Telecom - Commission Letter addressed to the Distribution List
Ottawa, 29 November 2021
Our reference: 1011-NOC2020-0187
RE: Telecom Notice of Consultation CRTC 2020-187 (“NoC 2020-187”) - Call for comments – Appropriate network configuration for disaggregated wholesale high-speed access services – RCCI’s request for disclosure of certain information filed in confidence by CNOC and Distributel
This letter addresses requests for disclosure of information made by Rogers Communications Canada Inc. (RCCI) in its reply, dated 6 October 2021, to comments by the Competitive Network Operators of Canada (CNOC) and Distributel Communications Limited (Distributel), dated 22 September 2021, regarding responses to requests for information and associated requests for additional information as part of the above noted proceeding.
On 12 August 2021, the Commission issued Telecom Decision 2021-280, which directed Bell Aliant, a division of Bell Canada; Bell Canada; Bell MTS Inc.; Bragg Communications Incorporated, carrying on business as Eastlink; Cogeco Communications Inc.; Quebecor Media Inc., on behalf of Videotron Ltd.; RCCI; Saskatchewan Telecommunications; Shaw Cablesystems G.P.; and TELUS Communications Inc. (collectively, the wholesale service providers) to make available certain information upon request and under agreed-upon non-disclosure provisions by 1 September 2021. The Commission also directed Cogeco to disclose certain responses to questions in the Appendix to NoC 2020-187 on the public record.
On 19 August 2021, Commission staff issued a letter, in which it directed the wholesale service providers to provide certain information by 1 September 2021. Commission staff further established deadlines for comments with respect to this additional information to be submitted by 22 September 2021 and replies to be submitted by 6 October 2021.
On 22 September 2021, in response to the information submitted by the wholesale service providers, CNOC and Distributel filed their comments and designated certain information as confidential.
On 6 October 2021, RCCI filed its reply and requested disclosure of certain information filed in confidence by CNOC and Distributel.
On 20 October 2021, CNOC and Distributel responded to RCCI.
As a preliminary matter, in its 20 October 2021 response to the disclosure request, Distributel submitted that RCCI did not actually ask that the Commission direct Distributel to disclose information designated as confidential in its 22 September 2021 comments. Distributel further submitted that RCCI did not follow the process for requesting disclosure of information designated as confidential as set out in Procedures for filing confidential information and requesting its disclosure in Commission proceedings, Broadcasting and Telecom Information Bulletin 2010-961, 23 December 2010. Specifically, Distributel argues that RCCI did not make an actual request that the Commission direct Distributel to disclose information designated as confidential, did not serve Distributel with its request for disclosure, and did not explain why disclosure would serve the public interest.
Commission staff is of the view that RCCI has made a request for disclosure as evidenced by the heading of the section titled “Disclosure Request” as well as its arguments that there is no basis for CNOC and Distributel to file hypothetical numbers in confidence and that the wholesale service providers would be best positioned to scrutinize the margins they are basing their business case on.
With respect to Distributel’s argument that RCCI did not serve Distributel with its request for disclosure, Commission staff notes that section 7 of the CRTC Rules of Practice and Procedure (the Rules of Procedure) permits dispensing with or varying the Rules of Procedure if considerations of public interest or fairness permit. RCCI is reminded that subsection 33(2) of the Rules of Procedure requires that the party requesting disclosure must serve the request on the author of the designation. Nonetheless, Distributel had notice of RCCI’s submissions when it was posted to the record of the proceeding and Distributel also provided its response. In the circumstances, Commission staff is of the view that the public interest favours dispensing with subsection 33(2) and considering the disclosure issue that RCCI raised, rather than dismissing it on the basis that the company did not serve Distributel in accordance with subsection 33(2).
The weighing of the specific direct harm likely to result from the disclosure of the information in question with the public interest in disclosure is addressed below.
Requests for disclosure of information designated as confidential are addressed in light of sections 38 and 39 of the Telecommunications Act (the Act) and sections 30 and following of the Rules of Procedure. In evaluating a request, an assessment is made as to whether the information falls into a category of information that can be designated as confidential pursuant to section 39 of the Act. An assessment is then made as to whether there is any specific direct harm likely to result from the disclosure of the information in question and whether any such harm outweighs the public interest in disclosure. In making this evaluation, a number of factors are taken into consideration, including the degree of competition and the importance of disclosure of the information for the purpose of obtaining a fuller record. The factors considered are discussed in more detail in Procedures for filing confidential information and requesting its disclosure in Commission proceedings, Broadcasting and Telecom Information Bulletin CRTC 2010-961, 23 December 2010, as amended by Broadcasting and Telecom Information Bulletin CRTC 2010-961-1, 26 October 2012.
- CNOC’s competitor retail prices and margins
RCCI noted that CNOC submitted a hypothetical business case analysis to validate its position and made confidentiality claims with respect to key business case assumptions for competitor retail prices and margins for 50 Mbps FTTN and 1 Gbps FTTP services.
RCCI submitted that these confidentiality claims do not allow RCCI to fully scrutinize CNOC’s business cases. RCCI further submitted that hypothetical business case information cannot be considered competitively sensitive and submitted in confidence. Further, RCCI submitted that the wholesale service providers would be best positioned to scrutinize the margins that the business cases are based on.
CNOC submitted that its confidentiality claim is narrow, and covers only certain key and commercially sensitive parameters that could be used for purposes that would subject CNOC and its members to substantial specific and direct harm. CNOC further submitted that the disclosure of the retail prices and wholesale margins would allow RCCI and other wholesale service providers to replicate CNOC’s business case analysis and determine Internal Rate of Return (IRR) values and hurdle rates for investments that correspond to the different business case scenarios. CNOC submitted that these hurdle rates are not hypothetical and are treated consistently as confidential by CNOC and its members.
CNOC submitted that wholesale service providers could use competitor hurdle rates to predict which competitors are able to deploy disaggregated high-speed access (HSA) services and the locations where such services will be deployed. In turn, this knowledge would allow wholesale service providers to develop more effective retail strategies to compete with competitive service providers, leading to specific direct harm to CNOC members.
Accordingly, CNOC requested confidential treatment of information used in its business case analysis.
Commission staff notes that the information in question can be used by the parties to assess the proposed business cases for various disaggregated configurations and allow the parties to scrutinize the validity of CNOC’s proposed business cases.
Specific direct harm to CNOC
Commission staff considers that the disclosure of the retail prices and wholesale margins would allow wholesale service providers and potential competitors to replicate CNOC’s business case analysis and determine IRR values and hurdle rates. Commission staff notes that existing or potential competitors could use the IRR values and hurdle rates to develop targeted business and marketing strategies that would likely result in specific direct harm to CNOC members. In this regard, Commission staff also notes that hurdle rates have consistently been treated as confidential in the past.
Weighing the public interest versus the specific direct harm CNOC
Commission staff considers that releasing the information in question on the public record will likely lead to specific direct harm to CNOC members, as outlined above, which is not outweighed by the public interest. Accordingly, it would not be appropriate to place CNOC’s competitor retail prices and margins for 50 Mbps FTTN and 1 Gbps FTTP services on the public record.
- Distributel’s Table 5 - Costs to serve an end-user via aggregated and disaggregated HSA services
RCCI noted that Distributel submitted a hypothetical competitor analysis with the results summarized in Table 5 Footnote1 based on the data Distributel submitted in its 2019 intervention to CNOC’s Part 1 application Footnote2 . RCCI further submitted that Distributel made confidentiality claims with respect to the results of its hypothetical competitor analysis in Table 5, which is the only cable carrier specific analysis.
RCCI submitted that these confidentiality claims do not allow RCCI to fully scrutinize Distributel’s business cases. RCCI submitted that genuine confidentiality claims should be respected in a Commission proceeding but not confidentiality claims for hypothetical business case calculations.
Distributel submitted that the information it has used to develop its hypothetical business cases are (i) consistently treated in a confidential manner by Distributel and (ii) highly granular and specific to its internal operations and network costs (i.e., non-tariffed transport costs) and the network usage patterns of it end-users (i.e., peak usage data).
Distributel submitted that disclosure of the information designated as confidential in Table 5 would allow its competitors to derive specific information about the costs to serve an end-user via aggregated and disaggregated HSA services that was calculated using internal confidential information. Accordingly, this information is competitively sensitive and highly confidential and should not be disclosed on the public record.
Commission staff notes that the information in question can be used by the parties to assess the proposed business cases for aggregated wholesale HSA service and various disaggregated wholesale HSA service configurations and allow the parties to scrutinize the validity of Distributel’s proposed business cases.
Specific direct harm to Distributel
Commission staff considers that the disclosure of the information in Distributel’s Table 5 would allow parties to derive specific information about Distributel’s internal confidential costs to serve an end-user via aggregated and disaggregated HSA services. Commission staff notes that existing or potential competitors could use this information to develop targeted business and marketing strategies that would likely result in specific direct harm to Distributel.
Weighing the public interest versus the specific direct harm Distributel
As noted above, releasing the information in Distributel’s Table 5 on the public record will allow parties to derive specific information about Distributel’s internal costs. Such disclosure would likely result in specific direct harm to Distributel, which is not outweighed by the public interest. Accordingly, it would not be appropriate to place the information contained in Table 5 on the public record.
Accordingly, Commission staff considers that additional disclosure is not necessary.
Original signed by
Director, Competitor Services & Costing Implementation
c.c.: Abderrahman El Fatihi, CRTC 819-953-3662 AbderRahman.ElFatihi@crtc.gc.ca;
Tom Vilmansen, CRTC 819-997-9253 Tom.Vilmansen@crtc.gc.ca
Attach. (1): Distribution List
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