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Ottawa, 3 December 1998
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Telecom Order CRTC 98-1216
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On 26 February 1998, Westport Telephone Company Limited (Westport) filed an application for approval of 1998 depreciation life characteristics.
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File No.: 8630-W3-01/98
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1.The Commission has reviewed the depreciation life characteristics submitted by Westport and has determined that its proposal is reasonable with the exceptions noted below.
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2.The Commission is of the view that, in its response to interrogatories dated 30 September 1998, Westport did not fully support the Average Service Lives (ASLs) proposed for accounts 6080F - Other Circuit, 6080Y - Copper Cable & Station Connection and 6080ZC - Fibre Cable. The Commission notes that the ASLs proposed for these accounts are shorter than those currently approved for most of the companies in the telecommunications industry for similar type assets.
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3.In light of the foregoing, the Commission is of the view that ASLs for the above mentioned accounts be adopted according to the following chart:
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Account ASLs
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6080F - Other Circuit 12 years
6080Y - Copper Cable &
Station Connection 18 years
6080ZC - Fibre Cable 18 years
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4.The Commission is of the view that the above depreciation life parameters would continue to provide the company with a fair opportunity to recover its embedded investment over a reasonable period of time, while at the same time, having minimal impact on the company's 1998 contribution requirement.
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5.For account 6080L - Central Office - Digital Switching Software, the Commission notes that the methodology used by Westport to calculate depreciation expense is inconsistent with the approach used by the other independent telephone companies which have had depreciation filings approved by the Commission. The Commission's accepted methodology has been to amortize, over a five year period, the net (undepreciated) investment on the books of the company, effective the date of the proposed change in methodology.
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6.The Commission is of the view that the methodology to be used for determining the depreciation expense of Digital Switching Equipment Software for Westport should be consistent with that used by the other Independents.
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7.In light of the foregoing, the Commission orders that:
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a) the accounts listed in the attached Table be depreciated using the depreciation life characteristics contained therein, including the changes in ASLs outlined above.
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b) the depreciation expense for account 6080L - Central Office - Digital Switching Software be calculated by amortizing the net account balance as at 31 December 1997, over a period of five years, effective 1 January 1998, and any future investment in this account over a 60-month period beginning on the date at which the investment is made.
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Secretary General
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This document is available in alternative format upon request.
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TABLE
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WESTPORT TELEPHONE COMPANY LIMITED
1998 DEPRECIATION LIFE CHARACTERISTICS
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Account Description Dispersion AYFR/ASL
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6080A Buildings Unit 25 yrs
6080AA Grounds Unit 15 yrs
6080AB Leasehold Improvements Unit 5 yrs
6080B Main Distribution Frame Unit 20 yrs
6080C Central Office - Power Unit 15 yrs
6080F Other Circuit Unit 12 yrs
6080G Central Office - Circuit Fibre Optics 2004
6080K Central Office - Digital Switching Equipment 2004
6080ZN Internet Unit 5 yrs
6080L Central Office - Digital Switching Software Amortization 5 yrs
6080Q Equal Access Software Amortization 10 yrs
6080S Telephone Sets Unit 5 yrs
6080Y Copper Cable & Station Connection Unit 18 yrs
6080ZC Fibre Cable Unit 18 yrs
6080ZK Vehicles Unit 10 yrs
6080ZK Tools & Test Sets Unit 5 yrs
6080ZI Furniture Unit 20 yrs
6080ZI Office Equipment Unit 5 yrs
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AYFR: Average Year of Final Retirement
ASL: Average Service Life
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