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Telecom - Staff Letter addressed to the Distribution List

Ottawa, 31 May 2024

Reference(s): 8740-T66-202303494, 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 – Supplemental Requests for Information

As a follow up to the Commission staff letter dated 13 May 2024Footnote1, Commission staff requests supplementary information from TELUS Communications Inc. (TCI) in furtherance of the review of associated cost studies for fibre-to-the-premises (FTTP) facilities over aggregated wholesale HSA services submitted as per the Commission’s directions in Telecom Notice of Consultation 2023-56.

Commission staff notes that the analysis is ongoing but additional information is required.

In that respect, Commission staff requests that TCI submit its responses to the attached requests for information no later than 21 June 2024.

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 responses 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.

As set out in section 39 of the Telecommunications ActFootnote2 and in Broadcasting and Telecom Information Bulletin CRTC 2010-961Footnote3, 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. Attachment 1

Distribution List

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

Requests for Information (RFI)

  1. Refer to TCI’s cost model “FTTP West Access v1_06” (referenced as the “TCI access cost study”) dated 31 May 2023, and the worksheet tab titled “Factors” where the corporate average Labour Material Ratio (LMR) is identified by asset class.
    1. For each asset class, provide, with supporting data and rationale, all assumptions and the methodology used to calculate the LMR for each individual asset class. Provide the spreadsheet backup information files necessary to validate the LMR factors calculated including the underlying data, its vintage, and all calculations by year where applicable. 
    2. Provide your comments, with supporting rationale, on the appropriateness of employing the company adopted approach of applying the LMR to the material unit cost to calculate the labour component by capital asset versus calculating the labour cost using time estimates and labour unit cost (LUC).
    3. Refer to TCI’s cost models “FTTP West Access v1_06” and “FTTP Quebec Access v1_06” dated 31 May 2023, and the worksheet tab titled “Collator” where the installed first cost (IFC) per subscriber was calculated for each of your operating territories (i.e., West and Quebec) and for each of the following capital assets:
      • Feeder - Aerial Cable from CO to FDH
      • Feeder - Underground Cable from CO to FDH
      • Feeder - Splicing , Material Costs
      • Feeder - Wholly Owned Poles from CO to FDH
      • Feeder - Jointly Owned Poles from CO to FDH
      • Feeder - Conduit
      • Splitter
      • Distribution - Aerial Fibre from FDH to Prem. Term
      • Distribution - Underground Fibre from FDH to Prem Term.
      • Distribution - FDH, MPT Splice Enclosure
      • Distribution - Wholly Owned Poles From FDH to Prem. Term
      • Distribution - Jointly Owned Poles From FDH to Prem. Term
      • Distribution - Conduit
      • Drop - NIB, Cable from MPT to NIB SxU & MxU
    • In reference to each of the capital assets identified, and in the attached table, re-calculate the labour costs using time estimates and LUC, ensuring that all formulae are retained (i.e., not copied and pasted as values), and with the following information:
      1. Identify the major activity
      2. Provide a breakdown of each activity into sub-activity
      3. Provide the Labour Unit Cost (LUC)
      4. Provide the vintage of the LUC
      5. Provide time estimates (in minutes) for each activity and, where applicable, each individual sub-activity
      6. Provide the vintage of the time estimate
      7. Provide the "% Occurrence Rate" for each sub-activity
    1. Provide revised proposed rates and cost information within TCI’s cost study that incorporates the labour cost calculations in your response to question 1) c) above.
  2. 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 84 where it states:

    “For Alberta and British Columbia, the Company’s internal forecasting model for capital budgeting purposes was used to generate average unit costs by cost item, location and premises type. The unit costs were then applied to a forecast of the regional and premises type distribution of the entire FTTP network once built. This approach was selected as the use of historic costs (restated to current dollar values) would not adequately reflect the composition and cost of TELUS’ future FTTP network that is actively under construction. This is of particular concern due to the significant and influential impact of the proportion of premises that require underground fibre placement (as opposed to aerial). Forward-looking adjustments were made to reflect recent improvements in the process and placement of underground fibre cables that reduce costs. Greenfield unit costs were separately evaluated and applied to the proportion of premises subject to this category.”

    • For each capital asset identified in question 1) c) above, identify and quantify separately, by year, the capital increase factors (CIFs) that were used historically and prospectively as well as the productivity improvement factors (PIFs) that were used historically and prospectively, including any applicable annual adjustments, to generate the “restated” average unit costs by location and premises type, with supporting rationale.
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