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Telecom - Staff Letter addressed to Carol Ho (TELUS Communications Inc.)

Ottawa, 20 September 2024

Reference: 8740-T66-202402238

BY EMAIL

Carol Ho
Senior Regulatory Advisor, Telecom Policy & Regulatory Affairs
TELUS Communications Inc.
25 York Street, Floor 28
Toronto, ON, M5J 2V5
regulatory.affairs@telus.com

Subject:  TELUS Tariff Notice 590 - Support Structure Pole Rental Rate Change – Requests for Information

On 26 April 2024, the Commission received an application from TELUS Communications Inc. (TELUS) proposing updated tariff pages and proposed rates for TELUS's General Tariff CRTC 21461, Item 404 – Support Structure Service.

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

In that respect, the process and associated dates are as follows:

Commission staff notes that further RFIs may be forthcoming in due course as the analysis continues.

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 Act and in Procedures for filing confidential information and requesting its disclosure in Commission proceedings, Broadcasting and Telecom Information Bulletin CRTC 2010-961, 23 December 2010, 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

cc.: Josée Line Gendron, CRTC JoseeLine.Gendron@crtc.gc.ca
Lauren Purdy, CRTC Lauren.Purdy@crtc.gc.ca

Attach. (3)

Distribution List

TELUS Communications Inc.  regulatory.affairs@telus.com
Bragg Communications Inc.  regulatory.matters@corp.eastlink.ca
Quebecor Media Inc.  regaffairs@quebecor.com
Rogers Communications Canada Inc.  rwi_gr@rci.rogers.com
Lytton Area Wireless Society  daniel@lyttonnet.com
BC Broadband Association  admin@bcba.ca
CityWest Cable & Telephone Corp.  denise.duncan@cwct.ca

Request for Information (RFI) Questions

For the following questions, the file “TELUS Application TN-590 Attachment 1” dated 26 April 2024 will be referenced as “the report” and “TELUS Application TN-590 Attachment 2” dated 26 April 2024 will be referenced as “the cost study”.

  1. Refer to the cost study tab “Table 1”. Additionally, complete tab “RFI #1” of the attached Excel template and provide:
    1. The values used to determine the existing tariff rate (column F).
    2. The percentage change from the previous cost study to the current cost study (column G).
    3. Justification for any changes (increases or decreases) of greater or equal to 30% (column H).
  2. Refer to the cost study tab “Pole and attacher counts”. For each of the years 2018 to 2023, complete tab “RFI #2” of the attached Excel template and provide:
    1. The number of poles that have a net book value (NBV) = 0 (fully depreciated) and fit into the following categories:
      1. Total TELUS owned poles
        1. TELUS wholly owned poles
        2. Jointly owned poles
      2. EPCOR poles
    2. The number of poles that have a NBV > 0 and fit into the following categories:
      1. Total TELUS owned poles
        1. TELUS wholly owned poles
        2. Jointly owned poles
      2. EPCOR poles
    3. The total number of poles that fit into the following categories:
      1. Total TELUS owned poles
        1. TELUS wholly owned poles
        2. Jointly owned poles
      2. EPCOR poles
      3. Rental poles
      4. Grand total of all poles
        1. Service poles
        2. Non-service poles.
  3. Refer to the cost study tab “Book values”.
    1. For each of the years 2018 to 2023, complete tab “RFI #3” of the attached Excel template.
      1. For TELUS owned poles, provide:
        1. The number of poles in service on 1 January
        2. Poles installed
        3. The number of poles removed
        4. The number of poles in service on 31 December
      2. If available, for each of the years above, provide a breakdown of pole installations into replacement and growth poles.
    2. Explain the methodology used to determine the percentage of the cost allocated to strands versus poles for each asset class A60, A61 and S21. Provide the formula used, including the numerator and denominator, for this calculation.
    3. Provide a reason for the significant variance between percentage of costs allocated to strands for asset classes A60 (6%) and A61/S21 (20.7%).
  4. For each of the years 2018 to 2023, complete tab “RFI #4” of the attached Excel template.
    1. Provide the total cost of all poles, by asset class:
      1. The Embedded Cost (book value or original cost)
      2. The Net Embedded Cost (Net book value [NBV])
      3. The Depreciation Expense
        1. Retirements.
    2. Provide average cost per pole, by asset class:
      1. The Embedded Cost (book value or original cost)
      2. The Net Embedded Cost (Net book value [NBV])
      3. The Depreciation Expense
        1. Retirements.
  5. Refer to the report, page 6, paragraph 16, “Table 2 – Pole life estimates”.
    1. Provide an explanation for the differences in pole life estimates between asset classes A60, A61 and S21.
  6. Refer to the cost study, tab “Maintenance”. For each of the years 2018 to 2023, complete the tab “RFI #6” of the attached Excel template.
    1. Provide the following for each pole maintenance type identified:
      1. Actual historical pole maintenance costs categorized by pole asset class
      2. # of poles categorized by pole asset class
      3. Average cost per pole categorized by pole asset class.
    2. Explain, with all underlying assumptions, the reason(s) for the variances between the average maintenance costs per pole from one asset class to another.
    3. Describe the activities required for each type of maintenance cost category identified in column B, rows 6 to 11 within tab “RFI #6” of the attached Excel template.
  7. Refer to the cost study tab “Table 1”.
    1. Verify and confirm whether maintenance costs incurred by TELUS included in the cost study under “Maintenance” are separate and mutually exclusive from the maintenance costs included in the cost study under “Joint use management”.
    2. If maintenance costs are not separate and mutually exclusive from the maintenance costs in the cost study under “Joint use management”, explain and perform the adjustment required to correct it, and provide updated costs. Provide all calculations, formulae and assumptions.
  8. Refer to the cost study tab “Removal”. For each of the years 2018 to 2023, complete the tab “RFI #8” of the attached Excel template.
    1. Provide the following for each pole asset class:
      1. The costs for each pole removal category and total removal cost
      2. The number of poles removed
      3. The total removal cost per pole.
    2. Describe the activities required for each pole removal cost category identified in column B within tab “RFI #8” of the attached Excel template.
  9. Refer to the cost study tab “Table 1”, column C, row 21 “Other costs (warehousing and distribution)”.
    1. For each of the years 2018 to 2023, complete tab “RFI #9” and provide:
      1. The warehousing and distribution (W&D) cost factor rate
      2. The total cost
      3. The cost per unit.
    2. Provide and explain the specific methodology and formula (including the numerator and denominator) used to calculate the W&D factor and the associated W&D cost.
    3. Justify the application of the W&D factor to the costs of capital expenses (debt interest, return on equity and income tax expense) in the calculation of the W&D cost.
    4. Recalculate the W&D cost without applying the factor to the costs of capital expenses (debt interest, return on equity and income tax expense).
  10. Refer to the cost study tab “Vegetation”. For each of the years 2018 to 2023, complete the tab “RFI #10” of the attached Excel template and provide the historical annual vegetation and tree-trimming cost per pole for each of the two cost components in column B, rows 5 & 6, and the total annual cost in row 7.
  11. Refer to the cost study tab “Corrective work”.
    1. Complete tab “RFI #11” of the attached Excel template.
      1. For each of the years 2018 to 2023, provide:
        1. The amount invoiced for make-ready work charges
        2. The amount invoiced for corrective work charges
        3. The total amount invoiced for both make-ready work and corrective work charge
        4. The ratio of corrective work charges to the total of make-ready and corrective work.
      2. Provide the total number of permit applications received between Q2 and Q4 of 2023 (inclusive), and indicate:
        1. The total number of permit applications received
        2. The number of applications that required make-ready work only
        3. The number of applications that required corrective work only
        4. The number of applications that required both corrective and make-ready work.
      3. Provide the total dollar amount invoiced for permit applications received between Q2 and Q4 of 2023 (inclusive), and indicate: the total dollar amount invoiced for permit applications that:
        1. The total dollar amount invoiced for permit applications
        2. The dollar amount invoiced for permit applications that required make-ready work only
        3. The dollar amount invoiced for permit applications that required corrective work only
        4. The dollar amount invoiced for permit applications that required both corrective and make-ready work
    2. Explain the methodology and provide all formulae (including detailed calculations outlining both the numerator and denominator) used to calculate the ratio of corrective work to total of make-ready and corrective work charges.
  12. Refer to the report, paragraph 63.
    1. Provide the specific statistical methodology, formulae and supporting calculations used to determine the 99% level of confidence and 1% margin of error regarding the pole sample’s representativeness.
  13. Complete tab “RFI #13” of the attached Excel template.
    1. Provide the number of unique poles by asset class for which TELUS bills third party attachers as of December 31, 2023, by:
      1. Wholly owned poles
      2. Jointly owned poles
      3. EPCOR poles
      4. Rental poles
  14. Complete tab “RFI #14” of the attached Excel template.
    1. Provide the number of unique poles by asset class for which TELUS does not bill third-party attachers as of December 31, 2023, by:
      1. Wholly owned poles
      2. Jointly owned poles
      3. EPCOR poles
      4. Rental poles
  15. Refer to the report, paragraph 63.
    1. Referring to the sample of 29,525 poles, complete tab “RFI #15” of the attached Excel template. Provide the quantity of poles for each quantity of third-party attachers across the classes of poles indicated, as of December 31, 2023. 
  16. Refer to the report paragraphs 70-73. 
    1. For each of the years 2018 to 2023, complete tab “RFI #16” of the attached Excel template and provide:
      1. The number of rental poles to which third parties attach
      2. Actual annual rental costs
      3. Average per pole rental cost
      4. Actual year-over-year rental rate percentage change
  17. Confirm that the pole rental rate paid to Fortis is consistent across all rental poles, or whether it can vary, and, if applicable, provide an explanation for the variances in pole rental rates. 
    1. If variances per pole exist, provide the rate and number of poles per rate category. 
  18. Refer to the cost study tab “Table 1”.
    1. Explain the decline in the number of rented poles to which third parties attach (column E, row 34) from the value used within the calculation of the current rate.
  19. Refer to the report, paragraph 75.iii:
    1. For each of the years 2018 to 2023, complete tab “RFI #19”, and provide an updated average cost per meter of cable based on actual material price codes and acquisitions for asset classes A10 and A12 in each year, obtained from the company’s accounting system. 
  20. Refer to the cost study tab “Loss in Productivity”, and provide the following information for the input factor “Spans placed with cableco presence”:  
    1. The rationale and specific methodology used to derive the value for % of spans with cableco presence.
    2. The year(s) in which field forces made their field observations.
    3. The number of field observations conducted by field force and consequently used in derivation of the input factor.
    4. The total number of spans included in both the field observations and inputs from contractors which were used to derive the input factor.
  21. Provide the following information for the input value “Average additional time per span due to cableco presence”:
    1. The year vintage(s) of the subject matter expert (SME) observation(s) used to develop the input value. 
    2. The number of installations with cableco presence considered by SMEs used in the derivation of the input value. 
    3. The total number of spans included in the installations with cableco presence considered by SMEs to derive the input value. 
  22. Provide the following information for the input value “average span length in meters”:
    1. The year vintage(s) of the field observations and input from contractor field forces used to develop the input value.
    2. The number of observations used in the derivation of the input value. 
    3. The total number of spans included in both the field observations and inputs from contractors which were used to derive the input value. 
  23. Refer to the cost study tab “Admin & Joint Use”.
    1. Identify and describe the activities completed that constitute the joint use management cost.
    2. For each of the years 2018 to 2023, complete tab “RFI #23” of the attached Excel template, list the activities identified in 23) a) and provide the historical joint use management costs by activity.
    3. Confirm that the costs related to joint use management relate only to poles, rather than to the combination of poles, strands, and conduit.
    4. If the joint use management cost relates only to poles, provide the estimated joint use management cost related to strands, and the joint use management cost related to conduit, including the underlying formulae, and supporting assumptions and calculations.
    5. If the joint use management cost also relates to structures other than poles, provide the revised joint use management cost for poles only.
  24. Refer to the cost study tab “Admin & Joint Use”.
    1. Identify and describe the activities associated with each type of administration cost (specifically, Product Management and Accounts Receivable (billing)).
    2. Provide the annual cost for each activity identified in question 24) a), including the underlying formulae, supporting assumptions, and calculations used. 
    3. Confirm that the costs related to Administration relate only to poles rather than poles, strands, and conduit.
      1. If the administration costs are specific to poles, provide the estimated administration costs for strands and conduit separately, along with the relevant formulae, assumptions, and calculations. 
      2. If the administration costs cover poles as well as other structures, provide the revised administration costs allocated solely to poles.
  25. Refer to the report section 2.2.5 “Total costs”.
    1. For each of the years 2018 to 2023, complete tab “RFI #25a” of the attached Excel template and provide the quantities of billing units for each class of poles listed in column B, rows 5 to row 8 and in total for each year in row 9.
    2. Explain, with supporting details and assumptions, why the quantity of billing units on rented poles has decreased substantially since the previous study.
    3. Refer to tab “RFI #25c” of the attached Excel template. Provide the names of each third party attacher billed by TELUS in column B, along with the quantity of their corresponding billing units in column C.
  26. Identify any subsidy amounts included in the cost study that were recovered, will be recovered, or funded through various public funding sources or other sources. For any costs recovered or funded as such, identify the source and the amount. If these amounts had not previously been removed from the cost study, explain with supporting rationale why not and adjust the cost study for their removal accordingly.
  27. Provide an updated version of the cost study based on any changes resulting from the above questions.
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