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Ottawa, 11 March 2011
Ref. No.: 8661-M59-201015868
BY E-MAIL
Mr. David Palmer
Director – Regulatory Affairs
Bell Canada
160 Elgin St. Floor 19
Ottawa, Ontario
K2P 2C4
bell.regulatory@bell.ca
Mr. Robert Olenick
Regulatory Analyst
TBayTel
1046 Lithium Drive
Thunder Bay, Ontario
P7B 6G3
rob.olenick@tbaytel.com
Mr. Ted Woodhead
Vice President
Telecom Policy & Regulatory Affairs
TELUS Communications Company
215 Slater Street
Ottawa, Ontario
K1P 0A6
regulatory.affairs@telus.com
Re: Interrogatories associated with 8661-M59-201015868
Dear Sirs:
Commission staff request that Bell Canada and Bell Aliant, operating in Ontario and Quebec (collectively, the Bell companies), TBayTel, and TELUS Communications Company respond to the attached interrogatories associated with this application. Responses are to be provided by 31 March 2011 with copies to MTS Allstream and other interested parties to the proceeding.
Yours sincerely
‘Original signed by D. Fry’ (for)
Yvan Davidson
Senior Manager, Competitor Services and Costing
Telecommunications
cc: MTS Allstream, iworkstation@mtsallstream.com
Ontario Telecommunications Association, jonathan.holmes@ota.on.ca
City West Telephone Corporation, lisa.marogna@cwct.ca
Attach.
ATTACHMENT
A. Questions to the Bell companies (defined as Bell Canada and Bell Aliant in Ontario and Quebec)
1. For each wholesale service provided by the Bell companies, provide the annual 2010 revenues associated with the service. Further, for each wholesale service indicate whether the service is (a) non-essential subject to phase-out as defined in Telecom Decision 2008-17, (b) a service with “frozen” rates, or (c) a service that is not expected to have significant capital cost components (i.e., capital PWAC costs greater than 10% of total PWAC costs).
The response should separate the revenues for the Competitor Digital Network (CDN) services between those services that are classified as conditional essential services and those classified as non-essential subject to phase-out.
2. For each wholesale service for which the company has filed a cost study since 2000 (excluding those services for which the cost study reflected the impact of the HST introduction).
a) Identify the service and provide the company’s estimate of the proportion of the capital PWAC costs relative to the total PWAC costs;
b) for each of the wholesale services identified in response to part a) above, further provide an estimate of the percentage of the capital costs that are not subject to the application of the company’s sales tax factor (e.g. capitalized internal labour), with supporting rationale and assumptions.
3. In its application, MTS Allstream proposed a proxy rate adjustment approach to evaluate the impact of the HST associated with each incumbent company’s wholesale services that would estimate the impact of the HST on the costs for all wholesale services for which there is a cost study on file and apply the resulting average change in costs to all other services for which no cost study is available.
Comment on an alternative approach to that proposed by MTS Allstream whereby the cost studies identified in response to 2) above are used to determine a proxy rate adjustment that would estimate the HST impact associated with wholesale services having significant capital costs (i.e., PWAC capital costs in excess of 10% of the total PWAC cost) using the following approach:
multiply the company average sales tax factor of 5% by the average percentage of capital costs subject to the sales tax factor relative to the total service costs,
where the average percentage of capital costs subject to the sales tax factor is derived by using the average proportion of the capital PWAC costs relative to total PWAC costs (based on the information provided in response to part 2.a) above) and multiplying it by (1- the average percentage of the capital costs that are not subject to the application of the company’s sales tax factor (based on the information provided in response to part 2.b)above)).
4. Identify, with supporting rationale, any wholesale services that should not be subject to the adjustment approach proposed in question 3 above.
B. Questions to TELUS Communications Company (TCC) ( defined as TCC operating in Alberta and British Columbia)
1. a) For each wholesale service provided by TELUS that has province-specific rates in British Columbia (e.g. unbundled loops, DC, AT, CDN) provide the annual 2010 revenues associated with the service in British Columbia.
b) For each wholesale service provided by TELUS that has company average rates across Alberta and British Columbia (e.g. co-location, aggregated ADSL), provide the annual 2010 revenues associated with the service in Alberta and British Columbia.
c) Further, for each wholesale service indicate whether the service is (a) non-essential subject to phase-out as defined in Telecom Decision 2008-17, (b) a service with “frozen” rates, or (c) a service that is not expected to have significant capital cost components (i.e., capital PWAC costs greater than 10% of total PWAC costs).
The response should separate the revenues for the Competitor Digital Network (CDN) services between those services that are classified as conditional essential services and those classified as non-essential subject to phase-out.
2. For each wholesale service for which the company has filed a cost study since 2000 (excluding those services for which the cost study reflected the impact of the HST introduction).
a) Identify the service and provide the company’s estimate of the proportion of the capital PWAC costs relative to the total PWAC costs.
b) For each of the wholesale services identified in response to part a) above, further provide an estimate of the percentage of the capital costs that are not subject to the application of the company’s sales tax factor (e.g. capitalized internal labour), with supporting rationale and assumptions.
3. In its application, MTS Allstream proposed a proxy rate adjustment approach to evaluate the impact of the HST associated with each incumbent company’s wholesale services by estimating the impact of the HST on the costs for all wholesale services for which there is a cost study on file and applying the resulting average change in costs to all other services for which no cost study is available.
Comment on an alternative approach to that proposed by MTS Allstream whereby the cost studies identified in response to 2) above are used to determine a proxy rate adjustment that would estimate the HST impact associated with wholesale services having significant capital costs (i.e., PWAC capital costs in excess of 10% of the total PWAC cost) using the following:
multiply the applicable sales tax factor (7% for services with rates specific to British Columbia, or the company average sales tax factor for services with rates averaged across the Alberta and British Columbia, specifying the factor for Alberta and British Columbia) by the average percentage of capital costs subject to the sales tax factor relative to the total service cost,
where the average percentage of capital costs subject to the sales tax factor is derived by using the average proportion of the capital PWAC costs relative to total PWAC costs (based on the information provided in response to part 2.a) above) and multiplying it by (1- the average percentage of the capital costs that are not subject to the application of the company’s sales tax factor (based on the information provided in response to part 2.b) above)).
4. Identify, with supporting rationale, any wholesale services that should not be subject to the adjustment approach proposed in question 3 above.
C. Questions to TBayTel
1. For each wholesale service provided by TBayTel, provide the annual 2010 revenues associated with the service.
2. For the wholesale services identified in 1, identify which service is expected to have significant capital cost components (i.e., capital PWAC costs greater than 10% of total PWAC costs), with supporting rationale.
3. In its application, MTS Allstream proposed a proxy rate adjustment approach to evaluate the impact of the HST associated with each incumbent company’s wholesale services by estimating the impact of the HST on the costs for all wholesale services for which there is a cost study on file and apply the resulting average change in costs to all other services for which no cost study is available.
Comment on an alternative approach to that proposed by MTS Allstream whereby the cost studies identified in response to 2) above are used to determine a proxy rate adjustment that would estimate the HST impact associated with wholesale services having significant capital costs (i.e., PWAC capital costs in excess of 10% of the total PWAC cost) using the following approach:
multiply the company average sales tax factor (8% prior to the introduction of the HST) by the average percentage of capital costs subject to the sales tax factor relative to total service costs,
where the average percentage of capital costs subject to the sales tax factor is derived by using the average proportion of the capital PWAC costs relative to total PWAC costs and multiplying it by (1- the average percentage of the capital costs that are not subject to the application of the company’s sales tax factor).
4. Identify, with supporting rationale, any wholesale services that should not be subject to the adjustment approach proposed in question 3 above.
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