the number of product managers forecasted for tariffed wholesale roaming services and justify the number of product managers forecasted for tariffed wholesale services. The response should also provide a comparison the number of customers for tariffed wholesale roaming service and DSL services.

Interrogatories to Rogers

1. 1. Provide revised cost and rates in $/Megabytes (MB) for data, $/minute for voice, and $/text for SMS that incorporates the responses to all requested interrogatories, where applicable, using the format of the tables used to provide:
      1. Price Floor Test - Total Present Worth of Revenues and Cost within Study Period,
      2. Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message,
      3. Demand Estimate over the study period including the start study demand and
      4. Detailed Summary of Costs Causal to Service and Demand respectively.
   2. Provide, for each year of the revised cost study in response to a) above, the capital cash flows for all wireless facilities associated with the RAN, Backhaul, and Core Network.
   3. Provide a copy of the updated economic model (including all associated files required to run the model) that incorporates the responses to all requested interrogatories, where applicable.
   4. Any deviation from the revisions required by the interrogatories below in assumptions should be provided in a separate cost study (and updated economic model where applicable) that highlights these deviations, including a supporting rationale for why these deviations are justified.
2. With respect to the approach used by the National Wireless Carriers to develop their proposed cost-based rates for GSM-based roaming services and with reference to the reply comments of TELUS Communications Company, dated 31 May 2016, where it stated that:

   “GSM-based roaming is similar to any other mobile service, which requires a network. Therefore, the long-run incremental cost is the difference between providing these services for the totality of demand, including GSM-based roaming, and not providing these services at all.”

   1. Confirm that company estimate the cost of Mobile Wholesale Wireless Roaming service as follows:

      Cost of Mobile Wholesale Wireless Roaming Service =

      Cost of Mobile Wireless Service (based on all-carrier wireless demand forecast) +

      Cost specific to Wholesale Wireless Roaming Service (based on wholesale wireless roaming demand forecast)

      If not, explain with supporting rationale how the company estimates the cost of Mobile Wholesale Wireless Roaming Service.

   2. Does the company estimate the cost of Mobile Wireless Voice ($/minute), Mobile Wireless Short Message Service ($/Text), and Mobile Wireless Data ($/megabyte) by allocating the Cost of Mobile Wholesale Wireless Roaming Service Cost (from a). above) between these three wireless services?

      If not, explain with supporting rationale how the company estimates the cost of each of the relevant roaming services.

3. Refer to the company’s response to request for information (CRTC)1Jun16-3 a) and b), dated 5 August 2016, where the company submitted that the Radio Access Network (RAN) components, including antennae, base stations and towers are almost entirely used for the purpose of provisioning wireless service to their respective users and to the roaming partners.

   Further refer to paragraph 1-31 in ILECs’ Regulatory Economic Studies Manual (the Manual) which states that the cost of an existing discrete facility that is non-fungible is the lost opportunity^Footnote6 of salvage value net of removal costs.

   1. In view of the above, explain with supporting rationale why the company has not estimated the cost of these existing wireless facilities at the start of the study in accordance with the methodology described in paragraph 1-31 of the Manual for existing discrete facilities that are non-fungible.
   2. Similar to RAN components, confirm whether Backhaul and Core Network facilities are also almost entirely used for the purpose of provisioning wireless service. If this is the case, explain with supporting rationale why the company has not estimated the cost of existing Backhaul and Core Network costs at the start of the study in accordance with the methodology described in paragraph 1-31 of the Manual for existing discrete facilities that are non-fungible. If not, explain why not with supporting rationale.
   3. For all existing wireless facilities included in the cost study, provide the Net Book Value (NBV) and the corresponding depreciation and amortization at end-of-year 2015, and associated remaining life estimates (this should not be the proposed life estimate for wireless facilities) in Table 1 in Attachment 2 (add lines as necessary to include all existing wireless facilities). Further, provide the supporting documentation that explains how the NBV, the corresponding depreciation and amortization, and the associated remaining life estimates were estimated. If the requested information is not available on individual wireless equipment basis, provide the same information on an aggregated basis, as available.
   4. Provide the company’s views, with supporting rationale, on the appropriateness of using an annual capital unit cost change of minus 26.04% for traffic-driven wireless switching and transmission equipment approved by the Commission in Telecom Decision CRTC 2016-117^Footnote7 .
   5. The revised cost study requested in Question 1) above, should  reflect the following changes in assumptions:
      1. Replace the capital cash flow and the associated life estimate at the start of the cost study for each of the existing facilities in the cost model with the associated NBV value and remaining life estimate provided in Table 2 in Attachment 2.
      2. Replace the Spectrum capital cash flow at the start of the cost study with the value provided in the column titled “Present Worth of the remaining value of spectrum asset” in the table provided in the response to CRTC 17Jun16-1. With respect to capital characteristics assume rectangular survivor curve patterns, and no capital increase factors (CIFs) and productivity improvement factors (PIFs).
      3. Replace the CIFs for all switching and transmission wireless equipment in the cost study with minus 26.4% approved by the Commission in Telecom Decision CRTC 2016-117.
   6. Further to response to c) above, if the company considers that additional changes are necessary as a result of the use of NBV then propose those additional changes with supporting rationale. Alternately, if the company does not agree with the use of the NBV, provide a reasonable proxy value other than the replacement cost new along with the associated average life estimates, etc., with supporting rationale, that can be used in the cost study in lieu of the lost opportunity of salvage value net of removal costs by completing Table 2 in Attachment 2. The company’s proposed proxy value along with the associated average life estimates should be provided for all existing wireless facilities in Table 2 in Attachment 2 (add lines as necessary to include all existing wireless facilities). If the requested information is not available on individual wireless equipment basis, provide the same information on an aggregated basis, as available.
4. Provide a copy of the Rogers Communications Inc. 2015 Annual Report.
5. Refer to the Rogers Communications Inc. 2015 Annual Report^Footnote8 .
   1. Refer to section “Notes to consolidated financial statements” and to the associated note, “Note 7, Property, plant, and equipment”, page 105. Provide the numbers for end-of-year 2015 that present results for only Rogers’ wireless network.
   2. Explain, with supporting rationale, why the total amounts of the NBV and Depreciation and Amortization from the response provided in question 3.c) above should not be identical with the total amounts of the Net Carrying Amount, and Depreciation and Amortization provided in 5.a) above.
6. Refer to the response to TELUS(CRTC)17June-16-4, Attachment 1, Rogers(CRTC)17June-16-4 b) Attachment, and Bell Mobility(CRTC)17Jun16-4 TN1B-TN2, Attachment 1, dated 5 August 2016:
   1. Complete Table 3 in Attachment 2 and correct any life estimates if they are incorrect (add lines as necessary to include all existing wireless facilities and their associated life estimates).
   2. In Table 3 in Attachment 2, staff has indicated with an asterisk those instances where there is a significant variation in the assumed life estimates between those provided by each of the National Wireless Carriers. For each instance where your company life estimate is significant lower provide supporting rationale for why this may be the case.
   3. Indicate whether the proposed life estimates are Economic life estimates or Accounting life estimates. If the proposed life estimates are Economic then provide accounting life estimates and if there is a significant difference between the two life estimates, explain why with supporting rationale.
7. Refer to Quebecor’s response to Quebecor Media(CRTC)17June2016-1, dated 5 August 2016, which states the following:

   “In our view, conversion factors should be based on more straightforward and objective bitrate calculations.  We offer the following sample calculations, which we believe accurately reflect the characteristics of current technologies:

   LTE Voice

   Typical coder-decoder (CODEC) bit rate range = 12.65 kbps* to 23.85 kbps**
   Corresponding packet size range*** = 33 B to 61 B
   Packet transmission rate = 1 per 20 ms
   33 B per 20 ms = 33 /1024 /1024 / 20 x 1000 x 60 MB per minute = 0.0944 MB per minute
   61 B per 20 ms = 61 /1024 /1024 / 20 x 1000 x 60 MB per minute = 0.1745 MB per minute
   Conversion factor range = 0.0944 MB per minute to 0.1745 MB per minute
   * 3GPP standard AMR-WB_12.65
   ** 3GPP standard AMR-WB_23.85
   *** Based on 3GPP conversion tables

   HSPA Voice

   The HSPA Voice conversion factor can be based on the LTE Voice calculation, adjusted for the fact that an HSPA voice conversation (unlike an LTE voice conversation) continues to occupy a channel even during moments of conversational silence.  As conversational silence typically occupies 50% of a conversation, a factor of two can be used.
   Conversion factor range = 0.0944x2 MB per minute to 0.1745x2 MB per minute
   = 0.1888 MB per minute to 0.3490 MB per minute

   SMS

   Standard message length = 140 characters = 140 B
   140 B = 140 / 1024 / 1024 MB = 0.0001335 MB
   Conversion factor = 0.0001335 MB per message”

   1. Explain with supporting rationale why the approach proposed by Quebecor should not be adopted by the national wireless carriers to derive the conversion factors used to translate the forecasted traffic for mobile wireless voice in minutes and mobile wireless text messages into megabytes (MB).
   2. The cost study requested in Question 1) should also reflect the following change in assumptions for the conversion factors:

      Replace the company’s conversion factors in the cost model with the following conversion factors.

      Conversion Factor

      	Voice	Text
      HSPA	0.3490 MB per minute	0.0001335 MB per SMS
      LTE	0.1745 MB per minute	0.0001335 MB per SMS

8.  With respect to proposed network interconnection with the company’s wireless network:
   1. Confirm that the mode of network interconnection included in the cost study is indirect interconnection.
   2. Describe in detail all technical and operational steps required for a wholesale roaming partner to interconnect with the company for the purpose of the wholesale roaming service using indirect interconnection. In doing so, list all required facilities and services required for interconnection from the company’s facilities to those of the wholesale roaming customer, whether provided by the company, a third party or the roaming partner and include a diagram showing this path of interconnection.
   3. Identify in the diagram and list provided in b) the following:
      1. all those facilities and services that are included in the proposed wholesale wireless roaming tariff and included in the proposed rate;
      2. any facilities or services not included in the wholesale roaming services rate that would need to be purchased by the wholesale roaming customer from the company in order for interconnection to occur.
      3. indicate whether the purchase of these facilities or services not included in the wholesale roaming service tariff from the company is subject to a tariff (and provide a copy of the relevant tariff pages) or forborne, and provide for the record a copy of the tariffed rate or an estimate of the rate that would apply in a forborne environment. Provide rationale for why these facilities and services should not be included as part of the wholesale wireless services tariff.
      4. Any services that would need to be self-provisioned by the wholesale roaming customer or purchased from a third party.
9. Refer to Rogers’ Wireless Phase 2 Costing model filed on 23 November 2015, worksheet “Model”, Section “Expenses Causal to demand - Voice termination costs” where weighted average monthly Trunk rate is provided and is used to calculate the voice termination costs.
   1. Explain with supporting rationale how the company determined the weighted average monthly Trunk rate.
   2. Explain with supporting rationale the assumptions used by the company to estimate the voice termination costs in terms of type of carriers involved (e.g. ILECs, competitive local carriers, long distance providers, wireless carriers) and the type of traffic (wireline voice calls and wireless calls) carried.
   3. Confirm whether the company has assumed that all Off-net calls^Footnote9 carried on Rogers’ network terminate as wireline voice calls. If yes, explain why with supporting rationale. If no, identify the assumptions used and provide the rationale.
   4. Confirm whether the company applied the weighted average monthly Trunk rate to all voice calls. If so, explain why with supporting rationale.
   5. The cost study requested in Question 1) above, should reflect the removal of the voice termination costs associated with voice calls carried on Rogers’ network but terminate as wireless calls.
10. Refer to Rogers’ 4 April 2016 submission, where the company provided certain cost information tables, including forecasted demand for data, voice and SMS at the All-Carrier level, and response to request for information Rogers(CRTC)17Jun16-7, where the company provided historical traffic information for data, voice and SMS.
    1. Explain with supporting rationale how the company estimated the growth rate for data demand for years 2016 to 2020. The response should include all assumptions and should also compare the 2016-2020 growth rate with the historical 2011-2015 growth rate. Further, if the 2016-2020 growth rate trend is not similar to the historical trend, provide the reasons the company has chosen to deviate from the historical trend.
    2. The cost study requested in Question 1) above, should reflect the following change in assumptions:

       Assume for the first two years of the cost study period that the all-carrier wireless data traffic growth rates per end-user are consistent with the historic (2014-2015) levels, followed by a constant growth rate of 42%^Footnote10 for each of the remaining years of the study period.

Interrogatories to TCC

1. 1. Provide revised cost and rates in $/Megabytes (MB) for data, $/minute for voice, and $/text for SMS using the economic parameters provided in current Appendix V of the company’s Economic Studies Manual, and that it incorporates the responses to all requested interrogatories, where applicable, using the format of the tables used to provide:
      1. Price Floor Test - Total Present Worth of Revenues and Cost within Study Period,
      2. Price Floor Test - Revenues and Costs per Megabytes, per minute and per Text Message,
      3. Demand Estimate over the study period including the start study demand and
      4. Detailed Summary of Costs Causal to Service and Demand respectively.
   2. Provide for each year of the revised cost study in response to a) above, the capital cash flows for all wireless facilities associated with the RAN, Backhaul, and Core Network.
   3. Provide a copy of the updated economic model (including all associated files required to run the model) that incorporates the responses to all requested interrogatories, where applicable.
   4. Any deviation from the revisions required by the interrogatories below in assumptions should be provided in a separate cost study (and updated economic model where applicable) that highlights these deviations, including a supporting rationale for why these deviations are justified.
2. With respect to the approach used by the National Wireless Carriers to develop their proposed cost-based rates for GSM-based roaming services and with reference to the reply comments of TELUS Communications Company, dated 31 May 2016, where it stated that:

   “GSM-based roaming is similar to any other mobile service, which requires a network. Therefore, the long-run incremental cost is the difference between providing these services for the totality of demand, including GSM-based roaming, and not providing these services at all.”

   1. Confirm that company estimate the cost of Mobile Wholesale Wireless Roaming service as follows:

      Cost of Mobile Wholesale Wireless Roaming Service =

      Cost of Mobile Wireless Service (based on all-carrier wireless demand forecast) +

      Cost specific to Wholesale Wireless Roaming Service (based on wholesale wireless roaming demand forecast)

      If not, explain with supporting rationale how the company estimates the cost of Mobile Wholesale Wireless Roaming Service.

   2. Does the company estimate the cost of Mobile Wireless Voice ($/minute), Mobile Wireless Short Message Service ($/Text), and Mobile Wireless Data ($/megabyte) by allocating the Cost of Mobile Wholesale Wireless Roaming Service Cost (from a). above) between these three wireless services?

      If not, explain with supporting rationale how the company estimates the cost of each of the relevant roaming services.

3. Refer to the company’s response to request for information (CRTC)1Jun16-3 a) and b), dated 5 August 2016, where the company submitted that the Radio Access Network (RAN) components, including antennae, base stations and towers are almost entirely used for the purpose of provisioning wireless service to their respective users and to the roaming partners.

   Further refer to paragraph 1-31 in ILECs’ Regulatory Economic Studies Manual (the Manual) which states that the cost of an existing discrete facility that is non-fungible is the lost opportunity^Footnote11 of salvage value net of removal costs.

   1. In view of the above, explain with supporting rationale why the company has not estimated the cost of these existing wireless facilities at the start of the study in accordance with the methodology described in paragraph 1-31 of the Manual for existing discrete facilities that are non-fungible.
   2. Similar to RAN components, confirm whether Backhaul and Core Network facilities are also almost entirely used for the purpose of provisioning wireless service. If this is the case, explain with supporting rationale why the company has not estimated the cost of existing Backhaul and Core Network costs at the start of the study in accordance with the methodology described in paragraph 1-31 of the Manual for existing discrete facilities that are non-fungible. If not, explain why not with supporting rationale
   3. For all existing wireless facilities included in the cost study, provide the Net Book Value (NBV) and the corresponding depreciation and amortization at end-of-year 2015, and associated remaining life estimates (this should not be the proposed life estimate for wireless facilities) in Table 1 in Attachment 2 (add lines as necessary to include all existing wireless facilities). Further, provide the supporting documentation that explains how the NBV, the corresponding depreciation and amortization, and the associated remaining life estimates were estimated. If the requested information is not available on individual wireless equipment basis, provide the same information on an aggregated basis, as available.
   4. Provide the company’s views, with supporting rationale, on the appropriateness of using an annual capital unit cost change of minus 26.04% for traffic-driven wireless switching and transmission equipment approved by the Commission in Telecom Decision CRTC 2016-117^Footnote12 .
   5. The revised cost study requested in Question 1) above, should reflect the following changes in assumptions:
      1. Replace the capital cash flow and the associated life estimate at the start of the cost study for each of the existing facilities in the cost model with the associated NBV value and remaining life estimate provided in Table 2 in Attachment 2.
      2. Replace the Spectrum capital cash flow at the start of the cost study with the value provided in the column titled “Present Worth of the remaining value of spectrum asset” in the table provided in the response to CRTC 17Jun16-1. With respect to capital characteristics assume rectangular survivor curve patterns, and no capital increase factors (CIFs) and productivity improvement factors (PIFs).
      3. Replace the CIFs for all switching and transmission wireless equipment in the cost study with minus 26.4% approved by the Commission in Telecom Decision CRTC 2016-117.
   6. Further to response to c) above, if the company considers that additional changes are necessary as a result of the use of NBV then propose those additional changes with supporting rationale. Alternately, if the company does not agree with the use of the NBV, provide a reasonable proxy value other than the replacement cost new along with the associated average life estimates, etc., with supporting rationale, that can be used in the cost study in lieu of the lost opportunity of salvage value net of removal costs by completing Table 2 in Attachment 2. The company’s proposed proxy value along with the associated average life estimates should be provided for all existing wireless facilities in Table 2 in Attachment 2 (add lines as necessary to include all existing wireless facilities). If the requested information is not available on individual wireless equipment basis, provide the same information on an aggregated basis, as available.
4.  Provide a copy of the TELUS 2015 Annual Report on the public record.
5. Refer to the TELUS document titled “TELUS 2015 Annual Report”^Footnote13 .
   1. Refer to section “Notes to consolidated financial statements”, and to the associated notes, “Note 16, Property, plant, and equipment”, page 150, and “Note 17, Intangible assets and goodwill”, page 151. Provide note 16 and note 17 information that presents the results for only TELUS’ wireless segment for end-of-year 2015.
   2. Explain, with supporting rationale, why the total amounts of the NBV, and Depreciation and Amortization from the response provided in question 3.c) above should not be identical with the total amounts of the Net Book Value Depreciation and Amortization provided in 5.a) above.
6. Refer to the response to TELUS(CRTC)17June-16-4, Attachment 1, Rogers(CRTC)17June-16-4 b) Attachment, and Bell Mobility(CRTC)17Jun16-4 TN1B-TN2, Attachment 1, dated 5 August 2016 as well as Table 3 in Attachment 2 of this letter, which is staff’s attempt to compare the life estimates provided to these questions:
   1. Complete Table 3 in Attachment 2 and correct any life estimates if they are incorrect (add lines as necessary to include all existing wireless facilities and their associated life estimates).
   2. In Table 3 in Attachment 2, staff has indicated with an asterisk those instances where there is a significant variation in the assumed life estimates provided by each of the National Wireless Carriers. For each instance where your company life estimate is significantly lower, provide supporting rationale for why this may be the case.
7. Refer to Quebecor’s response to Quebecor Media(CRTC)17June2016-1, dated 5 August 2016,which states the following:

   “In our view, conversion factors should be based on more straightforward and objective bitrate calculations.  We offer the following sample calculations, which we believe accurately reflect the characteristics of current technologies:

   LTE Voice

   Typical coder-decoder (CODEC) bit rate range = 12.65 kbps* to 23.85 kbps**
   Corresponding packet size range*** = 33 B to 61 B
   Packet transmission rate = 1 per 20 ms
   33 B per 20 ms = 33 /1024 /1024 / 20 x 1000 x 60 MB per minute = 0.0944 MB per minute
   61 B per 20 ms = 61 /1024 /1024 / 20 x 1000 x 60 MB per minute = 0.1745 MB per minute
   Conversion factor range = 0.0944 MB per minute to 0.1745 MB per minute
   * 3GPP standard AMR-WB_12.65
   ** 3GPP standard AMR-WB_23.85
   *** Based on 3GPP conversion tables

   HSPA Voice

   The HSPA Voice conversion factor can be based on the LTE Voice calculation, adjusted for the fact that an HSPA voice conversation (unlike an LTE voice conversation) continues to occupy a channel even during moments of conversational silence.  As conversational silence typically occupies 50% of a conversation, a factor of two can be used.
   Conversion factor range = 0.0944x2 MB per minute to 0.1745x2 MB per minute
   = 0.1888 MB per minute to 0.3490 MB per minute

   SMS

   Standard message length = 140 characters = 140 B
   140 B = 140 / 1024 / 1024 MB = 0.0001335 MB
   Conversion factor = 0.0001335 MB per message”

   3. Explain with supporting rationale why the approach proposed by Quebecor Media should not be adopted by the national wireless carriers to derive the conversion factors used to translate the forecasted traffic for mobile wireless voice in minutes and mobile wireless text messages into megabytes (MB).
   4. The cost study requested in Question 1) should also reflect the following change in assumptions for the conversion factors:

      Replace the company’s conversion factors in the cost model with the following conversion factors.

      Conversion Factor

      	Voice	Text
      HSPA	0.3490 MB per minute	0.0001335 MB per SMS
      LTE	0.1745 MB per minute	0.0001335 MB per SMS

8.  With respect to proposed network interconnection with the company’s wireless network:
   1. Confirm that the mode of network interconnection included in the cost study is indirect interconnection.
   2. Describe in detail all technical and operational steps required for a wholesale roaming partner to interconnect with the company for the purpose of the wholesale roaming service using indirect interconnection. In doing so, list all required facilities and services required for interconnection from the company’s facilities to those of the wholesale roaming customer, whether provided by the company, a third party or the roaming partner and include a diagram showing this path of interconnection.
   3. Identify in the diagram and list provided in b) the following:
      1. all those facilities and services that are included in the proposed wholesale wireless roaming tariff and included in the proposed rate.
      2. any facilities or services not included in the wholesale roaming services rate that would need to be purchased by the wholesale roaming customer from the company in order for interconnection to occur.
      3. indicate whether the purchase of these facilities or services not included in the wholesale roaming service tariff from the company is subject to a tariff (and provide a copy of the relevant tariff pages) or forborne, and provide for the record a copy of the tariffed rate or an estimate of the rate that would apply in a forborne environment. Provide rationale for why these facilities and services should not be included as part of the wholesale wireless services tariff.
      4. Any services that would need to be self-provisioned by the wholesale roaming customer or purchased from a third party.
9. Refer to TCC’s 4 April 2016 submission, where the company provided certain cost information tables, including forecasted demand for data, voice and SMS at the All-Carrier level, and response to request for information TELUS(CRTC)17Jun16-7, where the company provided historical traffic information for data, voice and SMS.
   1. Explain with supporting rationale how the company estimated the growth rate for data demand for years 2016 to 2020. The response should include all assumptions and should also compare the 2016-2020 growth rate with the historical 2011-2015 growth rate. Further, if the 2016-2020 growth rate trend is not similar to the historical trend, provide the reasons the company has chosen to deviate from the historical trend.
   2. The cost study requested in Question 1) above, should reflect the following change in assumptions:

      Assume for the first two years of the cost study period that the all-carrier wireless data traffic growth rates per end-user are consistent with historic (2014-2015) levels, followed by a constant growth rate of 42%^Footnote14 for each of the remaining years of the study period.

10. Refer to NERA model, worksheet Factor Unit Costs, where the following factors are identified:
    • FX Adjustment
    • Material Markup
    • Overall Material Cost Adjustment
    • Labor Markup
    • Overall Labor Cost Adjustment
    1. Provide a detailed description of each of the above factors. The response should also explain the purpose of these factors and how these factors have been developed.
    2. Explain with supporting rationale how the factors associated with each of the above are estimated.
    3. Explain how and why each of these factors are used in the estimation of causal incremental cash flows. Further, justify the application of these factors in the cost study.
11. Refer to NERA model, worksheet “Cash Flow Output”, where the company provided total capital expenditures at the start of the study period related to “Roamer Negotiations Setup”, “Internal Roamer Setup” and “Upgrades due to Domestic Roaming”.
    1. Provide a detailed description of each of these capital expenditures.
    2. Explain with supporting rationale how these capital expenditures are estimated.
12. Refer to NERA model, worksheet “Cash Flow Output”, where the company provided for each year of the study period operational expenditures (Opex) related to “Roamer Negotiations Setup - Roaming Agreement/Negotiations - Global Carrier Solutions”.
    1. Provide a detailed description of these expenses related to “Roamer Negotiations Setup - Roaming Agreement/Negotiations - Global Carrier Solutions.
    2. Explain with supporting rationale how these expenses are estimated.
13. Refer to paragraph 72 of Telecom Decision CRTC 2008-14^Footnote15 , where the Commission determined that management expenses beyond two levels of supervision are fixed common expenses.
    1. Confirm whether the company has included management expenses beyond two levels of supervision in the estimation of any expenses in the cost study.
    2. If the response to a) above is yes, please provide rationale for the deviation from the stated practice on this issue.
    3. If the response to a) above is yes, update the cost study requested in Question 1) above, to reflect the removal of all management expenses beyond two levels of supervision from all expenses included in the cost study.
14. Refer to NERA model, worksheet “Factor Unit Costs” where Travel & Entertainment expenses are provided. filed on 23 November 2015.
    1. Provide a detailed description of these expenses.
    2. Explain with supporting rationale why these expenses are causal to wireless service.
    3. Update the cost study requested in Question 1) above, to reflect the removal of Travel & Entertainment expenses from the cost study.
15. Refer to Table 5 – Detailed Summary of Causal Costs for Roaming Voice, Roaming data and Roaming SMS, filed on 23 November 2015.
    1. Provide a breakdown of the major activities included in the estimation of Billing Expenses (Causal to Demand). Also, provide detailed description of all the major activities associated in the estimation of the Billing Expenses
    2.  Explain with supporting rationale how these Billing Expenses (Causal to Demand) have been estimated.
    3. Further to the response to b) above, for the expenses that are estimated 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.
    4. Further to the response to b) above, for each expense that is based on unit costs or factors, provide the unit costs or factors used 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.
16. With respect to Voice termination costs include in the cost study.
    1. Explain how the company estimated these costs with supporting rationale, along with all assumptions used. Also, identify where in the costing model Voice termination costs are located.
    2. Explain with supporting rationale the assumptions used by the company to estimate the voice termination costs in terms of type of carriers involved (e.g. ILECs, competitive local carriers, long distance providers, wireless carriers) and the type of traffic (wireline voice calls and wireless calls) carried.
17. Provide step-by-step instructions on how to run TELUS Wireless Cost Model including the three sub models EASE (Economic Analysis Standard Evolution), the Cost Collector and the NERA Model.

Attachment 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., regulatory@mts.ca
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;

Date modified:

2016-12-20