Telecom Commission Letter Addressed to Northwestel Inc.

Ottawa, 19 November 2018

Our reference:  1011-NOC2018-0214

BY EMAIL

Mr. Stan Thompson
Chief Financial Officer and Vice-President
Northwestel Inc.
301 Lambert Street
Whitehorse, YK  Y1A 4Y4
regulatoryaffairs@nwtel.ca

Re: Review of the price cap and local forbearance regimes, Telecom Notice of Consultation 2018-214 Footnote1 – Requests for information

Dear Mr. Thompson:

Pursuant to paragraph 39 of Telecom Notice of Consultation 2018-214, attached are requests for information from the Commission.

Responses to these requests for information are to be filed with the Commission by 19 December 2018. The responses must be received, not merely sent, by that date.

Sincerely,

Original signed by

John Macri
Director, Policy Framework
Telecommunications Sector

c.c.: Christine Brock, CRTC, (873) 353-5852, christine.brock@crtc.gc.ca

Attach (1)

Requests for information addressed to Northwestel Inc. (Northwestel)

  1. Refer to Tables 3, 4 and 5 of Northwestel’s intervention where the net impact of the subsidy loss and the revenue increases for the years 2018 to 2023 resulting from the proposed permissible price increases for residential primary exchange services (PES) in regulated areas was provided. Provide all supporting calculations and assumptions for the information in these tables.
  2. Refer to paragraphs 51 to 68 of Northwestel’s intervention where the company proposed to increase rates for regulated residential PES to the highest approved rate of $38.34. These increases would be phased in over time with annual increases limited to the lesser of i) 1/3 of the difference between the existing rate and the regulated target price or ii) $2.50. Northwestel also proposed that following a three-year transition period, the rate element constraint would be inflation.

    Assume that Northwestel’s proposal is adopted with the following changes:

    • the price ceiling is set at $35.00 rather than $38.34; and
    • the maximum allowable increase per year is $1.50.
    1. Provide, with supporting rationale, the company's views on this approach.
    2. Based on this approach, reproduce Tables 3, 4 and 5 of Northwestel’s intervention, with supporting calculations and assumptions.
  3. Refer to Table 2 of Northwestel’s intervention where the company has included the cost of copper loops in its estimates of residential PES costs for band H1.
    1. Provide an updated cost study to support the proposed residential PES rate that relies on current capital and expense unit costs indicating the vintage of the data used.
    2. Has Northwestel recovered its investment in copper loop facilities in its serving territory? If not, what amount (in dollars) has not been recovered? Provide all calculations and assumptions.
    3. Provide a list of any other services that are sharing the copper loop facilities (e.g. Internet) along with the associated revenues and costs.
    4. Indicate whether a portion of the costs associated with the copper loop facilities have been attributed to other services using the facilities. If not, provide the company’s views as to why these costs should not be attributed to these other services. 
  4. Refer to Tables 8 through 11 of Northwestel’s intervention.
    1. Explain how the company determined the proposed rate increases.
    2. The company has assumed a rate of inflation of 2%. Does the company propose that these rate increases would go into effect regardless of the actual rate of inflation? If not, provide the proposed annual increases in terms of percentages excluding inflation.
  5. Refer to Table 12 of Northwestel’s intervention. Provide the associated Excel spreadsheet, with supporting calculations and assumptions.
  6. At paragraph 78 of Northwestel’s intervention, the company stated that it is proposing certain changes to its regulatory framework that will provide additional flexibility which cannot be monetized and therefore cannot be compared to the remaining shortfall but nonetheless are justifiable in their own right.
    1. Explain why these proposed changes should be considered as elements of compensation rather than separately as changes to Northwestel's regulatory framework that would be considered solely due to market conditions.
    2. Explain what impacts the proposed changes would have on competitors as well as residential and business customers.
  7. At paragraph 137 of Northwestel’s intervention, the company requested that the Commission permit the company to use rate ranges and rate deaveraging for its retail services, consistent with what is permitted for all other ILECs. In Northwestel Inc. – Regulatory Framework, Modernization Plan, and related matters, Telecom Regulatory Policy CRTC 2013-711, 18 December 2013, the Commission noted that rate ranges and rate deaveraging is a pricing tool permitted by the Commission in regulated areas where competition has been introduced in order to increase competitiveness and reduce regulatory burden for the ILEC.
    1. Specify the number of network access services (NAS) that Northwestel has lost due to competition in its serving territory for each of the years 2015 to 2017.
    2. Identify in which of the company's exchanges a wireline competitor has facilities and offers local voice services.
    3. Describe the level of regulatory burden the company currently faces resulting from the current regulatory requirements.
  8. At paragraph 149 of Northwestel’s intervention, the company proposed that the Commission grandfather the equal access obligation such that the company would not be require to provide equal access to end-users who do not have it today.
    1. Explain the impact, if any, on long-distance service providers of removing the requirement to provide equal access to residential PES customers.
    2. Explain how Northwestel would administer the grandfathering of the equal access obligation.
    3. Provide the total number of customers and percentage of customers in Whitehorse, Yellowknife, Fort Nelson, and Iqaluit who had selected another service provider for their primary interexchange carrier as of December 31, for each of the years 2015 to 2017.
    4. Indicate whether there would be any cost savings if Northwestel did not offer equal access to new customers in Whitehorse, Yellowknife, Fort Nelson and Iqaluit. If so, provide an estimate of those cost savings.
  9. At paragraph 138 of Northwestel’s intervention, the company proposed that the obligation to serve should be eliminated altogether for all ILECs in situations where another carrier has received government subsidy to provide broadband including through the Commission's new Broadband Fund.
  10. Assuming the Commission adopts the company’s proposal, explain, with supporting rationale, i) whether this proposal would apply only when funding is provided for the access component of broadband Internet access services and not when a carrier receives funding for transport infrastructure, and ii) how the Commission would establish and monitor such a regulatory policy for government subsidies not provided through the Commission’s new Broadband Fund.

  11. At paragraph 163 of Northwestel’s intervention, the company proposed that a local forbearance framework be implemented in its operating territory similar to the one proposed by Bell Canada et al Footnote2 in its intervention.
    1. Identify which residential and business local exchanges would become eligible for forbearance under the company's proposed competitor presence tests. If the information is not available, provide the estimated number of eligible residential and business local exchanges based on the proposed competitor presence tests.
    2. According to the Commission's 2017 Communications Monitoring Report, Footnote3 mobile wireless services in the North are available to 86.3% of the Canadian population. Provide the company's views, with supporting rationale, on setting the threshold for customers capable of being served by mobile wireless competitors at a higher level (e.g. 90% or even higher).
    3. Provide a response to part a) above assuming that the wireless competitor presence threshold is set at i) 90%, ii) 95% and iii) 100%.
  12. For each local regulated exchange as of 30 June 2018, provide the following information in a Microsoft Excel table using the format below:
    Territory/Province:
    (e.g. Yukon)
    Residential Business
    A B C D E F G
    Exchange name HCSA or NHCSA NP Total
    NAS
    NAS served Total
    NAS
    NAS
    served
    Exchange 1 HCSA N/A 1000 1000 200 200
    Exchange 2 HCSA N/A 1000 500 300 250
    Exchange 3 HCSA NP 50 40 500 250
    Exchange 4 NHCSA N/A 6000 5000 250 250
    Exchange 5 NHCSA NP 4000 3500 250 125

    Column A: Provide the exchange name

    Column B: Indicate whether the exchange is in an “HCSA” or “NHCSA” (i.e. non-HCSA).

    Column C: Indicate if number portability (NP) has been implemented in the exchange; otherwise indicate N/A.

    Column D: Provide the total number of residential NAS that the company is capable of serving.

    Column E: Provide the number of residential NAS served by the company.

    Column F: Provide the total number of business NAS that the company is capable of serving.

    Column G: Provide the number of business NAS served by the company.

  13. Based on the information provided in response to question 11 above, provide in a Microsoft Excel table using the format below, the following aggregated information for the public record:
    Regulated exchanges Total Company
    Total number of regulated exchanges 96
    Total number that are in HCSAs 94
    Total number that are in non-HCSAs 2
    Residential services Total Company
    Total number of residential NAS that the company is capable of serving in regulated exchanges XX
    Total number of residential NAS in regulated exchanges that are served by the company YY
    Business services Total Company
    Total number of business NAS that the company is capable of serving in regulated exchanges XX
    Total number of business NAS in regulated exchanges that are served by the company YY
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