ARCHIVED - Telecom Commission Letter Addressed to Dallas Yeulett (Northwestel Inc.)

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Ottawa, 20 December 2017

Our reference: 8740-N1-201700740


Mr. Dallas Yeulett
Senior Manager, Regulatory Compliance
Northwestel Inc.
P.O. Box 2727
Whitehorse, Yukon  Y1A 4Y4

Re:  Northwestel Inc. Tariff Notice 976: Wholesale Connect Service New rates and Circuits – Additional Request for information

On 6 February 2017, the Commission received from Northwestel Tariff Notice (TN) 976 which proposed revisions to the Wholesale Connect service - Access Service tariffs CRTC 21480 Item 300, with an effective date of 1 March 2017.

Comments were received from SSI Micro Ltd., Iristel Inc. and ArcTech Computers Inc.

Question 2 in the attached Request for Information (RFI) is associated with the use of 2012 vintage information expressed in 2017 dollars in the estimation of proposed Wholesale Connect Service costs. This 2012 vintage information was originally used in the estimation of Wholesale Connect Service rates that were approved by the Commission in Order 2013-93. As part of due diligence process, clarification is required to ensure that certain assumptions continue to be appropriate in order to estimate switching IFC.

Further, in order to assist in the continuing analysis of the application, Northwestel is to provide response to the attached requests for additional RFIs by 26 January 2018. Parties may file comments limited to the new information provided in response to the RFIs by 9 February 2018 and Northwestel may file reply comments by 23 February 2018.

Responses to RFIs and comments are to be served on all parties to this application by the specified dates. Copies of the document should also be sent to Sincerely,

Original signed by

Lyne Renaud
Director, Competitor Services and Costing Implementation
Telecommunications Sector

c.c:  Lyne Renaud, CRTC,
Mohammed Omar, CRTC, 819-934-6378,
B.Natraj (Nat Natraj), CRTC, 819-953-0361,
Linda Maljan, Government of the Northwest Territories,
Steve Sorochan, Government of Yukon,
Samer Bishay, Iristel Inc.,
Dean Proctor, SSi Micro Ltd.,
Christopher Hickey, CNOC,

Attach. (1)

Request for information

  1. Using the format of Appendix B, Attachment 2, Table 5, of the company’s 6 February 2017 submission, provide revised Wholesale Connect Service costs and rates for each community type for each speed tier that incorporates the responses to:
    1.  each interrogatory separately, where applicable
    2. all interrogatories combined together, where applicable
    3. Further to response to 1 b) above, provide a copy of the updated economic model (Including all associated files required to run the model) used to estimate revised cash flows, costs and rates.
  2. Refer to paragraph 45 in Scenario B, Appendix B, Attachment 1 of the company’s submission dated 6 February 2017 associated with TN 976 titled “Northwestel Report on the Economic Evaluation for the Tariff Revision of Wholesale Connect Service”, where the company submitted that the installed first cost (IFC) for core IP network elements are developed based on 2012 vintage supplier costs and capacities (Mbps) and a WFF.
  3. Confirm that the 2012 vintage supplier costs, capacities (Mbps) and WFF used in the Economic Evaluation dated 6 February 2017 are the same as those provided in response to CRTC (Nwtel)12Aug15_Request for Further Information_Q2, Attachment 2_Table 6b, (Capital Causal to demand –Switching).

  1. If  yes, explain with supporting rationale the following:
  1. Why the costs associated with Edmonton location (DRT-01 and DRT-02) are included in the estimation of switching IFCs for the Wholesale Connect service when Edmonton is not identified as a location where the Wholesale Connect service is available in the company’s tariff.
  2. Why the IFC for switching is estimated as the summation of all the components identified in the table 6b. The response should explain how the traffic is routed from one destination to another, with examples, and whether all the traffic is routed through each of the components all the time before being delivered to its final destination.
  3. If in response to a) ii above, the traffic is not routed through each of the components all the time before being delivered to its final destination, provide a revised IFC for switching that takes into consideration a weighted average of all the components that are used, with supporting rationale. The supporting rationale should explain in detail how the weighted average of all components are estimated.

If not:

  1. Why the costs associated with Edmonton location Provide supplier costs and capacities (Mbps) and WFF and its vintage that are used in the economic evaluation in the same format as provided in response to CRTC (Nwtel) 12Aug15_Request for Further Information _Q2, Attachment 2_Table 6b. Also, provide a reference as to when this information was filed with the Commission.
  2. With respect to the information provided in response to 2 b i) above, provide responses to the questions identified in 2 a) i, ii and iii above as applicable.
  1. Refer to the response to CRTC(NWTEL)23Aug17_Request for Information_Q1 a) where the company confirmed that all of the cost factors used in economic studies, including Fibre Cost Factor (FCF) are developed by restating historical costs to current year costs using Capital Increase Factors (CIFs).
  1. Explain with supporting rationale why the company has used annual unit cost change factor instead of CIFs to restate historic Fibre Electronic costs in the estimation of the FCF.
  2. Provide CIFs associated with Fibre Electronics which are comparable and consistent with the CIFs used to restate Fibre Optic Cable.
  3. Provide revised FCF factor using the CIFs provided in response to 3b) above to restate historic Fibre Electronic costs.
  1. Refer to Appendix B, Attachment 3, Table 6a (Revised) of the company’s submission dated 20 March 2017 where the company provides sales and product management costs based on the total number of forecasted customers in Section B (Expenses based on Labour Unit Cost).
  2. Further refer to Appendix B, Attachment 2, Table 5, Type Breakout Community (BO) of the company’s submission dated 6 February 2017 where the company provides for each speed tier, the present worth of sales and product management costs (under the Expenses Causal to Service, Other category).

  1. Explain with supporting rationale, why the company has included all the sales and product management costs, for each speed tier, as shown in in Appendix B, Attachment 2 and Table 5. The response should also explain why this approach would not result in over recovering of sales and management expenses
  2. If in response to 3 a) above, there is potential of over recovery of sales and management expenses, then provide revised sales and product management costs that should be included in each speed tier, with supporting rationale.
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