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Telecom - Staff Letter addressed to the Distribution List

Ottawa–Gatineau, 22 January 2025

References: 8740-E17-202304038, 8740-E17-202402311, 8740-C6-202304062, 8740-C6-202401149, 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 – Bragg Communications Incorporated, carrying on business as Eastlink and Cogeco Communications Inc.

As part of the proceeding initiated by Notice of hearing – Review of the wholesale high-speed access service framework, Telecom Notice of Consultation CRTC 2023-56, 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 tariff applications, Commission staff requests additional supporting information from Bragg Communications Incorporated, carrying on business as Eastlink (Eastlink) and Cogeco Communications Inc. (Cogeco).

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 Eastlink and Cogeco submit their respective responses to the attached RFIs no later than 21 February 2025.

In addition, Commission staff is setting the following process related to disclosure by parties:

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 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

c.c.: Abderrahman El Fatihi, CRTC 819-953-3662 AbderRahman.ElFatihi@crtc.gc.ca
William Lloyd, CRTC 819-953-997-4654 William.Lloyd@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 document (upon request only)

Distribution List

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

Cogeco; 0067, 0067/A; 8740-C6-202304062, 8740-C6-202401149; telecom.regulatory@cogeco.com;
Eastlink; 0046, 0046/A; 8740-E17-202304038; 8740-E17-202402311; regulatory.matters@corp.eastlink.ca;
Rogers Communications Canada Inc.; regulatory@rci.rogers.com;
Shaw Communications; Regulatory@sjrb.ca;
Videotron; regaffairs@quebecor.com;
Bell Canada; bell.regulatory@bell.ca;
TELUS Communications Inc.; regulatory.affairs@telus.com;
Saskatchewan Telecommunications; W.N. (Bill) Beckman; document.control@sasktel.com;
CNOC, regulatory@cnoc.ca;
Community Fibre, ben@communityfibre.ca;
Comwave, legal@comwave.net;
Public Interest Advocacy Centre, jlawford@piac.ca;
TekSavvy, regulatory@teksavvy.ca;
Vaxination Informatique, jfmezei@vaxination.ca;
John Roman, johnphiliproman@gmail.com;
WaveDirect Telecommunications Limited, joanne@wavedirect.org;
Vaxxine Computer Systems Inc., president@vaxxine.com;
Truespeed Internet Services Inc., adam@truespeed.ca;
SkyChoice Communications, serge@skychoice.ca;
Securenet, info@securenet.net;
Secure by Design, kirk@secure-by-design.com;
OpenMedia, erin@openmedia.org;
Netrevolution inc., drouleau@gtvr.com;
National Capital FreeNet, execdir@ncf.ca;
IGS Hawkesbury Inc., jbogue@hawkmail.ca;
First Mile Connectivity Consortium, info@firstmile.ca;
Devtel Communications Inc., devin@devtelcommunications.ca;
CPC, campbell@campbellpatterson.com;
Canadian Anti-Monopoly Project (CAMP), keldon@antimonopoly.ca;
Beanfield, todd@beanfield.com;
Marc Nanni, mn_crtc@proton.me;
Competition Bureau, Conor.Parson@cb-bc.gc.ca;
Competition Bureau, crtc2023-56@cb-bc.gc.ca;
Coextro, skhandor@coextro.com;
Carry Telecom, frankw@carrytel.ca;
Execulink, regulatory@execulinktelecom.ca;
Frontier Networks, cgooey@frontiernetworks.ca;
Citywide, david@yourcitywide.com;
CIK Telecom, jordan.d@ciktel.com;
British Columbia Broadband Association (BCBA), regulatory@bcba.ca

Requests for Information (RFI)

Section 1: Questions for Cogeco and Eastlink

  1. 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, facilities 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, converged cable access platform (CCAP), routers, etc.) that the company is proposing to include as either being under the 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.

Section 2: Questions for Eastlink

  1. Refer to Eastlink’s FTTN aggregated wholesale HSA Microsoft Excel confidential cost model filed in response to NoC 2023-56, submitted April 30, 2024, titled, “Eastlink_-_Tariff_Notice_46A_-_Cost_Study_-_HFC_-_April_30_2024_-_CONFIDENTIAL” (referenced as “Eastlink’s cost study”):
    1. Provide actual historical upstream and downstream traffic growth rate measurements per end-user 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 the calculation.
    2. Demonstrate how the traffic growth rate per end-user in year 1 and year 2 provided in the company’s cost study aligns with the historical data provided in response to question 2) a).
    3. Comment on the appropriateness of using upstream and downstream traffic growth rate of 32% annually in year 3 to year 5 of company’s cost study as previously approved in Telecom Decision 2016-117Footnote1, dated 31 March 2016.
    4. Using the format of the company’s Summary of Revenue and Cost Impact Tables (Table 1 and Table 2 for Eastlink) presented in its cost study, provide revised proposed rates and cost information using the cost study with the following changes in assumptions:
      • Upstream 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;
      • Upstream and downstream traffic growth rate in years 3 to 5 of the study period is equal to 32% per year.
  2. Refer to Eastlink’s cost study, submitted April 30, 2024. With respect to the company’s 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 the 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) the 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 technology (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 along with 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 only be served over one of the two DOCSIS technologies.
    7. Using the format of the company’s Summary of Revenue and Cost Impact Tables (Table 1 and Table 2 for Eastlink) presented in its cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
      • The HFC network uses only DOCSIS 3.1 technology.
  3. Refer to Eastlink’s cost study, submitted April 30, 2024;
    1. Specify whether 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. 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 and Table 2 for Eastlink) presented in its cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
        • Internet demand is the sole driver for determining quantities of usage-sensitive equipment.
  4. Refer to Eastlink’s cost study, submitted April 30, 2024:
    1. Refer to tab titled, “6bA1 - HFC Nodes”, (column C, row 10), (column E, row 10) and (column L, row 3 to row 10):
      1. Explain, with supporting rationale, the requirement to have installation cost in addition to the engineering and installation factor.  In responding, the company is to clearly demonstrate that its proposal to include a separate installation cost does not result in double counting of costs captured by the company’s engineering and installation factor.
      2. If Installation cost, in addition to the Engineering and Installation factor, results in double counting, using the format of Table 1 and Table 2 of Eastlink’s cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
        • Installation is excluded and only the engineering and installation factor is included.
  5. Refer to Eastlink’s cost study, submitted April 30, 2024:
    1. Refer to tab titled, “HFC-OSP”, (column J to column K, row 4 to row 12):
      1. Explain, with supporting rationale, why TV Attribution is gradually decreasing over the study period without corresponding increase in capacity (in Mbps) of nodes in downstream, upstream or both in tab titled, “Capacity”, (column Y, row 8 to row 13) and (column AF, row 8 to row 13).
    2. Refer to tab titled, “Attribution”, (column A to column I, row 13 to row 20):
      1. Explain, with supporting rationale, why additional “Attribution Change” is applied to HFC outside plant.
    3. Using the format of Table 1 and Table 2 of Eastlink’s cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
      • Update the node capacity based on the response to Question 6) a) and exclude the “Attribution Change” applied to HFC outside plant.
  6. Refer to Eastlink’s cost study, submitted April 30, 2024:
    1. Explain, with supporting rationale, why a capital increase factor (CIF) of 3% is applied to traffic-driven equipment (i.e. Edge Network, Core Network, Transport Equipment, CMTS and Node) instead of applying only the annual capital unit cost change assumption of minus 26.4% as per Telecom Decision 2016-117.
    2. Using the format of Table 1 and Table 2 of Eastlink’s cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
      • CIF of 3% is excluded and only the annual capital unit cost change assumption of minus 26.4% is applied to traffic-driven equipment.
  7. Refer to Eastlink’s cost study, submitted April 30, 2024:
    1. Refer to tab titled, “HFC-OSP”, (column I, row 7) and tab titled, “DSP Access”, (column F to column K, row 16):
      1. Subsection 1.2.1, paragraph 1-9 of the Regulatory Economic Studies Manual states:
        • “The causal costs of providing a service under the proposed course of action include the costs that are causal to the proposed course of action but which do not vary with the service demand (service-driven causal costs) and the costs that vary with the service demand (demand-driven causal costs) over the study period.  The demand-driven causal costs of a new service are determined by applying the causal cost of a growth unit of demand to the growth demand over the study period.  In the case of an existing service, the demand-driven causal costs are determined by applying the causal cost of a growth unit of demand to the growth demand over the study period as well as to the in-service demand at the beginning of the study period”

          As such, explain, with supporting rationale, why the net book value approach is applied to HFC outside plant existing facilities at the beginning of the study period instead of average cost per new home passed

    2. Using the format of Table 1 and Table 2 of Eastlink’s cost study, provide revised proposed rates and cost information using the cost study with the following changes in assumptions:
      • Apply the average cost per new home passed to HFC outside plant existing facilities at the beginning of the study period;
      • Make the corresponding life estimate equal to that of HFC outside plant new facilities;
      • Exclude the net book value (%).
  8. Refer to Eastlink’s cost study, submitted April 30, 2024:
    1. Refer to tab titled, “Parameters”, (column B, row 8):
      1.  Explain, with supporting rationale, why cost of equity of 15% is applied instead of 13% as per Telecom Order 2000-789, dated 21 August 2000.
    2. Using the format of Table 1 and Table 2 of Eastlink’s cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
      • Cost of equity is 13%.
  9. Refer to Eastlink’s cost study, submitted April 30, 2024, and Eastlink’s study report, submitted April 30, 2024, titled, “Eastlink_-_HFC_Study_Report_-_April_30_2024”, section 5.2, where it states:
    • “…the study period for the cost study covers the five-year period from 2023 to 2028, inclusive”:
      1. Explain, with supporting rationale, why the installed first cost (IFC) of 2023 vintage is restated using the CIF%, Expense Increase Factor (EIF%) and Productivity Improvement factor (PIF%) at year 1 of the study period instead of the 2023 vintage IFC being applied directly at year 1 of the study period.
      2. Using the format of Table 1 and Table 2 of Eastlink’s cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
        • Apply vintage 2023 IFC at year 1 of study period without being restated using CIF/EIF and PIF, and update year 2 to year 5 of study period accordingly.
  10. Refer to Eastlink’s cost study, submitted April 30, 2024:
    1. How much spectrum (in MHz) is allocated or reserved, separately, for downstream and upstream traffic.
    2. How much of the spectrum (in MHz) that has been allocated to (or reserved for) delivery of downstream and upstream traffic is being used by downstream and upstream channels, respectively, to deliver the corresponding downstream and upstream channel capacity (in Mbps)?
    3. Explain, with supporting rationale, the reason for any difference between the spectrum allocated to downstream (in MHz), and the spectrum occupied by downstream channels (in MHz)
    4. Explain, with supporting rationale, the reason for any difference between the spectrum allocated to upstream (in MHz) and the spectrum occupied by upstream channels (in MHz).
    5. Explain, with supporting rationale, how much is the maximum usable portion of the spectrum (in MHz) allocated to downstream and upstream, respectively, for configuring downstream and upstream channels. Additionally, explain with supporting rationale, what is the corresponding total downstream channel capacity (in Mbps) and total upstream channel capacity (in Mbps). Provide a detailed explanation of all assumptions, rationale and methodologies along with the supporting Excel spreadsheets demonstrating the calculation.
    6. If the maximum usable portion of the spectrum allocated to downstream and upstream is not used for configuring downstream and upstream channels, using the format of Table 1 and Table 2 of Eastlink’s cost study, provide revised proposed rates and cost information using the cost study with the following change in assumption:
      • The maximum usable portion of the spectrum (in MHz) allocated to Downstream and Upstream respectively, is used for configuring downstream and upstream channels to deliver the corresponding total downstream channel capacity (in Mbps) and total upstream channel capacity (in Mbps).
      • Accordingly, update the node count.
  11. Refer to Eastlink’s study report, submitted April 30, 2024, titled, “Eastlink_-_HFC_Study_Report_-_April_30_2024”:
    1. Provide a network diagram that shows the links and cross links between edge router(s), core router(s) and point of interconnection (POI) router(s) as well as the number of router ports associated with each of these links. Explain how the network architecture supports redundancy for failover protection. In addition, specify the capacity (e.g., 10GigE, 100GigE, etc.) of the router ports associated with each link.
    2. Explain, with supporting rationale, how the company’s calculation of the installed first cost (IFC) per megabits per second (Mbps) for routers and transport equipment incorporates redundancy for failover protection.    
    3. For each of the links and cross links between routers, quantify how many of the ports included in the IFC per Mbps of routers and transport equipment are for redundancy.
    4. If IFC per Mbps of routers and transport equipment does not incorporate redundancy for failover protection, explain how the redundancy for failover protection is incorporated in the cost study.
  12. Provide an updated cost study and the associated revised proposed rates and cost information in the format of Table 1 and Table 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 the Commission in the analysis of the responses.
    1. Question 2) d);
    2. Question 3) g);
    3. Question 4) b) ii);
    4. Question 5) a) ii);
    5. Question 6) c);
    6. Question 7) b);
    7. Question 8) b);
    8. Question 9) b);
    9. Question 10) b);
    10. Question 11) f).

Section 3: Questions for Cogeco

For the following questions, refer to Cogeco’s Microsoft Excel confidential cost model filed on 15 March 2024 in response to NoC 2023-56 (henceforth referenced as “Cogeco’s cost study”). 

  1. Refer to the tab “Parameters” of Cogeco’s cost study filed in response to NoC 2023-56, where the company has estimated the cost of capital to be used in its cost study.
    1. Provide the formula to calculate the After Tax Weighted Average Cost of Capital (“ATWACC”), expanding the notations used in the formula.
    2. Using the formula provided in the answer to question 14) a), calculate and provide Cogeco’s “ATWACC”, based on the input parameters provided within the tab “Parameters”. If the resulting value is different from what the company provided in its submission, provide rationale.
  2. Refer to Cogeco’s cost study submitted on 15 March 2024. With respect to the company's Hybrid Fiber-Coax (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 the company's rollout plan for transitioning from a co-existing DOCSIS 3.0 and DOCSIS 3.1 network architecture to a DOCSIS 3.1 only network architecture 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) Cogeco 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 technology (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 DOCSIS 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 only be served over one of the two DOCSIS technologies.
  3. Refer to Cogeco’s cost study:
    1. Provide actual historical upstream and downstream traffic growth rate measurements per end-user 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 the calculation.
    2. Demonstrate how the traffic growth rate per end-user in year 1 and year 2 provided in the company’s cost study aligns with the historical data provided in response to question 16 a).
    3. Comment on the appropriateness of using upstream and downstream traffic growth rate of 32% annually in year 3 to year 5 of company’s cost study as previously approved in Telecom Decision 2016-117, dated 31 March 2016.
  4. In Decision 2016-117, the Commission determined that with respect to wholesale HSA services, the annual capital unit cost per Mbps change of minus 26.4% should be used for traffic-driven equipment.
    • Refer to the tab “MPLS+Tpt Cost” of Cogeco’s cost study filed in response to NoC 2023-56. Further, refer to column N, column AD, column AQ, and column BG of this tab where the company provided values for annual capital unit cost change factors (under the titles “Net” or “Inflation”) that were used to estimate the incremental cash flows associated with the various core network equipment used in the company’s network. Refer also to tab “Parameters”, where the company specified how it estimated the annual unit cost change factors used to estimate capital cash flows in tab “MPLS+Tpt Cost”.
      1. Explain why the company modified the Commission determined annual capital unit cost factor value of minus 26.4%, by adjusting it further by inflation, when the Commission, in the above Decision, did not recommend any further adjustment to the value it approved.
      2. Refer to the tabs, “HFC-Tech” and “Capacity” of the company’s cost study filed in response to NoC 2023-56. Further refer to the calculations proposed by the company in those tabs to estimate the incremental capital cash flows associated with equipment such as “CCAP”, “Nodes” and “Amplifiers”. As these capital cash flows are derived based on usage of the equipment, provide the company’s rationale as to why it would be appropriate to adopt the company’s proposed annual unit cost change value to be applied to «CCAP», «Nodes» and Amplifiers, rather than the value of minus 26.4% retained by the Commission in Telecom Decision 2016-117.
  5. Refer to the formulas provided in column BH in the tab, “HFC-Tech”, in Cogeco's cost study, which show the calculations to estimate the company's software update expenses (“Expense Summary - SW Update”). These calculations show that these expenses are derived by applying the same “SW Mtce Expense Factors (Cum Cap)” to the capital cash flows of three of the company's access capital cost elements, namely, “CCAP: Converged Cable Access Platform”, “Nodes (Outside Plant)” and “Amplifier (Outside Plant)” and aggregating the resulting values.
    1. Explain and provide rationale as to why the company applied the same “SW Mtce Expense Factors (Cum Cap)” value to the cumulative cash flows associated with each of the “CCAP: Converged Cable Access Platform”, and “Nodes (Outside Plant)” cost categories, whereas this value was applied against only the incremental cash flows associated with “Amplifier (Outside Plant)” cost category.
  6. Refer to the formulas provided in column BC in the tab, “HFC-Tech”, in Cogeco's cost study, which show the calculations to estimate the incremental capital cash flows by year for the “HFC Platform” cost category, comprising of “CCAP”, “Nodes” and “Amplifiers”.
    1. These calculations show that the company calculated the capital cash flows of each of these cost elements based on the total units (i.e., incremental plus replacement) associated with the “CCAP” equipment, while basing it only on incremental units for the “Node” and “Amplifier” equipment, that excludes replacement units. Explain why the company used different demand drivers (i.e., total vs. incremental) to calculate capital cash flows of different types of equipment.
  7. Refer to the tab, “Table 6b A1” of the company’s cost study filed in response to NoC 2023-56, which provided the detailed cost breakdown of how the company derived the unit costs of the “Cable access plant”.
    1. Refer to column W, row 7 of the tab “HFC-CableNtwk”. Provide the company’s rationale for using “Total cost per HP blended cost for Ontario and Quebec” as the cost per homes passed for Quebec only.
    2. Refer to column D, row 145 and column D, row 156 in the tab "Table 6b A1" where Cogeco has provided the company's "Drop cost" explicitly for Quebec "Rural" and "Urban" areas respectively. Further refer to column D, rows 110 to 119 and column D, rows 123 to 131 where the company provided the various cost elements included in Ontario "Rural" and "Urban" cable costs, respectively. Also note that in the cost data provided for Ontario, the company has not specifically identified the "Drop cost" for either the "Rural" or "Urban" areas.
      • Explain why the company did not provide the "Drop cost" for cable in Ontario in "Rural" and "Urban" areas. Update the cost data provided for Ontario region and show the "Drop cost" of the cable explicitly as applicable.
  8. Refer to section 2.4 of Cogeco’s submission, dated 15 March 2024, on the “Economic Evaluation for the Tariff Revision of Third Party Internet  Access Service”, wherein the company provided a diagram of the network architecture used in the provision of its aggregated TPIA service. This network diagram shows that the CMTS is directly connected to the optical transport equipment, which is further connected directly to backbone routers of the company’s network. The diagram does not include any edge routers.
    • Further refer to part b) of Question 9 of the company’s “Response to Interrogatories Cogeco (CRTC)02Mar18”, wherein the company’s response was consistent with the network diagram submitted by the company in this proceeding.
      Based on the above information provided by the company, answer the following:
      1. Refer to the tab “MPLS + Tpt Cost” in Cogeco's cost study, where the company has shown the derivation of capital cash flows associated with various equipment including “Edge Routers”, “Core Routers” and “Transport (DWDM) – Equipment”. Explain and provide rationale as to why the company has included the capital and expense cash flows associated with the “Edge Routers” as well as associated “Chasis”, “Power” and “Building” investment cash flows in the cost model, contrary to the evidence provided by the company that “there are no routers between the CMTS and the network (Optical Transport)” equipment.
      2. Update the network diagram to provide the following additional details:
        1. Include and identify all connecting links that are required to transport the competitor Internet traffic from the CMTS to the Point of Interconnection.
        2. If Cogeco maintains that its CMTS connect to edge routers, include and identify the capacity (e.g., 10GigE, 100GigE, etc.) of the edge router ports facing the CMTS and the capacity (e.g. 10GigE, 100GigE, etc.) of the edge router ports facing the network.
        3. If the company confirms that it connects its CMTS to backbone routers, include and identify the capacity (e.g., 10GigE, 100GigE, etc.) of the backbone router ports facing the CMTS.
        4. 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 to transport the Internet traffic to the Point of Interconnection.
        5. Include and identify the average number of hops the Internet traffic will take to go from the first router in the core to the last router in the core.
        6. Clarify, with explanation, whether each connecting link identified in a) above is or is not usage-dependent.
  9.  Refer to tab “Table 6b A1” in Cogeco's cost study filed on 15 March 2024.
    1. Refer to the table on, column C, row 260 to column G, row 263, where the company estimated the “Total Cost Base” of core routers, based on different configurations of routers in Ontario and Quebec. Based on the above data, provide the following, showing the formulas used in each step.
      1. For each configuration identified above, identify the type of router used, the number of routers installed, and provide the “Supplier Identified Capacity (specify units)” and the installed cost of each type of router
      2. Using the Commission mandated working fill factor (WFF) for routers, calculate the average cost per unit capacity (Mbps, Gbps, etc.) of the core router for each configuration using the formula:
        Average cost per unit capacity = Installed cost ( Maximum capacity * WFF )
      3. Next, calculate the weighted average cost per unit capacity (Mbps, Gbps, etc.) of the core routers by weighting the unit cost obtained in question 22) a) ii) with the number of routers in each configuration
    2. If the company’s network includes edge routers, provide responses to the following.
      1. Explain how the company calculated the cost data for edge routers shown in column M, row 179 of tab “Table 6b A1” based on the data provided in column M, row 165 to column M, row 177
      2. Using the methodology outlined for core routers in question 22 a), calculate the average cost per unit capacity (Mbps, Gbps, etc.) of the edge router. Show all calculations and provide explanation and justification for any new variable included in the calculation.
  10. To assist the Commission in reviewing Cogeco’s proposed core network expenditure, provide information to develop the total IFC per Mbps for routers, similar to the level of detail provided by Rogers in its response to question 11 in “_Rogers Response to RFIs HSA Aggregated (CRTC)2Mar18 - Abridged” dated 18 May 2018, TN45:
    1. Using Commission mandated WFFs, provide the following information:
      1. If the company maintains that it includes edge routers in its network,
        1. the IFC per Mbps for edge routers facing the CMTS/CCAP;
        2. the IFC per Mbps for routers in the edge to core links;
        3. For each cost element in question 23) a) i) 1) and question 23) a) i) 2), provide the number of ports included, as well as the IFC per port at each end
      2. If the company confirms that it does not include edge routers in its network, provide the IFC per Mbps for core routers facing the CMTS/CCAP;
        1. For the above scenario, provide the number of ports included as well as the IFC per port at each end.
      3. Provide the 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;
        1. For the above scenario, provide the number of ports included as well as the IFC per port at each end.
      4. If the company maintains that it has edge routers in its network,
        1. Provide the IFC per Mbps for routers in the core to edge links;
        2. Provide the IFC per Mbps for routers from the edge to the competitor POI;
        3. For each cost element in question 23) a) i) 1) and question 23) a) i) 2),  provide the number of ports included as well as the IFC per port at each end
      5. If the company confirms that it does not have edge routers in its network, provide the IFC per Mbps from core routers to the competitor POI;
        1. For the above scenario, provide the number of ports included as well as the IFC per port at each end
      6. Provide the total IFC per Mbps for routers reflecting the average IFC per Mbps to transport the traffic from the head-ends to the competitor POI.
  11. Cogeco’s cost study contains several input parameters expressed simply as values. For each of the following input parameters used in the model, provide the sources of such information, and describe how the company estimated these values.
    1. “Average Amplifier Required per Node” Factor (tab “Ntwk Inputs”, column F, row 34)
    2. “Cap Mtce” Factor (tab “HFC-Tech”, column AY, row 8)
    3. “SW Mtce” Factor (tab “HFC-Tech”, column AZ, row 8)
    4. “Tech Mtce” Factor (tab “HFC-Tech”, column BA, row 8)
    5. “Inflation” value provided for Ontario and Quebec in tab “HFC-CableNtwk”, column AP and column AT, row 8) vs. “Inflation” value provided in tab “Parameters”, column E, row 5 and row 9). Provide rationale why these numbers should be different and their respective sources.
    6. The values provided in column G, row 39 and row 41, as well as values in column H to column O, row 51 in the tab “Bands”.
  12. Refer to row 36 of the tab, “Tariff-Access”, in Cogeco's cost study, where the company presented the taxes for each service band as negative taxes.
    1. Confirm that these taxes are indeed negative, and if yes, explain and provide rationale as to what this means when the company provides the wholesale FTTN service in a band. Additionally, explain whether this would imply that there is no positive tax payable cost associated with wholesale FTTN access services?
    2. Using the calculation for “Income Tax” for “Band 8” as an example, explain with supporting rationale, the company’s approach in estimating “Income Tax” using the formulas used by the company in column AF, row 36, column AF, row 47 and column AF, row 48 in the tab, “Tariff-Access”, including how these formulas are derived. This explanation should also include the details of how the formula in column O, row 27 in the tab “Resultdatabase” is derived, with explanation of the associated details of calculation shown in column H, row 65 of tab “Tariff-Access”.
    3. Refer to column H, row 24 of the tab “Tariff-Usage” in Cogeco's cost study where the company has calculated taxes associated with the core network portion of the model. Provide the detailed methodology used by Cogeco to calculate the company’s taxes. Show all formulas used, providing explanations for each step, starting from a simple definition of how the taxes are estimated.
  13. Refer to Cogeco’s cost study filed by the company on 15 March 2024 in response to NoC 2023-56.
    1. Re-run Cogeco’s cost study separately and independently for each of the following scenarios, based on the revisions the company may have made associated with the questions posed to Cogeco, further identified below. If the company, however, does not plan to revise its model based on any particular question, provide the company’s rationale when providing an answer to that particular question. Question 26 c) identifies how the answers to the following sensitivity analysis runs are to be submitted.
      1. Question 14
        • If Cogeco revises its cost of capital used in the model based on the response to question 14) b)
      2. Question 18
        • If Cogeco revises the company’s estimation of “software update expense cash flows” associated with “Amplifier (Outside Plant)” cost category used in the model based on the response to question 18) a).
      3. Question 19
        • If Cogeco revises the company’s estimation of incremental capital cash flows by year for the “HFC Platform” cost category used in the model based on the response to Question 19) a) .
      4. Question 20
        • If Cogeco revises the company’s estimation of “capital cash flows of the cable access plant” used in the model based on the response to question 20) a) as well as question 20 b).
      5. Question 21
        • If Cogeco revises the company’s estimation of cash flows in response to this question, based on the removal of cash flows included in the model related to “Edge Routers” as noted in question 21 a).
      6. Question 22
        • If Cogeco revises the company’s estimation of any of its unit costs / Mbps with any of its routers used in the company’s core network and the associated cash flows in response to the response to question 22.
      7. Question 24
        • If Cogeco revises the company’s estimation of any of the input parameters used in the model in response to the response to question 24.
      8. Question 25.
        • If Cogeco revises the company’s estimation of tax cashflow calculations used in the “Access” and “CBB” portions of the model based on the response to question 25.
    2. Refer to columns AY to FG of the tab, “HFC-CableNtwk”, columns BL to FY of the tab, “HFC-Tech”, and columns CJ to HH of the tab, “MPLS+Tpt Cost”, of Cogeco’s cost study filed in response to NoC 2023-56, where the company has shown calculations on the end of study valuations of the capital equipment causal to demand injected during the five-year study period, associated with the “HFC Access (Cable)”,  “HFC-Head End”, and “IP Routing”.
      • Since the formulas used in the company’s model for the calculations of “Time Value of Money annuity factors” in the above tabs do not conform to the Commission approved methodology, re-run the cost study using the appropriate Commission approved formulas, as shown in, “Time Value of Money Formulae, Appendix A” of the “Regulatory Economic Studies Manual”.
    3. Fill in the final results of the various sensitivity runs identified in question 26) a) and question 26) b) above, run separately and independently, in terms of “Tariff-Access”, “Present Worth of Revenues Per Sub” for each of the company’s eight speed bands, and for “CBB Tariff-Usage per 100 Mbps”, using the table format given in the attached Excel workbook, titled, “NoC_2023-56_Request_for_Information_-_HSA_(Cable_Carriers)_COGECO”.
    4. Re-submit Cogeco’s cost study filed on 15 March 2024 as a revised cost study (the revised cost study), reflecting all the changes incorporated by the company based on the answers provided by the company to RFI questions 26) a) i) to 26 a) viii) above.
  14. For each of the following questions, use the revised cost study as developed in response to question 26) d).
    1. Based on Cogeco’s responses to question 15), run the revised cost study with the change in assumptions specified below, and submit the resulting revised tabs, “Tariff-Access” and “Tariff-Usage” of the revised cost study, including the formulas in those tabs:
      1. HFC network uses only DOCSIS 3.1 technology
    2. Based on Cogeco’s responses to question 16), run the revised cost study with the change in assumptions specified below, and submit the resulting revised tabs, “Tariff-Access” and “Tariff-Usage” of the revised cost study, including the formulas in those tabs:
      1. Upstream 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; and,
      2. Upstream and downstream traffic growth rate in years 3 to 5 of the study period is equal to 32% per year.
    3. Run the revised cost study with the change in assumptions specified below, and submit the resulting revised tabs, “Tariff-Access” and “Tariff-Usage” of the revised cost study, including the formulas in those tabs:
      1. Apply the annual capital unit cost change assumption of minus 26.4% to all equipment (CCAP, Nodes and Amplifiers) included in in the tab “HFC-Tech”, and all equipment (Edge Routers, Core Routers, DWDM Equipment and Fibre Cable) included in in the tab “MPLS+Tpt Cost” of the company’s cost study.  For clarity, the minus 26.4% factor would replace the “IFC Net” value in “column L”, the ‘IFC Inflation’ values in “columns AB and AR” in the tab “HFC-Tech”, and the “IFC per Mbps Inflation” factors used in the estimation of equipment costs in column N, column AD, column AQ and column BG in the tab “MPLS+Tpt Cost”.
    4. Refer to row 7, column J, column Z and column AP of the tab “HFC-Tech” in Cogeco's cost study filed on 15 March 2024, where the company utilizes the Equipment Life Estimates provided in the Tab, “AssetClass” of the model
      1. Provide historical data from the company’s accounting records, or from the company’s official equipment provisioning documents providing support for the company’s assumption of the life estimates of Nodes and Amplifiers as used in the cost study.
      2. If the company is not able to provide the necessary evidence as requested in question 27) d) i) , explain and provide rationale as to how and why the company chose the specific life estimates of Nodes and Amplifiers as employed in the cost study. 
      3. Explain and provide rationale as to why the company did not use the life estimate for Node equipment as given in the cell Column D, Row 1” of the tab, “AssetClass” in estimating the cost of this equipment.
      4. Run the revised cost study with the change in assumptions specified below, and submit the resulting revised tab, “Tariff-Access” of the revised cost study, including the formulas in that tab: Replace the value provided for "Useful Life" of "Nodes (Outside Plant)" in column Z of the tab "HFC-Tech" with the useful life of the Optical Node Equipment provided in column D, row 13 of the tab "AssetClass”.
    5. Based on Cogeco’s responses to question 23), run the revised cost study with the change in assumptions specified below, and submit the resulting revised tab, “Tariff-Usage” of the revised cost study, including the formulas in that tab: Use the total IFC per Mbps for routers as developed in question 23) a) vi), to replace the corresponding IFC cost in question 26) d). In answering this question, if any additional assumptions or calculations are required, provide all such information as well, including the formulas used.
  15.  Refer to Cogeco’s cost study submitted on 15 March 2024:
    1. How much spectrum (in Mhz) is allocated or reserved, separately, for downstream and upstream traffic.   
    2. How much of the spectrum (in Mhz) that has been allocated to (or reserved for) delivery of downstream and upstream traffic is being used by downstream and upstream channels, respectively, to deliver the corresponding downstream and upstream channel capacity (in Mbps)?
    3. Explain, with supporting rationale, the reason for any difference between the spectrum allocated to downstream (in MHz), and the spectrum occupied by downstream channels (in MHz)
    4. Explain, with supporting rationale, the reason for any difference between the spectrum allocated to upstream (in MHz) and the spectrum occupied by upstream channels (in MHz).
    5. Explain, with supporting rationale, how much is the maximum usable portion of the spectrum (in MHz) allocated to downstream and upstream, respectively, for configuring downstream and upstream channels. Additionally, explain with supporting rationale, what is the corresponding total downstream channel capacity (in Mbps) and total upstream channel capacity (in Mbps). Provide a detailed explanation of all assumptions, rationale and methodologies along with the supporting Excel spreadsheets demonstrating the calculation.
    6. If the maximum usable portion of the spectrum allocated to downstream and upstream is not used for configuring downstream and upstream channels, run the revised cost study with the change in assumptions specified below, and submit the resulting revised tabs, “Tariff-Access” and “Tariff-Usage” of the revised cost study, including the formulas in those tabs::
      • The maximum usable portion of the spectrum (in MHz) allocated to Downstream and Upstream respectively, is used for configuring downstream and upstream channels to deliver the corresponding total downstream channel capacity (in Mbps) and total upstream channel capacity (in Mbps).
      • Accordingly, update the node count.
  16. Refer to Cogeco’s cost study filed by the company on 15 March 2024 in response to NoC 2023-56.
    1. Specify whether 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. 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. Run the revised cost study with the change in assumptions specified below, and submit the resulting revised tabs, “Tariff-Access” and “Tariff-Usage” of the revised cost study, including the formulas in those tabs:
        • Internet demand is the sole driver for determining quantities of usage-sensitive equipment.
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