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Telecom - Staff Letter addressed to the Distribution List

Ottawa, 13 May 2024

Reference(s):  8740-B2-202302248 , 8740-T66-202303494, 8740-S22-202302230, 1011-NOC2023-0056

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Distribution List

Subject: Follow-up to Telecom Notice of Consultation CRTC 2023-56 – Notice of Hearing – Review of the wholesale high-speed access service framework – Requests for Information

As part of the proceeding initiated by Notice of hearing – Review of the wholesale high-speed access service framework, Telecom Notice of Consultation 2023-56, dated 8 March 2023 (NoC 2023-56), the Commission directed wholesale high-speed access (HSA) service providers to file proposed tariffs and associated cost studies using the Phase II costing methodology, with supporting rationale, for fibre-to-the-premises (FTTP) facilities over aggregated wholesale HSA services, and to file new Phase II cost studies to establish rates for aggregated wholesale HSA services.

The Commission received tariff applications, as well as supporting information, from the wholesale HSA service providers consistent with the Commission’s directions in NoC 2023-56.

Commission staff have reviewed the applications and supporting information and documentation filed in response to NoC 2023-56. In relation to the proposed tariffs, Commission staff requests additional supporting information from the wholesale HSA service providers.

Commission staff notes that its analysis is ongoing and further requests for information (RFI) may be forthcoming in due course.

In that respect, Commission staff requests that each of the wholesale HSA service providers identified in the Distribution List individually submit their respective responses to the attached RFIs no later than 11 June 2024.

Commission staff continues to examine the wholesale HSA tariff applications. Parties will be advised as to the next steps in the evaluation process by way of a separate procedural letter, which will set out further process for the proceeding, including requests for disclosure.

All documents filed and served must be received, not merely sent, by the date provided. Parties are to send an electronic copy of all documents to Commission staff copied on this letter.

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 the Commission’s website.

An abridged copy of this letter and all related correspondence will be added to the public record of the proceeding.

As set out in section 39 of the Telecommunications ActFootnote1and in Broadcasting and Telecom Information Bulletin CRTC 2010-961Footnote2, 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.

Sincerely,

Original signed by

Chris Noonan
Director, Competitor Services & Costing Implementation
Telecommunications Sector

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. (3)

  1. Distribution List
  2. Request for Information (RFI) Questions (Attachments upon request only)
  3. Excel Table

Distribution List

Company; Tariff Notice Number(s); Our Reference Number Company Contact; Company Email

Requests for Information (RFI)

Section 1:  Questions for Bell / TELUS / SaskTel 

  1. Provide the year-end in-service for Fibre to the Premise (FTTP) premises passed and FTTP Internet subscribers by province (i.e., Quebec, Ontario, etc.), by single family unit (SFU) and multiple dwelling unit (MDU) for the historical years 2018-2023 and forecast years 2024-2026 in Attachment 1, Table 1. Explain and justify in detail, and with supporting rationale, how the forecasts were developed.
  2. Refer to “Bell Canada Report On The Economic Evaluation For The Introduction Of Gateway Access Service (GAS) Fibre To The Premises (FTTP) Access Ontario And Quebec” dated 31 May 2023, paragraphs 92-98 where it describes the calculation of the Fibre PON Utilization Factor (FPUF)” in four steps.
    • Further, refer to “TELUS Communications Inc. Report On The Economic Evaluation For Aggregated Wholesale High-Speed Access (HSA) Service, Introduction Of Fibre To The Premises (FTTP) Access Service – Up To 1.5 Gbps” dated 31 May 2023, paragraph 92 where it states:

      “The average unit cost of distribution and feeder fibres per premises passed was restated into a cost per end-user of high-speed access services. This was done by dividing the cost per premises passed by a penetration rate.”

      • Provide your views, with supporting rationale, as to which of these two approaches better reflects the company’s forward-looking incremental costs associated with the provision of aggregated HSA services over FTTP and which, if any of these, should be adopted by the Commission and why.

Section 2:  Questions for Bell Canada 

  1. Refer to “Bell Canada Report On The Economic Evaluation For The Introduction Of Gateway Access Service (GAS) Fibre To The Premises (FTTP) Access Ontario And Quebec”dated 31 May 2023, Section 7.5.1 where it states:

    “Using the information from our financial systems, we were able to extract the related costs per asset class for each of the historic years as well as the associated number of locations that were covered by our fibre build, as a result of those expenditures.”

    • Further, refer to Bell Canada’s cost model “Gateway Access Service Fibre To The Premises (GAS-FTTP) – Monthly Rate – Revised” (referenced as the “Bell Canada access cost study”) dated 9 August 2023, worksheet tab titled “Fibre Capital Details” where the capital expenditures (capex) for the FTTP Distribution and Feeder networks by component is identified within each asset class.
      1. For each asset class, explain, with supporting data and rationale, all assumptions and the methodology used to allocate the total asset class capex to each individual asset class. Identify the driver(s) used for allocating to each asset class or network component.
      2. Provide your comments, with supporting rationale, on the appropriateness of employing the company adopted approach of calculating the Installed First Cost (IFC) by using the historical and forecast capex by service and by asset class divided by the total homes passed versus using the Corporate Average Capital Unit Cost Methodology, outlined in Section 3.4.3.1 of the company's Regulatory Economic Studies Manual.
  1. Refer to Bell Canada’s cost model “Gateway Access Service Fibre To The Premises (GAS-FTTP) – Monthly Rate – Revised” dated 9 August 2023, worksheet tabs titled “ONT and Drop Capital Detail” and “OLT Capital Detail” where the derived unit costs based on supplier prices are identified. Provide a detailed list of the capital items, by configuration(s), by identifying the specific manufacturer component / sub-component part name and part number and associated cost data, which includes:
    • Supplier Price in Canadian $
    • CDN/US exchange rate, if used to estimate Supplier Price in Canadian $
    • Supplier Price Vintage
    • Supplier Discount (%)
    • Sales Tax (%)
    • Warehouse and Distribution Factor (W&D)
    • Cost plus Sale Tax and W&D
    • Engineering and Installation (Supplier plus Company)
    • Installed First Cost (IFC)
    • Supplier Identified Capacity (Specify Units)
    • Capacity Driver Description
    • Average Working Fill Factor (AWFF) (%)
    • AWFF Vintage
    • Unit cost per capacity driver ($)

    All associated cost data must be explicitly identified.

  2. Calculate the FTTP Internet subscriber penetration rate as per the formula below, showing all information used. Provide revised proposed rates and cost information within Bell Canada’s cost study that incorporates the responses to question 1) above as well as the application of the FTTP Internet subscriber penetration rate in place of the FPUF.

    Penetration Rate = ∑ Yr=2021 Yr=2024 Year-end In-Service Internet Subscribers on FTTP ∑ Yr=2021 Yr=2024 Year-end In-Service FTTP Premises Passed

  3. Refer to Bell Canada’s cost model titled “Bell Canada TN 7664A – ATT 2 – APP 2 – GAS-FTTP SC with Visit” (referenced as the “Bell Canada service charge cost study”), submitted 14 August 2023, tab titled, “Table 6a – Expenses”.
    1. With respect to Bell Canada’s proposed time estimates, explain with supporting rationale why the time estimate for a “Bell technician” is higher than the time estimate for a “BTS technician” for the following activities:
      1. Cost element “Do physical Cross Connect work in the CSP in the field – Bell Technician” (column I, row 43), and “Cross Connect work in the CSP in the field – BTS Technician” (column I, row 44).
      2. Cost element “Bell Technician Average Travel Time” (column I, row 45) and “BTS Technician Travel Time” (column I, row 46).
      3. Cost element “This includes time required for Coordination and Testing – Bell Technician” (column I, row 47) and “This includes time required for Coordination and Testing – BTS Technician” (column I, row 48).
  4. Provide a revised Bell Canada service charge cost study, including the associated revised proposed rates and cost information, that incorporates the responses to the following questions included in the requests for information:
    • Question 6) a).

Section 3:  Questions for TELUS

  1. Refer to “TELUS Communications Inc. Report On The Economic Evaluation For Aggregated Wholesale High-Speed Access (HSA) Service, Introduction Of Fibre To The Premises (FTTP) Access Service – Up To 1.5 GBPS”dated 31 May 2023, paragraphs 89-90 and 96 where it states:

    “For Alberta and British Columbia, the unit costs of distribution fibres were evaluated by taking a weighted average that categorizes the distribution network into locations where (i) buried fibre and/or new conduit is required, and (ii) aerial fibre and/or existing conduit can be utilized. This distinction was selected due to the similarity of unit cost estimates (e.g., aerial fibre has similar costs to fibre installation via an existing conduit) and the vast difference in costs between each category. To account for the use of multiple vendors, a weighted average of unit costs was evaluated based on the current rate cards for each vendor, forecasted to expected values at the start of 2024 using capital increase factors (CIFs).

    “The unit costs of feeder fibres for Alberta and British Columbia were based on a weighting of historic project costs (from 2013 onwards), and a forecast of the costs of feeder fibre for completion of the FTTP network. It is the Company’s experience that the costs of feeder fibres have remained relatively constant over time. The costs captured by the method are only the costs of feeder fibre installation that are driven by FTTP network expansion, and does not include utilization of the Company’s pre-existing feeder fibre network. For this reason, the applied costing method is conservative.”
    “The method to estimate the average unit cost of a fibre drop for Alberta and British Columbia was similar to the method to estimate the unit cost of distribution fibres. For brownfield locations, the unit cost of a fibre drop was evaluated by taking a weighted average that categorizes the installation method into locations where (i) buried fibre and/or new conduit is required, and (ii) aerial fibre and/or existing conduit can be utilized. Given the use of multiple vendors, a weighted average of unit costs was evaluated based on the vendor prices, forecasted to expected values at the start of 2024 using CIFs.”

Further, refer to TELUS’ cost model “FTTP West Access v1_06” (referenced as the “TELUS access cost study”) dated 31 May 2023, worksheet tab titled “Collator”.

  1. Provide all column data for each of the asset classes “Feeder – Underground Cable from CO to FDH” and “Distribution – Underground Fibre from FDH to Prem Term.” to specifically identify the outside plant construction mix of buried (without conduit) and underground (with conduit).
  2. Provide the buried and underground percentage split for each of the asset classes identified in the response to question 8) a) above.
  3. Provide all column data for each of the asset classes “Drop – NIB, Cable from MPT to NIB SxU & MxU” to specifically identify the outside plant construction mix of aerial, buried and underground.
  4. Provide the aerial, buried and underground percentage split for the asset class identified in the response to question 8) c) above.
  1. Refer to TELUS’ cost model “FTTP West Access v1_06” dated 31 May 2023, worksheet tab titled “Unit costs and prems” where the 2023 unit costs were identified.
    1. Justify, with supporting rationale, the variation in unit costs by asset class, by province and by tier.
    2. Provide the underlying detail and supporting calculations of all unit costs within each asset class, by tier and by province.
  1. Calculate the FTTP Internet subscriber penetration rate as per the formula below, showing all information used. Provide revised proposed rates and cost information within TELUS’ cost study that incorporates the responses to question 1) above as well as the application of the FTTP Internet subscriber penetration rate.

    Penetration Rate = ∑ Yr=2021 Yr=2024 Year-end In-Service Internet Subscribers on FTTP ∑ Yr=2021 Yr=2024 Year-end In-Service FTTP Premises Passed

  1. Refer to “TELUS Communications Inc. Report On The Economic Evaluation For Aggregated Wholesale High-Speed Access (HSA) Service, Introduction Of Monthly Capacity-Based Billing (CBB) Charge” dated 31 May 2023, paragraph 7 where it states:

    “Traffic traverses two L2TP tunnels in the network. One tunnel is established between the RE located in the wholesale end-user’s serving CO and the L2TP tunneling switch (LTS). The other tunnel is established between the LTS and the RE located in the CO where the NNI terminates. To establish a tunnel between networks, the LTS sends a RADIUS authentication request to the Competitor which then authenticates the request and sends back a response.”

Further, refer to TELUS’ cost model “CBB Collator” (referenced as the “TELUS CBB cost study”) dated 9 August 2023, worksheet tabs titled “LTS” and “Cashflows” where the costs for L2TP tunneling switch (LTS) and RADIUS server respectively have been identified.

  1. Confirm if the costs of the “L2TP tunneling switch (LTS)” and “RADIUS server” are dedicated to the aggregated wholesale HSA service. Comment on the feasibility of using existing “LTS switch(es)” or “RADIUS server(s)” that support interfaces for retail Internet to also support the aggregated wholesale HSA service.
  2. If the equipment can be shared, calculate the IFC using the capacity cost method and provide an updated TELUS CBB cost study, including the associated revised proposed rates and cost information.
  1. Refer to TELUS’ tariff notice TN 657B submitted 9 February 2024, attachment titled, “Appendix A -Proposed Tariff CRTC 25082, Item 4.10(English)”, Item 4.10.08 a. Monthly Rates and Service Charges:
    1. Explain and justify whether, in those situations where an onsite visit from a technician is not required, one of the following service charges is meant to be applied:
      1. The service charge identified in Item 4.10.08 a., or;
      2. The administrative fee (per end-user) identified in “Appendix A -Proposed Tariff CRTC 25082, Item 4.10(English)”, Item 4.10.08.c, “Other Fees Associated with Wholesale Internet FTTP Service”.
  2. Refer to TELUS’ file, submitted 31 May 2023, titled, Tariff Notice – Installation_Collator – FTTP Installation,
    1. Refer to the tab titled, Table 6a – Expenses, cost element Service Provisioning, (column F, row 14), titled DmdRev, Additionally, refer to the tab titled, Unit Cost ($), (column C, row 26), where a unit cost is provided per order:
      1. Explain, with supporting rationale, why the unit costs referenced in the above tabs are different.
      2. If the unit costs in question 13) a) should be the same, provide an update to the file and tabs that contain the unit costs.
  3. Refer to TELUS’ file, submitted 10 July 2023, titled, “Response to request for disclosure - 30 June 2023 - TELUS - TN-584_583A_657A Att 5, App 1 - Abridged REVISED” (referenced as the “TELUS service charge cost study”), tab titled, “Table 6a – Expenses”, in section B1, for the following: 
    1. Briefly describe the following major activities and associated tasks identified in each of the Tables 1G and 10G:
      1. IM (Implementation management), (rows 19 and 29, columns C and D)
      2. Order provisioning (Service design and provisioning Onshore team), (rows 21 and 31, columns C and D)
      3. Design (Network design and software updates), (rows 22 and 32, columns C and D)
      4. Installation (Central office Installation), (rows 23 and 33, columns C and D)
    2. Refer to column labelled “source of time estimate data”, (column I, rows 16, 17, 26 and 27) in Tables 1G and 10G. Explain with supporting rationale how time tracking for “CES” and “SME analysis” was used to estimate the time for the major activities and tasks indicated above.
  4. Provide an updated TELUS service charge cost study, the associated revised proposed rates and cost information that incorporates the responses to the following questions included in the requests for information:
    1. Question 12) a) i) and question 12) a) ii);
    2. Question 13) a) ii).

Section 6:  Questions for SaskTel

  1. Refer to the cost model “7 FTTC Refile - Costings_template_V12 OCT 2022 with multiple scenarios MM”, dated 1 November 2023, worksheet tab titled “Output_All” where the capital expenditures and demand (i.e., “Customers Served” and “Plays”) are provided by asset class by Community.
    1. Provide a detailed explanation of the inclusions for each demand component, “Customers Served” and “Plays” in the cost model.
    2. Comment, with supporting rationale, on appropriateness of using “Customers Served” as the forecasted demand over the study period in order to calculate the Present Worth of Demand.
    3. Refer to the worksheet tab named “Output_All”:
      1. For each “Community”, identify the number of premises passed for the FTTP deployment.
      2. From your response to Question 1) above, calculate the FTTP Internet subscriber penetration rate as follows:

        Penetration Rate = ∑ Yr=2021 Yr=2024 Year-end In-Service Internet Subscribers on FTTP ∑ Yr=2021 Yr=2024 Year-end In-Service FTTP Premises Passed

      3. Apply the penetration rate calculated in question 16) c) ii) above to the premises passed for each “Community” provided in question 16) c) i) above to generate the average number of FTTP Internet subscribers by “Community”.
      4. Provide the associated revised proposed rates and cost information within SaskTel’s cost study that incorporates the response from question 16) c) iii) above.
  2. Refer to SaskTel’s cost study, submitted 2 November 2023, titled, “SaskTel_Cost_Studies_ TN378B_ABR_231101_SaskTel_Cost Study_TN378B_App1_ABR_rev” (referenced as the “SaskTel access cost study”), for the following:
    1. Refer to the tab titled, “Table 2”:
      1. Explain how the “FTTP HSA Access Charge” (Table 2a column B, row 8) was estimated. Include all calculations and assumptions, identifying the annual demand, average service revenue per unit per month, annual revenues and present worth of revenues.
      2. Refer to file “SaskTel_Cost_Studies_ TN378B_ABR_231101_SaskTel_Cost Study_TN378B_App2A_FTTP_Access_ABR_rev”, Tab “Table 6d Revenues” where the projected revenues are provided in row 7, column G to column O, and “Present Worth of revenues” is provided in column Q. Explain, with supporting rationale, why the projected revenues do not match the revenues referred to in question 17) a) i).
    2. Refer to the tab titled, “Table 3”:
      1. Explain if the“FTTP HSA Access Charge” demand identified in columns B to J, row 5 is “year end” demand as indicated in the title of “Table 3”, or year end demand expressed on a monthly basis (year end demand multiplied by 12).
  3. Refer to SaskTel’s file, submitted 2 November 2023, titled, “SaskTel_TN378B_Aggregated Wholesale HSA Service-650.34 - PROPOSED” (referenced as the “SaskTel service charge cost study”), section 7, Item 2 titled, “Aggregated Wholesale HSA Access”.
    1. Indicate if a service charge applies when no visit is required for FTTP.
    2. If a service charge applies for FTTP when no visit is required, provide the tariff item number and the proposed associated rate which applies.
  4. Refer to SaskTel’s file, submitted 15 August 2023, titled, “##",
    1. Refer to tabs “##”, (column A, row 7) and “##”, (column A, row 7), where it states:
      ##: 
      1. Further, explain, with supporting rationale, why the company did not use the updated service provisioning time estimates provided in TN 246A (submitted 11 March 2011) as a proxy for the time estimates and activities for these cost elements.
      2. Explain, with supporting rationale, why the company proposes that ADSL time estimates and activities are appropriate for FTTP Access service.
      3. Further, explain, with supporting rationale, why the company has not sought recent time estimates related to the FTTP access service. If the company has updated time estimates, provide a revised “Table 9”, titled, “Details of Service Provision Activities” which reflects the revised time estimates for the wholesale FTTP service.
      4. If the company does not have FTTP specific wholesale time estimates, explain why annual productivity has not been applied against the time estimates in its Phase II cost study and provide a revised “Table 9”, titled, “Details of Service Provision Activities” which reflects the revised time estimates reflecting annual productivity.
  1. Refer to the tab titled “Service Connection Charge ”, and to the submission for TN 329, submitted 30 June 2016, titled, “SaskTel - ADSL_Cost Study_ABR_160630_SaskTel_Cost Study_TN329_Att1_ADSL_ ABR”.
    • Further, refer to Telecom Order CRTC 2019-288 Footnote3, paragraph 276 where it states in part:

      "… SaskTel proposed to include line conditioning costs in its service charge. The Commission determined in Telecom Regulatory Policy 2011-703 that the line conditioning costs are causal to the monthly access charge.”

  1. Provide a revised tab, “Service Connection Charges- SCC Access ” that excludes “ line conditioning ” costs from the service charge rates as per Telecom Regulatory Policy 2011-703 and Telecom Order 2019-288.
  2. Explain and justify in detail, and with supporting rationale, why “line conditioning” costs are required to provision the FTTP access service.
  3. If the “line conditioning” costs are required to provision the FTTP access service and are not currently included within the FTTP access costs, provide an updated SaskTel FTTP access rate cost study that includes the “line conditioning” costs, including associated revised proposed access rates and cost information in the format of Table 1 of SaskTel’s access cost study.
  1. Provide an updated SaskTel service charge cost study, including the associated revised proposed rates and cost information, that incorporates the responses to the following questions included in the requests for information:
    1. Question 18) a);
    2. Question 19) a);
    3. Question 20) a) to question 20) c).
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