Telecom Decision CRTC 2004-69

See also: 2004-69-1, 2004-69-2

Ottawa, 2 November 2004

Point of interconnection and service charge rates, terms and conditions for third party Internet access using cable networks

Reference: Rogers Tariff Notices 11 and 11A, Cogeco Tariff Notices 7 and 8, Shaw Tariff Notices 4, 4A and 4B, and Vidéotron Tariff Notice 8

In this Decision, the Commission approves tariffs and agreements setting out the rates, terms and conditions for third party Internet access (TPIA) to allow Internet service providers to connect with and serve customers over the cable networks of the major cable companies, namely, Cogeco Cable Canada inc., Rogers Communications Inc., Shaw Communications Inc., and Vidéotron ltée. The rates are approved on an interim basis pending further consideration of the level of mark-up over costs appropriate for TPIA services and facilities provided by the cable companies.

1. In Terms and rates approved for large cable carriers' higher speed access service, Order CRTC 2000-789, 21 August 2000 (Order 2000-789), the Commission established the principles governing access by Internet service providers (ISPs) when offering service over cable networks. The Commission also approved the transport rates for use of major cable networks by ISPs. However, the Commission did not establish interconnection rates, service charge rates and some other terms and conditions needed for third party Internet access (TPIA). Order 2000-789 applied to the networks of the four major cable television companies: Cogeco Cable Canada inc. (Cogeco), Rogers Communications Inc. (Rogers), Shaw Communications Inc. (Shaw) and Vidéotron ltée (Vidéotron), [collectively, the cable companies].

2. In Order 2000-789, the Commission stated that it would conduct a follow-up proceeding to establish point of interconnection (POI) rates for the interconnection of ISPs at cable network POI locations and service charge rates for the connection of ISPs and ISP customers to cable networks.

3. Pursuant to Order 2000-789, a CRTC Interconnection Steering Committee (CISC) working group, the Cable High Speed Access Working Group (HSWG), developed, and provided to the Commission, technical descriptions of ISP interconnection options at cable network POI locations. The cable companies subsequently filed Tariff Notice (TN) applications for approval of interconnection and service charge rates and terms. Cogeco TN 7, Shaw TN 4 and Vidéotron TN 8 were filed on 13 July 2001, Rogers TN 11 was filed on 19 July 2001. In relation to these tariff filings, Rogers TN 11A and Shaw TN 4A were filed on 12 October 2001. Cogeco TN 8 was filed on 8 March 2002, proposing a change to Cogeco's TPIA rate for connecting additional computers to a cable modem.

4. An interrogatory process was conducted and comments were filed on 14 March 2002 by the Independent Members of the Canadian Association of Internet Providers (IMCAIP), the Coalition for Better Third Party Access (CBTPA), The Colbert Group and the Canadian Cable Television Association, now known as the Canadian Cable Telecommunications Association (CCTA), representing Cogeco, Rogers and Shaw. Reply comments were filed by the CCTA on behalf of Cogeco, Rogers and Shaw on 28 March 2002. On 11 July 2002, the Commission required Cogeco and Vidéotron to provide and disclose on the public record complete responses to interrogatories indicating demand forecasts used by the cable companies to derive POI rates. Supplementary comments were provided by IMCAIP and CBTPA, and replies to these comments were filed by Cogeco and Vidéotron, on 8 and 20 August 2002 respectively.

Appropriate mark-up level

5. In IMCAIP against certain incumbent cable and telephone carriers - Provision of higher-speed access and retail Internet services including Lite service, Telecom Decision CRTC 2004-28, 5 May 2004 (Decision 2004-28), the Commission made certain determinations regarding access to TPIA and requested the cable companies to provide their views, along with justification, as to the appropriate mark-up level to be used in establishing the end-user access rates for TPIA.

6. The Commission considers that the proceeding initiated by Decision 2004-28 to consider the appropriate level of mark-up regarding TPIA access is also the appropriate forum to consider the level of mark-up appropriate for TPIA interconnection and service charge rates that are the subject of this Decision. Accordingly, the Commission directs Cogeco, Rogers, Shaw and Vidéotron to file in the proceeding initiated by Decision 2004-28, within 30 days of the date of this decision, supplementary justification to support the level of mark-up over costs appropriate for TPIA interconnection and service charge rates.

7. In this Decision the Commission considers TPIA interconnection and service charge rates on an interim basis pending the determination in the proceeding initiated by Decision 2004-28 to examine the appropriate mark-up for TPIA services and facilities provided by cable companies.

The applications

8. The TN applications addressed a number of rates, terms and conditions relating to the services and facilities required by ISPs to provide Internet access service using the networks of the cable companies.

POI interconnection services and facilities

9. The interconnection services and facilities included in the TN applications are those required by an ISP to connect from a location adjacent to the cable building to the POI router in the building used to exchange Internet traffic with the ISP. Typically, the POI is at a cable network headend building.

Definition of POI entrance

10. With respect to POI entrance, the Commission notes that there was a lack of consistency among the cable companies as to which components would be provided. The Commission determines, based on the costing studies filed and on the HSWG consensus technical descriptions of POI entrance, that POI entrance be defined as: the right-of-way access, splicing enclosure, construction, conduit, fibre cable, installation, splicing, entrance panels and patch cords necessary to connect an ISP's transmission facilities from a point adjacent to the cable headend building to connect to the POI router in the building.

POI Entrance Rates

11. The cable companies proposed a range of POI entrance rating approaches. Rogers did not propose tariffed rates, arguing that POI entrance costs are site-specific. Shaw and Vidéotron proposed rates for POI entrance, but Shaw indicated that the site specific aspects of installation should be recovered based on the costs at each location. Cogeco proposed a monthly tariffed rate for POI entrance.

12. The cable companies were asked to estimate the number of ISPs that would connect at each POI. Cogeco assumed that not more than three ISPs would connect at any of its 41 proposed POI locations. Vidéotron assumed that after an initial introduction period there would be six ISPs connected to its network. Vidéotron assumed that all ISPs would connect at one central POI in Montréal. Shaw and Rogers filed their estimates of demand for POI interconnection in confidence. Rogers submitted that each ISP would require separate entrance facilities except for a shared entrance panel.

13. The CCTA supported the cable companies' demand estimates, noting that they were based on the average POI location which reflected large urban centres, where TPIA demand may be higher, and smaller cable systems where demand is likely to be lower. The CCTA also stated that there had been a consolidation of ISPs recently, thus reducing the number of ISPs that would be potential customers of TPIA.

14. IMCAIP argued that the level of demand by ISPs for interconnection, in terms of the number of ISPs requiring connection at a POI, had been underestimated by the cable companies. IMCAIP asked that the Commission adjust the proposed rates to reflect a higher ISP demand level.

15. The CBTPA argued that capacity existed on cable company entrance facilities, in most cases, to permit ISPs to connect at POIs by splicing fibre-optic cables to existing cable company entrance facilities at a fibre splicing enclosure near the POI. The CBTPA argued that the proposed rates for POI entrance were excessive because, in its view, new construction would not be required in most cases.

16. The CBTPA submitted that ISPs might require a secondary, redundant entrance to the POI to enhance the reliability of the POI connection. The CBTPA further submitted that secondary entrance should be available at approved rates as opposed to negotiating such access with individual cable companies.

17. The CCTA responded to the request for redundant POI entrance by submitting that each ISP's requirements for redundancy would vary. The CCTA further submitted that some ISPs would want an entirely separate building entrance, while others would require back-up equipment to be available. The CCTA stated that the proposed POI reports that would be prepared in response to a request from an ISP to connect at a POI would provide costing estimates for ISPs that requested a redundant entrance configuration.

Commission analysis and determination

18. The Commission considers that a tariffed rate should apply for each cable company for POI entrance facilities such that ISPs are not required to negotiate entrance terms for each POI on a case-by-case basis. The Commission notes that negotiated entrance arrangements based on costs incurred, as proposed by several cable companies, has proved to be a source of uncertainty and delay in other competitive access situations such as co-location in telephone company central offices. The Commission considers that POI entrance for TPIA is less complex than co-location since the ISPs are connecting using a limited number of approved transmission methods to provide only Internet access service on the cable network. Accordingly, the Commission concludes that a single schedule of tariffed POI entrance rates should apply for all POI locations of a cable company.

19. The Commission notes that some cable companies assumed that POI entrance facilities could be shared among ISPs while Rogers concluded that each ISP would require separate entrance facilities. The Commission considers that a shared entrance approach for ISPs would provide cost reductions for ISPs, minimize construction activity and facilitate the availability of redundant access at POIs to enhance ISP reliability.

20. Parties provided a range of views as to the number of ISPs that would connect at a POI, ranging up to six. The Commission notes that the number of ISPs connecting at a POI will likely vary with the size of the customer base accessible from a particular POI and with the number of ISPs operating in the market area. The Commission considers that a demand level of three ISPs per POI represents a reasonable average for the purpose of determining POI entrance rates to apply across the territories of the major cable companies.

21. In establishing the POI entrance rates the Commission has taken into account the Phase II costing studies filed by the cable companies in confidence with abridged copies for the public record, the POI configurations provided by the HSWG, and the comments of parties.

22. The Commission notes that the fibre outside splicing closure (FOSC), such as in a manhole, and the multi-fibre cable and entrance conduit connecting from the FOSC to the fibre entry splicing closure (FESC) in the cable company building can be shared among ISPs. Access to a conduit from the manhole to the POI building may require new construction.

23. The Commission notes that the cable companies had varying positions as to the need for new construction to provide POI entrance facilities. IMCAIP and CBTPA submitted that construction should not be required to provide for POI access.

24. The Commission considers that an ISP interconnection request would only cause costs for new conduit and fibre construction in a small number of instances. In the circumstances the Commission considers that a 20% probability factor with respect to new conduit construction and fibre placement in connection with a new POI entrance would be appropriate and has applied such a factor in determining the adjusted cost for this service.

25. The Commission further determines that the rates, terms and conditions set out in the POI entrance tariffs are to also apply when a second, redundant access to the POI is requested by an ISP for reliability purposes. The Commission considers that the facilities required for a second entrance to the POI would be comparable to the primary entrance. Where an ISP requests a physically separate POI entrance, the Commission determines that it is to be treated as a new separate POI entrance for the purpose of the POI entrance charge and the report fees to provide the new entrance.

26. The Commission approves on an interim basis a POI entrance rate of $6,527.00, which is based on Phase II costs, plus the mark-up proposed by the cable companies, for access by an ISP to a POI location. This rate applies to a POI entrance which includes right-of-way access from a point adjacent to the POI building, outside enclosures, conduit, fibre, splicing, entrance panels and patch cords to connect to the POI router.

27. Where some elements of the POI entrance service component are available from a competitive carrier, such as existing fibre and entrance facilities, the Commission finds that those elements may be leased by the ISP from the competitive carrier and would not be required to be obtained from the cable company. In these circumstances the ISP or competitive carrier must provide any terminal equipment necessary to terminate an access circuit in the cable company building.

28. The Commission approves on an interim basis a POI configuration rate of $2,800.00, which is based on Phase II costs, plus the mark-up level proposed by the cable companies, to apply where an ISP contracts with a competitive carrier having existing facilities to the POI, and does not require the POI entrance to be provided by the cable company. This rate covers the functions required to connect or reconfigure a connection in the POI building at the FESC and connecting to the POI router. For example, where a DS-3 or OC-3 facility is provided by a competitive carrier that uses an existing entrance to the cable building, this POI configuration rate applies with respect to the service required to complete the connection to the POI router.

29. Where an ISP requests changes to its POI configuration that require only a reconfiguration of existing connection facilities, such as a reconfiguration of POI line cards, the Commission determines that the cost is to be recovered by the cable company based on the hourly diagnostic labour rates approved in the Appendix, plus the cost of any materials.

30. Unlike the other cable companies, Shaw included an electric power usage rate in its proposed tariffs. The Commission considers that the approach to POI interconnection approved in this Decision will result in very little additional equipment being located in the cable company POI building, which significantly mitigates the need for an additional charge for electric power. The Commission finds that a separate power usage rate is not appropriate for the POI access arrangements approved in this Decision. Accordingly, the Commission denies the electric power usage rate as proposed in Shaw's TPIA tariff application.

POI Line Cards, or other interconnection interface, at each POI

31. Cogeco, Shaw and Rogers submitted that cable companies should not be responsible to supply POI router line cards to ISPs. Vidéotron proposed one-time charges for the provision and installation of line cards depending on the technology selected.

32. IMCAIP argued that, since line cards may have multiple ports depending on the model selected, the cable companies should manage the line cards and be required to share among ISPs the capacity available on line card ports, under reasonable terms and conditions, on a first-come, first-served basis.

33. The CCTA submitted that arrangements whereby line cards would be managed by the cable companies and shared among ISPs would be administratively complex.

Commission analysis and determination

34. The Commission notes that in Order 2000-789 it approved rates for the transport of ISP traffic over the cable network. The transport rate, also referred to as the end-user access rate, included recovery of the cost of the cable company POI router. The POI router separates the cable company's Internet traffic from the ISP traffic. The line card that connects an ISP's transmission facility to the POI router uses the transmission technology selected by the ISP from the options that the Commission approved in Order 2000-789, such as Ethernet or asynchronous transfer mode (ATM). The line card must also be compatible with the POI router provided by the cable company.

35. The Commission notes a concern of the ISPs, raised in the HSWG, that ISPs might be required to purchase a line card, compatible with the cable company router, only to have the cable company subsequently change the router, or for the ISP to require a higher capacity line card. In either case the ISP would have to replace the line card, possibly stranding its investment in the original card.

36. Through interrogatories, the Commission examined the possibility of having the cable company provide line cards on a monthly tariffed basis. In this case, the cable company would be responsible for the purchase and upgrading of line cards if the cable company decided to change its router.

37. The Commission notes that the cable companies provided estimates of line card rates, but maintained their position that ISPs should be responsible for the provision of line cards.

38. The Commission considers that a cable company, more so than an ISP, is able to reuse the line card in other locations or for other ISPs. The Commission further considers that if the line cards were under the control of the cable company, the replacement or reconfiguration of a POI router could be managed more efficiently. The cable company would also be in a position to provide spare line cards more efficiently than individual ISPs in the event of a card failure.

39. The Commission is of the view that it would be more efficient, and reduce barriers to competitor entry, for cable companies to manage the procurement, installation, maintenance and ongoing replacement of POI router line cards than for each ISP to manage its own line cards in the cable company POI router. The Commission also considers that the cable company would also be in more direct control of the POI router environment, which is an integral part of its data network, if it were responsible for the router line cards.

40. The Commission considers, however, that it would be an administrative burden on the cable companies to have to maintain, and update as necessary, tariff pages for line cards for multiple transmission protocols and line card capacities for various vendors, all of which may change with the evolution of technology.

41. The Commission considers that a reasonable approach would be to require the cable companies to provide two common types of line cards at tariffed rates, based on a three year contract period. An ISP that obtains a line card that the cable company provides pursuant to a tariff would be assured that the cable company would support the router interface selected by the ISP for the contract period.

42. If however, ISPs do choose to provide their own line cards compatible with the cable company router, the Commission considers that they should pay for installation and maintenance based on the cable companies' diagnostic labour rates.

43. The Commission considers that the cable company should be responsible to obtain, install and maintain the line card it provides pursuant to a tariff using the same operating standards that it applies to its own network equipment, including the provision of spare components.

44. The Commission considers that Fast Ethernet 100Base-FX and dedicated DS-3 are the two interconnection methods most likely to be requested by ISPs. The Commission directs the cable companies to file, for approval, within 30 days of the date of this Decision, tariffs, with supporting cost studies, for line cards for dedicated DS-3 interconnection and Fast Ethernet 100Base-FX interconnection. If the POI router requires an interface processor that is not included in the costs identified for the POI router itself, the proposed line card rates may include recovery of the interface processor cost. The tariffs are to be based on a 36-month contract commitment from the ISP.

45. The Commission notes that Rogers included the full cost of a spare line card, over and above the cost of the line card in use in the POI router, in its cost study. The Commission considers that a spare line card could be shared among ISPs at a POI.

46. A provision of 50% of the cost of the line card and processor, if applicable, is to be included in the costs to be recovered in the line card rates to provide for spares in the event of failure. The Phase II cost study to be filed in support of the line card tariffs should also specify any installation and maintenance amounts included and should incorporate a mark-up on costs that the cable company considers to be reasonable, with full justification.

47. Where the cable company initiates a change to the POI access equipment, including the POI router, that affects TPIA service, the Commission considers that such a change is a network change for which, consistent with Telecom Letter Decision CRTC 94-11, 4 November 1994, a 6-month notification period to all affected ISPs is required.

Gigabit Ethernet

48. In Order 2000-789 the Commission determined that cable companies must accommodate ISP interconnections at the POI via approved transmission protocols:

1. one or more dedicated DS-3s;
2. Fast Ethernet 100Base-FX;
3. OCS Packet over Sonet;
4. ATM, or other mutually-agreed on high-speed telecommunications facility.

49. In discussions at the HSWG, the CBTPA indicated that gigabit Ethernet (gigE) offered the possibility of cost reductions and increased capacity for ISPs. In this proceeding, CBTPA advocated that gigE should be added to the mandated connection methods listed above. Other ISPs did not support a similar need for gigE as a mandated connection technology.

50. In this proceeding, the cable companies expressed concern that ISPs connected with gigE capacity could flood the Internet traffic networks of the cable companies with high volumes of traffic and could cause service degradation for all users, including the cable company Internet customers. Such high volumes of traffic could, in their view, be generated by an attack from malicious Internet users. The cable companies stated that traffic flow control methods for gigE exist, but that they generally rely on the POI router to have processing power to handle all incoming packets in order to discard unwanted packets. The cable companies submitted that such flow control methods to manage gigE traffic flow would add costs to the cable network.

51. While gigE has the potential to provide ISPs with lower-cost, higher-capacity interconnection with cable networks, the Commission considers that the record of this proceeding does not demonstrate that ISPs require the capacity of gigE for interconnection at this time. The Commission also notes the cable companies' arguments that they would have to incur additional costs to provide adequate traffic flow control for gigE connections. In light of these considerations the Commission determines that gigE interconnection for TPIA is not required at this time. However, the Commission would be prepared to address the need to require the cable companies to support gigE interconnection for TPIA when a request is made demonstrating a need for ISPs to use higher capacity gigE technology for TPIA interconnection.

POI Locations

52. Vidéotron proposed one POI in Montréal to serve all of its cable systems in Quebec. Cogeco, Shaw and Rogers indicated that one POI per metropolitan area, at the primary cable system headend, would permit ISPs to serve customers in those areas. Rogers indicated that exceptions in its territory were Toronto, where five POIs would be required, and Ottawa, where three POIs would be required to cover the entire metropolitan area. Cogeco indicated that many of its cable systems were not connected to gather Internet traffic and ISPs would need to connect at each cable system in most cases.

53. IMCAIP endorsed the principle of POI consolidation and the ability to maximize the aggregation of Internet traffic at the least number of POI locations. IMCAIP argued that POI locations should be flexible such that ISPs could serve customers in a least-cost manner, taking advantage of the network configurations of the cable companies.

54. The Colbert Group, an ISP, also argued that cable companies should be required to provide aggregation of Internet traffic for their entire territory to a single POI. However, it acknowledged that mandating connection at local POIs in smaller communities, rather than at a central point, would favour competitive entry by local ISPs.

55. The CBTPA argued that the establishment of competition in high-speed Internet access at the local level required that local ISPs be able to interconnect locally. Where an ISP was required to transport its traffic to a central POI designated by the cable company, the CBTPA proposed that the cable company should provide local points of connection and transport the local traffic to the central POI at no charge using the cable company's network.

56. The CBTPA also argued that with the introduction of new technology with router capability at Cable Modem Termination System (CMTS) locations, often situated in local communities, the cable companies should be able to offer local ISP interconnection without major network changes.

57. The CCTA replied that technologies that support TPIA traffic routing at the local CMTS were not yet implemented in the cable networks. The CCTA noted that implementation of new technologies was a decision for the cable companies that involved capital investment and changes to network design.

58. The CCTA also argued that aggregating traffic to a greater degree than proposed by the cable companies could result in additional costs to the cable companies. The CCTA noted that an additional level of aggregation could be accomplished by ISPs using competitively available alternate transmission capacity.

59. The CBTPA, on 2 August 2002, in its comments on the supplementary information provided by Cogeco and Vidéotron on 23 July 2002, made a request for Vidéotron to provide a POI at Cap-de-la-Madeleine to serve a local ISP operating there. Vidéotron replied that this request was outside the scope established by the Commission for the supplementary information on demand forecasts added to the record in July 2002. Nevertheless, Vidéotron reiterated its position, and endorsed the CCTA position, that changing the POI locations from those proposed by the cable companies would add costs to the TPIA service.

Commission analysis and determination

60. The Commission notes that the TPIA transport rates approved by the Commission in Order  2000-789 were based on cost studies for the then existing cable network transport and aggregation of Internet traffic. The cable companies have proposed to establish POI locations that take advantage of their existing Internet traffic gathering network. The Commission notes that the coverage areas of these POI locations varies widely from company to company. Cogeco proposed that ISPs would have to connect at each of its widely dispersed cable systems, while Vidéotron proposed that its network could provide one central POI for all of its cable systems. Rogers indicated that as it integrates its systems in the Toronto area, it would provide fewer, more aggregated POI locations in Toronto.

61. The Commission notes that the cable companies generally proposed POIs at the point in their cable networks where Internet traffic was aggregated and at least some of the Internet traffic, other than TPIA traffic, was routed to networks separate from the cable company. The Commission further notes that access at these aggregation points was advocated by IMCAIP. The Commission considers that access at aggregated traffic points is required to foster competition. The Commission further considers that the POI locations proposed by the cable companies allow ISPs to benefit from the aggregation networks of the cable companies to the point where Internet traffic is routed to other networks. As further aggregation of Internet traffic is implemented in the cable networks, the Commission considers that ISPs should be able to connect at aggregation points to access a maximum number of cable customers from the fewest POIs.

62. The Commission considers that alternate POI locations in local communities that provide lesser traffic aggregation would provide ISPs with greater flexibility with respect to interconnection. However, the Commission considers that the provision of such alternate POI locations would generally require the cable companies to incur additional costs at local points to handle Internet traffic for ISPs locally. The Commission is not persuaded that there is sufficient justification or demand to require such additional costs at this time.

63. The Commission notes that the new technologies planned to be implemented at CMTS locations in local segments of cable networks could provide the capability for cable companies to support local Internet traffic routing for TPIA without major new investments. However, the Commission considers that the record of this proceeding is not sufficient to assess the facilities, operating procedures and costs to provide local POIs. Based on the current design for TPIA, the Commission considers that additional POI routers would need to be installed to route Internet traffic to ISPs locally until such time as new CMTS technology is in place.

64. The Commission approves the POI locations proposed by the cable companies. The Commission will consider requests from ISPs for additional POI locations on a case-by-case basis. The Commission further determines that at least 6-months notice must be provided to affected ISPs when a cable company proposes to remove a POI location.

TPIA Service Standards

65. In their TPIA service agreements, the cable companies included intervals for the provision of initial and secondary reports to ISPs requesting POI access. Following an ISP service order and request to connect at a POI, the initial report would provide a cost estimate for an engineering study with respect to the requested POI connection. After acceptance by the ISP of the initial report, the second report would provide a detailed cost estimate and plan to complete the connection. The total time period for these reports could be 50 business days if the ISP used the full 10 days provided for acceptance of each report. The cable companies stated that actual connection could take up to three months after acceptance of the second report, depending on the work to be done, and could be extended if equipment deliveries are delayed.

66. The ISPs submitted that delays in completing TPIA interconnection frustrated attempts to provide competitive alternatives for Internet access.

67. Through interrogatories, Commission sought comment on:

• a requirement for only one cable company costing and design report per ISP access request;
• an interval of 20 business days for provision by the cable company of a report in response to the initial connection request from an ISP, and 15 business days for subsequent requests;
• the completion of the connection at the POI within three months of acceptance of the design for an initial connection and within one month for subsequent changes, subject to equipment delivery delays; and
• the procedure that should apply for ISPs to request a second entrance path at a POI to provide redundancy.

68. Rogers, in response to the proposed time intervals and procedure, agreed that a single design and cost report could be appropriate, if consideration were given to the situation where a subsequent request required major work and would take more than one month to complete. Shaw also agreed with the proposed approach, but suggested that a two-month interval was more appropriate to complete subsequent access requests that might require significant work. Vidéotron agreed that the proposed approach was feasible. Cogeco generally agreed with the procedure subject to situations such as multiple and simultaneous applications.

Commission analysis and determination

69. The Commission considers that the process requiring two report stages, which was based on the approval stages for co-location in telephone company central offices, is too cumbersome for TPIA. TPIA is more limited than co-location in terms of locations for connection and in terms of intrusion into the cable headend building. The connection must be based on one of the approved transmission technologies. In light of these considerations, the Commission is of the view that the cable companies can deal with TPIA interconnection requests using a more simplified and timely procedure than that used for co-location.

70. The Commission considers that the simplified approach presented by the Commission for comment would generally assist competition by providing more timely interconnection for ISPs. The Commission notes that the cable companies generally accepted the simplified single report procedure for ISPs to obtain connection at a cable company POI.

71. The Commission directs cable companies to revise their TPIA service agreements to provide only one design and costing report per ISP connection request. The report is to be provided within 20 business days for an initial ISP request and within 15 business days for a subsequent request at a POI. Completion of the connection is to be within three months of acceptance of the report for an initial ISP request and within one month for a subsequent request.

72. The Commission determines that when a cable company anticipates that it cannot, in exceptional cases, complete an ISP connection within the time intervals required, it must state its reasons for the extended interval in the cable company report provided to the ISP in response to an ISP request to connect. Disputes regarding delays may be brought to the Commission.

73. Consistent with the approach adopted in Order 2000-789, the Commission requires that cable companies provide the same service intervals for services provided to ISPs for connection of their end-customers as they provide to their own customers for similar services.

Service Charges

74. The cable companies submitted costing studies in support of their proposed service charge rates. Through Commission interrogatories, the companies were asked to provide the cost studies in standard format and based on common parameters.

75. The Commission has reviewed the cost studies provided by the cable companies and has adjusted the labour rates proposed by the cable companies to reflect the type of labour (administrative, technical, engineering) and to ensure that the rates applied to the same range of services for each company. The Commission then applied the labour rates for each cable company to the labour resource requirement for the service and added costs for materials to derive an adjusted cost for the service for each cable company. For activities occurring with different levels of frequency, such as appointment re-scheduling or the need for the installation of a cable filter, the cable companies included a loading factor to reflect the frequency of these activities. The Commission selected loading factors that it considered to be reasonable and applied the same loading factors for all companies. The mark-up on costs, as proposed by the cable companies, was then added to derive the interim service charge.

76. The particular service charges proposed in the cable companies' TNs were

1. ISP connection service charges at the POI,
2. connection and repair service charges for each end-customer connection and
3. charges for installation or replacement of end-customer drop wires.

ISP Connection Service Charges at the POI

77. ISP connection service charges consist of three rate elements namely,

1. the ISP Registration Charge when the ISP initially makes a service request to connect to a cable company,
2. the Initial Report Fee for each ISP requesting connection at a POI and
3. the Subsequent Report Fee when changes are requested by an ISP to a POI connection.

The cable companies each proposed different service charges for these rate elements.

78. The ISP Registration Charge covers administrative costs when an ISP initially requests connection to a cable company's network. Only Vidéotron did not include in its proposed rate a commercial credit check. The Commission considers that such a check should be reflected in the ISP Registration Charge. Accordingly, the approved rates are based on, among other things, provision for a credit check.

79. For the Initial Report Fee, the companies indicated that the charge relates to a variety of on-site work including technical and costing assessment undertaken by the cable company in connection with an ISP request to connect to the cable network at a POI, and to provide a report to the ISP.

80. The Subsequent Report Fee applies only when an ISP requires revised or additional interconnection facilities at a POI that do not require additional fibre placement or splicing.

81. Based on the adjustments made to the cable companies' cost studies, the Commission approves on an interim basis the ISP connection service charges as set out in the Appendix of this Decision.

82. For technical work related to the ISP connection at the POI that is not covered by the approved service charges for POI access the Commission considers that the tariffed labour rate should apply. For example, if the ISP were to request a change to its POI router line card requiring work by a cable company technician, the cable company approved labour rate would apply.

Connection and Repair Service Charges for Each End-customer Connection

83. End-customer connection charges include three rate elements, namely,

1. Standard Customer Connection,
2. Customer Transfer to Another ISP and
3. Customer Specification Change.

84. The Standard Customer Connection provides for service order processing as well as service provisioning activities, outlet installation and network signal testing at the end-customer premises, and existing drop wire reconnection if necessary.

85. The Customer Transfer to Another ISP service charge recovers the administration and reconfiguration costs incurred when an existing high-speed Internet end-customer transfers from one ISP (including a cable company) to another ISP. In this case the cable wiring and drop are already tested for Internet service; hence, there are only administrative and customer configuration activity costs. Unlike the other cable companies, Cogeco proposed to include this charge in the Standard Connection rate. The Commission has adjusted Cogeco's proposed rates to include the same service elements as the other companies.

86. The Commission determines that it would be appropriate to apply the Customer Transfer to Another ISP service charge for the connection of a new TPIA customer in cases where the cable company is not required to dispatch a technician to the end-customer premise for the connection of the new customer. In circumstances where a cable company provides high-speed Internet service connections for its new customers without a technician visiting the end-customer premise, the Commission considers that ISPs connecting customers in similar circumstances should also be able to do so without a cable company technician visit. Where no cable company technician is required to visit the end-customer to activate the ISP service, the Commission determines that the ISP is to pay only the Customer Transfer to Another ISP charge to connect the end-customer. The Commission notes that the criteria for such connection may depend on local conditions of the cable network and considers that cable companies and ISPs should develop criteria for connections without a cable company technician being present. The Commission determines that when such criteria are developed, tariff revisions are to be filed for approval reflecting such criteria. If consensus cannot be reached in a reasonable time, the matter can be brought before the Commission for resolution.

87. The End-User Specification Change service charge applies when an existing ISP end-customer requires a change to its network specifications.

88. Based on the adjustments made to the cable companies' cost studies, the Commission approves on an interim basis the end-customer connection and repair service charges as set out in the Appendix of this Decision.

Charges for Installation or Replacement of End-customer Drop Wires

89. The cable companies proposed rates for the installation and/or replacement where necessary of end-customer drop wires, for example from the pole to the house. Vidéotron also proposed rates for the disconnection and re-provisioning of drops.

90. The cable companies argued that the signal quality required for high-speed Internet access was higher than for television services, and that a replacement of the drop wire might be necessary for Internet service. The companies also argued that any benefit to other cable services due to a drop replacement would be minimal.

91. IMCAIP submitted that the cable companies did not apply a charge to their own Internet customers when a drop replacement was required and that, similarly, no charge should apply to ISPs where a drop replacement was required to connect an ISP end-customer. IMCAIP also stated that the cable companies were increasingly providing digital services which would require signal quality similar to Internet access service. IMCAIP requested that, at a minimum, a portion of any drop replacement costs should be attributed to the cable television services using the upgraded drop.

92. The CBTPA argued that the cost estimates of the cable companies for drop replacement were excessive. The CBTPA proposed that, since cable company services also use the drop, 75% of the drop cost should be allocated to cable services. In the alternative, the CBTPA suggested that ISPs should be able to have their own contractor replace drops where necessary.

93. The CCTA submitted that, while the drop portion of the cable network was under the control of and the responsibility of the cable company, the need for a drop replacement at the time of connection of an ISP end-customer would be totally causal to that ISP service. Therefore, the CCTA submitted that the drop replacement in those circumstances should be totally paid by the ISP.

94. The Commission considers that a drop wire replacement is a normal cable network maintenance activity and is not a new function caused by the start-up of TPIA service. Existing and new drop wires will continue to be owned by the cable company. The Commission considers that in cases where a drop wire must be replaced, it will have an extended life and will provide improved signal quality for all services, including digital television and Internet access. The Commission considers that where a drop wire is replaced at the time that an end-customer starts high-speed Internet service, the incremental cost is the cost of advancing the drop wire replacement from the date that it would otherwise be replaced at the end of its useful life. The Commission considers that the cost of advancing the replacement of a drop wire because it does not meet Internet service standards is likely to be minimal. The Commission further notes that if required to pay for the replacement of a subscriber drop, an ISP would not necessarily be assured of the benefits of its use over its life as the end-customer may change ISPs. The Commission also notes that the cable company will own the replaced drop, will benefit from improved service quality for its own services using the drop, and will continue to control and benefit from the replaced facilities over their life. The Commission finds that it would not be appropriate to require the ISP to pay for drop replacement. Accordingly, the Commission denies the drop replacement rates proposed for TPIA.

Diagnostic labour rates

95. The cable companies proposed diagnostic labour rates to apply when service problems are reported by ISPs. The Commission determines that the diagnostic service labour rate is to apply only when the problem is determined to originate from the ISP equipment, its end-customer equipment or other ISP related activity. The Commission considers that the cable company should not bill a diagnostic service charge to the ISP where the problem is found to originate within the cable network, or from end-customer equipment not used for high-speed Internet access.

96. The Commission approves on an interim basis the diagnostic labour rates set out in the Appendix of this Decision. This rate also applies for technical work done relating to ISP connection at a POI.

Connection of a Second Computer by an End-customer

97. The Commission notes that cable modems can be configured to serve multiple computers. Several cable companies now charge an additional fee, in their retail Internet access prices, to enable multiple computers to be connected.

98. Cogeco and Rogers also have a rate of $9.95 per additional computer in their TPIA tariffs that would apply to ISPs where the ISP end-users connect additional computers. The companies indicated that this rate is the same as the retail price charged to their own customers to connect additional computers.

99. Cogeco stated that it had revised its retail offering to its end-customers to allow up to three computers to be connected at no additional charge. This offer was available to Ontario customers only. Quebec customers would continue to pay the $9.95 price for each additional computer. In TN 8 Cogeco proposed to eliminate the TPIA tariff rate that it would charge to ISPs where the ISP end-customer connected up to three additional computers in Ontario, but proposed to retain the charge in Quebec, to match the retail prices it charged to its own end-customers. In its current TPIA tariff Vidéotron has an additional computer rate of $19.95 and in TN 8 proposed a rate of $14.96.

100. The Commission notes that it did not examine issues with regard to multiple computers for TPIA in the proceeding leading to Order 2000-789. In the current proceeding, despite having been invited to do so, Cogeco and Vidéotron did not provide supporting studies to justify the multiple computer rate changes proposed.

101. The Commission notes that the approved TPIA tariffs include provision for a throughput volume charge by cable companies to ISPs where end-customer usage exceeds a set limit. For several cable companies the current rate is $0.80 per 100 megabits in excess of 5 gigabits in a month upstream for an end-customer and $2.00 per 100 megabits over 2 gigabits downstream. The Commission in Order 2000-789 determined that volume charges by cable companies to ISPs for their end-customers' usage must be the same as the volume rates applied to cable company's own end-customers. The Commission considers that volume rates provide appropriate compensation to the cable company for the additional traffic that may be generated by the connection of additional computers to a cable modem. The Commission further considers that the proposed rates for second computers are, in effect, an additional charge related to the volume of throughput generated by end-customers. The Commission determines that the charges for the connection of additional computers by an end-customer are not appropriate. Accordingly, the Commission denies the TPIA charges for additional computers connected by ISP end-customers.

Disposition

102. The Commission approves the tariff notice applications with the revisions set out in this Decision. The Commission directs the cable companies to issue revised tariff pages and to file revised TPIA service agreements within 30 days of the date of this Decision, modified to implement the Commission's determinations. Approved rates, terms and conditions are to be effective the date of this Decision.

Secretary General

This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca

TPIA interim point of interconnection and service charge rates

Date modified:

2004-11-02