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Telecom - Staff Letter addressed to the Distribution List

Ottawa, 22 August 2024

Reference(s): 8740-R28-202304054, 8740-S9-202304070, 8740-V3-202304046, 1011-NOC2023-0056

BY EMAIL

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 20 September 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 of information filed in response to the attached requests for information.

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. (2)

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

Distribution List

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

Requests for Information (RFI)

Section 1: Questions for Rogers, Shaw and Videotron

  1. Refer to the company’s (Rogers, Shaw, or Videotron) Microsoft Excel confidential cost model filed in response to Notice of Consultation (NoC) 2023-56 (referenced as the company’s cost study):
    1. Provide actual historical upstream and downstream traffic growth rate measurements for the company’s network over each of the last five completed years (i.e. 2018, 2019, 2020, 2021 and 2022). Provide a detailed explanation of all assumptions, rationale, and methodologies along with the supporting Excel spreadsheets demonstrating all calculations.
    2. Demonstrate how the traffic growth rate in year 1 and year 2 provided in the company’s cost study aligns with the historical data provided in response to question 1) a).
    3. Comment on the appropriateness of using upstream and downstream traffic growth rate of 32% annually in years 3 to 5 of the company’s cost study as previously approved in Telecom Decision 2016-117Footnote3, dated 31 March 2016.
    4. Using the format of the company’s Summary of Revenue and Cost Impact Tables (Table 1 for Rogers, Tables 7.1 and 7.2 for Shaw, and Table 1 for Videotron) presented in its 2023 cost study, provide revised proposed rates and cost information using the cost study with the following change in assumptions:
      1. Upstream (if applicable) and downstream traffic growth rate in year 1 and year 2 of the study period is equal to the historical growth rate of upstream and downstream traffic, respectively;
      2. Upstream (if applicable) and downstream traffic growth rate in years 3 to 5 of the study period is equal to 32% per year.
  2. Refer to the company’s cost study filed in response to NoC 2023-56. In respect to annual capital unit cost change assumptions for usage-sensitive equipment used in the delivery of aggregated wholesale high-speed access (HSA) services (e.g., routers, Ethernet switches, CMTS, CCAP, etc.):
    1. In all instances where the annual capital unit cost change used by the company differs from the minus 26.4% annual capital unit cost change approved by the Commission, provide the actual company-specific information (i.e., equipment prices and corresponding capacity) for usage-sensitive equipment used in the delivery of wholesale high-speed access services (e.g., Routers, Ethernet Switches, CMTS, CCAP, etc.), for each of the years 2014 to 2022. Furthermore, substantiate the assumptions made in respect to the proposed company-specific capital unit cost changes.
    2. Using the format of the company’s Summary of Revenue and Cost Impact Tables (Table 1 for Rogers, Tables 7.1 and 7.2 for Shaw, and Table 1 for Videotron) presented in its 2023 cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
      1. Apply the annual capital unit cost change assumption of minus 26.4% to usage-sensitive equipment in the cost study.

  3. The cost model for cable carriers is composed of two categories of costs: access and usage. Access costs comprise costs associated with facilities that are non-usage-sensitive (i.e., the costs do not vary with changes in usage levels), whereas usage costs comprise costs associated with facilities that are usage-sensitive (i.e., the costs vary with changes in usage levels).

    In Telecom Decision 2016-117, the Commission determined that wholesale HSA service providers must ensure that all equipment costs accounted for in the access portion of their cost models include costs for only non-usage-sensitive equipment. As the cable carriers all use the capacity-based billing (CBB) model, this results in all usage-sensitive equipment being assigned to the CBB category.

    Under Phase II methodology, costs (capital as well as expenses) to be considered in a rate setting submission are classified as whether they are causal to the service or causal to demand. Costs causal to service are defined as costs that are directly associated with the service only, and not with the demand level for the service, such as software capital expenditures specific to the service, development of billing systems, service advertisement, etc. Costs causal to demand include costs that vary with the demand level of the service, such as installation, provisioning of facilities to meet demand forecast, facility maintenance, customer billing service, etc.

    Based on the above, provide responses to the following:

    1. In regard to the company’s cost study, identify all network cost components (coaxial cable, segmentation fibre, CCAP, routers, etc.) that the company is proposing to include as either being under Access or CBB cost categories. Provide all assumptions and supporting rationale used by the company as the basis for the above classification.
    2. For each cost component that the company is proposing to include under Access and CBB cost categories, further classify them as costs “causal to service” or “causal to demand,” with supporting rationale used by the company as the basis for the above classification.

  4. Refer to paragraph 98 of Telecom Decision 2006-77Footnote4, dated 21 December 2006, where the Commission noted that the costing of inter-office fibre (i.e., between head-ends for the cable companies) or transport fibre does not lend itself to conventional costing methods such as capacity costing since once inter-office fibre cable is deployed, the increasing demand in the inter-office network is typically met by changing demand or adding fibre transmission equipment, not by adding more fibre.

    The Commission further noted that this was recognized in Bell Canada Costing of Interoffice Fibre Cable, Telecom Letter Decision CRTC 93-1Footnote5, 27 January 1993 (Letter Decision 93-1), where the Commission approved Bell Canada’s proposed cost factor approach to determine the causal costs of inter-office fibre optic cable.

    1. Develop a cost factor for inter-office fibre facilities using five years of actual historical capital expenditures (i.e., 2018, 2019, 2020, 2021 and 2022) using the formula given below:

      Cost Factor = ∑ y r = 1 5 Total Capital Expenditure on Inter-Office Fibre Cable ∑ y r = 1 5 Total Capital Expenditure on Equipment Utilizing Inter-Office Fibre Cable

      1. For each of the total capital expenditures on inter-office fibre cable (numerator) and the total capital expenditures on equipment utilizing inter-office fibre cable (denominator), provide in a table format, five years of actual historical capital expenditures (i.e., 2018, 2019, 2020, 2021 and 2022) broken down by each facility used in the calculation.
      2. Provide a description of the methodology and assumptions used in determining the following:
        1. The total capital expenditures on inter-office fibre cable
        2. The total capital expenditures on equipment utilizing inter-office fibre cable
    2. Use the inter-office fibre factor developed above to estimate the capital cash flows associated with fibre deployed between the company’s head-ends for Year 0 and Years 1 to 5.
    3. Using the format of the company’s Summary of Revenue and Cost Impact Tables (Table 1 for Rogers, Tables 7.1 and 7.2 for Shaw, and Table 1 for Videotron) presented in its 2023 cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
      1. Replace the proposed transport fibre capital cash flows for Year 0 and Years 1 to 5 with the capital cash flows calculated in response to question 4) b) and use these capital cash flows to calculate the associated capital and expense cash flows.
  5. Refer to the company’s cost study filed in response to NoC 2023-56. With respect to the company’s hybrid fibre-coaxial (HFC) access network:
    1. Provide a list of all services the company offers, or plans to offer, during the five-year study period that are transmitted through each of the following: CMTS / CCAP, segmentation fibre, node, and bi-directional amplifier facilities.
    2. Provide your company’s rollout plan for transitioning from a co-existing Data Over Cable Service Interface Specification (DOCSIS) 3.0 and DOCSIS 3.1 network architecture to a network architecture that no longer uses DOCSIS 3.0 and describe how this transition is implemented in each year of the study period.
    3. For each year of the study period, provide details of what spectrum bands (x megahertz to y megahertz) and the associated capacity in megabits per second (Mbps) your company is planning to allocate to each of the following: DOCSIS 3.0, DOCSIS 3.1 (separately for downstream and upstream traffic), cable TV and any other services. Identify each service carried on DOCSIS 3.0 and DOCSIS 3.1 technologies (downstream and upstream) and each service supported on separate spectrum band.
    4. Specify the downstream and upstream capacity of the optical nodes for each year of the study period. Specify the overall capacity and breakdown of the capacity for the DOCSIS 3.0 and DOCSIS 3.1 components.
    5. Specify the HSA service speed bands the company is planning to deliver over each of DOCSIS 3.0 and 3.1 in each year of the study period.
    6. Discuss whether a higher HSA service speed band can be delivered over a combination of DOCSIS 3.0 and DOCSIS 3.1 channels, or whether each speed band can be served over only one of the two DOCSIS technologies at the same time.
    7. Using the format of the company’s Summary of Revenue and Cost Impact Tables (Table 1 for Rogers, Tables 7.1 and 7.2 for Shaw, and Table 1 for Videotron) presented in its 2023 cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
      1. HFC network uses only DOCSIS 3.1 technologies.
  6. Refer to the company’s cost study filed in response to NoC 2023-56;
    1. Specify the following:
      1. If the demand driver used in the company’s cost model for determining the quantities of usage-sensitive equipment is solely Internet or includes other services.
      2. If other services are included, identify them.
    2. If the demand driver includes other services,
      1. Provide updated demand forecasts that include only Internet demand.
      2. Using the format of the company’s Summary of Revenue and Cost Impact Tables (Table 1 for Rogers, Tables 7.1 and 7.2 for Shaw, and Table 1 for Videotron) presented in its 2023 cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
        1. Internet demand is the driver for determining quantities of usage-sensitive equipment.

Section 2: Questions for Rogers, Shaw

  1. Refer to Rogers’ and Shaw’s respective Microsoft Excel confidential cost model filed in response to NoC 2023-56:
    1. Rogers and Shaw proposed a quality of experience (QoE) method for network provisioning.
      1. Based on actual historical utilization data over the most recent five years (i.e., 2018, 2019, 2020, 2021 and 2022), calculate the ratio of All Carrier total peak downstream (DS) traffic across all serving groups or nodes (in Mbps) to in-service total supplier identified maximum DS capacity across all serving groups or nodes (in Mbps) for each year and also calculate the average of five years. Provide a detailed explanation of all assumptions, rationale, and methodologies along with the supporting Excel spreadsheets demonstrating the calculation.
      2. Input the ratio calculated in question 7) a) i) above and the manufacturer recommended utilization levels for augmentation trigger in tab “Table-1” of the Excel document “Request for Information Rogers & Shaw (CRTC) - Mar 24 - round 1”, and compare by explaining the difference (if any) between this ratio and the manufacturer recommended utilization levels for augmentation triggers.
    2. Demonstrate how much QoE overhead was factored into the actual historical utilization calculated in question 7) a) i). Provide a detailed explanation of all assumptions, rationale, and methodologies along with the supporting Excel spreadsheets demonstrating the calculation.
    3. Convert and incorporate the proposed QoE overhead of the company into a working fill factor (WFF [%]) for each speed band (if applicable) and for all the speed bands collectively as a single blended value using the following formula and appropriate speed band wise weight (if applicable):

      WFF (%) = Working or useable downstream capacity excluding QoE overhead, spare capacity and other non-working capacity across all serving groups or nodes (in Mbps) Total in-service, supplier identified maximun downstream capacity across all serving groups or nodes (in Mbps)

    4. Demonstrate how the approach used by the companies in their submissions complies with the five (5) conditions that must be satisfied when a company files a company-specific measured WFF as per Telecom Regulatory Policy 2009-274Footnote6, dated 14 May 2009.
    5. Using the format of the company’s Summary of Revenue and Cost Impact Tables (Table 1 for Rogers and Tables 7.1 and 7.2 for Shaw) presented in its 2023 cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption: WFF of 75% is included for downstream for optical node and QoE overhead is excluded for downstream.

Section 3: Questions for Rogers

  1. Refer to Rogers’ fibre to the node (FTTN) aggregated wholesale HSA cost model “Rogers Tariff Notice 79 - CONFIDENTIAL - Aggregated FTTN Proposed TPIA Model June 22, 2023” submitted June 22, 2023 (referenced as the Rogers’ cost study):
    1. Explain, with supporting rationale, why cashflows in month-1 are not discounted using the Net Present Value (NPV) formula.
      1. Using the format of Table 1 of Rogers’ cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption: cashflows from month-1 to month-60 are discounted using the NPV formula.
    2. Explain why the incremental node counts differ in (column QO, row 63) to (column SV, row 63) of tab “Optical Nodes” from those in (column BN, row 65) to (column DU, row 65) of tab “CCAP.”
      1. Using the format of Table 1 of Rogers’ cost study, provide revised proposed rates and cost information using the cost study with the input incremental node counts as given in (column QO, row 63) to (column SV, row 63) of tab “Optical Nodes.”
    3. Refer in tab “Optical Nodes” to: (column JD, row 1) and (column JD, rows 7 to 63) as well as (column JE, row 1) and (column JE, rows 7 to 63).
      1. Explain why only the Capacity per DS Channel and the Capacity per US Channel of year-1 was used for calculating the number of nodes instead of the respective Capacity per DS Channel and Capacity per US Channel of each year as given in tab “Global Assumptions” (columns C to G, rows 25 to 26).
      2. Using the format of Table 1 of Rogers’ cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
        1. Capacity per DS Channel and Capacity per US Channel of each year as given in tab “Global Assumptions” (columns C to G, rows 25 to 26) are applicable for the respective years of the study period.

    4. For cost item “Segmentation fibre maintenance,” Rogers applied a maintenance and repair (M&R) factor for month-1 that is different from the M&R factor for month-2 to month-60.

      Similarly, for cost item “Transport fibre maintenance,” Rogers applied an M&R factor for month-1 that is different from the M&R factor for months 2 to 60.

      Additionally, refer to answer 2 of Rogers’ Response to Requests for Disclosure “Response to request for disclosure - 30 June 2023 - Rogers Response to Disclosure Requests 2023-56 July 10 2023” submitted Jul 10, 2023, where it is mentioned that M&R factor for transport and segmentation fibre is 10% of plant in service.

      1. Explain why the M&R factor for month-1 is different from the M&R factor for months 2 to 60.
      2. Using the format of Table 1 of Rogers’ cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption: M&R factor for transport and segmentation fibre is 10% of plant in service from month-1 to month-60.
  2. Refer to Rogers’ cost study, submitted June 22, 2023:
    1. Refer to tab “Global Assumptions,”
      • Distributed Gateway routers (DGW) Ports per TPIA Demand (column C, row 65);
      • Distributed Gateway routers (DGW) Ports per All-carrier Demand (column C, row 66);
      • Core Gateway routers (CGW) Ports per Phub (column C, row 72); and
      • Point of Interconnection (POI) Router Ports Required per Phub (column C, row 57).
        1. For each type of router (DGW, CGW and POI), provide a description of the methodology and assumptions used to determine the number of router ports.
        2. Explain, with supporting rationale, the requirement to have DGW ports per TPIA Demand in addition to the DGW ports per All-carrier Demand.
        3. If DGW ports per TPIA Demand in addition to the DGW ports per All-carrier Demand results in double counting, using the format of Table 1 of Rogers’ cost study, provide revised proposed rates and cost information using the cost study with the following assumption:
          1. DGW ports per TPIA Demand is excluded and only DGW ports per All-carrier Demand is included.
    2. Provide a network diagram of Rogers Network Evolution (RNE) [end to end flow] highlighting the required architecture fibre, segmentation fibre and transport fibre on that diagram.
    3. Refer to (column AMC, row 1) and (columns AMD to AOK, rows 7 to 63) tab “Optical Nodes”:
      1. Given the RNE project, confirm architecture fibre is not being double counted.
      2. If architecture fibre is being double counted,
        1. Quantify how much architecture fibre is being double counted.
        2. Using the format of Table 1 of Rogers’ cost study, provide a revised cost study with revised proposed rates and cost information removing any double counting for architecture fibre.
    4. Refer to (column SV, row 5) and (columns SW to VD, rows 9 to 65) of tab “Access Network (Aggregated)” and to (column AJS, row 1) and (columns AJT to AMA, rows 7 to 63) tab “Optical Nodes”:
      1. Explain the differences between FTTN opto-electronics and Optical Node Opto electronics.
      2. Provide a network diagram, covering headend to homes, which highlights the major components of FTTN opto-electronics as shown in Table 6b - FTTN - Opto per HP and Optical Node Opto electronics as shown in Table 6b - A1 2 FTTN Opto-Elec. For each of these major components, specify whether it is associated with FTTN opto-electronics and/or Optical Node Opto electronics as applicable.
      3. Confirm that opto-electronics is not being double counted. If opto-electronics is being double counted, using the format of Table 1 of Rogers’ cost study, provide a revised cost study with proposed rates and cost information with FTTN opto-electronics excluded and only Optical Node Opto electronics included.
  3. Refer to Rogers’ cost study submitted June 22, 2023:
    1. Refer to tab “Table 6b - A1 Router Ports CGW” (column N, rows 11 to 15), tab “Table 6b - A1 Router Ports DGW,” (column N, rows 11 to 15) and tab “Table 6b - AGGREGAT POI Routers” (column N, rows 11 to 20):
      1. Explain, with supporting rationale, why the Engineering & Installation factor for routers is several times higher than what was mentioned in Rogers’ cost model, “Réponse-Response - 2 March 2018 - Rogers Response to RFIs HSA Aggregated (CRTC)2Mar18 - Proposed Agg TPIA Model CONFIDENTIAL” submitted 18 May, 2018, at tab “Table 6b - A1 Router Ports CGW” (column N, rows 11 to 19) and at tab “Table 6b - AGGREGAT POI Routers,” (column N, rows 11 to 22);
      2. ii) Using the format of Table 1 of Rogers’ cost study, provide revised proposed rates and cost information with the Engineering & Installation factor for routers equal to that used in the Rogers’ cost model “Réponse-Response - 2 March 2018 - Rogers Response to RFIs HSA Aggregated (CRTC)2Mar18 - Proposed Agg TPIA Model CONFIDENTIAL” submitted 18 May, 2018.

  4. Refer to Rogers’ cost study, submitted June 22, 2023, where Rogers has proposed working fill factors for shared facilities with finite capacities, which are different from the previously approved working fill factors.

    Additionally, refer to 18 July 2003 Commission staff letter and Telecom Decision 2005-6Footnote7, dated 3 February 2005 where working fill factors of 80% for routers and transmission equipment were previously approved, given that incumbent local exchange carriers (ILECs) and cable carriers use similar equipment.

    Lastly, refer to question 9 of “Réponse-Response - 2 March 2018 - CONFIDENTIAL_Rogers Response to RFIs HSA Aggregated (CRTC)2Mar18 – CONFIDENTIAL,” where Rogers submitted data that demonstrated a working fill factor of 83% for CCAP:

    1. Demonstrate how the proposed deviation complies with the five (5) conditions that must be satisfied when a company files a company-specific measured WFF as per Telecom Regulatory Policy 2009-274, dated 14 May 2009.
    2. Comment on the appropriateness of working fill factors of 83% for CCAP and 80% for routers and transmission equipment (the same as for the ILECs’ routers and transmission equipment, on the basis that cable carriers use similar equipment).
    3. Using the format of Table 1 of Rogers’ cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption: working fill factors of 83% for CCAP and 80% for routers and transmission equipment.
  5. Provide an updated cost study and the associated revised proposed rates and cost information in the format of Table 1 that incorporates the assumption changes addressed in the following questions included in the requests for information, where applicable. Further, highlight the adjustments made in the cost study to assist Commission staff in the analysis of the responses:
    1. Question 1) d);
    2. Question 2) b);
    3. Question 4) c);
    4. Question 5) g);
    5. Question 6) b) ii);
    6. Question 7) e);
    7. Question 8) a) i), question 8) b) i), question 8) c) ii) and question 8) d) ii);
    8. Question 9) a) iii), question 9) c) ii) 2) and question 9) d)
    9. Question 10) a) ii);
    10. Question 11) c).

Section 4: Questions for Shaw

  1. Refer to tab “Present Worth” in Shaw’s cost study “Shaw TN 42 TPIA HFC Service Regulatory Ec Study - Final CONFIDENTIAL” submitted 22 June 2023 (referenced as the “Shaw cost study”). In Section 2 “Capital Expenditure Related Information” of tab “Present Worth,” Shaw has identified capital assets, each with varying useful life estimates, as follows:
    • Nodes – Optical Equipment
    • Nodes – Fibre
    • Transport – Data Switching Equipment
    • Transport – Fibre
    • CCAP Devices
    • Routers (Virtual POI)
    • N/W Equipment RSCs
    • DHCP Servers Licences
    • Test Equipment for Data & Telecom
    • Test Equipment for HFC 2-Way
    • Network Management Software
    • Data Switch (CBB)
    • Access Channel Capacity
    • Access Channel Capacity Amplifiers
    • Hub builds and upgrades
    • Operational Support Systems

    Explain how Shaw determines the net present value of the capital expenditures of each of the above-listed assets (i.e., the values that are populated in the tab “Detailed Cost Table” of the cost study). As part of Shaw’s explanation, include responses to the following:

    1. Provide the assumptions made in terms of the timing within each year of the study period (including year 0) of any addition or replacement of the above-listed capital assets and any associated capital expenditures that are assumed to occur.
    2. Explain how Shaw calculates the capital expenditure of the above-listed assets incurred in each year of the study period (including year 0), considering the useful life of each asset and the timing of any addition or replacement of that particular asset within each year of the study period.
    3. Explain how Shaw calculates the terminal values of the above-listed assets in each year of the study period, considering the useful life of each asset and the timing of any addition or replacement of that particular asset within each year of the study period.
    4. For each capital asset listed in question 13, demonstrate, with supporting rationale and explanations, how Shaw’s responses to question 13) a) through question 13) c) are incorporated within Shaw’s cost model. Specifically, the offset calculations within the formulas for the line items “capital replaced during the period” and “remaining useful life at end of study period” should assign the correct numerical values for each year of the study period.
    5. If calculations noted above do not assign the correct values for the line items noted above in Shaw’s cost study, using the format of Tables 7.1 and 7.2 of Shaw’s cost study, provide revised proposed rates and cost information using the study with the following change in assumption:
      1. Correct any erroneous offset calculations used within Shaw’s cost study for the line items “capital replaced during the period” and “remaining useful life at end of study period” for each of the above-listed assets.
  2. Refer to the file “Shaw TN 42 TPIA HFC Service Regulatory Ec Study - Final ABRIDGED.pdf,” wherein the cost item “Access Channel Capacity Amplifiers” and Table 7.1 are referenced.
    1. Explain, with supporting rationale, how Shaw estimates the number of Access Channel Capacity Amplifiers needed on a per-homes passed basis.
    2. Provide the rationale for the methodology used in Shaw’s cost model to calculate the per-unit cost of “Access Channel Capacity Amplifiers,” including an explanation of how this methodology correlates with the cost item “Access Channel Capacity.”
  3. Refer to the file “Shaw TN 42 Agg HFC Cost Study Att 2 Table 6bA1.pdf” in respect to “Access Channel Capacity,” where Shaw has provided a cost per home passed for various sub-components. Provide the calculation, including the methodology, assumptions, and supporting rationale used by Shaw to derive the cost per home passed for the following items:
    1. “Labour”;
    2. "Coax / duct / conduit.”
  4. Provide (i) an updated cost study and (ii) the associated revised proposed rates and cost information in the format of Tables 7.1 and 7.2 that incorporates the assumption changes addressed in the following questions included in the requests for information, where applicable. Further, highlight the adjustments made in the cost study to assist Commission staff in the analysis of the responses:
    1. Question 1) d);
    2. Question 2) b);
    3. Question 4) c);
    4. Question 5) g);
    5. Question 6) b);
    6. Question 7) e);
    7. Question 13) e). (if required)

Section 5: Questions for Videotron

  1. Refer to section 4.5.3 “Immobilisations causales de la demande” of Videotron’s study report “Service d’Accès Internet aux Tierces Parties (Service AITP) Architecture groupée- Frais d'accès mensuels et Frais mensuel relatif à la capacité” submitted on 22 June 2023 (Videotron’s cost study report), where Videotron has proposed to apply an inflation rate to its annual capital unit cost change for its usage-sensitive capital equipment.

    Further refer to row 10 “Inflation moins gain de productivité – tous coûts sauf ceux variant selon l’usage” in the tab “Modèle ING” of the cost study “ETUDE_COUTS_PHASE_II_ACCES_HFC_CONF” submitted on 22 June 2023 (Videotron’s cost study), where Videotron proposed its discount factors applicable to cashflows for its access-sensitive capital equipment and where the discount factors include the inflation rate.

    1. Explain with supporting rationale the appropriateness in applying an inflation rate in the computation of the annual capital unit cost change for the usage-sensitive capital equipment.
    2. Using the format of the tabs “Tableau 1” in Videotron’s cost study, provide modified proposed rates and cost information using the cost study with the following assumption change:
      1. Do not apply an inflation rate to compute Videotron’s annual capital cost change, neither for the usage-sensitive capital equipment.

  2. Refer to section 4.3.3 “Taux d’augmentation du trafic par utilisateur final” of Videotron’s study report submitted on 22 June 2023, where Videotron has proposed its annual traffic growth rate for the five-year study period.

    Further, refer to row 119 “Trafic en mbps” in section “5) Demandes Toutes entreprises, trafic à l’heure de pointe” of tab of “Demande 2022-2027” of Videotron’s cost study submitted on 22 June 2023, where Videotron applied an annual traffic growth rate for the five-year study period that differs from the annual traffic growth rate stated in the study report.

    1. Videotron calculated the usage-driven equipment cashflows in its cost study by applying the demand growth rate as stated in the study report but used a different growth rate in its calculation of present worth of demand. Explain with supporting rationale the appropriateness of applying different traffic growth rates.
    2. Using the format of the tabs titled “Tableau 1” in Videotron’s cost study, provide revised proposed rates and cost information using the cost study with the following assumption change:
      1. Replace the annual traffic growth rate applied in tab “Demande 2022-2027” with the annual traffic growth rate as stated in the study report.
  3. Refer to Videotron’s cost study submitted on 22 June 2023. Further refer to the following tables where Videotron proposed the unit cost per capacity factor for capital assets:
    • Table 6b “Quebecor - 6b - FAM - Câble Coax CONFIDENTIEL,” submitted on 22 June 2023, more precisely column “Ingénierie et installation (fournisseur plus entreprise)” of Section A1, where Videotron reported labour cost as a result of “Table 6bB1”;
    • Table 6b “Quebecor – 6b – FAM – Terrain & Bâti CONFIDENTIEL” submitted on 22 June 2023, more precisely column “Ingénierie et installation (fournisseur plus entreprise)” of Section A1, where Videotron reported labour cost as a result from “Table 6bB1”;
    • “Quebecor – 6b – FMC – Équip_ de com CONFIDENTIEL,” more precisely column “Ingénierie et installation (fournisseur plus entreprise)” of Section A1, where Videotron reported labour cost as a result from “Table 6bB1”;
    • Table 6b “Quebecor - 6b - FMC - Terrain & Bâti CONFIDENTIEL” submitted on 22 June 2023, more precisely column “Ingénierie et installation (fournisseur plus entreprise)” of Section A1, where Videotron reported labour cost as a result from “Table6bB1”;
    1. For each Table 6b specified above, explain with supporting rationale why the amounts reported in the column “Ingénierie et installation (fournisseur plus entreprise)” of the associated Section A1, sometimes differ from the labour cost amounts provided in Sections B or B1, or why Section B or B1 does not include the calculation of the labour cost.
    2. For each Table 6b referenced above, if the calculation of labour costs is not clearly shown in Section B1, provide a complete breakdown of the labour costs and a revised Table 6b that includes the breakdown of the labour costs.
    3. For each Table 6b referenced above, if the responses to question 19) a) and question 19) b) result in changes of the proposed unit costs for capital items, provide a revised Table 6b that reflects the updated unit costs.
    4. If the responses to question 19) a) and question 19) b) result in any change of the proposed units costs, using the format of the tabs “Tableau 1” in Videotron’s cost study, provide revised proposed rates and cost information using the cost study with the following assumption change:
      1. Replace the unit costs reported in “Column K, Row 54,” “column K, Row 55” and “Column K, Row 67” of tab “Modèle ING,” in “Column D, Row 9” of tab “DOCSIS – CF” and in “Column D, Row 7”, “Column D, Row 8” and “Column D, row 9” of tab “CEM – CF” of the cost study with the revised unit costs calculated in question 19) c).
  4. Refer to Table 6b “Quebecor - 6b - FMC - Équip_ de com CONFIDENTIEL” submitted on 22 June 2023, where Videotron derived the CCAP unit cost per downstream channel. The proposed unit cost incorporates a Working Fill Factor (WFF). Further refer to tab “DOCSIS-CF” of Videotron’s cost study submitted on 22 June 2023, where Videotron modified the CCAP unit cost per downstream channel to a unit cost per Mbps. As part of the calculation of the CCAP unit cost per Mbps, Videotron applied an additional WFF.
    1. Explain with supporting rationale why Videotron has applied WFFs twice in its calculation of the unit cost for CCAP.
    2. Using the format of the tabs “Tableau 1” in Videotron’s cost study, provide modified proposed rates and cost information using the cost study with the following assumption change:
      1. Do not apply a WFF in the calculation of the CCAP unit cost per Mbps in tab “DOCSIS – CF.”
  5. Refer to tab “Backbone – CF” of Videotron’s cost study submitted on 22 June 2023. Further, refer to Table 6b “Quebecor – 6b – FMC – Équip_ de com CONFIDENTIEL” submitted 22 June 2023. The backbone network subcomponents (tab “Backbone – CF” section 1 Établissement du coût / mbps,” column A) and their unit costs (column D) differ from the ones shown in the above-noted Table 6b.
    1. Explain, with supporting rationale, why the backbone network subcomponents listed in Table 6b differ from the ones reported in the tab “Backbone – CF.” If the list of network subcomponents provided in the tab “Backbone – CF” is not current, modify it to reflect the correct network subcomponents, identifying the differences.
    2. Provide, with regards to question 21) a), an updated Table 6b that contains the full list of Videotron’s backbone network subcomponents and the derivation of unit costs for each of these network subcomponents. Explain with supporting rationale how Videotron calculated the unit costs for each of these backbone network subcomponents.
    3. Provide the maximum capacity in Mbps of Videotron’s backbone network along with a detailed explanation of all assumptions, rationale and data used in the calculation of the backbone network’s maximum capacity.
  6. Refer to Row “Coût en capital moyen pondéré” in section “Facteurs Financiers” of tab “CBB – Cash Flow” of Videotron’s cost study submitted on 22 June 2023, where Videotron proposed a calculation of its After Tax Weighted Average Cost of Capital (AT-WACC) that doesn’t factor in the income tax rate for the debt section of the AT-WACC formula:
    1. Explain with supporting rationale the appropriateness of not applying the income tax rate in the AT-WACC calculation.
    2. Provide an updated calculation of the AT-WACC that includes the income tax rate
    3. Using the format of the tabs “Tableau 1” in Videotron’s cost study, provide modified proposed rates and cost information using the cost study with the following assumption change:
      1. Apply, the updated AT-WACC calculated in the response to question 22) b), to all sections of the cost study where the AT-WACC is calculated.
  7. Refer to tab “Modèle ING” of Videotron’s cost study filed on 22 June 2023, more precisely to columns M to R of row 37 “RÉSEAU DE FIBRE OPTIQUE,” where Videotron submitted the existing kilometers for the segmentation fibre as of 31 March 2023. Further refer to tab “Modèle ING” of the cost study “Revised - Modèle Phase II AITP groupé sans écarts - 13-03-2017 CONFIDENTIEL” filed on 13 March 2017, more precisely to columns M to R of row 37 “RÉSEAU DE FIBRE OPTIQUE,” where Videotron submitted the existing kilometers for the segmentation fibre as of 31 March 2016.
    1. Provide the number of kilometers of segmentation fibre that Videotron has installed between 31 March 2016 and 31 March 2023 by taking the difference of the number of kilometers of segmentation fibre as of 31 March 2016 and 31 March 2023.
    2. Further provide the average number of kilometers of segmentation fibre per year Videotron has installed by dividing the response to question 23) a) by the number of years between 31 March 2016 and 31 March 2023.
    3. If there are significant differences between the average number of kilometers of segmentation fibre per year calculated in question 23) b) and Videotron’s proposed number of kilometers of segmentation fibre for years 2023 to 2027, as provided in columns M to R of Row 37 in the tab “Modèle ING” of its 2023 cost study, explain, with supporting rationale and assumptions, the differences in the data and the relevance of the assumptions.
    4. Using the format of the tabs “Tableau 1” in Videotron’s cost study, provide modified proposed rates and cost information using the cost study with the following assumption change:
      1. Replace the proposed annual number of kilometers of segmentation fibre for years 2023 to 2027, with the average number of kilometers of segmentation fibre per year calculated in question 23) b).
  8. Refer to the network diagram on page 28 of Videotron’s study report, submitted on 22 June 2023, which provides the schematics of Videotron’s TPIA service. Provide a revised version of the network diagram, identifying the following information and additional details:
    1. Include and identify all connecting links that are required to transport the competitor Internet traffic from the CCAP to the Point of Interconnection.
    2. Include and identify the capacity (e.g., 10 Gigabit Ethernet [gigE], 100 GigE, etc.) of the router ports facing the CCAP and the capacity (e.g., 10 GigE, 100 GigE, etc.) of the router ports facing the network.
    3. Include and identify the capacity (e.g., 10GigE, 100GigE, etc.) of the router ports facing other router ports in the core of the network which are linked together in order to transport the internet traffic to the Point of Interconnection.
    4. Include and identify the average number of router ports that are used to transport the traffic in the core of the network (i.e., the average hops the Internet traffic will take to go from the first router in the core to the last router in the core).
    5. Clarify whether each connecting link identified in question 24) a) is or is not usage-dependent, explaining the response with supporting rationale.
  9. Refer to Table 12 “52 - Québecor (Vidéotron s_e_ - AMT 52 étude de coûts 30-06-2016 Tableau 12 CONFIDENTIEL” filed on 30 June 2016, where Videotron proposed detailed information on its historical and forecasted demand. Further refer to Videotron’s cost study submitted on 22 June 2023.
    1. a) Consistent with the level of detail provided in the 2016 Table 12 document referenced above, provide an updated Table 12 that applies to Videotron’s cost study submitted on 22 June 2023.

  10. Refer to pages 24 and 25 of the company’s response to the request for information “Suivi_O2016-396_et_O2016-448_-_Réponses_-_18-05-2018_CONFIDENTIELLES” submitted on 18 May 2018.

    To assist the Commission in reviewing Videotron’s proposed core network expenses, provide the total installed first cost (IFC) per Mbps for routers, similar to the level of detail provided by the company in the above-referenced response.

    1. Based on the level of detail provided by Videotron in the above document, using the Commission approved utilization factors, provide the following information:
      1. IFC per Mbps for routers in the edge to core links.
      2. IFC per Mbps for routers in the core-to-core links. In particular, identify the average number of links or hops in the core-to-core links.
      3. IFC per Mbps for routers in the core to edge links.
      4. iv) IFC per Mbps for routers from the edge to the competitor POI.
      5. The IFC per Mbps for routers reflecting the average IFC per Mbps to transport the traffic from the head-ends to the competitor POI.
    2. Using the format of the tabs “Tableau 1” in Videotron’s cost study, provide modified proposed rates and cost information using the cost study with the following assumption change:
      1. Replace the proposed routers’ IFC per Mbps on 31 March 2023 (cost study, tab “Backbone – CF,” Column D, Row 45) with the IFC per Mbps provided in question 26) a) v).

  11. Refer to tab “OPTIQUE – CF” of Videotron’s cost study filed on 22 June 2023 where Videotron submitted the cash flows for optical nodes.

    Further, refer to section C (Bande passante en aval – DOCSIS) of Table 14 “Quebecor - Tableau 14 CONFIDENTIEL,” where Videotron submitted the available bandwidth per node.

    Additionally, refer to Table 6b “Quebecor - 6b - FMC - Équip_ Ext CONFIDENTIEL” submitted on 22 June 2023, where Videotron provided the calculation of the installed first cost of optical nodes.

    1. Explain with supporting rationale and supporting data why the maximum capacity per node provided in the cost study (Tab “OPTIQUE – CF,” Column D, Row 10) differs from the optical node capacity calculated in Table 14 (Column F, Row 55).
    2. Comment, with supporting rationale and assumptions, how Videotron determines the number of nodes per serving group as stated in Table 14 and further explain in detail how it allocates the demand to each node in a serving group.
    3. In Table 6b, Videotron applied a WFF to compute the optical node installed first cost (IFC) (column “Facteur d’utilisation moyenne (FUM)” of section A1). Videotron also applied a WFF (Tableau 14, Columns D to J, Row 52) to get the available bandwidth per node. It also applied a WFF in tab “OPTIQUE – CF” of the cost study (Column D, Row 10) in its calculation or the unit cost per Mbps for the optical nodes. Comment on the appropriateness of applying the WFFs in different sections of the cost model to arrive at the optical node unit cost.
    4. Using the format of the tabs titled “Tableau 1” in Videotron’s cost study, provide modified proposed rates and cost information using the cost study with the following assumption changes:
      1. Replace the proposed cost per node in tab “OPTIQUE-CF” (Column D, Row 9) with the optical node IFC from Table 6b, ensuring that the WFF is only applied once to each node component unit cost.
      2. Replace the proposed maximum capacity per node reported in tab “OPTIQUE – CF” (Column D, Row10) with the available bandwidth per optical node from Tableau 14 (Column F, Row 55) ensuring that the WFF is only applied once to each node component unit cost.
  12. Provide an updated cost study and the associated revised proposed rates and cost information in the format of “Tableau 1” that incorporates the assumption changes addressed in the following questions included in the requests for information, where applicable. Further, highlight the adjustments made in the cost study to assist Commission staff in the analysis of the responses:
    1. Question 1) d);
    2. Question 2) b);
    3. Question 4) c);
    4. Question 5) g);
    5. Question 6) b) ii);
    6. Question 17) b);
    7. Question 18) b);
    8. Question 19) d);
    9. Question 20) b);
    10. Question 22) c);
    11. Question 23) d);
    12. Question 26) b);
    13. Question 27) d).
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