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

Ottawa, 30 March 2021

Our reference: 8740-N1-202008664

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 1114 – General Tariff, Terrestrial Enterprise Internet Services

Dear Mr. Thompson:

On 18 December 2020, the Commission received an application from Northwestel Inc. (Northwestel) under Tariff Notice (TN) 1114. The company proposed changes to General Tariff CRTC 3001, Item 1736 – Terrestrial Internet Services, in order to double the speeds of certain non-destandardized Optimized Internet Service packages 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 14 May 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 the economic cost study report (the study report) contained in the Attachment to Northwestel’s submission dated 18 December 2020, Northwestel Inc. TN 1114,  – – entitled Northwestel Report on the Economic Evaluation for Optimized Internet Services, filed in confidence.Footnote1
    1. Refer to paragraph 29 of the study report which provides details on fibre costs. Provide the Fibre Cost Factor (FCF), indicating the vintage of the data used in the development of the factor.
    2. Provide the annual capital unit cost change assumption used to restate historic traffic driven costs to the beginning year of the study and within the study period. If the annual capital unit cost change assumption of -26.4%Footnote2 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 assumption of -26.4% for traffic driven capital unit costs.
    3. Refer to paragraph 30 of the study report which provides details on switching equipment.
      1. Explain how the capital costs for the Internet Protocol (IP) core components, specifically the Provider Backbone Multiprotocol Label Switched (MPLS) Routers (IP Router), Distribution Routers (PE Router), and Distribution Switches in the Core IP/MPLS Network routers were used to develop switching equipment capital unit costs providing the detailed calculations and assumptions used. The response is to provide all of the relevant unit costs, drivers and calculations used to estimate the switching equipment annual cash flows for each of 100 megabits per second (Mbps), 200 Mbps and 500 Mbps speed tiers. If the capital unit cost change assumption of -26.4% for traffic driven capital unit costs identified in part b above was not used, provide the information requested based on that assumption
      2. Compare the switching unit costs used to develop the cash flows in part i above with those used in TN 999Footnote3 and explain any differences greater than 10%.
    4. Refer to paragraph 31 of the study report which provides details related to transmission equipment.
      1. Provide the Transport installed first costs (IFCs) per Mbps (unit costs) for each community aggregation route, and the weighted averages calculated for Type B communities based on the provisioned transport capacity for each community link. If the capital unit cost change assumption of -26.4% for traffic driven capital unit costs identified in part b above was not used, provide the information requested based on that assumption.
      2. Further, provide explanations as to the company’s definition of “community”, with pertinent examples.
      3. Explain how the unit costs provided in part i. above were used to develop the transmission equipment annual cash flows and present worth of annual costs (PWACs) for each speed tier. Provide all relevant unit costs, drivers used and calculations in an Excel spreadsheet.
      4. Compare the transmission equipment unit costs used to develop the cash flows in part ii above with those used in TN 999 and explain any differences greater than 10%.
    5. Refer to paragraph 36 of the study report which provides details on service provisioning expenses. This paragraph indicated that the present worth of expenses for each of the major service provisioning activities identified therein, along with the present worth of demand for all IP Virtual Private Network (VPN) circuits, were used to estimate the service provisioning unit cost per circuit. In an Excel spreadsheet, provide the formulas used in the estimation of the service provisioning unit cost per circuit identified in paragraph 36 of the study report. Provide the annual expenses for each of the activities identified in paragraph 36 over the study period, along with the associated present worth for each of these expenses, the annual demand for IP VPN circuits over the study period, the associated present worth of demand for the IP VPN circuits, and the estimated service provisioning unit cost per circuit. Compare, in an Excel spreadsheet, the service provisioning expenses per subscriber per month in this TN with those from TN 999 and explain, with supporting rationale, any change in service provisioning expenses. The response is to clearly describe any changes in cost inclusions, methodology, assumptions or other factors
    6. Refer to paragraphs 40 to 42 of the study report, which provides details on Expenses Causal to Demand Other (Other Expenses) that included ongoing Power expenses for network facilities and Bad Debt expenses.
      1. Provide the bad debt factor used.
      2. For each of the 40 Mbps and 100 Mbps speed tiers, illustrate in an Excel spreadsheet how both ongoing Power expenses for network facilities and Bad Debt expenses were estimated including all factors, associated formulas and assumptions. The response should provide the annual cash flows and the PWACs for each of the components.
      3. Compare the Other expenses per subscriber per month in this TN with those from TN 999 in an Excel spreadsheet and explain, with supporting rationale, any change in the expense per subscriber per month, clearly describing any changes in cost inclusions, methodology, assumptions or other factors.
    7. Refer to paragraph 44 of the study report, which identifies third party leased facilities costs and explains how these leased facilities costs are unitized.
      1. Through an example, provide the detailed calculations used to estimate the leased facility unit cost, indicating the capacity measure (e.g. Mbps). The response should provide the leased facilities cost used, the total bandwidth capacity of the leased facility, and the working fill factor(s) used in the calculation.
      2. Further, explain how the total bandwidth capacity of the leased facilities was estimated for the study period.
      3. Compare the third party leased facility unit costs in this TN with that in TN 999 and explain any differences greater than 10%.
    8. Refer to paragraph 46 of the study report and provide the Ethernet Metropolitan Area Network (EMAN) rate(s) imputed to estimate the cost of the access for each speed tier.
    9. Provide the annual capital unit cost change assumption used to restate historic non-traffic driven capital costs to the beginning of the study period and within the study period.
    10. Provide the annual expense unit cost change assumption, net of productivity, used to restate historic costs to the beginning of the study period and within the study period.
  2. Refer to the Appendix to the Attachment to Northwestel’s 18 December 2020 submission.
    1. Refer to Table 2 in the Appendix, row item “Maintenance”, and paragraph 34 and 35 of the study report. Provide the following in an Excel spreadsheet :
      1. A breakdown of the maintenance expenses by speed tier into the following components
        1. Maintenance expenses calculated using asset specific maintenance factors. 
        2. Maintenance expenses calculated using explicit costs associated with customer equipment, providing example(s) of customer equipment used. Through an example, provide the detailed calculations used to estimate the explicit cost of maintenance of customer equipment.
        3. Maintenance expenses calculated using explicit costs associated with customer reported troubles (trouble tickets). Provide the average time per trouble ticket and the labour unit cost(s) used in these calculations.
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