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Telecom - Commission Letter addressed to the distribution list

Ottawa, 25 March 2021

Our reference: 8622-S93-202008482

BY EMAIL

Distribution List

RE: Part 1 application filed by SSi Micro Ltd. to require Northwestel Inc. to provide Third-Party Internet Access (TPIA)

Madams/Messrs.:

Pursuant to section 37 of the Telecommunications Act,attached is a request for information (RFI) in regards to the Part 1 application filed by SSi Micro Ltd., requesting that the Commission require Northwestel Inc. to provide TPIA service in Northwestel’s cable- and FTTP-served communities.

Responses must be filed with the Commission by 8 April 2021. Parties may file comments strictly limited to the new information provided in response to this RFI by 15 April 2021, and parties may file their reply to the comments with respect to this RFI by 22 April 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 designated information is confidential and why its disclosure would not be in the public interest, including why the specific direct harm that would be likely to 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.

A copy of this letter will be placed on the public record of this proceeding.

Yours sincerely,

Original signed by

Lisanne Legros
Director
Telecommunications Networks Policy

c.c.:     Marianne Blais, CRTC, (819) 997-4836, marianne.blais@crtc.gc.ca
Nicolas Gatto, CRTC, (873) 353-9280, nicolas.gatto@crtc.gc.ca
Simon Wozny, CRTC, (873) 455-4630, simon.wozny@crtc.gc.ca

Distribution list

regulatory@ssicanada.com
regulatory@iristel.com
jlawford@piac.ca
regulatory@cnoc.ca
sthompson@nwtel.ca
regulatory@teksavvy.ca

Requests for information – SSi Micro, Iristel, CNOC, TekSavvy

  1. If applicable, answer each of the following questions assuming a scenario in which the Commission were to approve SSi Micro’s Part 1 application for TPIA service in Northwestel’s cable- and FTTP-served communities, including an interim retail-minus rate set at a discount of 35% from current retail rates.
    1. Discuss what new or innovative retail services your company would be able to offer to residents and businesses under such a scenario;
    2. Discuss how any of the above retail services would advance the Telecommunications Policy Objectives set out in section 7 of the Telecommunications Act, and the 2006 and 2019 Policy Directions;
    3. Indicate the lowest interim retail-minus rate discount (i.e. 35%, 25%, 15%, 5%, 0%) at which your company would be prepared to commit to offer retail services using a TPIA service provided by Northwestel;
    4. Indicate which specific communities your company would intend to begin offering those services, as well as expected market share in those communities;
    5. If applicable, provide any business cases with respect to providing Internet service over TPIA in particular communities that may have been developed by your company; and,
    6. Finally, provide any assumptions in regards to rates, costs, and business cases discussed above.
  2. At paragraph 36 of Northwestel’s Answer to SSi Micro’s Part 1 application, Northwestel indicates that its residential Internet services are “regulated and priced below costs overall.” If the Commission were to approve SSi Micro’s Part 1 application and implement an interim rate for the proposed TPIA service using a retail-minus rate setting approach, and then final rates were set higher than the interim rates, the result could be that competitors are required to make a significant retroactive payment to Northwestel.
    • If applicable, would this scenario affect your company’s ability or willingness to provide retail services using a TPIA service provided by Northwestel, and, if so, how?

Requests for information – SSi Micro, Iristel, PIAC, CNOC, TekSavvy

  1. For a scenario in which the Commission were to approve a TPIA service as proposed by SSi Micro, with a final rate set based on Phase II costing:
    1. Discuss what short-term and long-term incentives, if any, competitors might have to invest in telecommunications facilities in Northwestel’s operating territory; and,
    2. If applicable, discuss what specific investments your company would intend to make and anticipated timeframes for making such investments.
  2. In Telecom Regulatory Policy 2013-711 the Commission considered investment in transport infrastructure as an important priority for telecommunications development in the North, and made determinations in that proceeding with a view to achieving the objective of providing competitors with access to transport infrastructure at reasonable rates in order to foster competition. Further, the Commission indicated that Northwestel’s then-new Wholesale Connect service removed a significant barrier to competitive entry into the terrestrial retail Internet market.
    • Discuss whether any barriers to competitive entry that could be addressed by the introduction of a TPIA service as proposed by SSi could be addressed by modifications to the existing Wholesale Connect service.

Requests for information – Northwestel

  1. Section 3.1 of Northwestel’s Answer to SSi Micro’s Part 1 application is titled “Broadband Funded FTTP Deployment Would be Jeopardized.” In that section, at paragraph 18, Northwestel indicates that its business case for those projects funded through the Commission’s Broadband Fund would be altered in two ways: “(a) competitive loss would erode the forecasted retail revenues, and (b) we would incur additional wholesale costs in the funded communities that were not included in the business case supporting the funding bid.”
    • Also in that section, at paragraph 19, Northwestel indicates that, in conducting calculations and revising modelling relative to the introduction of the TPIA service proposed by SSi Micro, “we find that providing TPIA at SSi's proposed 35% discount off of our retail rates triggers a significantly negative net present value (NPV) in communities approved for broadband funding. (Even a lower discount than 35% still results in a negative NPV for communities approved for broadband funding).”
    • In consideration of the statements above, address the following:
      1. Provide the estimated NPV as referenced, before and after introduction of TPIA service, including any supporting evidence and assumptions (such as estimated loss of revenues, estimated market share loss, and/or estimated loss of subscribers) relied on to arrive at these estimates; and,
      2. Provide annual customer churn and/or market share loss related to Northwestel’s referenced experience in Inuvik.
  2. Section 3.2 of Northwestel’s Answer to SSi Micro’s Part 1 application is titled “Northwestel’s Incentive to Invest Would be Jeopardized.” In that section, at paragraph 23, Northwestel indicates that, to fund investments, “we rely on revenues from the services we sell, particularly in our major markets. Any dilution or redirection of those revenues would negatively impact our ability to invest in Internet network evolution.”
    • For a scenario in which the Commission were to approve a TPIA service as proposed by SSi Micro, with a final rate set based on Phase II costing, discuss in detail how Northwestel’s incentives to invest in expanding or upgrading its Internet network would be affected.
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