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Ottawa, 26 April 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
Dear Sir:
Follow up interrogatory on the cost effects of the Harmonized Sales Tax
Commission staff is in receipt of responses dated 15 April 2011 from Bell Canada and Bell Aliant Regional Communications, Limited Partnership (collectively, the Bell companies) to interrogatories posed by staff regarding the impact of the introduction of the Harmonized Sales Tax on competitor services costs.
In light of the responses to these interrogatories, the Bell companies are requested to provide a response to the attached interrogatory by 29 April 2011.
Yours sincerely
Original signed by
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
TBayTel rob.olenick@tbaytel.com
TCC regulatory.affairs@telus.com
ATTACHMENT
1. In the response to The Companies(CRTC)11Mar11-2, the Companies indicated that 79.5% of the total PWAC filed in Bell Canada’s 20 May 2003 economic study for Direct Connection service (“the 2003 study”) related to capital costs. In that response, the Companies further provided an estimate of the percentage of capital costs in the 2003 study that were not subject to the application of Bell Canada’s sales tax factor. In the response, the Companies indicated that the capital costs associated with labour, software, land and buildings were not subject to the application of the sales tax factor.
a) Provide the sales tax factor used in the 2003 study.
b) Confirm that the sales tax factor identified in response to a) above reflects a company weighted average sales tax applicable to economic studies in the provinces of Quebec and Ontario. If yes, for each of Quebec and Ontario, provide the sales tax applicable to this economic study and the weights used to calculate the company average sales tax factor. If no, provide the methodology and the associated assumptions, data sources and vintages of the data used to calculate the company average sales tax factor used in the 2003 study, with supporting rationale.
c) Provide a breakdown of the Companies’ estimated capital costs of 79.5% into the following:
i. Hardware (e.g., as identified in Table 2 of the response to the Companies(CRTC)16Feb04-2 DC)
ii. Software related to hardware (e.g., as identified in Table 2 of the response to the Companies(CRTC)16Feb04-2 DC)
iii. Other software (specify)
iv. Labour
v. Land and Buildings
vi. Other (specify)d) For each of the percentage of capital costs provided in response to c) i), c) ii), and c) iii) above, indicate if and how the sales tax factor was applied in the 2003 study, with supporting rationale.
e) For each of the LGC (DMS) software and DTC software unit costs of Table 2 of the response to the Companies(CRTC)16Feb04-2 DC, provide the methodology and assumptions used to derive these 2003 software unit costs, identifying the amount of sales tax, if any, that was included in the unit costs.
f) Confirm that (79.5%) times (1- percentage of the capital costs not subject to the application of the sales tax factor) represents the percentage of the PWAC of the study that is applicable to the 8% Ontario sales tax, (as opposed to the company average sales tax). If not, explain why not, and provide the percentage of PWAC in the study that is applicable to the 8% Ontario sales tax with supporting rationale; further identify each cost component that is assumed to not be subject to the Ontario sales tax.
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