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Telecom - Commission letter addressed to Stan Thompson (Northwestel Inc. )

Ottawa, 16 February 2021

Our reference:  8740-N1-202006775

BY EMAIL

Mr. Stan Thompson
Chief Financial Officer & Vice-President
Northwestel Inc.
P.O. Box 2727
Whitehorse, Yukon Y1A 4Y4
regulatoryaffairs@nwtel.ca

RE:  Northwestel Inc. - Tariff Notice 1099 – General Tariff, Basic Services

Dear Mr. Thompson:

On 14 October 2020, the Commission received an application from Northwestel Inc. (Northwestel) under Tariff Notice 1099. The company proposed changes to General Tariff CRTC 3001, Item 1735 – Terrestrial Internet Services, in order to introduce new Internet packages, including unlimited Internet packages, for residential and business customers in its areas served by fibre-to-the-premises and cable.

Paragraph 28(1) (a) of the Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure provides that the Commission may require parties to file information or documents where needed.

Northwestel is requested to provide comprehensive answers, including rationale and any supporting information, to the attached questions by 23 March 2021.

As set out in section 39 of the Telecommunications Act and in Broadcasting and Telecom Information Bulletin CRTC 2010-961, Procedures for filing confidential information and requesting its disclosure in Commission proceedings, persons may designate certain information as confidential.

A person designating information as confidential must provide a detailed explanation on why the relevant information qualifies for designation as confidential and why its disclosure would not be in the public interest, including as to how the specific direct harm that would likely result from the disclosure would outweigh the public interest in disclosure. Furthermore, a person designating information as confidential must either file an abridged version of the document omitting only the information designated as confidential or provide reasons why an abridged version cannot be filed.

Where a document is to be filed or served by a specific date, the document must be actually received, not merely sent, by that date.

The Commission requires the response or other documents to be submitted electronically by using the secured service “My CRTC Account” (Partner Log In or GCKey) and filling the “Telecom Cover page” located on this web page. 

A copy of this letter and the subsequent responses will be added to the public record of this proceeding.

Sincerely,

Original signed by

Michel Murray
Director, Dispute Resolution & Regulatory Implementation
Telecommunications Sector

c.c.:  Wendy McClintock, CRTC, 819-639-6211,Wendy.Mcclintock@crtc.gc.ca
Nat Natraj, CRTC, 819-953-5081, nat.natraj@crtc.gc.ca
bell.regulatory@bell.ca

Attach. (1)

Request for Information

  1. Refer to Northwestel’s response to the request for information, Northwestel(CRTC)4Nov 20-2 TN 1099
    1. Provide a complete and detailed explanation of why Cable internet service costs by speed tier are a suitable proxy for Fiber to the Premises (FTTP) service costs, Footnote1 as the two types of services use different access technologies and could potentially have different capital costs and expenses associated with them.
    2. In its response, Northwestel indicated that “we assessed the impact of imputing Wholesale Connect rates and determined that the proposed rates for unlimited Internet packages would continue to meet the price floor test if Wholesale Connect were imputed for the transport element.”
      1. Provide a revised Table 2 in the Appendix to the Attachment of the company’s 13 November 2020 submission that includes the imputed Wholesale Connect rates by speed tier. For each speed tier, provide the imputed Wholesale Connect rates in a row item “Cost: Wholesale/Imputed Services”.
      2. Describe the methodology and assumptions used to impute the Wholesale Connect rates for each speed tier.
  2. Refer to the economic cost study report (the study report) contained in the attachment to Northwestel’s submission dated 13 November 2020: Northwestel Inc. - Tariff Notice 1099 – General Tariff, Basic Services – Responses to Requests for Information - Cost Study - ATT - CONF.
    1. Refer to paragraphs 29 and 30 of the study report:
      1. Provide the calculations used to attribute the hybrid fibre coaxial cable costs to each internet speed tier in the format of Appendix A Table 6 of TN 904A.
      2. Provide the transport fibre costs included for each speed tier and provide the Fiber Cost Factor (FCF) used to estimate the transport fibre costs.
      3. Explain why the cost for outside plant in TN 1099 varies by speed while, for Cable internet service in the company’s “Application to Review and Vary certain elements of Telecom Decision CRTC 2015-78 or to approve an Exogenous Adjustment to Northwestel’s retail Internet services”, 3 June 2015 (the R&V application) Scenario 4, Appendix D, Table 2A, it is uniform for all speed tiers.
    2. Refer to paragraph 31 of the study report, which provides details relating to switching equipment.
      1. Provide the unit costs per megabit per second (Mbps), and associated cost inclusions, for each of the Internet Protocol (IP) core routers, specifically the Provider Backbone Multiprotocol Label Switched (MPLS) Routers (IP Router), Distribution Routers (PE Router), and Distribution Switches in the Core IP/MPLS Network.
      2. Explain how the unit costs for the IP core routers provided in response to part i. above were used to develop switching equipment annual cash flows and present worth of annual costs (PWACs) for each speed tier, providing all of the relevant unit costs, drivers and calculations in an Excel spreadsheet.
      3. Compare the switching unit costs used to develop the cash flows in part ii above with those used in the R&V application Scenario 4, Appendix D, Table 2A. Explain any differences greater than 10%.
    3. Refer to paragraph 32 of the study report, which provides details related to transmission equipment.
      1. Provide the unit cost per Mbps, and associated cost inclusions, for each of a) transport unit costs per Mbps for each community aggregation route and b) the weighted averages calculated for communities based on the provisioned transport capacity for each community link. Furthermore, provide explanations as to the company’s definition of “community”, with pertinent examples.
      2. Explain how the unit costs provided in part i. above were used to develop the transmission equipment annual cash flows and PWACs for each speed tier, providing all relevant unit costs, drivers and calculations in an Excel spreadsheet.
      3. Compare the transmission equipment unit costs used to develop the cash flows in part ii above with those used in the R&V application Scenario 4, Appendix D, Table 2A. Explain any differences greater than 10%.
    4. Refer to paragraph 33 of the study report that refers to peak period utilization.
      1. Provide the peak period utilization factor(s) used for the Cable internet service by speed tiers, indicating the vintage of the data used. If separate utilization factors were developed for Cable residence and business internet services, provide the factors for each respectively. If the factors were not developed by Cable residence and business internet service, explain why the same peak period utilization factor is appropriate for both services.
      2. As the company is proposing to use the Cable internet service costs as a proxy for the FTTP service, explain why the peak period utilization factor(s) for Cable internet service is expected to be appropriate for the FTTP service.
    5. Refer to paragraph 34 of the study report and provide the Structure and Technology Cost factors used.
    6. Provide the annual capital unit cost change assumptions used to restate historic traffic driven costs to the beginning year of the study, as well as those used within the study period. If the annual capital unit cost change factor of -26.4% was not used to restate historic traffic driven capital unit costs to the beginning of the study period and within the study period, explain why and provide revised cost studies that use the capital unit cost change factor of -26.4% for traffic driven capital unit costs.
    7. Provide the annual capital unit cost change assumptions used to restate historic non-traffic driven capital costs to the beginning of the study period and within the study period.
    8. Provide the annual expense unit cost change assumptions, net of productivity, used to restate historic costs to the beginning of the study period and within the study period.
    9. Provide the name of each community where FTTP service will be available from 1 January 2021 to 31 December 2026, coinciding with the study period in TN 1099.
    10. Refer to paragraph 46 of the study report and provide the methodology and assumptions used to attribute third party leased facility cost to each speed tier.
  3. Refer to the Appendix to the Attachment to Northwestel’s submission dated 13 November 2020: Northwestel Inc. - Tariff Notice 1099 – General Tariff, Basic Services – Responses to Requests for Information - Cost Study - ATT - APP_CONF.
    1. Refer to Table 1 in the Appendix and confirm that, in the table titled “Usage assumptions (within the cap) for new terrestrial and Cable internet packages”, the usage Footnote2 in gigabits (GB) are monthly usage amounts per end user. If yes, explain how the monthly usage amounts by speed tier were determined for each year of the study. If not, explain what the usage assumptions represent and how they were calculated.
    2. Refer to Table 2 in the Appendix, row item “Maintenance”,  and paragraph 36 and 37 of the study report and provide in excel spreadsheet format:
      1. A breakdown of the annual maintenance costs by speed tier into the following components:
        1. Total maintenance costs calculated by applying asset specific factors.
        2. Total maintenance costs calculated by using explicit costs for customer equipment and customer reported troubles (trouble tickets). Provide the average labour estimate (hours) per trouble ticket and the labour unit costs used.
      2. Explain why the maintenance costs for comparable speeds, such as 50 Mbps residence and 50 Mbps business services in TN 1099, are different from those in the R&V application Scenario 4, Appendix D, Table 2A. The response should address if there were changes in methodology and assumptions employed in estimating maintenance costs.
  4. In the 14 October 2020 application letter for TN 1099, the company submitted that with the introduction of unlimited data packages comes the opportunity to impose Internet traffic management practices (ITMPs). Although the company indicated that there are no immediate plans to introduce an ITMP and there are currently no active ITMPs, if required, ITMPs would be imposed in accordance with the Commission’s requirements set out in Review of the Internet traffic management practices of Internet service providers, Telecom Regulatory Policy CRTC 2009-657, 21 October 2009.
    • Consistent with the Commission's determinations with respect of ITMPs,
      1. Under what circumstances would the practices be applied?
      2. What could the practices entail (for example, what type of Internet traffic could be impacted)?
      3. How could such practices potentially impact users experience (for example, could there be specific effects on speed)?
      4. How could the practices potentially impact service performance?
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