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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Part VII Application by TELUS Communications Company regarding
Shaw Cablesystems Limited's facilities and equipment
On TELUS' support structures
HELD AT: TENUE À:
Okanagan East Conference Room Salle Okanagan East
Ramada Hotel Downtown Calgary Ramada Hotel Downtown Calgary
708 8th Avenue SW 708, 8th Avenue SW
Calgary, Alberta Calgary (Alberta)
May 9, 2008 Le 9 mai 2008
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Part VII Application by TELUS Communications Company regarding
Shaw Cablesystems Limited's facilities and equipment
On TELUS' support structures
BEFORE / DEVANT:
Len Katz Chairperson / Président
Elizabeth Duncan Commissioner / Conseillère
Candice Molnar Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Jesslyn Mullaney Telecom Staff Team Leader
Danny Moreau Senior Analyst, Competition
Mario Bertrand Acting Director,
John Traversy Executive Director,
Regan Morris Legal Counsel
HELD AT: TENUE À:
Okanagan East Conference Room Salle Okanagan East
Ramada Hotel Downtown Calgary Ramada Hotel Downtown Calgary
708 8th Avenue SW 708, 8th Avenue SW
Calgary, Alberta Calgary (Alberta)
May 9, 2008 Le 9 mai 2008
- iv -
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
Opening Remarks by TELUS Communications 4 / 20
Opening Remarks by Shaw Communications 13 / 61
Questions by the Commission 26 / 123
Examination of Shaw by TELUS 186 / 1246
Examination of TELUS by Shaw 209 / 1392
Closing Argument by TELUS Communications 236 / 1676
Closing Argument by Shaw Communications 242 / 1706
Calgary, Alberta / Calgary (Alberta)
‑‑‑ Upon commencing on Friday, May 9, 2008 at 0900 /
L'audience débute le vendredi 9 mai 2008 à 0900
1 THE CHAIRPERSON: Good morning.
2 The application before us this morning is a Part VII application by TELUS Communications Company regarding Shaw Cablesystems facilities and equipment on TELUS' support structures.
3 The applicant today is TELUS Communications Company and the respondent is Shaw Communications Ltd.
4 Bonjour et bienvenue à tous. Je suis Len Katz, vice‑président des télécommunications de la CRTC et je présiderai cette audience. Mes collègues, Elizabeth Duncan, conseillère régionale de l'Atlantique et Candice Molnar, conseillère régionale de Manitoba et Saskatchewan siégeront avec moi aujourd'hui.
5 Over the course of this hearing we will be assisted by a number of Commission staff, including among others, Regan Morris, our legal counsel; Jesslyn Mullaney, our Telecom Staff Team Leader; Danny Moreau, Senior Analyst, Competition Implementation and Technology; Mario Bertrand, Acting Director, Competition Implementation and Technology; and we are fortunate today to have John Traversy, our Executive Director of Telecommunications with us as well.
6 Please don't hesitate to contact Regan Morris if you have any procedural questions with respect to the conduct of the hearing.
7 The purpose of this oral hearing is to adjudicate TELUS Communication Company's Part VII application regarding Shaw owned facilities and equipment attached to TELUS' support structures.
8 Before we begin, I would like to say a few words about the administration of the hearing.
9 The hearing is less formal than traditional telecom hearings and much narrower in scope. Due to the expedited nature of these hearings, intervenors and the general public will not participate in the oral phase of the proceedings.
10 The parties will be asked to introduce the members of their respective teams. The applicant, followed by the respondent will have 10 minutes each for opening remarks. Following these remarks, the parties will be questioned, first by the Commission. The applicant and the respondent will each have 20 minutes to question each other and the Commission will end with its final questions.
11 The Commission will not entertain written final argument; rather parties will have 10 minutes at the end of the hearing for their item to make final oral submissions.
12 The Notice of Public Hearing letter indicated the parties must file all documents with the Commission and serve on the other parties prior to this hearing. We are therefore not inclined to accept any additional documents at this hearing.
13 We are counting on your cooperation to ensure order throughout the hearing.
14 This is a verbatim transcript of the hearing being taken by the court reporter. In order to ensure the court reporter is able to produce an accurate transcript, please make sure your microphone is turned on when speaking.
15 If you have any questions on how to obtain all or part of this transcript, please approach the court reporter at the end of the hearing.
16 We ask you to ensure that all cell phones and pagers are turned off at all times while you are in the hearing room.
17 We intend to issue a written decision shortly thereafter.
18 We will begin with opening remarks by the applicant who will have 10 minutes to make their presentation. Before beginning their remarks, I would ask the applicants to introduce the members of their teams.
19 For the record, there is simultaneous translation (off microphone).
OPENING REMARKS / REMARQUES D'OUVERTURE
20 MR. ROGERS: Good morning. (Off microphone).
21 I'm sorry, I will start again. Good morning, Mr. Chairman. Phil Rogers, counsel for TELUS Communications. I will briefly introduce the members of our team.
22 We have Janet Yale, Executive Vice‑ President, Corporate Affairs of TELUS. Seated directly beside me, Mr. Ted Woodhead, Vice‑President, Telecom Policy and Regulatory Affairs. Beside Janet, John Fleiger, Vice‑President Parker Solutions Carrier Services; Charlene Schneider, Director Access And Carrier Agreements of TELUS; Ron Buziol, Senior Regulatory Adviser, Access and Carrier Agreements; Gary Mielke, Senior Regulatory Adviser, Access and Carrier Agreements; and supporting Mr. Buziol at the back, Mr. Lester Brown, who was responsible for the conduct of the audits in the field.
23 That is the TELUS representation.
24 We are prepared to proceed now with our opening remarks.
25 THE CHAIRPERSON: Do you have a document?
26 MR. ROGERS: We have provided a copy of the opening remarks.
27 MS YALE: Do you have it? I will just wait until you have it in front of you. Okay.
28 Mr. Chairman, this is a case that is important to the telephone companies, cable companies and in fact the whole telecom sector. It is important because it calls on the Commission to decide how to apply its support structure regulatory framework to a set of facts which is very likely to occur again elsewhere.
29 As the Commission is aware, support structures are a scarce economic resource which, for a variety of reasons, cannot be readily reproduced. Communities and the people living in those communities do not welcome the duplication of support structures beyond what is absolutely necessary.
30 In its recent decision on essential facilities, the Commission affirmed that support structures are classified as a "public good" resource. As such, the use of this resource must be rationed carefully according to the Commission's rules. Those rules should be applied uniformly and respected by all players, whether cable companies, telephone companies, CLECs, wireless carriers or IXCs. All of these parties have a right to apply for and use spare capacity where available on support structures. It would be unfair to give any one party more favourable treatment than the others.
31 In this proceeding, the Commission is being asked to examine the facts arising from a series of audits by TELUS of support structures in British Columbia. As in most expedited hearings, the facts in this case can be complex. However, at the end of the day the Commission is being asked to reach a conclusion on one basic question: On a balance of probabilities does the evidence support the conclusion that Shaw attach its cable and equipment to TELUS' structures without authorization?
32 If so, the tariff prescribes that certain charges are to be paid, the same charges as would apply to any other party that uses support structures without going through the Commission's prescribed permit process. Shaw knows what these charges are and indeed has paid all of them in the case of one of the audits in British Columbia.
33 We are here today to decide what should be done in the case of the other audited areas of British Columbia.
34 There is one principle that is very important to keep in mind throughout this case: the tariff and the Commission's decisions make it very clear that the onus, the onus to obtain a permit or authorization rests on the party seeking to attach. There is no absolute unfettered right to attach to support structures. The licensee must first obtain a permit.
35 Furthermore, there is nothing in the tariff or the Commission's framework which indicates that there is a general presumption that a permit must have been issued for any equipment found on structures. In fact, the tariff has express provisions which anticipate that disputes over unauthorized attachments will occur, and the tariff clearly places the burden of proof on the licensee to show that the charge should not apply.
36 From the language of the tariff, setting the charge at $100 per attachment and placing the onus on the licensee to show that it should not apply, the Commission clearly intended to discourage any cable company, CLEC or wireless provider from proceeding to attach without permits.
37 One additional point is clear from the evidence found by the audits. The audits show large amounts of cable on support structures that Shaw had not been paying for. Shaw accepts that the audit properly identified and quantified their attachments. The difference between what Shaw had been paying for and what they now agree they have on the structures is simply too large to be accounted for by any clerical or recording errors.
38 MR. WOODHEAD: A brief review of the Commission's framework for support structures provides the regulatory context in which this dispute arises. The Commission's framework for regulation of support structures is a product of a series of related decisions.
39 The Commission's requirements balance the competing interests not simply as between TELUS and Shaw, but those of other existing and potential users of support structures in TELUS' territory and indeed elsewhere in Canada.
40 In Decision 95‑13 the CRTC directed the telephone companies to make their support structures available to cable television companies and all Canadian carriers where there is spare capacity. Five years later, the Commission approved the final form of the tariff in a standard support structure agreement. Among the non‑recurring charges approved by the Commission was the unauthorized attachment charge of $100 per rental unit.
41 During that proceeding, the cable companies had agreed with the principle of an unauthorized attachment charge but had proposed an amount of $25. The Commission rejected that proposal and instead set an amount of $100 to act as a deterrent against unauthorized attachment.
42 The Commission also provided a possible exemption to avoid such a charge. Where the attaching company does not have a permit, the tariff states:
"The unauthorized attachment non‑recurring charge does not apply and the company will issue a permit where the licensee can substantiate that a monthly rental has been applied with respect to such attachment or where the licensee can substantiate that the company has approved the attachment of the licensee's facilities but has not issued a permit." (As read)
43 It is clear from this language that the Commission has put the burden of proving that the charge should not apply on the licensee, not the owner of the structure.
44 Furthermore, the evidence in this case will establish on a balance of probabilities that neither of the two exceptional circumstances identified by the tariff apply to Shaw's attachments found by the audit.
45 Accordingly, in the language of the tariff, the unauthorized attachment charge shall apply.
46 The Commission regulates access to structures having regard to the fact the demands for use of this scarce resource are increasing and that, in the face of this increased demand, the same rules must apply for all parties. With the licensing of new wireless carriers following the AWS auction this year, demand for access will likely increase once again.
47 For all users, the tariff requirements are very clear. The tariff expressly obliges the intended user of a structure to apply for a permit. The tariff is equally clear that an unauthorized attachment charge applies when it is determined that equipment has been placed without a permit.
48 The Commission put this provision in place to discourage unauthorized attachments. The Commission knew that without such a provision, parties that put equipment in place without a permit would be rewarded by avoiding all charges up to the point of discovery.
49 Accordingly, the Commission established a charge of $100 per unauthorized attachment.
50 The Commission clearly gave careful consideration to both the appropriateness and the specific amount of the unauthorized attachment charge. The Commission foresaw that without such a charge, there was a reasonable chance that the access regime would deteriorate into one that could best be described as attach at will, at least until caught.
51 MS YALE: Mr. Chairman, Shaw is a major user of support structures. By its agreement to pay ongoing charges based on the data disclosed in the audit, Shaw has accepted the audits as a valid factual basis on which to apply the tariff.
52 So what is not at issue in this case is the number of Shaw attachments on our facilities as revealed by the audit. The issue is how they got there and that is an issue of credibility. Either Shaw put those facilities on or in these structures or TELUS did.
53 If you believe Shaw ‑‑ and this is the story they are telling ‑‑ then you have to believe that TELUS, acting on Shaw's behalf but without the requisite permits, incurred operational and capital cost to put these attachments in place but kept no record of having done so and gave up decades of monthly charges and only discovered these facts when we conducted our audits of third party occupancy.
54 This means you would have to believe that TELUS had systematically built out Shaw's network without any compensation over several decades. Shaw's explanation to that effect is simply not credible.
55 The alternative, the only credible explanation, is that Shaw systematically engaged in attaching to TELUS' structures without authorization and these unauthorized attachments were only discovered through TELUS' audits.
56 The Commission should not reward this non‑compliance by applying anything other than the authorized attachment charges prescribed by the tariff. If one of the largest users of support structures in Canada can ignore the framework and evade tariff charges prescribed by the Commission, the message to the industry, including the new wireless entrants, will be clear: there is little incentive for existing or potential users to adhere to the Commission's rules.
57 Indeed, by doing so, they will be placing themselves at an economic disadvantage relative to the much larger established players like Shaw.
58 Mr. Chairman, that concludes our opening submissions and we will be pleased to answer your questions.
59 THE CHAIRPERSON: Thank you.
OPENING REMARKS / REMARQUES D'OUVERTURE
61 MR. BRAZEAU: Good Morning, Mr. Chairman and Commissioners and welcome to warm and sunny Calgary.
62 My name is Jean Brazeau. I am Vice‑ President of Telecommunications at Shaw. With me here today, on my far left, is Peter Johnson, who is Vice‑ President of Law. To my right is Chris Ewasiuk, who is Director of Access. Next to Chris is Rhonda Bashnick, who is Vice‑President of Finance; and Jay Kerr‑Wilson is our Acting Counsel today.
63 Jay will present our opening and closing statements.
64 Thank you, Mr. Chairman.
65 MR. KERR‑WILSON: TELUS has applied to the Commission for an order directing Shaw to pay $2.4 million in unauthorized attachment charges in 12 service areas in B.C. The only basis for TELUS' claim is a discrepancy between TELUS' internal records, the information that was in the TELUS billing system and the results of the audit TELUS conducted in the 12 areas.
66 TELUS is asking the Commission to find that the entire discrepancy in its own records is the result of unauthorized attachments.
67 Shaw submits that TELUS' application should be denied for the following three reasons.
68 One, there is absolutely no evidence upon which the Commission could find that Shaw has made unauthorized attachments to TELUS' facilities or grant the remedy TELUS is seeking.
69 Two, TELUS' claims are based on inherently unreliable or irrelevant information, none of which satisfies the requirements of those tariff provisions that provide a remedy for unauthorized attachments. In particular, this is because the TELUS billing system databases is fundamentally flawed for the purpose of recording and keeping track of the cable meterage and pole counts as a result of the implementation of Decision 95‑13.
70 Three, in an attempt to bolster its unsubstantiated claims, TELUS has referred to the installation of Shaw facilities which are outside the service areas in issue, are attached to support structures that are not TELUS' support structures or were installed by TELUS itself.
71 The record demonstrates there are far more reasonable explanations for the discrepancy between the billing system and the results of the audit that have nothing to do with unauthorized attachments. The most obvious of these explanations is that following Decision 95‑13 BCTel adjusted its billing system to reflect the new support structure tariff, but in the process did not include the actual cable meterage and pole count.
72 The extent of the discrepancy in the billing system was only discovered when TELUS finally conducted its audit in 2006. Now TELUS wants Shaw to pay for the decisions that BCTel made more than a decade ago.
73 Shaw submits that it is important for the Commission to consider this dispute in the context of Shaw's commercial relationship with TELUS. Shaw pays TELUS in excess of $20 million a year for support structure rental and other services. The incremental rental fees associated with TELUS' application amount to less than 1 per cent of the total support structure payments that Shaw makes to TELUS each year.
74 Shaw depends on access to TELUS' support structures to provide competitive services and has no incentive to jeopardize that access.
75 This proceeding hinges on the correct interpretation of the support structure tariff item relating to charges for unauthorized attachments. Shaw submits that the tariff item on unauthorized attachments is very clear.
"An unauthorized attachment charge shall apply where a licensee has installed a facility, except a subscriber drop wire, on or in support structures for which a permit has not previously been issued."
76 In the event of a dispute, a company, in this case TELUS, must identify the specific facility which is alleged to be attached without authorization to the company's support structures. The facility must have been installed by the licensee, in this case Shaw. And once the facility has been identified, the licensee has the right to try to substantiate that the attachment of the facility was authorized.
77 Based on the records submitted by the parties, the Commission can then decide whether or not the attachment was unauthorized and make the appropriate order.
78 In this case TELUS has not identified any specific facilities or attachments that it claims were unauthorized. Instead, it has made a very broad claim, alleging that there are a number of unspecified unauthorized Shaw attachments to TELUS' support structures in 12 areas. A vague allegation that somewhere among the 25,000 poles and 1.5 million metres of cable there are some poles with attachments that weren't authorized provides no factual basis to charge a punitive fee.
79 The vast majority of the facilities in issue were installed prior to 1995, during a period when BCTel itself installed all cable company facilities on BCTel support structures. Shaw believes that as much as 95 per cent of the facilities in the 12 areas were installed by BCTel prior to 1995. TELUS concedes that at least 75 per cent of the facilities were installed during that period.
80 Either way, Shaw submits that the vast majority of the facilities were installed by BCTel itself and therefore cannot be considered unauthorized.
81 Furthermore, without any information relating to specific identifiable attachments, Shaw is denied a reasonable opportunity to respond to the allegations. Without knowing which attachments TELUS is alleging are unauthorized, how can Shaw substantiate that they are authorized?
82 The TELUS approach puts Shaw in the position of having to establish that all its attachments are authorized. Not only would that approach be unreasonable and grossly prejudicial to Shaw, it is also clearly not what is contemplated by the wording of the tariff item.
83 If the Commission and the parties had intended to make licensees prove that all their attachments were authorized, then the tariff would have clearly provided for that. Shaw submits that because the approach proposed by TELUS is inconsistent with process established in the tariff, the application could be denied on that basis alone.
84 The correct interpretation of the tariff is not just an issue that will impact Shaw in the 12 audited areas. TELUS has already made similar claims against other cable operators, and if the Commission endorses the approach proposed by TELUS it is certain that TELUS will make additional claims against Shaw and against small cable companies that also depend on access to TELUS' support structures to provide service.
85 These small cable companies will also be prejudiced by being denied a reasonable opportunity to respond to the claims.
86 So Shaw's primary submission is that there is no evidence on the record upon which the Commission could grant the order requested by TELUS. Shaw's second submission is that the evidence provided by TELUS doesn't even support TELUS' own position.
87 Prior to Decision 95‑13, BCTel charged cable companies a single bundled rate that covered both pole contacts and cables lashed to BCTel's strand between the poles. BCTel charged cable companies on the basis of route meterage regardless of the number of cables that were lashed to the same strand. So a cable company was charged the same rate for a single 30 metre cable as it was for two or more 30 metre cables lashed to the same strand.
88 In Decision 95‑13, the Commission ordered telephone companies to unbundle their support structure rates. It also established an aerial cable rate that was based on individual cables as opposed to the route meterage rate charged by BCTel which did not account for multiple cables on the same strand.
89 These changes required BCTel to revise its support structure billing system in two significant ways. BCTel did not track individual poles in its billing system and was unwilling to undertake a pole count to determine how many poles it actually had. Therefore, in order to implement this decision, BCTel derived a pole count by dividing the total aerial route meterage by an average pole span of 36.6 metres. This pole count approximation was then used for the purpose of invoicing cable licensees and was adjusted over time to reflect new attachments and attachments that were removed.
90 But until 2006 when TELUS conducted its audits, the original BCTel pole count approximation continued to be the basis for the TELUS billing system and the 12 areas in issue. In any area where the actual span between the poles was less than 36.6 metres, there would be more poles revealed by the audit than the number reflected in the billing system.
91 This accounts for the discrepancy in the pole count and has nothing to do with unauthorized attachments.
92 Second, BCTel derived the amount of cable metres by simply converting the existing aerial route metres to cable metres on a 1:1 basis. As a result, BCTel recorded multiple cables existing on the same strand as a single cable for billing purposes.
93 So for example, two cables on a 60 metre span totalling 120 metres were only recorded as 60 cable metres. Therefore, the TELUS billing system database did not accurately reflect the actual cable meterage existing at the time that the new support structure tariff was implemented.
94 In 2006 TELUS conducted its audits and found that there was a discrepancy between the data in TELUS' billing system and the results of the audit. In its application it claims the entire discrepancy should be attributed to unauthorized attachments.
95 However, it is clear from the record that this simply isn't the case. Obviously the majority, if not all of the discrepancy, arises because the original BCTel pole count approximation and cable meterage conversion did not reflect actual numbers of poles and actual amounts of cable at the time the Commission approved the new rates.
96 With respect to the aerial cable conversion from a route meterage rate to a cable meterage rate, Shaw has identified that in each of the 12 audited areas BCTel continued to charge for a single length of cable even where it had approved two lengths of cable lashed to the same strand.
97 BCTel never recorded the multiple cables in its billing system. It wasn't until TELUS conducted its audits that these discrepancies became apparent. This fact alone accounts for a significant amount of the discrepancy between the billing system and the audit.
98 Furthermore, Shaw has produced permits for attachments that were not properly reflected in the TELUS billing system.
99 And, finally, TELUS has conceded there may be administrative errors in the billing system that may account for some of the discrepancy.
100 It is very clear there are a number of other explanations for the discrepancy revealed by the audit other than unauthorized attachments. However, TELUS is asking the Commission to order Shaw to pay unauthorized attachment charges even in those circumstances where the discrepancy is a result of the original BCTel implementation of the tariff.
101 The Commission does not have any evidence that would support a finding that even some minor portion of the discrepancy can be attributed to unauthorized attachments and order Shaw to pay unauthorized attachment charges on that portion.
102 The Commission cannot grant such in order since it would have no way of knowing precisely which attachments would fall into that category and should be subject to the charge. This would put Shaw in the position of not knowing for which exact attachments the charge had been paid, which would leave it with the possibility of facing repeated claims by TELUS that it pay the same charge with respect to the same attachments.
103 The Commission's order has to resolve the dispute with finality by indicating precisely which attachments were authorized and to which attachments the charge should apply. The TELUS approach makes it impossible for the Commission to order such a final determination.
104 And it is not just the ability of the Commission to order the payment of unauthorized attachment charges that is at issue here. The tariff item also requires TELUS to issue a permit to Shaw in those circumstances where Shaw can establish that the attachment was authorized. Under the TELUS approach, which provides no information on specific locations, it is not possible to identify those attachments for which Shaw is entitled to a permit.
105 So in summary, Shaw submits the following:
106 One, on the only reasonable interpretation possible, the tariff requires TELUS to identify each particular facility it alleges is an unauthorized attachment. It has not done that, so the application should be denied on that basis alone.
107 Two, TELUS claims that the entire discrepancy between its billing system and the audit is the result of unauthorized attachments. This is demonstrably not the case. There is no evidence on the record upon which the Commission can conclude that any of the discrepancy is based on unauthorized attachments, let alone all of it.
108 We have clearly identified that when BCTel implemented Decision 95‑13, its billing database did not record the actual cable meterage or number of poles. It cannot therefore be used as an appropriate database against which we measure the audit results.
109 Three, TELUS is asking the Commission to make Shaw pay unauthorized attachment charges in circumstances where there are no unauthorized attachments. The Commission has no authority to make such an order.
110 And four, the proper interpretation of this tariff item will not only affect Shaw in this dispute with TELUS, but will also have a direct impact on those small cable systems that also rely on access to TELUS' support structures.
111 Thank you.
112 MR. BRAZEAU: Mr. Chairman, when I introduced the panel, I made a significant omission by not introducing Peter Bissonnette, who is participating in this proceeding by phone. So I apologize for that.
113 Peter Bissonnette is the President of Shaw Communications.
114 THE CHAIRPERSON: Thank you very much, both parties, for your opening remarks.
115 The way we are going to proceed is I will start by asking a series of questions to both parties. I will then pass it on to my colleagues, Elizabeth Duncan and Candice Molnar, and then our counsel will identify any areas that need further follow‑up as well.
116 I am going to direct my questions into four specific areas.
117 One is the issue of permits which you both have raised.
118 The second issue is with regard to the tariff and the interpretation of the tariff.
119 The third item is the process that we have gone through to get to the point where we are at today.
120 And then fourth, the issue of the all or nothing positions that both of you are taking where both of you are saying we may be partially in error but taking the entire situation in hand, we want you to rule in our favour as opposed to the other person's favour.
121 But I think you both have sort of suggested that you are not 100 per cent clean on either side of this thing, and I will let you folks represent yourselves in that regard. I just picked words out of your evidence itself.
122 So let's go back to the first question and that is with regard to permits.
123 I guess I will direct my question first to TELUS here.
124 Can you provide for us what a permit really is?
125 I have read through all the evidence and I found out that there is an order that is placed that opens up a work order; it works its way through the process. It comes out the other end at some point in time when it has been approved and suddenly it is a permit I guess at that point in time.
126 What is the physical definition of a permit? When does it become a permit? When does it get into your billing system? And how would Shaw or anybody else know that they now have a physical permit in their hands for authorization?
127 MR. FLEIGER: Commissioner Katz , it's John Fleiger speaking.
128 Basically the process works like this. If Schaub wants to put cable upon TELUS' support structures, they apply, which is a document. They make an application. That is turned into a work order, job order number within TELUS to validate the facts. And there are communications that go on back and forth between TELUS and Shaw in regard to any clarification that is needed.
129 In certain cases there could be make ready work that we have to do before Shaw could go out and place that cable on the pole lines and usually, in many cases, it is more than one pole involved or run of conduit. It could be 10 poles, 20 poles, 100 poles.
130 So that work is validated back and forth between the two parties.
131 TELUS might then go out and do the make ready work on behalf of Shaw, and then at the completion of that make ready Shaw would go out and either put the cable up itself or contract that to a third party.
132 THE CHAIRPERSON: Do they already have a permit by this point in time when they go out?
133 MR. FLEIGER: No.
134 THE CHAIRPERSON: They don't, okay.
135 MR. FLEIGER: Yes, they do. And at the end of the whole process they have that permit in their hands, which is a document. It is the evidence, the documentary evidence that they have a right to be on that pole line structure between pole "X" and pole "Y".
136 THE CHAIRPERSON: But the permit is lit up, if I can call it that, when they formally apply and there is a work order issued?
137 MR. BUZIOL: It's Ron Buziol speaking.
138 The permit actually is lit up at the point that the capacity search is done. We now have capacity on the structure. We sign off on the permit. We put the associated cost against that permit, or against that application. It is then forwarded to the licensee, in this case Shaw. Shaw would then sign off on it and at that point it becomes a permit, when they have agreed to accept the charges from TELUS.
139 THE CHAIRPERSON: The construction then takes place to build this thing out, place until I gather the construction is completed and someone says there now is a completed work order?
140 MR. BUZIOL: Yes, that is correct.
141 THE CHAIRPERSON: And then (inaudible) at that time?
142 MR. BUZIOL: Yes, it does.
143 MR. WOODHEAD: Excuse me, it is Ted Woodhead.
144 The permit is essentially a living document. You apply to occupy the structure. You provide route drawings, mapping, showing exactly what it is you want to build on, or at least what route you want to build on. And there might be make ready work, in which case we would have to cost out that make ready work. We would send that document or that quote to Shaw and if they accept it, we would make ready the structure to accept it, because it may have to be guy wires ‑‑ you know, support for the structure may be required.
145 When that work is done, then Shaw or us, whatever the case may be, might place structure ‑‑ sorry, cable on the strand or in the conduit. And at the end of all of that, there is an inspection done and that living document has gone back and forth and that represents your permit.
146 It then enters into our billing system and typically it would enter into our billing system, usually 92 per cent of the time, by the second quarter thereafter.
147 THE CHAIRPERSON: And in reading your evidence you indicate that every quarter you send to Shaw a reconciliation of the changes that take place between the previous quarter?
148 MR BUZIOL: Every quarter we send to Shaw a billing that itemizes the incremental work, either additions or deletions that have happened in the prior quarter.
149 Mr. Woodhead said that in 92 per cent of the cases that billing information is sent to Shaw within either the next quarter or the quarter thereafter.
150 THE CHAIRPERSON: And each time you send them that and there is an effective change, you have updated the records and the permits as well?
151 MR. FLEIGER: Yes, we have.
152 THE CHAIRPERSON: The permits are always up to date and in sync with the billing system?
153 MR. FLEIGER: That is correct.
154 THE CHAIRPERSON: Do you ever hear back from Shaw with regard to a reconciliation of the billing at all?
155 MR. BUZIOL: No. No we don't. It would be very rare that we have heard back from Shaw or any other licensee in terms of reconciliation.
156 THE CHAIRPERSON: First you said no, then you said it's very rare.
157 How long has this been going on for? How long have you been doing this process of quarterly reports to Shaw?
158 MR. FLEIGER: In excess of 30 years. Since other third parties were putting structure or cabling on our support structure.
159 THE CHAIRPERSON: So on a quarterly basis you have been sending them a reconciliation of their bills identifying all the changes, the modifications that are made by permit effectively?
160 MR. FLEIGER: That is correct.
161 THE CHAIRPERSON: Do you seek confirmation at all from Shaw or is payment deemed to be confirmation from your perspective?
162 MR. FLEIGER: The payment is deemed to be confirmation from the third party support structure users.
163 THE CHAIRPERSON: And that payment in 100 per cent of the time correlates to your records of your permits?
164 MR. FLEIGER: I might not go to say 100 per cent, but a very, very high per cent, yes, well in the high 90s.
165 THE CHAIRPERSON: I'm going to move on to the tariff now and I guess I will direct the first question to Shaw.
166 Shaw, do you accept the tariff as being in force and enforcible today as a valid CRTC tariff?
167 MR. BRAZEAU: I think certainly we do, and I think we have been abiding by the tariff. I think we have explained ‑‑ and some of my colleagues may want to jump in here.
168 But I think we have explained how we ‑‑ our conclusion as to why there is a discrepancy in the calculation, and I think we fully explained why we think that all of the attachments were authorized.
169 And just coming back to your questions about permits, permits are important, but ‑‑ and this really speaks to the fact that we really need specific examples of where TELUS claims that the attachment is unauthorized, because, as mentioned by TELUS, there is a lot of communications back and forth between the two companies.
170 And even though we may not have a specific permit or can't locate a specific permit, there is other proof or evidence that the attachment has been authorized.
171 And once we are shown a specific example, or a specific claim of unauthorization, then we can go back to all of our records and examine them and try to prove that the attachment was authorized.
172 So the important thing here is authorization. It is not the number of permits that one has or doesn't have.
173 I don't know if anyone would...
174 THE CHAIRPERSON: If you have your tariff in front of you, I will refer to a sentence up in the .1 non‑recurring charges before you get to the unauthorized attachment .a.
175 It says:
"The company may require the licensee to pay in advance any of the estimated non‑recurring charges stated in this tariff item." (As read)
176 Can someone explain to me what the intent of that clause was when it is a non‑recurring item, which I guess relates to an unauthorized attachment, and it says here that TELUS, the company, may require advance ‑‑
177 MR. ROGERS: Mr. Chairman, could you identify which clause you are reading from?
178 MR. FLEIGER: Mr. Chairman, I would suggest ‑‑ not suggest, I would say that that goes to the make ready work that needs to be done in the field in order to prepare a support structure for additional cable to be placed on it.
179 So in essence the licensor could request that that make ready payment, which could be certainly in the thousands if not tens of thousands of dollars in certain cases, to be paid before that make ready work was actually done in the field.
180 THE CHAIRPERSON: Thank you.
181 So when we go down to the .a, the unauthorized attachments, and we read down to the last four lines ‑‑ and I will read it out:
"The unauthorized attachment non‑recurring charge does not apply and the company will issue a permit where the licensee can substantiate that a monthly rental has been applied with respect to such attachments and where the licensee can substantiate the company has approved the attachment of the licensee's facilities but has not issued a permit." (As read)
182 I think you have both referred to that clause.
183 I guess my question is to TELUS here.
184 There are three words in each one of these, in the front half of that sentence and the back: "to such attachment" "has approved the attachment".
185 Do you interpret that to be the entire permit or the specific attachment itself?
186 MR. WOODHEAD: That to me refers to the entire attachment, because as I noted earlier, cable companies without exception provide us with a route along which they wish us to place facilities for them, or that they place facilities for themselves. It could be 60, 100 or more poles or it could be kilometres' worth of conduit. And you don't typically get ‑‑ we, for example, are involved with 1.2 million poles in British Columbia. Eight hundred thousand of those poles are joint use poles with BC Power or BC Hydro; 400‑some‑thousand are TELUS owned poles. Each pole has multiple attachments on it.
187 If you were to read this tariff item to suggest that you would have a permit for each attachment, you can sort of do the math. There would be millions of permits.
188 That is not actually how the industry has done this ever. The industry submits route maps as part of their application for occupancy and those form a permit. It could form ‑‑ it could be in respect of multiple attachments or various route, kilometres of conduit or route, metres of conduit.
189 My answer is it does not refer to a specific attachment.
190 MR. BRAZEAU: Mr. Chairman, just because of the language here, "such attachments and where the licensee can substantiate the company has approved the attachment", it doesn't speak to the permit, but it speaks to the approval of the attachment; that the attachment has been authorized.
191 That is the point that we are trying to make, is that unless you get a specific example from TELUS that points to a potential, you know, unauthorized attachment, unless we have that specific information, we have no opportunity to go out there and demonstrate that that attachment has been effectively approved by TELUS.
192 So it is not ‑‑ approval and permits do not go hand in hand.
193 THE CHAIRPERSON: Are you physically not able to do that?
194 MR. WOODHEAD: To do what?
195 THE CHAIRPERSON: (Off microphone).
196 MR. WOODHEAD: I would say it would be ‑‑ it is certainly not the custom of the industry. It is not administratively possible to do it because, as I said, the number of actual ‑‑ just to use poles as an example, and I can go on to conduit if you want. But just use poles, we are talking millions of attachments.
197 If, for example, when Shaw went to Panorama and they said TELUS, can you please make ready, inspect, search, do whatever you have to do to tell us whether we can put cable up ‑‑ I believe it is Route 93, 94 ‑‑ for a period of kilometres, I guess we would be asking them to submit by pole, by contact a permit. And that just seems to me to be ‑‑
198 THE CHAIRPERSON: But I think you have indicated earlier that a permit is a work order and a work order has multiple locations on it.
199 Given the magnitude of the discrepancy that your audit has shown, I could only imagine that there is major, major projects and initiatives that have gone unrecorded. So there is probably a section of a highway or something with a number of poles, 200 poles, 300 poles that obviously none of which have got a permit on in order to amass the size of the discrepancy you have identified here.
200 Can you not say on the highway between Vancouver and Surrey, the entire length of that strand does not have any records on our side at all and therefore there are whatever there are, 350 poles going down that road, and Shaw, tell us your authorization for that?
201 MR. WOODHEAD: I'm sorry, I don't understand actually the question.
202 If Shaw submitted an application to occupy in that fact situation as I understand it, as I said this living document would go back and forth, we would dispatch our forces out to search to see if those poles ‑‑ if there are poles ‑‑ if those poles are capable of handling the structures or, sorry, the facilities that Shaw wants to put on there. And that would ultimately culminate in the documentation being put into the billing system.
203 So no, our position would be that that would be a highly unlikely ‑‑
204 THE CHAIRPERSON: But you are alleging that there was no work order here; that Shaw went ‑‑ I believe you are alleging; I won't put words in your mouth ‑‑ that Shaw went in during the night, or sometime during the day and laid out a route network without a permit, without a permit, and as a result of that you don't have it in your database anywhere.
205 I'm sort of saying if it was one pole, two poles, a dozen poles, two dozen poles I could understand the workarounds or they added on extra poles as they were driving down the street and locating something and found out they wanted to put an attachment on because the guy wire was hanging down too low and they attached it on.
206 But we are looking at the numerous, 479,000 route metres, or whatever you call it, of unauthorization, which goes beyond the onesies and twosies. It goes on to the kilometres and the miles.
207 You must have that information if you are alleging that they have done that without a permit, without a work order.
208 MS YALE: Mr. Chairman, I guess, you know, you are getting at one of the issues that is at the heart of this, is who has the onus.
209 You know, does TELUS have the onus to be patrolling its highways to see if in the course of those attaching cables to support structures, if they are on there doing maintenance or whatever, they happen to be adding attachments or does the licensee in question, which is the way the tariff is worded, have the onus to get proper authorization for the attachments they put in place?
210 If you looked to your point at the start of that item sub .a, it says:
"An authorized attachment charge shall apply..."
211 Shall apply.
"... where a licensee has installed a facility except a subscriber drop wire for which a permit has not been previously issued." (As read)
212 The stuff at the bottom of that paragraph is the exception and the onus is on the licensee to substantiate the exception, because at the end of the day if the onus is on the company, is on TELUS, to monitor the activities of the companies who benefit from the support structure arrangements, you know, that puts us in an impossible situation.
213 THE CHAIRPERSON: But surely 479,000 route metres over a number of years, no doubt your installers have gone in for repair, for additions. They have a work order in front of them. They know what is on the poles or the strands as they are going.
214 None of your installers, your outside plant people ever came back in all these years and said there is something wrong here, I was told to go out there and install something. There is no room on this pole or in this conduit; it has been used up. And therefore your budget for capacity is suddenly blown out. You have to go back and reconsider everything.
215 Has nobody in all these years identified this?
216 MR. WOODHEAD: First off, it would be ‑‑ Shaw would be ‑‑ it would be not uncommon to see Shaw trucks on these facilities. They install drop wires, they always have. They maintain their own facilities.
217 The point would be that I think in the mid‑90s and following, following the mid‑, you know, '95 and so on, we did in fact begin to get some sense that there were more facilities out there and that ultimately is what culminated in the first audit in 2002.
218 The onesies and twosies, as you put it, that typically is not what happens. So it wouldn't be uncommon to see, you know, people installing, you know, kilometres of facility.
219 MR. BRAZEAU: Mr. Chairman, as we indicated in our opening remarks, the discrepancy, the significant discrepancy is easily explained. It is the conversion from route to total cable meterage. There is where lies the huge discrepancy in the numbers of aerial cable that we are discussing today.
220 And it is not Shaw in the middle of the night, you know, having its trucks roll out and putting up cable.
221 Maybe Peter Bissonnette, if he is on, he can speak to what our practices are, but that is certainly not Shaw's practice.
222 MR. BISSONNETTE: I don't know if you can hear me? Are you hearing me?
223 THE CHAIRPERSON: Yes, we can.
224 MR. BISSONNETTE: Oh good, thank you. I was frustrated because I was hearing all these arguments from TELUS and I wasn't going to be able to answer them.
225 First of all, Mr. Chairman, let me just say, you know, I am aware of the history of how cable was being placed. I'm aware of the P408 which is the permitting process, and up until 1995 ‑‑ and I worked at BCTel for 13 years until '81 and then I worked at Rogers for five years and then at Western Cable and I have been with Shaw for 20 years.
226 In all of the time that I worked in those various capacities, BCTel has placed almost 100 per cent of the cable in those systems that either Western owned or at the time Rogers owned in Vancouver or Shaw owns throughout British Columbia.
227 So our practice is never to have construction crews working for Shaw.
228 We had a very good relationship with BCTel and now with TELUS on the outside plant side of things. So to the extent that it made good economic sense, we have always used BCTel, now Telus, to place our cable where TELUS has the support structure.
229 It's interesting that you point to that one work order, the permit for the 14 kilometres of cable in Invermere, and BCTel themselves referred to that. That was cable that in their Part VII they have identified as being an unauthorized attachment and therefore Shaw should pay for that cable. We have looked into our records and we have determined two things about that cable.
230 One is that we do have a P408, the permits, and they are signed by TELUS. This was done just two years prior to their audit. So to the extent that they say that their records are accurate, we question that on the basis of this one trunk itself.
231 Second of all, some of the cable they said was inappropriately installed to their support structure. In fact, part of that run was actually done on Hydro support structures, and where we required BCTel's support structure space we had a P408 and it went through the living document process that was described. And in describing that project, which spanned many hundreds of poles, it basically said this cable runs between point A and point B, which was actually 14 kilometres of route meterage.
232 So they used that specifically to point out that Shaw had unauthorized attachments, which was incorrect.
233 They said that their records were accurate, which is incorrect.
234 And the Commission needs to know that up until '95 all cable, whether it was underground or air, it was placed by BCTel on our behalf. And after '95 we made a corporate directive to continue to use BCTel where BCTel's support structure existed. So 95‑plus per cent of the cable that is placed on our facilities on the cable systems that we owned was done by BCTel.
235 BCTel knew what was being placed because they were placing it.
236 THE CHAIRPERSON: Mr. Bissonnette, prior to 1995 you are saying Shaw never was able to go up on a TELUS or a BCTel facility, notwithstanding the fact that I think I have read some support structure agreements that give you that authority?
237 MR. BISSONNETTE: Yes, there were two things in play in this, Mr. Chairman.
238 One is union jurisdiction. The TWU, which is the telephone union, Telephone Workers Union, essentially claimed jurisdiction over that work.
239 On the IBW side, which was the workers that were working for Shaw at the time, that cable placement was actually included as discretionary jurisdiction of the company. We could choose to have the work done by somebody else as opposed to having it done by our own IBW workers.
240 In fact, the IBW ‑‑ and we went to an arbitration over this very point and Shaw was successful in that award, which allowed us to continue to use TWU or BCTel to place that cable.
241 MR. WOODHEAD: I would suggest one of the issues here is whether ‑‑ Mr. Bissonnette has raised the issue of whether Shaw has ever placed its own facilities pre '95 or whatever on BCTel plant.
242 Obviously the Commission rendered a decision in '92 and the Supreme Court ultimately determined a fact situation that related specifically to TWU complaint, a labour complaint with respect to Shaw placing facilities on BCTel plant.
243 So to say that that hasn't occurred or that it didn't ever occur would seem to me to be stretching what would appear to be the facts that at least some people believe they were.
244 With respect to this cable meterage conversion issue, the fact remains that putting aside the unauthorized issue, Shaw has paid prospectively, has not challenged the audit, has paid prospectively for every single route meterage unit, billing unit that was found. I don't think we have heard boo from Shaw about this conversion issue.
245 But that being said, I mean the fact to me that they pay going forward and prospectively speaks to this issue of whether or not this conversion in fact was an issue.
246 In terms of the pole count, my understanding from the audit is that in terms of poles the proxy that the Commission approved in '96, in the order in 96‑1464, the audit actually showed that that proxy was pretty good. The discrepancy was 1.5 per cent. There were 1.5 per cent less poles than the proxy would have otherwise done.
247 So I don't think there is a lot of, you know, there is a lot of problem either with the proxy or the audit in that respect.
248 THE CHAIRPERSON: You are leading me into my next series of questions, but I want to follow up first on one other point.
249 In the Shaw submission dated April 7th, at paragraph 24 there is a statement right at the end at the bottom saying:
"All Shaw fibre attachments to TELUS' support structures in the Vancouver area are carried out by TELUS itself as part of a long‑standing collaborative relationship between the two companies in that city."
250 It sounds like you have a cosy relationship there.
251 What is unique and different about that than has been going on everywhere else?
252 MR. BRAZEAU: I think Peter Bissonnette can speak to that.
253 MR. BISSONNETTE: Yes. I would like to speak to that, Mr. Chairman.
254 I forgot to mention, Mr. Chairman, we really appreciate that you let me come in via this telephone medium. I know it is unusual, but we do appreciate that.
255 In response to my point, which was that 100 per cent of the cable, or virtually 100 per cent of the cable was placed by BCTel on behalf of Shaw, TELUS has said well, that is not the case.
256 Now, there were some systems that prior to our ownership may not have taken the same approach and I can't speak to that. I can tell you that Shaw, in all those systems it owned, relied on BCTel exclusively to place its cable.
257 And, number two, is the only exception to that would be on a one or two bases where there might be an emergency. So if a truck hits the telephone pole and the cable is damaged, our crews typically would go out there together. We would work with BCTel or TELUS to put up their strand and then ultimately put our cable on top of that strand.
258 But we did not have construction vehicles. We did not have the proper strand over‑lashing equipment. We relied on BCTel to do that.
259 So our fix in those situations would have been a temporary one until BCTel could come by and lash in a properly.
260 So there was an absolute directive from Shaw to all of its systems wherever possible to use BCTel.
261 There were situations where, as BCTel or TELUS have now said, there were joint use poles were TELUS ‑‑ I'm sorry, were Hydro may have been placing cable on a joint use pole on Hydro space and on Hydro support structure on behalf of Shaw as well.
262 That has typically occurred in the Vancouver Island region, which isn't subject to this audit.
263 THE CHAIRPERSON: With regard to those systems that Shaw bought, when you bought them there was obviously an agreement, a permit of some sort, between the company that was selling their systems and TELUS, to the extent that they had permits.
264 When Shaw took over those systems, was there due diligence done and a letter sent by legal to TELUS, I guess, asking for an assignment of those contracts?
265 MR. BRAZEAU: Peter, maybe you can answer that.
266 MR. BISSONNETTE: I can answer in general terms.
267 First of all, when we buy cable systems ‑‑ and, as the Commission is aware, last year we bought the Grand Forks cable system, for instance, and Grand Forks would represent themselves in a certain way. Primarily when we look at a cable system, they would tell us how many subscribers they have. They would tell us what the condition of the plant was in terms of its capacity.
268 So in the case of Grand Forks, they said there is some plant that is 450 MHz, there is some that is 550. And so we would do an audit on, you know, just whether or not in fact they had 450 or 500 MHz plant.
269 But it would be impossible or virtually impossible anyway for us to go and try to correlate the records of, say, that cable system with those of TELUS other than to look at the bills that had been received with respect to their current costs of support structure.
270 THE CHAIRPERSON: But did you ask for an assignment of the agreements?
271 MR. BISSONNETTE: Yes. Peter, can you address that?
272 MR. JOHNSON: Yes, we can.
273 In connection with the acquisitions of the cable systems, we typically conducted due diligence process and would take some period of time to go through material agreements of the vendors, of the previous owners.
274 One of the agreements we would look at would be the support structure agreements.
275 The practice has been generally to bring the cable systems under our umbrella of the existing support structure agreement that is sort of the standard form established by the Commission, and we would bring those cable systems under our umbrella of the existing Shaw support structure agreement with BCTel, TELUS.
276 Recently TELUS has changed its position and said that they want a full‑out assignment of support structure agreements, of the existing agreement related to the particular system that we have acquired.
277 THE CHAIRPERSON: Did they not require the assignment prior to recently, whatever that recently was?
278 MR. JOHNSON. We have not been asked until actually the Mascon acquisition, which closed I think within the last two years, for a specific assignment with respect to the cable systems that are at issue in this hearing, to our knowledge.
279 THE CHAIRPERSON: Do you legally need the contract to be assigned or is there an assignment clause already in the contract between TELUS and the system?
280 MR. JOHNSON: There is an assignment provision in the support structure agreement. Despite that, the parties have operated on the basis that regardless of the assignment provision, if there is an existing support structure agreement in place ‑‑ and if you look at the support structure agreements that are at issue here in this hearing, one agreement covers off multiple systems.
281 In particular, I think there is one support structure agreement that covers off nine cable systems that are subject to this hearing.
282 THE CHAIRPERSON: But if the system that you purchased had attached illegally or without permission additional attachments, how would you acquiring that system and TELUS, who is I guess the recipient of no revenue, be aware of that?
283 MR. JOHNSON: Well, first of all, we don't believe that ‑‑ well, first of all, it is incumbent on TELUS to come back to us and to identify a specific location. That could be a 14 kilometre stretch such as in Invermere, but nonetheless they need to identify a specific location.
284 Of course, we know that in this process they have not done that with the exception of the Invermere situation.
285 So we have not heard back in terms of specific unauthorized attachments.
286 You know, some 30 years has passed, and in some cases 15 years has passed, before we have actually heard that this such a material issue for TELUS.
287 MR. FLEIGER: I would just like to state that that would not be TELUS' view. We believe that there is a responsibility on the buyer to clearly identify to TELUS in fact what they have bought and all the associated detail with regard to the network and where the cables are on our support structure in that regard.
288 THE CHAIRPERSON: Has that ever been laid out to Shaw or to any of your other parties who attach to your infrastructure?
289 MR. FLEIGER Yes, it has.
290 THE CHAIRPERSON: Is there documentation to that effect?
291 MR. WOODHEAD: Pardon me?
292 THE CHAIRPERSON: Is there documentation to that effect somewhere?
293 MR. WOODHEAD: The actual support structure, standard support structure licence agreement, Article 12.5 with respect to assignment:
"The licensee shall be subject to ‑‑"
"Any assignment by the licensee shall be subject to the company's prior written consent which shall not be unreasonably withheld."
295 I believe what my friend Mr. Johnson is suggesting is that I think that in some situations always the consent is required but that they had been tucked under existing licence agreements; in other cases they are not.
296 So I think that is to explain why in certain cases there might be nine systems under one standard agreement, which was the Commission's standard agreement that came out of the joint report.
297 THE CHAIRPERSON: So when Shaw acquired those systems did you implicitly or explicitly, by agreeing to the assignment, agree to the transfer?
298 MR. WOODHEAD: We are agreeing to the assignment of the licensee's facilities to Shaw, yes.
299 MR. BISSONNETTE: Mr. Chairman, can I say something?
300 MR. MIELKE: In many cases we didn't know. That's the point.
301 MR. BISSONNETTE: Mr. Chairman, can I just say something?
302 THE CHAIRPERSON: Certainly.
303 MR. BISSONNETTE: You touched on a really important point.
304 First of all, the relationship between Shaw and BCTel and TELUS is one that was based on trust and reciprocity. We did all of the appropriate things with respect to putting cable on support structure and so there was no need, there was no need for that kind of conversation in our relationship because they placed the majority of our cable.
305 In terms of their conduct, we acquired a cable system which was not one of the three ‑‑ not one of the ones that are in question here. Just at the same time as we were acquiring that cable system TELUS undertook to do an audit. So they thought that they needed to do an audit because they suspected something was going on.
306 And the vendor of that cable company, when presented with that audit and the discrepancies, agreed to provide for the cable that had been put up without permits in that particular area.
307 In Shaw's case there has never been a need for that because TELUS or BCTel will acknowledge that the majority of the cable has been placed by their own crews.
308 THE CHAIRPERSON: When Shaw acquires a system, is there a clause for recourse if the system vendor has not reflected or portrayed what he was selling?
309 MR. BISSONNETTE: There is and maybe Peter can talk to that.
310 There is a timeframe associated with it as well in terms of a holdback.
311 MR. JOHNSON: Yes, that's exactly right.
312 So what we would typically have is an indemnity of some kind, but there would be a limitation on the time period within which you could go back to the previous owner and seek any kind of compensation for any material liability.
313 We typically deal with that by way of a holdback post closing.
314 THE CHAIRPERSON: Has Shaw ever had to rely on that?
315 MR. JOHNSON: Shaw has relied on that, yes.
316 MR. BISSONNETTE: May I just say one other thing, Mr. Chairman.
317 We can't reinforce enough that fact that BCTel or TELUS has been placing our cable.
318 It was interesting in one of their most recent responses they alluded to the fact that well, most of this unattached ‑‑ sorry, unauthorized cable is actually fibre‑optic cable and so because Shaw has made all of these press releases talking about the extensive amount of cable that has been placed and TELUS said well, you know, we certainly haven't seen that reflected in our records. Well, let me be clear about this.
319 All of the fibre that is placed in the Lower Mainland of Vancouver is placed by BCTel, either underground or on aerial plant.
320 And in the early 1990s we had a situation where BCTel was using the fact that they didn't have enough space to accommodate us to actually block us, if you will, from placing fibre, because they really didn't want us placing fibre, to the point where they were suggesting to us that they will build their own fibre and we can lease it back from them.
321 So there were those discussions were going on.
322 So in these situations, though, they are alluding that ‑‑ the press releases were referring to fibre that was in Creston and Fernie and Fruitvale, but there is virtually no fibre in those communities that are a part of this hearing. Most of the fibre that was referred to in those press releases is either in Vancouver that they placed and they would know about it because it was identified on the permit, or it was on somebody else's support structures, like on MTS' support structures or our fibre that goes down to the U.S.
323 But it was a red herring again. They are trying to draw you to the conclusion that we were somehow sneaking up fibre in the middle of the night on their support structures to save $90,000 on a bill that for us right now averages about $20 million a year; that we would somehow be that sneaky and insidious to do that.
324 And that is not the case. We have been absolutely open with BCTel and TELUS and continue to do that. And we cherish the integrity of the relationships between our two companies.
325 THE CHAIRPERSON: I want to come back to my question, though.
326 You said there is recourse. Have you ever had to rely on that recourse for any situations related to support structure agreements?
327 MR. JOHNSON: In connection with the ‑‑ sorry, just to respond to that directly.
328 First of all, there is usually a time limitation, as we have mentioned. I think it is typically two years.
329 In connection with the Bowen Island acquisition, which we want to remind the Commission is outside of the scope of the particular audit that is at question here, it was not relevant to the actual materials that were submitted.
330 But in connection with the Bowen Island acquisition, we have relied on that provision because it was the vendor's decision to make that payment and the vendor paid that amount. We were fully reimbursed for that amount by the vendor or the previous owner of that system.
331 MR. ROGERS: Mr. Chairman, your questions to Shaw with regard to whether or not there is a recourse and whether it actually materialized in any case and you have heard the answer ‑‑ and I think it is relevant to ask those questions. But there is an overriding issue which I'm sure you are aware of, and that is even if there was no recourse agreement between the vendor and the purchaser, it really wouldn't matter because the Commission's obligations vis‑à‑vis the requirement to have a permit fall on whoever the licensee is at that time.
332 So it is a matter of private agreement between the vendor and the purchaser. The obligations ride to ‑‑
333 THE CHAIRPERSON: I'm trying to find out how the information came about. How was it deduced that this vendor, who was selling something to Shaw, actually had a discrepancy in his records?
334 MR. ROGERS: Right.
335 THE CHAIRPERSON: Not the quantum or the recourse or anything else.
336 MR. ROGERS: Right.
337 THE CHAIRPERSON: If you allow me to continue.
338 MR. ROGERS: Right.
339 THE CHAIRPERSON: Thank you.
340 So how did this come about, now that you know the question?
341 MR. JOHNSON: Actually, what we would like to do is maybe turn that over to Rhonda to identify the challenge that we have had in terms of the implementation or the issue that we think BCTel has had in terms of the implementation of Decision 95‑13.
342 THE CHAIRPERSON: As long as she at the same time tells me how one found out and whether it was TELUS who asked you or whether you in doing your audit found that there was a shortcoming.
343 MR. JOHNSON. Yes, certainly.
344 MR. BISSONNETTE: It was TELUS, Mr. Chairman.
345 MR. JOHNSON: Yes.
346 MR. BISSONNETTE: Mr. Chairman, TELUS actually told us that they had just completed an audit, sort of coincident with the transaction, and that there was a discrepancy in their audit from the records.
347 MR. BRAZEAU: But, Mr. Chairman, just to add, there was a discrepancy in the amount of aerial cable from what was there and the audit.
348 However, the same situation or same facts could have still existed in Bowen Island as exist in our own systems, which is when there was a conversion as a result of Decision 95‑13 by BCTel, there was a lot of cable that was not included in their billing.
349 That is, in our view, why you see such a large discrepancy. I think this is really critical to this application and that's where I think Rhonda can provide some information as to how we got to this huge discrepancy.
350 MS BASHNICK: Okay. So thank you.
351 Just to sort of take us through where this 470,000 number is very likely coming from, in 1995 when the decision came out, there was in these 12 systems approximately 900,000 route metres of cable, and on September 19th BCTel issued a letter and they said in that that they will be converting the amount of cable metres in their database simply by converting the existing aerial network to total cable metres on a 1:1 basis.
352 So we went back out to the systems, we talked to the people in the field and said: Okay, in how many instances on a cable, on a strand, would there actually have been more than one cable? And conservatively they came back and said at least 50 per cent of the time there would have been two cables on a strand.
353 So if you take the 900,000 and you say had that been converted then, assuming two cables 50 per cent of the time on a strand, that's another 450,000 that would have been added to the meterage at that time, which ironically is very close to this difference we are coming up with today.
354 THE CHAIRPERSON: All right.
355 MR. BRAZEAU: Just to add, all of those cables had been attached by BCTel and even though for some of them we can't find the permit, given that it was attached by BCTel, it had to be authorized by BCTel.
356 MR. FLEIGER: It is also interesting to note ‑‑ and I am not going to validate the figures that Shaw put forward. But if in fact after that decision that computation was made, it's interesting to note that Shaw was very clear that the new charges were on a per cable basis and they chose not to reveal that to any of the parties, the CRTC or to TELUS or otherwise, and they knew full well that they were significantly underpaying TELUS in regard to the rental units.
357 That was clearly what the CRTC had in mind when they gave that six‑month period of time for parties to come forward and to in effect fess up to what is actually out there and that they would not have to pay the $100 unauthorization charge associated with that.
358 I would also like to go back to a couple of others.
359 Shaw has definitely tried to portray TELUS in the light that our records are totally inaccurate, et cetera.
360 It is interesting to note that in regard to the 12 audited areas TELUS ‑‑ and this is on the record, so this isn't new information ‑‑ is that TELUS was able to produce permits ‑‑ these are authorized permits ‑‑ 1866 of them.
361 Shaw was only able to put forward 776 valid permits.
362 So even in an authorized manner Shaw can only come up with less than half of the permits, and again the tariff speak specifically to permits. So that's an interesting note.
363 The other thing I would like to bring to your attention, because Mr. Bissonnette brought it up, is the Invermere situation. Clearly Shaw does have permits for the fibre cable that runs along that 14 kilometres.
364 However, there are two additional cables that run along almost the entire length, and Shaw could not produce and TELUS cannot find in its records any permits pertaining to those two other cables that ran that full 14 kilometre route.
365 MR. BISSONNETTE: Mr. Chairman, you should understand that the cable that runs from Invermere, the permits that reflect our support structures with TELUS or BCTel are in place.
366 We also have support structure agreements with BC Hydro for that run, or some of that run. So where it is not BCTel, it is in Hydro space.
367 THE CHAIRPERSON: But where it is in BCTel ‑‑
368 MR. BISSONNETTE: We have permits.
369 THE CHAIRPERSON: You have permits.
370 MR. BISSONNETTE: Yes.
371 MR. FLEIGER: No, in the case of two other cables that run along that same route there are no permits associated with those. We could not find anything in our records. Shaw could not provide anything to us.
372 We have a map that fully illustrates that and it is a topic on the record, so we are more than happy to provide that map that shows these routes and what runs across TELUS' support structure and what doesn't run across TELUS support structure.
373 THE CHAIRPERSON: I don't think we are going to take it in as evidence, though. We have asked everybody to submit their stuff in advance of the preceding.
374 I hear what you are saying, but it is kind of late to come in right now with ‑‑
375 MR. FLEIGER: It's the same map that was submitted. It is just colour‑coded to identify the cables.
376 MR. GOERES: They filed a map. We have colour‑coded it.
377 MR. FLEIGER: Right. It's the same Shaw map.
378 THE CHAIRPERSON: Shaw, do you have objection to this?
379 MR. JOHNSON: We didn't colour‑code that map, though.
380 MR. FLEIGER: We did. It's your map.
381 THE CHAIRPERSON: Do you have an objection?
382 MR. BISSONNETTE: I can't see the map from here so I can't comment.
383 MR. KERR‑WILSON: I think as long as we are given a reasonable opportunity to respond to what they have done to the evidence, then we are willing, at your discretion, Mr. Chairman.
384 THE CHAIRPERSON: I'm asking you. If you have no problem with it, we will circulate it. If you have a problem with it, then ‑‑
385 MR. KERR‑WILSON: I think subject to our being able to comment on what they have done to it.
386 THE CHAIRPERSON: Certainly, okay.
387 MR. FLEIGER: I would like to make one more comment with regard to the double cable issue.
388 The audits that we have done in these 12 areas are predominately in rural B.C., in smaller towns and villages, and it certainly was not common practice ‑‑ at least TELUS believes it was not the common practice for these small cable companies to go out and double cable their entire network. It just would make no economic sense.
389 It also is totally inconsistent with the process and the technical specifications of running a network.
390 Typically on a pole structure you have a steel cable, which is a strand that just connects those two poles and allows you to lash facilities onto that.
391 TELUS would have its first cable on that in almost all cases, the first cableco cable would be lashed to that. In the third position on that strand would be, subject to spare capacity, emergency restoration, et cetera.
392 If in fact Shaw wanted to put a double cable in, they would have had to apply. Another strand would have been attached to that pole, and that second cable company cable would have been lashed to that.
393 And there would have been a permit and an application to support that.
394 THE CHAIRPERSON: I am going to move on to the next series of questions. It refers to the history that got us to where we are today.
395 As I understand the record in reading both your submissions, there was a joint report that was issued back in the mid‑1990s leading to an order by the CRTC with regard to pole estimates, and I have heard both your positions on that as well.
396 After that there was a national tariff that included this unauthorized attachment that was brought into play, which was then converted into a tariff by BCTel and subsequently by TELUS as well.
397 Shaw, did you participate in this entire process that led up to the creation of this tariff or were you represented by people who participated on your behalf?
398 MR. KERR‑WILSON: Shaw filed comments both on its own behalf and through its participation in the CCTA.
399 THE CHAIRPERSON: All right. And the CCTA represented you, and when this joint report was out did you file a dissenting view or a difference of position?
400 MR. KERR‑WILSON: No. The CCTA'S position would have been consistent with Shaw's position, except where Shaw filed separate comments in some cases.
401 THE CHAIRPERSON: Okay. And the only difference between that and what the CRTC ultimately accepted was the $25 as opposed to the $100?
402 MR. KERR‑WILSON: On the issue of the charge, that's right, the CCTA proposed $25 and the Commission imposed $100.
403 MR. BRAZEAU: And also the CCTA also recommended that there be a full audit after implementing the decision. I think if the audit had been performed at that time, some of these issues that we are facing today we would not be.
404 THE CHAIRPERSON: But the CRTC did not order that audit to be taking place.
405 MR. BRAZEAU: That's right.
406 THE CHAIRPERSON: And they approved the rates and they approved the methodology and they approved the rate.
407 MR. BRAZEAU: That's correct.
408 MS SCHNEIDER: If I might, Mr. Chairman, as a matter of fact the CRTC said that they would not order TELUS to do an audit but that it left it open to either party, if they chose to do so, to perform an audit and correct the numbers if they needed to.
409 MR. BRAZEAU: That's correct and we were satisfied with the BCTel's decision to convert their route to aerial based on a 1:1 ratio. They informed us of that fact and they informed us that that would be reflected in our invoicing. You know, we checked our invoices and the conversion was correct. It was BCTel's decision to do so and we decided to live with that decision.
410 THE CHAIRPERSON: And I found it instructive that on October 25th Shaw filed their evidence I guess for this proceeding and actually quoted from the CRTC Order 96‑194.
411 In the preamble ‑‑ it is on page 5 of your evidence of that date, and the last "whereas" says:
"Whereas the Commission is also of the view that notwithstanding the above approximation, it is open to either BCTel or the customer to correct such an approximation on a going forward basis." (As read)
412 And Shaw did not see fit to correct anything. You were comfortable and happy with the methodology as it was defined.
413 MR. BRAZEAU: As per BCTel's decision and their letter informing us of their methodology, we were satisfied with their approach.
414 THE CHAIRPERSON: So to the extent that this methodology was to your benefit, you were comfortable with that?
415 MR. BRAZEAU: It was to BCTel's benefit, I assume, because they are the parties that recommended this approach.
416 I can't read any intent on why they chose this approach, but I am assuming that the alternative would have meant a full audit and they were not prepared to do so.
417 THE CHAIRPERSON: All right.
418 Shaw, in your October 25th evidence, paragraph 15, which we just covered right now. Sorry, I already covered that one.
419 I will move to TELUS.
420 You have indicated in your evidence in November, paragraph 20 I guess, should the Commission, looking at this issue stated ‑‑ and I quote. This is a quote from you:
"There may be some errors and you might have lost some copies of permits as part of this as well."
421 Can you comment on the extent to which you are saying you may have had some errors and you may have lost some copies of permits?
422 MR. WOODHEAD: I will start and perhaps John can add.
423 To the extent ‑‑ we don't believe that there is any systematic failure with the billing system or how data is captured. It moved from a paper only system to an electronic system in 1987.
424 But I'm not going to sit here and tell ‑‑ and I don't have visibility into every single order that is inputted into that system.
425 I'm not going to say to you that it doesn't have failures where data isn't inputted correctly or something. But it is not of the magnitude that you would be looking at here. You know, no billing system is correct. That's why they have call centers.
426 So, you know, we have full confidence in the integrity of the system.
428 MR. FLEIGER: I would just reiterate what you have said. I don't think anyone in this room would ever say that a billing system is 100 per cent accurate all the time. They certainly are not.
429 But this is a process that has worked for decades, going back probably 30 or 40 years, with very documented processes. I just can't see that a failure of the system would cause a 50 per cent variance to ‑‑ and in some cases a lot more than that for particular areas of billing. That is just not credible.
430 MR. BISSONNETTE: Mr. Chairman, may I just say something on the billing errors.
431 They may not be billing errors, but they may be timing errors. We still receive invoices from TELUS that are three years old for projects that were done three years ago.
432 I know that in my time when I was with Rogers we received a couple of hundred thousand dollars worth of invoices that were for work that had been done three years before, and we indicated to BCTel at the time that we didn't think it was fair that they should be billing us something that is three years old and that they have a responsibility also to ensure that there is a certain timeliness.
433 And they actually chose to write off the invoice.
434 Now, whether or not they permitted that property or not, I don't know. But we do know that they placed the cable and they were not timely in their invoicing.
435 So to the extent that they say every quarter they give us a full and complete billing, you know, they might be giving us a billing record, but it is not full and complete.
436 THE CHAIRPERSON: All right.
437 MR. FLEIGER: Mr. Chairman, I think we mentioned earlier today that I'm not saying that there cannot be exceptions. Anybody can usually always find an exception of something gone awry. But clearly in 92 per cent of the cases the up‑to‑date billing information was sent out within the next two quarters to Shaw.
438 That is valid. That is validated. We ran a report. If the Commission would like to have that or if Shaw would like to have that, they are more than happy to do that.
439 MR. BISSONNETTE: Mr. Chairman, what they are saying then is if it's not billing records and if it's not timeliness of billing and it's not one of those lost permits, then it must therefore be attributed to some kind of motive that Shaw was trying to place cable in a secretive way and they did so in over 500,000 or around 500,000 metres ‑‑ is it metres or kilometres ‑‑ that a lot of cable was placed by Shaw in a secretive way. That just is not the case.
440 That is why I guess I get so passionate about this; is that somebody would suggest that we would try to do that, having had a 30‑year long‑standing positive relationship with BCTel and TELUS.
441 MS BASHNICK: I would like to say just further to that, too, that I think we are not saying that there is an error in your billing system. All we are saying is that your billing system doesn't have the data to compare to the audit because the original conversion was done on a 1:1 basis.
442 So that's very clear that the data that is in there is going to be short the 450,000 because it was never converted in the billing system.
443 So it's not an error.
444 THE CHAIRPERSON: You are also saying something else, though.
445 In your evidence of April 7th, in paragraph 21 ‑‑ and I will quote.
446 It says:
"While the review has undoubtedly revealed a discrepancy in TELUS' billing records, there is no evidence to indicate that the discrepancy is entirely the result of unauthorized Shaw attachments." (As read)
447 I look at the word "entirely". Does that mean that it is your position that there might be some cases where there is unauthorized Shaw attachments?
448 MR. BRAZEAU: No. What we are saying is that their position is that 100 per cent of this is unauthorized, and we are saying come on.
449 THE CHAIRPERSON: Okay.
450 MR. FLEIGER: I think we are saying the same thing. We are saying that yes, maybe there are some billing errors, et cetera, but to have a variance this large and attribute it all to TELUS' error is come on, you know, that's not credible.
451 MR. BRAZEAU: But, Mr. Chairman, it's not ‑‑
452 MR. FLEIGER: You just had somebody admit right after the decision came out that they went and did a check and they found out that oh, maybe the conversion should have been 1.5, not 1:1, yet Shaw chose to remain silent on that.
453 MR. BRAZEAU: Well, this was a decision by BCTel not to do the audit. If they would have performed the audit at that time ‑‑ and they had the option to ‑‑ then the conversion would have been a different ratio.
454 That was not done. That is not our obligation. It was their obligation. We accepted their decision. We decided to live with their decision. It was their decision, not ours.
455 MR. BISSONNETTE: May I make one more point.
456 I recall vaguely ‑‑ and I'm not as close to this as, you know ‑‑ but I recall vaguely that the billing itself, the actual quantum of the billing was virtually the same before and after the conversion, which made sense to us.
457 MS BASHNICK: It was exactly the same.
458 MR. BISSONNETTE: So it made sense to us that if the BCTel records at the time reflected what was really happening in the plant and a support structure had been placed by BCTel and we had been paying on that basis, that when they did the conversion and the conversion was being done in a way that wasn't detrimental to anybody, it just changed the way that the measurement was done, that the amount, the quantum should be about the same. And that's in fact what the case was.
459 So there was no reason for us to say oh, they screwed up, because we didn't know that they had screwed up. The amounts that we were paying for the support structure were almost identical.
460 MR. WOODHEAD: Mr. Katz, may I just respond to that, not to throw you off your line.
461 I believe we just heard that in 1995 that they were happy with the conversion because it was 1:1, while they knew that 50 per cent of this stuff was double cabled.
462 The point is, I can tell you with a great deal of certainty that as of 95‑13 those things would have been billed. They would have been incremental billing units.
463 So if they knew that 50 per cent of these things were double cabled and, you know, attached, then here we are 13 years later ‑‑ if they knew, as they have said ‑‑ here we are 13 years later without the incremental monthly revenues for a period of 13 years and I think that is our case, or these are unauthorized attachments.
464 MS BASHNICK: Let's be very clear that that conversion was BCTel's choice. It is very clear in this letter that they sent to us that they were converting the aerial network total cable to total metres on a 1:1 basis. That was BCTel's choice to do that.
465 It basically would have taken either party to do the audit to come up with the exact number. Obviously no one was going to spend the cost to do that at that time, so that was the implementation decision that was done. Shaw was fine with that.
466 Now all that has happened is consistent with what the decision said in '95. If you wanted to do a correction of this estimate ‑‑ which is all it is, is an estimate, go forward ‑‑ then either party has the opportunity to do that.
467 That is just what TELUS has done now in '96 with this audit ‑‑ or in 2006 with the audit.
468 So it is just a correction of the estimation that was originally done in '95.
469 THE CHAIRPERSON: I have just one more question and I'm sure my colleagues can't wait for me to stop asking questions. I'm probably using up their questions as well here.
470 It is to TELUS.
471 Shaw has indicated that many of the unauthorized attachments, as they are deemed by TELUS, are due to installations made by TELUS.
472 Can you comment as to whether you have actually made them and notwithstanding the fact that there was a permit there or somebody else has ‑‑ or Shaw has done it themselves.
473 MR. FLEIGER: Right. If the attachments were done by Shaw itself without a permit, then certainly we would not be aware of them.
474 I think we have already spoken earlier that Shaw did have the opportunity and they did have the right to put up their own support structure for some period of time before the mid‑1995 period, and that they exercised that right and they actually hired contractors to do work on their behalf.
475 They have always had the opportunity to do maintenance. Maintenance might include replacing a cable that runs between two poles, five poles, ten poles.
476 If TELUS personnel were out in the field and they were observing this, they would have no reason to believe that Shaw was working in an unauthorized manner.
477 So we weren't, you know, following them around ‑‑ and it is not realistic to expect that we could ‑‑ and in every instance that we saw them ask them if they had a proper permit to do that work.
478 So did they have the opportunity? I think clearly they had the opportunity to do their own work, either permitted or not permitted, prior to '95.
479 THE CHAIRPERSON: Just so I understand, though, you are suggesting that 479,000 metered units have been installed based on Shaw asking their unionized installers ‑‑ they are presumably unionized ‑‑ to go out there and do things without a valid permit?
480 Is that what you are alleging?
481 MR. FLEGIER: Either their own people or contractors that they have hired.
482 And yes, that is what we are alleging.
483 MR. BISSONNETTE: Mr. Chairman, we find this so distasteful that they would suggest that that is what we would do. We wouldn't.
484 We didn't have the capability to do it. The only contractors that we were using in those areas were contractors to do installations, not to do maintenance or not to do construction. We did not have construction facilities and we had no appetite to use contractors for construction activities.
485 To that point, Shaw made all of its installation people employees as opposed to using contractors because we didn't have the same faith in using contractors in getting the kind of quality work that we expected other than by doing it ourselves.
486 So we had a directive to all of our regional managers in all of our systems to use TELUS, BCTel to place cable unless it was on Hydro support structures, in which case Hydro many times placed the cable on our behalf.
487 MS YALE: Sorry, it's Janet.
488 Mr. Chairman, the only alternative explanation for how that cable got there is that TELUS put it there and that we were so inept that we did all this work, incurred all this cost, kept no record of it, no track of it, never told Shaw about it and then needed to audit ourselves to find out about all this work that we didn't know we had done.
489 You know, that is just not possible.
490 MR. BISSONNETTE: You have to remember that TELUS didn't own BCTel when the majority of this work was being done. It was BCTel who did the conversion. It was BCTel who acknowledged the conversion. It wasn't TELUS.
491 I hope that you are not suggesting, as I said, that we would go out either at high noon or under cover of darkness to place cable on your facilities. That is such a ridiculous notion when we have such a history of a positive relationship.
492 We pay you $20 million a year for support structure make ready work. Why would we try to nickel and dime you?
493 THE CHAIRPERSON: Okay, we are going off topic here. You folks will each have an opportunity to cross‑examine each other in the next round, which is what we are getting to right now. I would rather have the Commission and legal staff finish off their examination.
494 MR. BISSONNETTE: I'm sorry.
495 THE CHAIRPERSON: Elizabeth...?
496 COMMISSIONER DUNCAN: I have a number of questions, a lot as a result of the comments, your opening comments, but then also the discussion, and then the questions I came here with. So bear with me while I sort through them all.
497 Some of them have certainly been answered so they might be repetitive, but still I want to make sure I leave here with a clear position, a clear understanding of each of your positions.
498 So first of all we start out in addressing the Vice‑Chair's questions.
499 I'm wondering, TELUS, should we expect, then, that Shaw would be able to produce a permit, not an application?
500 So what we are looking for is not the application but the signed permit and the signed permit that, if I understand it, would be backed up by a map of the area that they applied for?
501 MR. FLEIGER: Yes, in most cases we would expect them to produce a permit and most permits would have a network diagram, a map associated with that, showing where that structure, where that cable runs from point A to point B, whether that be in a pole line situation or conduit situation.
502 COMMISSIONER DUNCAN: So there wouldn't be, as we have been talking about when we are referring back to the tariff, the penalty clause there. We are not talking about individual items. We are going to see a permit the covers an area?
503 MR. FLEIGER: Yes.
504 COMMISSIONER DUNCAN: All right.
505 Shaw, I'm just wondering, Mr. Brazeau, how you file or keep track of these permits?
506 MR. BRAZEAU: I will let Rhonda ‑‑ or Peter, sorry.
507 MR. JOHNSON: It is important for us to remember that we are talking about authorization and not just permits. Permits is just one piece of evidence.
508 COMMISSIONER DUNCAN: That was part B of my question, but go ahead. That's fine.
509 MR. JOHNSON: Okay. So John raised a good point when he talked about make ready charges.
510 We have invoices of make ready charges that we can substantiate where we have been authorized to place facilities. That would be outside of a permit, but it would certainly demonstrate and evidence authorization.
511 There are other forms of authorization as well. We can go back to invoicing and records that we have on accounts payable to evidence this.
512 So what is important to look at is the authorization.
513 And when you look at the tariff itself, I think it is important to recognize what Janet said, which is that the licensee has installed the facility. This is in connection with the unauthorized attachment charge.
514 What we are saying is we, Shaw, did not ‑‑ we the licensee did not install those facilities. We can't even get to the unauthorized attachment provision here because BCTel installed those facilities for us.
515 COMMISSIONER DUNCAN: I'm assuming that you are making the distinction between the permit and the type of authorization that should be acceptable because maybe you don't have all those permits in one place. So you are just looking for another way to substantiate it.
516 MR. JOHNSON: Sorry, yes of course, to make it clear.
517 COMMISSIONER DUNCAN: I had noticed that when Mr. Brazeau spoke earlier when he referred to the appropriate authorization. So I was curious to know what that would be.
518 MR. JOHNSON: Yes, thank you.
519 COMMISSIONER DUNCAN: I'm wondering, then ‑‑
520 MR. WOODHEAD: Commissioner Duncan ‑‑
521 COMMISSIONER DUNCAN: Yes...?
522 MR. WOODHEAD: ‑‑ I would just like to point you to the general tariff for this, because a permit is an approved application by the telephone company, not half of an approved application; it is the complete application.
523 COMMISSIONER DUNCAN: And that's why I was asking you that, because I had picked up on that when you were doing it.
524 So it's not a single piece of paper for each attachment; it is a permit that covers a whole area?
525 MR. WOODHEAD: That's correct.
526 COMMISSIONER DUNCAN: All right. I understand, thank you.
527 I want to talk then, just following along on your conversation again with the Vice‑Chair, on the error in the starting point or what Shaw is proposing is an error in the starting point.
528 Did I understand that that error was made and you realized it, Shaw. Now, this is in 1995?
529 Did you recognize it at that point that it was an error?
530 MR. BRAZEAU: In our mind, it wasn't an error. BCTel made a decision. BCTel decided to interpret 95‑13 based on a 1:1 conversion between route metres and total cable metres. They made that decision.
531 You know, it wasn't as if they didn't understand the decision and came up with a wrong invoice and said aha, we got them, right, and look at all the benefits we are getting.
532 They made that decision. They wrote to us ‑‑ and I am assuming they wrote to all of the other cable companies ‑‑ saying there is the decision. We have to change the methodology by which we invoice you for support structures. Here is the way we are going to proceed going forward. Thank you very much.
533 And again, the decision gave us the opportunity to challenge that or for BCTel to change their approach. Nobody did.
534 COMMISSIONER DUNCAN: Then did I understand, Mr. Woodhead maybe, that you had indicated that there was a 1.5 per cent margin of error in that conversion?
535 MR. WOODHEAD: Well, there are a couple of conversions we are talking about here.
536 The conversion I was talking about was that when the Commission approved the strand conversion distance, that would derive a pole count without actually going out and counting the poles.
537 And when we subsequently went and did the audit, we found that the variance in the actual number of poles to what the proxy calculation brought us to was that there was a 1.5 per cent variance in the number.
538 COMMISSIONER DUNCAN: And that was because you were using a 36.6 and not recognizing the two strand ‑‑ two wires. Is that the reason?
539 MR. WOODHEAD: No.
540 COMMISSIONER DUNCAN: I don't have ‑‑
541 MR. WOODHEAD: The cabling is a completely different calculation.
542 COMMISSIONER DUNCAN: I will let you explain it to me then.
543 MR. BRAZEAU: Two separate issues. One was poles, which is that ratio that Mr. Woodhead just mentioned.
544 COMMISSIONER DUNCAN: All right.
545 MR. BRAZEAU: And then there was a second issue, which is the amount of cable that was lashed to those strands.
546 COMMISSIONER DUNCAN: All right. So that's what is the 479,000?
547 MR. BRAZEAU: That's the strands.
548 COMMISSIONER DUNCAN: That all relates to the cable?
549 MR. BRAZEAU: Exactly.
550 COMMISSIONER DUNCAN: So I'm just thinking then, if there is an error like that and if TELUS accepts that ‑‑ because obviously TELUS is going forward and doing a lot of audits ‑‑ would you object to them making that conversion at this point for all the other ‑‑
551 MR. BRAZEAU: We have not objected.
552 COMMISSIONER DUNCAN: No, but I mean ‑‑
553 MR. BRAZEAU: I think when TELUS said well Shaw accepts the results of the audit, absolutely. They have shown us that there are X amount of cable meterage out there as a result of their audit.
554 Again, maybe this audit should have been done earlier.
555 It is there. We accept that and going forward we are compared ‑‑ and I think we are paying for these, the extra cable.
556 COMMISSIONER DUNCAN: I didn't make my question clear.
557 I realize that you are paying now and that you have accepted that, but what I am saying is this is only 10 systems or 12 systems that have been audited. They are obviously going to conduct many more audits.
558 So could they at this point in time make a correction to their system that would avoid at least this much of the discrepancy and would you agree that it would be 50 per cent?
559 MR. BISSONNETTE: No, we wouldn't.
560 Again, if you take the majority of our cable, Commissioner Duncan, much of it is in Vancouver and may not have the same ratio of lashing, of cables lashed between, you know, up between the poles.
561 One of the other things we should remember is that some of these cable systems in '95 we didn't own and so when we look at the number that Rhonda mentioned, that is looking back from this period, while we were preparing for this case, to look at what the quantum would have been had that ratio been the case.
562 But many of those cable systems weren't even ours. Like Chilliwack wasn't ours. Let's see, Fruitvale wasn't ours. Whistler wasn't ours. Yahk we don't even serve and we haven't served for 10 years. Invermere wasn't ours.
563 Many of these cable systems didn't even belong to Shaw, so we wouldn't be able to at that time look at the translations that BCTel did and say that this is a definitive difference in the calculation of ratio because we didn't own those cable systems.
564 Certainly TELUS has always had the ability to go into Vancouver, and I'm surprised that they haven't gone into Vancouver if they thought that we were placing cables in the middle of the night or in the middle of high noon.
565 The fact is that we have really the solid permits in place and in some of the cable systems which we didn't own we can't speak to that. We can't speak to the ratio.
566 COMMISSIONER DUNCAN: I guess I was just going by Ms Bashnick ‑‑ I hope I'm pronouncing your name correctly ‑‑ I was just going by the comment, the 50 per cent.
567 Did you go and ask the crews recently and that's how you came to the 50 per cent?
568 MS BASHNICK: Yes, we spoke with them recently in those particular systems.
569 COMMISSIONER DUNCAN: Okay.
570 MS BASHNICK: So that's why we would say that that ratio applies to those systems as of '95. If we accepted sort of that 1.5 ratio across the board, we are just exchanging one estimate for another estimate.
571 So it really has to come down to an audit is what changes the estimate that was originally done in '95.
572 MR. FLEIGER: I would just like to clarify. I had mentioned it earlier, but I would like to emphasize it again.
573 That is all premised on the notion that you believe that all this double cabling existed. In these particular audited areas we do not subscribe to that theory. They were relatively small rural‑based systems and there was really no economic reason for them to be doing double cable in their feeder and distribution. It made really no sense.
574 Not only that, in the context of technically how it would get put up, the first cable company cable would get lashed to the TELUS cable on the existing strand. If they wanted to put up a second one, a second strand would have been placed by TELUS and that second cableco cable would get lashed to that and it would have been caught in our records. It would have been caught in our billing system.
575 So we just do not ‑‑
576 MR. BISSONNETTE: But that's not the case.
577 MR. FLEIGER: Just let me finish.
578 MR. BISSONNETTE: Yes.
579 MR. FLEIGER: We do not believe that that is the case in these audited areas that we are talking about.
580 What is likely more plausible is that post '95 when there was a huge influx of Internet requirements, a huge influx of requirement for additional bandwidth, in that era, you know, double cables, second cables got put on support structures.
581 MR. BISSONNETTE: Well, let me answer both of those.
582 First of all, what he is suggesting is that the cable ‑‑ that only one cableco cable could be lashed over a telephone cable, and that is absolutely not correct. There are many situations where there are two cablecos. And it is really the cables that are lashed over a telephone company. They wouldn't have to put in a second strand and it really is dependent upon the size of the cable.
583 Much of the cable in those days was smaller cable, 420 and 750 cable, and the weight of those cables could be accommodated with a single strand.
584 So that's number one.
585 Number two is in terms of putting cable up to meet a demand, most of the demand was in our major centers. Most of the growth was in our major centers. Many of these cable systems had not grown in 10 years.
586 Trail and Nelson and Castlegar, those systems have probably added 500 customers in the last 15 years. They are very, very stagnant systems and so there is no need to be building more cable to meet the demand. The demand is on the bandwidth within the single coaxial cable.
587 MR. WOODHEAD: Commissioner Duncan, if I understand Mr. Bissonnette correctly, and just to clarify, we are not talking about Vancouver. We are talking about these 12 audited areas.
588 So now if I understand correctly, the story is that these systems only grew by 500 customers so there wasn't any double cabling. But we found double cabling.
589 The only explanation then that you could have for that was the requirement for higher megahertz amendments to those systems to do things like Internet, increased specialty channels, digital and all of the rest of the service offerings.
590 MR. BRAZEAU: Commissioner Duncan, in the process of looking at all our records for this proceeding we were able to locate some permits where it is clearly indicated that there were two cables that are lashed to the strand.
591 So our position is that prior to '95, prior to BCTel's decision to modify its rating structure, that a significant amount of the facilities were double strand.
592 COMMISSIONER DUNCAN: I have another question and it is going to the point that you didn't own all of these systems.
593 I notice there are four systems that you purchased after 2005, or actually after 2004.
594 I know, Mr. Bissonnette, you spoke at great length about what Shaw's policy was in a directive to use only BCTel to do construction, but how are you able to speak to, for example, what Monarch Cable's policy might have been, or Sunshine Communications or Whistler's?
595 How can you say with certainty that that was their policy; that they didn't use outside contractors or do the work themselves?
596 MR. BISSONNETTE: I can't say without, you know, raising the question of accuracy, other than what they told us their practices were.
597 I would speak about the example of Whistler.
598 Whistler had told us that most of the cable that exists in Whistler was placed by BCTel, and there is some Hydro support structure I believe in that area that would have been the exception to that rule. But Whistler Cable told us that they used BCTel or TELUS to place their cable.
599 In some cases we have a fibre‑optic cable that runs between Vancouver and Whistler and that cable was actually placed by BCTel and Bell Canada, along with support structure which runs between Vancouver and Whistler.
600 So I can't say without certainty that they didn't use somebody, but they told us that they had. And before '95 we know that they had. And in many of these cable systems their current form is very similar to their ‑‑ in terms of the number of cables that they would have up there, would have been in place prior to '95, which we know was done by BCTel.
601 COMMISSIONER DUNCAN: I guess I'm a little concerned about the 50 per cent number that has been thrown out, or the percentage that has been thrown out, because it is based on ‑‑ we went to the systems, we asked the men in the field.
602 Well, you are asking them to remember back to ‑‑ well, I guess they are looking at the system right then and you are asking them in 1995, that many years ago, is that the way it was then?
603 MS BASHNICK: Yes, it was really as of ‑‑ what would there have been there in 1995?
604 And we do have, you know, as Jean had indicated, we have gone back as well to invoices and work orders and that, permits that we did get from TELUS, and there was placement of two cables on a strand back prior to 1995.
605 MR. JOHNSON: We want to be clear that that is with respect, Commissioner Duncan, to the 12 systems at issue here.
606 MS BASHNICK: Yes.
607 MR. JOHNSON: So these are some of the smaller systems.
608 COMMISSIONER DUNCAN: In the response to the interrogatories that the Commission asked, you submitted those. So TELUS has an opportunity to see where that was, those two strands, where that's indicated.
609 You submitted that information in response to our questions?
610 MR. BRAZEAU: No, I don't believe that.
611 MR. JOHNSON: Sorry, Commissioner Duncan, could you repeat the question?
612 I'm not sure we understand.
613 COMMISSIONER DUNCAN: Well, the Commission asked for you to submit all the applications. Just a second, I will just turn to the question I'm referring to.
614 It is question 1.
615 We asked for a list of all the support structure installation applications including date, location, details, number of poles, metres of strand, conduit.
616 So you submitted all the information that you had. That's what we asked for.
617 All I'm saying is, is TELUS then able to look at the material you submitted and find all of the instances that you are referring to?
618 MR. JOHNSON: We believe that we have come up with additional invoices from TELUS that identified the placement of the double cable in the Chilliwack region. So that was not submitted at the time.
619 COMMISSIONER DUNCAN: But if they weren't invoicing it, how would the invoice show that?
620 MR. WOODHEAD: Was this filed? Sorry, excuse me.
621 Was this filed with the Commission at any point here? Were we served with it?
622 MR. JOHNSON: I'm not sure if ‑‑ I don't think you have been served with the actual ‑‑
623 COMMISSIONER DUNCAN: Thanks for asking my question better. Thank you.
624 That's what I was getting at, yes. Thanks.
625 THE CHAIRPERSON: Can I just interject here.
626 I am being asked for a hygiene break quite urgently by some people. So can we take a break for 15 minutes, please. We will reconvene in 15.
‑‑‑ Upon recessing at 1059 / Suspension à 1059
‑‑‑ Upon resuming at 1115 / Reprise à 1115
627 THE CHAIRPERSON: So let's reconvene with Commissioner Duncan.
628 Mr. Bissonnette, are you on the line again?
629 MR. BISSONNETTE: Yes, I am, Mr. Chairman.
630 THE CHAIRPERSON: All right.
631 Commissioner Duncan...?
632 MR. KERR‑WILSON: Mr. Chairman, before Commissioner Duncan asks her next question ‑‑ sorry, it's me over here ‑‑ we have actually been able to confirm that the two Chilliwack invoices that we were referring to were disclosed by Shaw as part of the interrogatory responses.
633 So those two specific documents are on the list that Shaw provided in response to CRTC‑1.
634 I can give the specific references and then we can speak to what it is those invoices show.
635 MR. ROGERS: Excuse me, can you indicate whether they were copied to us as well or just to the Commission?
636 MR. KERR‑WILSON: Well, what Shaw was asked to provide was a list of the permits. So they are actually BCTel documents and what Shaw had disclosed was the individual list of the permits that it had in its records.
637 So this is in the list of permits that it had disclosed to the Commission.
638 MR. ROGERS: So that full response was given to us as well?
639 MR. KERR‑WILSON: Yes, it was in the interrogatory responses filed by Shaw on ‑‑ whenever it was.
640 MR. BUZIOL: Mr. Commissioner, if I may, that spreadsheet that was provided to TELUS does not have the detail of the number of cables that was placed. It just has the application number along with the total meterage.
641 So unless we actually see the application, we would be unable to tell if it was double cabled.
642 MR. KERR‑WILSON: From our position, it was a BCTel document and we provided the reference to the document. We didn't provide copies of the permits, but they did disclose the permits to TELUS at the appropriate time.
643 THE CHAIRPERSON: Are you questioning the applicability of entering this information on the record or are you just commenting on the substance of what is on there?
644 MR. BUZIOL: No, the information is on the record in the form of a spreadsheet. But in order to validate if it was double cabled, we would actually need to see a copy of the physical permit.
645 THE CHAIRPERSON: Wouldn't you have the permit if this was your invoice?
646 MR. KERR‑WILSON: We have.
647 MR. BUZIOL: It's not an invoice. It's a spreadsheet that shows the permit.
648 THE CHAIRPERSON: But this is an invoice; right?
649 MR. BUZIOL: That is our record I believe, what you are looking at there.
650 THE CHAIRPERSON: All right.
651 MR. KERR‑WILSON: Yes. So that is not what we are talking about. What we are talking about is a BCTel application for use of support structure that Shaw had disclosed in its list of permits. The Commission had asked it to provide us with a list of the permits we had.
652 So it was on that list of permits.
653 TELUS is quite right. Shaw didn't provide physical copies of all of permits because it wasn't asked to do that. It was asked to provide a list.
654 We had identified it by the BCTel permit number, so it was available to TELUS to look at those records if they wanted.
655 THE CHAIRPERSON: And you are saying you can't identify whether they are a second strand or not, a second line?
656 MR. BUZIOL: Not simply by the spreadsheet, no, we cannot.
657 THE CHAIRPERSON: All right. Let's proceed.
658 COMMISSIONER DUNCAN: I think maybe I will just ask a follow‑up question about the small systems which are the smaller systems which are the subject of this audit.
659 I'm just wondering, these cable systems, the double cable that you are referring to I'm assuming would have been trunk and distribution cable and they would have been, are you saying, put on one strand?
660 MR. BRAZEAU: I think Mr. Bissonnette can speak to that.
661 MR. BISSONNETTE: Yes, Commissioner Duncan.
662 As you know, in cable systems there are main trunklines and coming off of those main trunklines many times in order to actually get cable to the household, we go into our distribution network. And many times the distribution network can run along the same strand as the main trunk, depending on the physical location of either the subdivisions or the houses within subdivisions.
663 COMMISSIONER DUNCAN: Are you saying, just so that I'm clear, that BCTel accepted, in an instance where there was trunk and distribution both, they counted it only once?
664 MR. BISSONNETTE: That's right. That was actually the practice up until 1995.
665 So from 1970 when we started building cable systems all the way up to 1995, it wasn't something that we actually ‑‑ or that they actually really look as irrelevant because they billed us on the basis of the route metres between two spans, irrespective of the number of cables that were on there, whether they were trunk or distribution cables.
666 MR FLEIGER: Commissioner Duncan, TELUS would just like to be on the record that it disagrees with that; that we would not put both those cables on the same strand.
667 COMMISSIONER DUNCAN: That was going to be my next question actually.
668 I was wondering, am I correct in assuming that both those cables would be on one strand?
669 And so I understand TELUS' position as no.
670 Mr. Bissonnette ‑‑
671 MR. FLEIGER: That's correct.
672 MR. BISSONNETTE: In practice the answer was yes.
673 Now, when you look at some of the smaller cable systems, putting up more strand was frankly not something that the telephone company wanted to do. And so to the extent that the current strand could support one cable and a distribution cable, which was much, much smaller, it's in fact half the diameter, their practice was actually to do that. That's their practice.
674 If you look to the records that they are referring to, they talk about double cabling on top of strand.
675 If you go into Vancouver where there is really dense population ‑‑ and I know that's where their practices are also apparent ‑‑ where there is dense housing and apartment buildings, most of the mainline cable through Vancouver, because the distribution length is so short, would also have distribution over‑lashed on top of the telephone company cable as well as the cable company's cable.
676 COMMISSIONER DUNCAN: I appreciate that. I guess I would like to sort of concentrate and not be distracted by what Shaw would do in Shaw built systems and in large systems like Vancouver. I want to sort of stay with these small systems.
677 MR. BISSONNETTE: Yes.
678 COMMISSIONER DUNCAN: I think that is fairer.
679 I'm just wondering, if I could ask TELUS then, in the support structure agreements I assume there is construction parameters in those agreements, is there?
680 MR. FLEIGER: Yes, there is.
681 COMMISSIONER DUNCAN: So what would ‑‑
682 MR. FLEIGER: There are practices, technical standards that are adhered to.
683 COMMISSIONER DUNCAN: So would those construction standards require two strands?
684 MR. FLEIGER: Yes, they would.
685 COMMISSIONER DUNCAN: All right. Thanks. That sort of ‑‑
686 MR. WOODHEAD: Commissioner Duncan, the actual construction standards are in the support ‑‑ what was the Support Structure Operations Guide that had diagrams of the strand and positions that were available.
687 COMMISSIONER DUNCAN: But the cable operators would be aware of them ‑‑
688 MR. WOODHEAD: They would be aware of this.
689 COMMISSIONER DUNCAN: ‑‑ and that's what you followed?
690 MR. WOODHEAD: Yes.
691 COMMISSIONER DUNCAN: So your position, then, would be supported by the agreements that you entered into with the cable companies?
692 MR. WOODHEAD: That's correct. And the telephone companies established the construction and technical standards.
693 COMMISSIONER DUNCAN: I guess, Mr. Bissonnette, what you are saying is that in practicality that's not what you did ‑‑ or was done, because you didn't build these systems necessarily.
694 Is that right?
695 MR. BISSONNETTE: Yes. What they did.
696 They actually would place ‑‑ because they weren't in the business of putting up strand and where they could use one strand and they could accommodate it.
697 Many of the times where there was a resistance to us going on the strand was that they were trying to preserve to themselves that strand for competitive reasons.
698 But clearly their practice was to put more than one cable company cable on top of ‑‑ on the same strand, because that is the way the distribution actually worked, the practical reality of the distribution.
699 Putting up double strands would have made sense and when you have a small cable meandering through a small community.
700 COMMISSIONER DUNCAN: I don't know, Mr. Bissonnette, in fairness, at the time these systems were built that there was much thought about competitive, you know, building for a competitive situation.
701 But I will just ‑‑
702 MR. BISSONNETTE: May I just say in answer to that, though, from '95 ‑‑ I'm sorry, from 1991 onwards, the telephone company ‑‑ this is when we were introducing the placement of fibre‑optic cable.
703 The telephone company got very, very concerned about the number of fibre cables that we were putting in because they almost looked at it as their own domain. So they tried to limit our ability to place fibre.
704 So we noticed from 1991‑92 ‑‑ I actually met with BCTel with some of my former colleagues who were outside plant managers and expressed a concern about the fact that we couldn't ‑‑ you know, that they were obstructing us in placing fibre‑optic cable and we finally came to a resolution of that.
705 They appreciated the fact that we were using BCTel placement crews to do the work and so they were able to accommodate our needs.
706 But fibre was clearly a competitive issue in their mind.
707 COMMISSIONER DUNCAN: I think I don't necessarily disagree with what you are saying there. What I am thinking is that these systems that were audited here are older and that the two cables on the one strand that you are referring to wouldn't be fibre.
708 MR. BISSONNETTE: You are absolutely right. They were distribution and they were primarily trunk cable and distribution would be the majority of the cable.
709 COMMISSIONER DUNCAN: So what you are saying is that BCTel would have constructed that plant ‑‑
710 MR. BISSONNETTE: Yes.
711 COMMISSIONER DUNCAN: ‑‑ not in compliance with their own construction standards.
712 Is that correct?
713 MR. BISSONNETTE: No, they didn't have a limitation on their standards. The standard was the capacity of the strand to hold weight. So there was no prohibition against having two cableco cables on top of the strand. They had construction practices that you could use the second strand if in the opinion of the outside plant construction manager, if that strand couldn't accommodate the weight of one distribution cable and one main trunk cable.
714 Again, the practical reality is if you drive through these small communities, you will see four and five cables on one strand.
715 COMMISSIONER DUNCAN: What would the four and five cables be?
716 MR. BISSONNETTE: They could be telephone cables as well, so telephone ‑‑
717 COMMISSIONER DUNCAN: Oh, all on one strand.
718 MR. BISSONNETTE: Yes.
719 COMMISSIONER DUNCAN: Continue. What do you think there would be? Four or five telephone trunk distribution ‑‑
720 MR. BISSONNETTE: They could be telephone cable over‑lashed on top of telephone cable. They could be cable companies' cable over‑lashed on top of two cable companies.
721 The practice was to maximize the usage of strand, but to do it within the strand load bearing capability of the strand. The strand could accommodate very easily in most cases more than one telephone company cable and one cable company cable.
722 Again, the distribution cable, which is smaller in diameter, did not overly burden the strand between two poles. That was a practice that BCTel followed.
723 COMMISSIONER DUNCAN: Before we go too much further with this, I just want to ask Mr. Fleiger one question in response to my earlier question.
724 As I understood, your construction standards did not permit that. Is that...
725 MR. FLEIGER: That's correct. The construction standards were based on the number of cables and there would be no more than three cables on a strand.
726 We did that purposely because we didn't want people out in the field making judgment calls about how much load bearing could be done on a particular strand. So that was the standard.
727 The number of cables; there were two cables on a strand with the third position reserved for emergency restoration purposes, et cetera.
728 And if any party came and wanted to put another cable up, another strand would be installed and that cable would be lashed to that second strand.
729 MR. BISSONNETTE: May I just respond to that.
730 He clearly said three cables, and one was reserved for certain things. BCTel controlled the support structure. They placed their own cable on that support structure and they made the determination that that strand could accommodate an extra cable. That is a reality.
731 I have worked in outside plant. I have seen it. I have experienced it. I have placed cable in situations. I have seen what the outside plant looks like.
732 And I am telling you absolutely that there are more than two cables on many of the strands that run through these small communities.
733 MR. JOHNSON: Just to supplement that, the Chilliwack permit actually evidences that as well.
734 COMMISSIONER DUNCAN: Do you want to just elaborate on that?
735 MR. JOHNSON: Sure. There is a permit that is in the record here, which we have discussed, which does identify two cables being placed in connection with a strand.
736 This is on TELUS' paperwork. This is TELUS' permit.
737 COMMISSIONER DUNCAN: All right.
738 MR. JOHNSON: On one strand, sorry.
739 COMMISSIONER DUNCAN: I'm going to just ‑‑
740 MR. FLEIGER: So we would just clearly like to be on record that we disagree with Mr. Bissonnette and that we do have standards. We do follow those standards. The standards are what they are and they are documented and followed in the field.
741 COMMISSIONER DUNCAN: Is it possible that BCTel didn't adhere to those standards as rigidly as TELUS would today?
742 MR. FLEIGER: I would say that there was a high degree of adherence to those standards ‑‑
743 COMMISSIONER DUNCAN: Okay.
744 MR. FLEIGER: ‑‑ and that it wasn't, you know, a free‑for‑all wild west show going on in B.C. with regard to every region in the province doing things differently.
745 I think telcos have a very long history of having standards from construction purposes, from network equipment installations, and they are followed rigorously.
746 COMMISSIONER DUNCAN: Okay.
747 MR. BISSONNETTE: May I just say something, Madam Commissioner.
748 I worked at BCTel for 13 years. I worked in the outside plant, and we totally disagree with what he said.
749 There are many, many instances where there was cable over‑lashed by BCTel with more than two cables, two of which are cableco cables.
750 COMMISSIONER DUNCAN: The reason that I was sort of interested in elaborating more on this or getting a better understanding of it was I was following up on the 50 per cent point that was raised earlier.
751 I want to go back to some of the questions that I came with, and then I going to go back to the opening comments.
752 I want to first of all ask questions to TELUS because you happen to be on the top of the pile here.
753 Do you agree, then, with Shaw's interpretation of the tariff which requires that TELUS is required to specify which facilities they are on without authorization?
754 And is that then going to be a specific attachment or is it going to be, as we discussed earlier, the whole area covered by a permit?
755 MR. WOODHEAD: I was involved in each and every one of these decisions that we are talking about: 95‑13, 96‑1484 and 2000‑13.
756 I was also involved in the joint task force exercise to arrive at the standard support structure agreement and the support structure operating guide and was involved ultimately in the wording of this tariff.
757 My recollection ‑‑ and it is a very clear recollection ‑‑ is that the problem is that particularly when you are trying to establish a national tariff and you are talking not just about 1.2 million poles in British Columbia but you are talking about tens of millions of poles across the nation, as well as hundreds of thousands of kilometres of duct work, that if you were going to require a permit for each attachment to each pole or each entrance duct to each run a conduit, it would fill, you know, stadium after stadium with paper.
758 So what the wording of this tariff talks about when it talks about an attachment, it is talking about the verb "attachment", like these things are attached to a facility.
759 The custom in the industry was for, and always has been ‑‑ at least as far as my education on this was and certainly in the time that I have been dealing with this ‑‑ that an application would be submitted, as I said, for a specific route, and you can call it what you will, within a geographic area, within a subset of a cable system or whatever it is along a highway, under a street, whatever. And that is how it would proceed.
760 You know, in many instances, for example the cable company wouldn't even address how many ‑‑ like how many poles? We don't know. We just want it from here to here. Please go and do whatever make ready you need to do to strengthen the pole or do whatever. So it doesn't relate to a specific attachment.
761 COMMISSIONER DUNCAN: Okay. So in the information that was given to Shaw, you mention that after each area was audited you provided Shaw with the results of the audit and that included maps showing the Shaw facilities and a spreadsheet detailing the difference between equipment in the field and what was authorized.
762 So I'm wondering, then, did the information provided to Shaw give them an opportunity to go back to your network job orders, as you refer to them in your filings, so that they could see that they had been approved or not approved?
763 Did they have adequate information to tie back into the permits that they applied for?
764 MR. WOODHEAD: Yes, they did. We have provided them with all of this information.
765 In fact, we invited Shaw to come along on these audits with us, with Mr. Brown and Ron and these people. They chose, for whatever reason, not to do that.
766 And then they could go back into their records and reconcile that with their network job orders.
767 You know, I think we have been clear already that there is a certain disparity as to how many permits or approved applications we have been able to put on the record. It is more than double what they have been able to put on.
768 But they had ample information to go back and reconcile their network or their job order or network order with their records.
769 COMMISSIONER DUNCAN: Would you be agreeable with the point that was made earlier, that that make ready invoice would suffice as proof that they had authorization, you know, if they don't ‑‑
770 MR. WOODHEAD: I will take a crack at this and then I will pass this over to the actual operational folks here.
771 My understanding would be if there was some approval of make ready or whatever, there is a number of things that could happen. The order could be cancelled. You know, other things could happen. And that might not necessarily even mean that any facility was ever placed.
772 I will pass it over to John and Ron here.
773 MR. BUZIOL: Yes, Madam Commissioner, the application itself is the permit. So the invoice would not be reflected ‑‑ or it wouldn't be reflected on the invoice in terms of the total rental meterage or the total attachments that were made. That would be only reflected on the permit itself.
774 MR. BRAZEAU: But, Madam Commissioner, I think we spoke to this issue in our opening statement; that without specific permits, this just opens up to vague allegations that somehow or somewhere there are unauthorized attachments.
775 And you can never get out of that vicious circle and prove exactly that those facilities were authorized. That's why I think the tariff speaks to the opportunity for the licensee to demonstrate that those facilities were authorized.
776 I think authorization means more than a permit. If we can show that these facilities were authorized, then by definition they are not unauthorized.
777 We have also argued that 90 per cent of the facilities that are under consideration were installed by BCTel in '95, pre '95.
778 So a huge chunk of the facilities under consideration, by the fact that BCTel installed those, were authorized even though there is no direct line to a specific permit.
779 MS YALE: Commissioner Duncan, your question was: Would there be enough information ‑‑ I think we have kind of strayed from the question.
780 Is there enough information that comes from the audit to allow Shaw to reconcile and get the opportunity that they claim they needed to be able to see whether or not they in fact had authorizations for what the audit disclosed?
781 Our position is yes, of course. They got the information from the audit. They could reconcile it against their own billing records and they would know exactly what it is that we are saying we found.
782 The proof is that they are now paying the monthly charges for those circuits ‑‑ those attachments. So they know exactly what the attachments are that are in issue for which we say there are no valid authorizations.
783 It is not more complicated than that.
784 MR. BISSONNETTE: Madam Commissioner, we are paying it because we have actually been able to go out there and determine that there are facilities there.
785 What we take exception to is the unauthorized nature of this and, you know, TELUS' knowledge that 75 per cent ‑‑ so that's on the high side ‑‑ that 75 per cent of the cable before '95 was placed by themselves.
786 So either the entirety of this has fallen outside that 75 per cent, because we say it was actually 95 per cent, or there was a billing error or somebody has done something nefarious.
787 But the fact that ‑‑
788 COMMISSIONER DUNCAN: Sorry, go ahead.
789 MR. BISSONNETTE: What we have said is that we are paying for it because we have a positive, good‑faith relationship with TELUS and we were able to confirm that there was cable in the places where they have said there was cable.
790 But what we have said is that it was not not authorized. It was authorized cable we placed, because they authorized themselves to place it.
791 COMMISSIONER DUNCAN: But I guess what you are telling me, though, is that you don't necessarily have the permits but you want us to accept that 75 per cent of the cable was installed by BCTel and so therefore it was authorized?
792 MR. BISSONNETTE: Actually, we are saying 95 per cent, ma'am.
793 COMMISSIONER DUNCAN: I understand that.
794 MR. FLEIGER: Well, in the 75‑95, whether it is zero or 50 per cent, I really believe there is really no fact to support that as to what the number could potentially be. The fact that ‑‑
795 MR. BISSONNETTE: Well, we know of 95 ‑‑
796 MR. FLEIGER: The fact of the matter is that there is a significant more amount of cable out there than what either TELUS or Shaw can validate through authorized permits.
797 MR. BISSONNETTE: And we are telling you ‑‑
798 MR. FLEIGER: And, you know, we are being led to believe, as Janet Yale has said earlier, that that all mysteriously got up on poles without TELUS ever having a record of it, without TELUS ever having billed for it and that's just not credible and it's not reasonable.
799 MR. BISSONNETTE: I'm telling you under oath that we did not place that cable; that the cable was authorized that was placed by yourselves.
800 We have not gone out and placed cable without permits or authorization.
801 MR. FLEIGER: Well, then where is the permits for the balance?
802 THE CHAIRPERSON: Let's move on. I think it is for the CRTC decision to decide where the cable came from.
803 Let's move on to the next question.
804 COMMISSIONER DUNCAN: What I want to look at or discuss are the invoices that were given.
805 They are confidential pages so I have tried to make my questions general. Shaw has obviously seen the billing.
806 I'm just wondering, what would cause an over‑billing, because I notice there are some credits?
807 What reasons would you think there would be for an over‑billing?
808 MR. BUZIOL: So when the audit was performed, if we found more cable than we were actually billing for, then that would be a credit, or more attachments.
809 COMMISSIONER DUNCAN: No, I understand that, but how would that come about? How would it end up that there would be more ‑‑
810 MR. BUZIOL: Oh, pardon me. It could be numerous reasons.
811 One could be that the cable was removed, the attachments that we didn't have a permit for, and therefore there was no adjustment to our billing system. There was maintenance work done, cable again was removed and we just didn't know about it. We were unaware of it.
812 COMMISSIONER DUNCAN: So the maintenance work, that would be like a plant redesign. That would be more the maintenance, though, wouldn't it.
813 But you are thinking on maintenance, some cable might come down and be rerouted?
814 MR. BISSONNETTE: That doesn't make sense.
815 MR. BUZIOL: Or perhaps they upgraded a cable. They had a 415 up at one point and upgraded it, removed the old one and put a new one up that was perhaps shorter than what the other one was.
816 MR. BISSONNETTE: That doesn't make sense. That just doesn't make sense.
817 COMMISSIONER DUNCAN: Would you want to elaborate then?
818 MR. BISSONNETTE: Well, if we were taking a cable down and then we were replacing it with another cable, then there would be a cable there.
819 MR. BRAZEAU: Plus we would also point ‑‑
820 COMMISSIONER DUNCAN: So what do you ‑‑
821 MR. BISSONNETTE: It wouldn't be over‑billed.
822 MR. BRAZEAU: Plus we would just also point out that we have also been charged unauthorized charges for those facilities.
823 COMMISSIONER DUNCAN: Don't they net out? They net out so you are not charged for those, I think.
824 Isn't that correct?
825 MR. BRAZEAU: They are being charged.
826 MR. MIELKE: Madam Commissioner, another explanation for actually finding fewer quantities than what we are billed for is often there is migration of aerial cable to underground.
827 COMMISSIONER DUNCAN: Okay, that seems like a reasonable ‑‑
828 MR. MIELKE: You may find that there was an increase in underground conduit usage at the expense of the aerial.
829 COMMISSIONER DUNCAN: All right.
830 I'm wondering, was there a change in the application of the tariff regarding entrance conduit connections?
831 I'm just wondering what would explain the significant difference between the billing and the audit results for that category as compared to the difference in the other categories.
832 MR. BRAZEAU: Chris will speak to that.
833 COMMISSIONER DUNCAN: Sure.
834 MR. EWASIUK: I think what we have found in those instances is quite often these are very old, old structures quite often put in by the developers in those subdivisions when they were occurring 20‑25 years ago, and so that is quite often the case.
835 The other factor there is that when we looked at some of those incursions, we actually found that the TELUS practices were the same as sort of Shaw practices or the same ‑‑ the TELUS materials in the structures were in the same condition as Shaw's so that the practices were very similar.
836 COMMISSIONER DUNCAN: I guess I'm not quite understanding how there would be in many instances going from being none to some.
837 What changed of those?
838 MR. JOHNSON: The challenge is that the developer installed for both TELUS and for Shaw. That's what we are trying to say.
839 COMMISSIONER DUNCAN: Okay.
840 MR. JOHNSON: So that's why it wouldn't necessarily be reflected in TELUS' records.
841 A lot of this relates to, you know, the Chilliwack system when it was built out in the mid‑90s, 15 years ago, and so that is where some of that comes into play.
842 COMMISSIONER DUNCAN: So you are now being charged an unauthorized charge because the contractor, the developer of the subdivision put them in?
843 MR. JOHNSON: So the developer had a contractor who placed it on behalf of the utilities.
844 I don't know if Peter wants to add to that, but that is the concept.
845 MR. BISSONNETTE: Yes. So there was a period of time, Madam Commissioner, where D‑duct was actually the ‑‑ TELUS actually would compel builders to put in duct on their behalf. And in the mid‑90s we said that that should be separate and apart from the TELUS infrastructure. So we started placing our own ducts which we owned and which we placed cable into.
846 So that may have had an impact on the entrance cables. We are talking now about mini distribution. It may have had impact on that.
847 COMMISSIONER DUNCAN: Is that TELUS' explanation as well?
848 MR. MIELKE: If I may, Madam Commissioner...?
849 COMMISSIONER DUNCAN: Yes.
850 MR. MIELKE: TELUS has always had the requirement for a licensee to submit an application when attaching to our structure, whether it be their structure that is attaching or their facilities in terms of the cable.
851 In the subdivisions that we are talking about, and with the number that is in front of the Commission right now, is they are older subdivisions. In a lot of cases Shaw has come in after the fact. So TELUS was in there serving our customers with phone service and Shaw came in after the fact.
852 In some cases they placed direct buried cable and then they attached to our structures and we did not know about it. We did not have those applications.
853 That is the difference between ‑‑
854 COMMISSIONER DUNCAN: All right.
855 MR. JOHNSON: When a person buys a home in a subdivision, they typically take a phone service as well as a cable service at the same time ‑‑
856 COMMISSIONER DUNCAN: Yes.
857 MR. JOHNSON: ‑‑ so the facilities would typically be built at the same time.
858 MR. BUZIOL: Yes. And there are examples here, Madam Commissioner, of Shaw having their own facilities in addition to TELUS' facilities, and they did attach to our structure in order to get into the home itself.
859 COMMISSIONER DUNCAN: So this is not an issue for Shaw then. You don't have a problem with that aspect of the audit?
860 MR. JOHNSON: Well, what we are identifying here is that the developer itself would have installed the facilities so there would be no permit per se. It was part of the practice going back now the 15‑20 years.
861 COMMISSIONER DUNCAN: Okay. I guess I was thinking that you came along after the developer did it and put your own in. You didn't?
862 MR. BISSONNETTE: No, the developer puts them in on our behalf. So they will actually run parallel in a trench. We tend to do the trenching together with the telephone company, the hydro company and ourselves, and we take advantage of the trenching that is done in a subdivision.
863 The duct that we put into those trenches does not attract any tariff because it is our own duct.
864 Where we might come into the subdivision from an aerial and go from an aerial lateral to underground, I think is what was being referred to, and in all cases where that aerial cable is placed we do so with a permit or BCTel has placed it.
865 MR. WOODHEAD: To be clear, these circumstances, as I understand it, relate to where there is entrance duct attached to our conduit, whether there is two sets going in where they come in.
866 But to get into the actual premise, they are attaching an entrance duct onto our conduit and entering the house.
867 MR. JOHNSON: And the practice before 2003 was not to ‑‑ sorry, this is Peter speaking, Commissioner.
868 The practice before 2003 was not to have a separate permit for the entrance duct. It was only after that time ‑‑ even though there might have been a possibility or a right to do so ‑‑ that the practice typically was not for TELUS to ask Shaw for permits specifically for that.
869 So that's why TELUS' records would not actually identify that.
870 COMMISSIONER DUNCAN: Okay. So there was a change then.
871 MR. MIELKE: It has always been TELUS' practice that an application must be submitted and that is clear in our SSLAs with Shaw and with other licensees.
872 COMMISSIONER DUNCAN: Okay.
873 MR. WOODHEAD: And that's why there is a charge for entrance duct.
874 COMMISSIONER DUNCAN: I'm wondering what procedure is in place to ensure that all the network job orders are entered in the system.
875 I read your response there to the questions and I understood that the job orders are ‑‑ I want to confirm that the job orders are automatically assigned by the system and that they are numbered by the system so that none go astray, is what I'm after.
876 MR. BUZIOL: Sorry, can you repeat the question, please?
877 COMMISSIONER DUNCAN: Referring to the network job orders, I want to understand what the control is to ensure that all the job orders are accounted for and entered in the system so that there is not a job order somewhere out there in your computer not closed out and Shaw actually has the permit.
878 Maybe you have something that has 100,000 poles on it or 100,000 metres or whatever and it has never been closed out so Shaw hasn't been billed.
879 What procedure do you have in place to ensure that all job orders are accounted for and that they are closed out, you know, within a reasonable span of time?
880 You say within two quarters of the activity they are billed, so...
881 MR. BUZIOL: With the life of a network package or a job order there is a routing tag that follows that job order, and it works its way back. As the application becomes approved and then it becomes a permit, it works its way back through the clerical support staff that input it into the billing system itself.
882 And as the job gets closed, every single job order is closed by TELUS so it is taken off of our active list and be in a closed list.
883 At that point it is confirmed that the application is input into the billing system.
884 COMMISSIONER DUNCAN: So there is someone at a senior level whose responsibility it is to make sure that all of the finished orders are completed in the system?
885 MR. BUZIOL: Each engineering manager assures that that does take place, yes.
886 COMMISSIONER DUNCAN: Okay.
887 MR. BISSONNETTE: I would like to raise the point, Madam Commissioner ‑‑ it is Peter Bissonnette again. And I don't attribute this to all of this. But in 1969 BCTel had a labour dispute. In 1976 they had a labour dispute. In 1981 they had a labour dispute, and of course TELUS recently had a labour dispute.
888 I know, having worked there at two or three of those labour disputes, there were times the processes didn't follow the normal protocol as they would at times where there was labour.
889 I know also that records did go missing during that time because there were issues with respect to some of the legal situations that took place during that period.
890 So that did take place during that period of time. Whether we can attribute any of this or some of this to that, I think it raises the question.
891 THE CHAIRPERSON: I'm going to interject here for a minute.
892 I think the way we structured the proceeding was to allow each party 20 minutes to cross‑examine each other and comment on their submissions.
893 If we are going to continue this way when each person says something and someone interjects, we are going to be here for some time.
894 Although I want to get the record complete and as accurate as possible, I want to make sure the Commissioners get their questions asked and then allow each one of you the 20 minutes that you have signed up for basically to clarify your own positions and to clarify the record for us as well.
895 So if I can ask us to adhere to that, I would appreciate it.
896 COMMISSIONER DUNCAN: I guess that's a message for me to speed it up. So I will try to eliminate some of my questions here.
‑‑‑ Laughter / Rires
897 COMMISSIONER DUNCAN: All right. So I understand, Mr. Bissonnette, what you are saying is that maybe the systems weren't as carefully managed as they could have been. But it seems to me that regardless, if everything wasn't closed out during a strike period or a period of labour unrest that they would still be left open in their system. So at some point they would have to be closed.
898 It would come to somebody's attention if, as they say, there is someone at a senior level, an engineering manager you say, that is responsible for making sure that all the pending orders are completed.
899 MR. BUZIOL: That is correct.
900 COMMISSIONER DUNCAN: Okay.
901 I just want to talk about the last page of the attachment to Shaw's March 3rd question 1.
902 They identify the support structure installation applications for Yahk ‑‑ and I hope I'm pronouncing that correctly ‑‑ in British Columbia.
903 How would you explain the significant difference between Shaw's record, which is 20,000‑plus metres, and the amount on your invoice at page 7 of 7 of those confidential pages?
904 Again, what I'm trying to get at is I just want to test the reliability of the bills, the billing.
905 So if you have a chance to look at it, Shaw says they acquired the Yahk system April 19, 1991 and they have, if I added it correctly, 20,822 metres of aerial cable.
906 And if I go back and look at the confidential sheets ‑‑ since they are pink, I won't say the number out loud; you have to look yourself ‑‑ how would you account for the difference?
907 What would be your explanation with respect to the pre‑audit units billed reading as it does?
908 MR. BUZIOL: Madam Commissioner, as we proceeded with the audit, we went through each town and checked to see if the town in fact did have cable and if in fact we were billing for any cable in that specific town.
909 We did discover through the audit that there was in fact cable still on TELUS' structure in Yahk. We did discover that there was in excess of 20,000 metres of cable on TELUS' structure that was actually deactivated. It was cut off; it was dead cable.
910 Because of our billing system being at zero and not knowing why it was at zero at that point, we did issue, or I did issue an invoice for unauthorized attachments. And in my negotiation with Scott Atkinson of Shaw, we did discuss Yahk. And what I was asking ‑‑ or what TELUS was actually asking is that we remove the cable, or Shaw removes that cable, and we will write it off at that.
911 That negotiation never was resolved.
912 COMMISSIONER DUNCAN: Okay. So part of your unauthorized attachment, the invoice, but the cable is inactive.
913 So what you are saying is it is Shaw's responsibility ‑‑ or this is what your point is: it is Shaw's responsibility to remove it?
914 MR. BUZIOL: Correct.
915 Sorry, it is using capacity on TELUS' structure today.
916 MR. BRAZEAU: But there were still unauthorized charges for that cable even though that cable had been authorized.
917 MS BASHNICK: Yes. Just to add a little more clarification there, too, I think what happened was that Shaw actually requested that it be deactivated and TELUS would have taken their billing system down to zero.
918 My understanding is ‑‑ and I'm not entirely clear on this ‑‑ that we did actually have a request to TELUS to actually take that cable down as well.
919 COMMISSIONER DUNCAN: Okay. So what you are saying, it would almost appear, then, it shouldn't be shown as an unauthorized charge.
920 MR. BISSONNETTE: Exactly. We don't serve Yahk any more either.
921 Again, we use BCTel to do the wrecking ‑‑ or TELUS now ‑‑ to do the wrecking. So if there is cable that we have said we want you to remove, we don't go and remove it because it is lashed over telephone and cable. So the telephone company themselves go out and wrecks that cable if they choose to do so. If they don't, they can leave it there forever, but there are no charges attributable to it.
922 MR. BUZIOL: Yes. In 2006 when the results were presented to Mr. Scott Atkinson of Shaw, we did discuss the cable being removed. The option that I gave was that the licensee, in this case Shaw, can remove that cable.
923 TELUS does not object to Shaw having removed that cable today.
924 COMMISSIONER DUNCAN: But there wasn't necessarily a requirement to remove it?
925 They can remove it, you said?
926 MR. BUZIOL: Yes. Either they could ask us to remove it or they could remove it themselves.
927 The negotiation never did get resolved, though, with Shaw.
928 COMMISSIONER DUNCAN: The issue here at hand, though, is: Was it unauthorized attachment?
929 I guess if you show ‑‑ it is certainly not unauthorized to the extent that you have here, because Shaw has shown that they do have 20,000‑plus authorizations in place.
930 MR. BUZIOL: Yes. And our billing system at that time was zero.
931 COMMISSIONER DUNCAN: Okay. So that's just an adjustment you would have to make.
932 I'm curious of Shaw, because you were getting these audit results as they were finished, did you consider participating in the audit after you got 1, 2, 3, 4 or 5 of these and found that you were unhappy with the results?
933 MR. EWASIUK: Madam Commissioner, the first audit results we got were for the Invermere area and we went through pretty extensive discussions with TELUS around those audits. We did some due diligence on the results of those audits to build some comfort for ourselves of what they were finding.
934 What the review of the audit result basically entailed was sitting down with TELUS ‑‑ and someone in their group mentioned that we have been given maps and all that kind of stuff. We actually have not been given maps of what they have audited from. We have been allowed to look at the maps that they did.
935 Basically what the audit was, was literally hundreds of maps marked up showing different colours of cable and whose cable it was and that kind of thing.
936 So we were given the opportunity to look at all that information.
937 But if we wanted to do any due diligence, we weren't provided those maps. We would actually have to write down sort of from this pole to that pole, go drive the route, that kind of thing, to be able to confirm what they were finding.
938 So very onerous in terms of being able to do what due diligence we were able to do there.
939 But from looking at what we found in reviewing the Invermere information, I think generally what we have said from the audit results is that the audit did a pretty good job of going out there and counting how much telecommunication facilities is on the poles. The audit did a pretty good job of doing that.
940 But what it didn't do, and what certainly the maps and the information that were provided for Invermere that we went through in detail did not do, was compare or show us what parts of the information they were getting from the audit was actually unauthorized attachments. They couldn't show us, you know, TELUS has permits for these portions of your facilities, but we don't have permits for these portions of your facilities. So show us, justify for us these portions that we think are unauthorized.
941 They couldn't do that and they still haven't done that.
942 So that is the whole objection of what we raised here.
943 COMMISSIONER DUNCAN: They did show you what was authorized, though. So you could go back and check.
944 MR. EWASIUK: No, they didn't. All they showed us was a map with ‑‑
945 COMMISSIONER DUNCAN: But didn't they reference their network job orders?
946 MR. EWASIUK: No.
947 COMMISSIONER DUNCAN: I thought I asked earlier and they said that they did.
948 MR. WOODHEAD: We have permits for the 41 route in Invermere, and this is what we were talking about before. What was found was there was a permit for one route and then there was not a permit for another route, and then there was a point at which they were bouncing up onto Québec ‑‑ sorry, to BCTel Hydro and back down onto TELUS for which there was no permit.
949 THE CHAIRPERSON: What am I missing here?
950 You have the detail that says there is a permit for this route but not for that route. Why can't you send that to them and say: Do you have the permission for that permit?
951 You have identified the specifics now. Why can't you ask them to come up with their permit?
952 MR. EWASIUK: The point here, Mr. Chairman, is that the only time they did that was for that 14 kilometre fibre build around Invermere. For all the other information, we have not been provided details and so we couldn't do the same kind of detailed analysis that we did for that Invermere fibre project.
953 THE CHAIRPERSON: But I'm asking TELUS this question because they have the detail, they have the maps, they have down to the location.
954 So why can't you then use that information to ask ‑‑
955 MR. WOODHEAD: What we have is an application for a permit for a route along, I believe it is Highway 93, 94 or something, and that is where Shaw wanted to place some structure or some facilities, and they have that; they generated it.
956 It gives locations, an end point and a beginning point.
957 But if what you are asking is does it say "This pole, this pole, this pole, this pole, this pole, this pole, this pole..."
958 THE CHAIRPERSON: Well, what I heard you say is: We have permits or authorization from A to B, but not from B to C and then we have it again from D to G.
959 So I'm saying if you know what you have and what you don't have, why can't you ask them to pony up the permits or the authorizations for that piece of it that you don't have?
960 MR. WOODHEAD: We have asked and they can't.
961 MR. FLEIGER: Right. And let's just look at the facts of Invermere because we're talking about that.
962 In '95 that system showed approximately 2,000 metres of cable. We did our audit and we found 29,000 and we went back and forth with Shaw through the permit discovery phase, and we could only come up with permits that authorized 12,000.
963 So it went from 2,000 to 12,000 that was permitted, to 29,000, a huge difference of infrastructure that has no permits.
964 So where are those permits?
965 THE CHAIRPERSON: Did I hear you say your records started with 2,000 and after working with TELUS you were able to ‑‑
966 MR. FLEIGER: With Shaw.
967 THE CHAIRPERSON: With Shaw, you were able to validate up to 12?
968 MR. FLEIGER: Up to 12, but in actual fact the audit found 29,000.
969 THE CHAIRPERSON: But your own records initially only had two. You needed Shaw to help you find the other ten.
970 MR. BUZIOL: If I may clarify, what Mr. Fleiger is referring to is in 1995 the billing system had 2000 metres. The pre‑audit numbers in 2006 were 12,000 metres. And the discrepancy that we found was between 12,000 metres and the 29,000 metres that was actually in the field.
971 If I may address the comments that Chris Ewasiuk made earlier, in terms of the maps that we did, when we completed an audit we formulated the spreadsheet which the Commission has on record, and we also tabulated all the results. We tabulated that spreadsheet from all the results that we had on our paper maps.
972 The spreadsheet was then given to Mr. Atkinson and we sat down ‑‑ I sat down personally with Mr. Atkinson. We reviewed the maps in the office, showed him where the cable is in the field and made myself available at any time for him and myself to go out in the field and review, do a spot check if you will, of the audit that has taken place to confirm the accuracy of the audit. That never took place.
973 Also, the other thing that I would ask Shaw, as we have asked other licensees that we have audited, is for a copy of the support structure application that they had submitted to TELUS that gave them approval to be on the structure.
974 At that time Mr. Atkinson had produced about five or six I believe applications in the Kootenay area, and they also produced a spreadsheet showing applications in Whistler.
975 We reconciled those applications against our billing system, and the process was that if an application was in fact not in our billing system the unauthorized attachment charges would then be adjusted accordingly.
976 THE CHAIRPERSON: Sorry to interrupt.
977 COMMISSIONER DUNCAN: That's all right.
978 Just so that we are clear on what I'm taking away from this, my understanding is that TELUS gave you the information necessary in their audit results, what they gave you, the information that you required to be able to go back to your permits and you are saying no.
979 MR. EWASIUK: No. Yes, we are saying no to that.
980 COMMISSIONER DUNCAN: I don't want to just zero in on Invermere.
981 MR. EWASIUK: Sure.
982 COMMISSIONER DUNCAN: I'm talking about the whole thing.
983 MR. EWASIUK: And that's right. I think Invermere is only an example of what we have experienced in the entire audit process.
984 As Mr. Buziol has just said, we looked at maps and it showed all of the facilities that are out there, but it did not differentiate those for which TELUS had a permit and those that weren't permitted. So we had no idea of sort of knowing which Pacific facilities ‑‑
985 COMMISSIONER DUNCAN: But by deduction you could conclude which were the unauthorized as well as Shaw ‑‑ no, as well as TELUS.
986 MR. EWASIUK: No, I don't think so.
987 MR. BRAZEAU: Plus, the aerial count that they are talking about was post 1995, right, so that their number was based on the '95 number that was based on that 1:1 ratio that BCTel had calculated.
988 COMMISSIONER DUNCAN: Do you agree with TELUS' filing on April 7th where they say that Shaw has both a contractual duty and a regulatory duty to take steps to reconcile the differences?
989 This is in reference to your not checking the invoices or your deciding it wasn't cost‑effective to check them.
990 MR. BRAZEAU: No, no. Absolutely we do.
991 To come back to the BCTel decision to do the 1:1 ratio, it was their decision; it wasn't our decision. We accepted their decision and we did our due diligence on our invoicing as a result of that decision.
992 COMMISSIONER DUNCAN: But on the period since then, since 1995 ‑‑ and TELUS has said that they have been monitoring very closely every single one since then, pluses and minuses ‑‑ have you ever found any mistakes or any reason to go back to TELUS?
993 MR. BRAZEAU: I will let Rhonda speak to that.
994 MS BASHNICK: Generally I would say no. You know, we monitor it more at a higher level on the change in the value on the invoice quarter over quarter.
995 COMMISSIONER DUNCAN: Okay.
996 MS BASHNICK: As we have said, 90 per cent or more of this cable existed prior to 1995. So over the last 13 years, there has really only been a 10 per cent increase in the amount of cable and additional charges being applied.
997 So it is managed at a high level.
998 We did, though ‑‑ just a very recent example. We had a Bowen Island invoice that came in. They added on additional route rentals that approximated over $25,000 on a $5,000 invoice, and clearly that caught our attention and we have now disputed that.
999 So we do monitor these things.
1000 COMMISSIONER DUNCAN: But just at a higher level.
1001 MS BASHNICK: Yes. Yes.
1002 COMMISSIONER DUNCAN: With regard to the facilities that have safety concerns that you have acknowledge that you are going to repair and that you are going to bring into conformity with required standards, I'm wondering how will you identify which of those attachments were installed by Shaw or are you simply proposing to fix all of them regardless of who installed them?
1003 Like how will you know whether it was work that you did or TELUS did? How will you know?
1004 MR. BRAZEAU: I will let Peter address that issue.
1005 MR. BISSONNETTE: Quite candidly, I don't know if we will know. I think other than what we have said previously, is that 95 per cent of the cable was placed before 1995 by BCTel. So I guess if we had plant maps that could determine how old that plant has been, that might help us to determine that.
1006 But what we have said is ‑‑ and I don't think that this is a large issue anyway.
1007 I think where there are areas where they think that we don't ‑‑ where the cable doesn't follow the prescribed approach, we have always been prepared to rectify that as part of the relationship, irrespective of who installed it.
1008 COMMISSIONER DUNCAN: Okay.
1009 MR. JOHNSON: Just to add to that, in situations where we actually have gone back to look at incursions we have identified in some situations where our facilities ‑‑ well, the facilities that have been actually identified as Shaw facilities in some cases are not actually Shaw facilities.
1010 So part of the process here is to go back and verify the information that has been just sent to us as of March 20th.
1011 So we are running through that process right now.
1012 COMMISSIONER DUNCAN: So it's interesting to me, though, that you are able to tell when you look at it if you did it or if TELUS did it. No?
1013 MR. BISSONNETTE: No. I think what Peter was saying is that we can tell if it is our cable or TELUS' or somebody else's, and what Peter said was in some of the cases that TELUS identified as being our cable as being out of technical specifications, it really wasn't our cable.
1014 COMMISSIONER DUNCAN: How do you identify that?
1015 MR. BISSONNETTE: We have maps. If you get right down to the macro of a system, we have had CAD systems that show the actual network design, where this distribution cable is, where the main trunk cable is and where the poles are situated or where the laterals are situated.
1016 And if we go to a specific location that we have a map for that, we can identify if that cable is or isn't our cable, as can BCTel or as can TELUS, sorry.
1017 COMMISSIONER DUNCAN: My last question is: What is your response to TELUS', Ms Yale's comments this morning that the Commission has to decide on the balance of probabilities does the evidence support the conclusion that Shaw attached its cable and equipment to TELUS' structures without authorization?
1018 What is your comment to the "balance of probabilities"?
1019 MR. BISSONNETTE: Well, the balance of probabilities is ‑‑ sort of the history of the practice is that the balance of probabilities is that BCTel or TELUS place that cable themselves, because that was their practice.
1020 You know, our workers were not ‑‑ first of all, TWU had exclusive jurisdiction on replacing cable in their own facilities up until '95 and in these small communities most of the cable systems that existed in '95 ‑‑ as we have said, it has only grown by about five and 10 per cent.
1021 Our company's practice was to use BCTel and subsequently TELUS to place our own cable because we didn't have those facilities, and so on the balance of probability it is that the telephone company place that cable themselves and therefore, if there is no record of that, somehow the record either got lost or wasn't input properly.
1022 The second part of the balance of probabilities is that when they did the conversion in 1995, the way they used to account for it to the way they are going forward, that either they didn't recognize that there was cable that they had placed that they had not accounted for.
1023 COMMISSIONER DUNCAN: Okay. Thank you very much.
1024 Thanks, everybody, for your patience.
1025 THE CHAIRPERSON: Commissioner Molnar...?
1026 COMMISSIONER MOLNAR: I'm going to say good afternoon because we have been at this for a long time and obviously we have had many questions. I don't have very many left, and I apologize if I am repeating a question you have already answered.
1027 Let me begin with Shaw, if I could, and speak to the issue of the conversion.
1028 First, a very simple question: This unauthorized attachment charge relates to conduit, relates to aerial strand and relates to poles.
1029 Has there been any conversion related to the conduit?
1030 MR. BISSONNETTE: Not to my understanding.
1031 COMMISSIONER MOLNAR: Okay. So that is not caused by conversion.
1032 MR. BISSONNETTE: Correct me on our panel if I'm wrong, but that was to the best of my understanding.
1033 MR. BRAZEAU: No, that's correct. It's mostly the aerial cable and part of the pole through the pole conversions. So those are the two elements.
1034 COMMISSIONER MOLNAR: Okay.
1035 As it relates to the aerial cable, in 1995 this occurred and a very significant conversion, you would say 50 per cent potentially understated in the amount of aerial cable there.
1036 After 1995 there was still a number of different regulatory proceedings relating to support structures.
1037 Did you ever place anything on the public record as it regards the concern with this conversion and the fact that perhaps the amount of your use of support structures might be understated?
1038 MR. JOHNSON: We want to be clear about this and you are asking a very good question.
1039 What happened here is that BCTel made a decision to implement 95‑13 and they gave us a notice to that effect. What is important is in the conversion, again about the aerial meterage, on the conversion of the 1:1 basis, we don't know why they did this, but they basically told us that this is what was going to be happening.
1040 We are not aware, frankly, and during this process in preparing for this hearing it came to light what was going on and what would really explain that 479,000 metres, because frankly we were surprised by the results of the audit as well.
1041 The whole point here is that you have to ‑‑ the TELUS billing database is problematic for the purposes of reviewing the audit. You can't start with the TELUS billing database.
1042 That doesn't help us in terms of identifying unauthorized attachments and, unfortunately, TELUS has adopted the wrong methodology in terms of using that database for the purposes of identifying unauthorized attachments.
1043 We did not take advantage of the fact of ‑‑ whatever the ratio was at the time. It was clear that BCTel had made that call. And going forward with respect to post '95 placement, they billed us as they were allowed to under that new revised tariff for the cable meterage.
1044 Pre '95 they didn't have an opportunity to do that because the tariff didn't contemplate that. The tariff contemplated a combined or bundled rate of pole and strand. That is very critical to understand, because pre '95 combined pole and strand; post '95 separates it out.
1045 BCTel decided not to go back and not to charge us for the cable meterage under the strand. They just went forward and that is when they started implementing ‑‑ they weren't allowed to previous to that.
1046 But it is very critical for us to understand that piece of it.
1047 MR. BISSONNETTE: And remember also, in '95 we didn't own many of those systems so we wouldn't have know what the ratio was anyway.
1048 COMMISSIONER MOLNAR: If I could just ask TELUS to comment, this issue of the conversion is obviously a critical one as it regards, you know, the going in position, 1995 setting the ways upon which your billing system and your ongoing process of inventory and billing occurs.
1049 Have you done some work? Do you understand what sort of work was done to ensure the integrity of that going in number in 1995?
1050 MR. WOODHEAD: Well, I obviously wasn't with TELUS in 1995 ‑‑ and my friends down the table here can maybe add to this.
1051 Certainly the conversion that was done to approximate poles, as I have said earlier, is pretty close. We are within 1‑1/2 per cent.
1052 COMMISSIONER MOLNAR: I'm not talking poles here.
1053 MR. WOODHEAD: Okay, so you are talking route metres.
1054 COMMISSIONER MOLNAR: I am talking route metres, yes.
1055 MR. WOODHEAD: I would suspect that what happened here was that the costs of doing the complete audit across our whole system in British Columbia, it was felt that they would do a 1:1 ratio.
1056 We of course had no idea that there was this, as we have suggested, that there was this ‑‑ if you believe Shaw, this massive amount of double cabling out there.
1057 So it would seem, you know, a reasonable proposition that I suppose you would go to this 1:1 ratio.
1058 Now, that being said, what we have heard here today is ‑‑ and I will try to be brief. What we have heard here today that apparently, you know, they knew that 50 per cent of this stuff was double cabled. And that brings me to the tariff and that brings me to 95‑13.
1059 Contrary to what my friends over here are saying, the tariff is a public document. This is a document that sets out the rights and obligations of all owners, users, of everyone on these things or in these structures.
1060 I guess my position would be, because I find it kind of novel this, you know. They sent us a letter and they said 1:1. So hey, we are good with that because, well apparently 50 per cent of these, according to them, were double cabled.
1061 Well, there is an additional charge as of 1995. So in 13 years, to my knowledge, unless someone says I'm saying something wrong, I have never seen anybody ‑‑ as I understand it, nobody has ever put up their hand and said, you know, you're kind of under billing us here.
1062 So that is kind of my answer, but I leave it to my friends here to ‑‑
1063 MR. BRAZEAU: Commissioner Molnar, we are talking about unauthorized attachments here. Those attachments were authorized.
1064 Now, if TELUS did not ‑‑ or BCTel at the time, who needed to take or to do a full audit of the system in order to calculate how much aerial cable was there and to charge the cable companies for that aerial cable, that is certainly one discussion.
1065 They didn't do it and they were happy to use a 1:1 ratio.
1066 But having said that, all of those attachments were authorized and what we are discussing here is whether those attachments were unauthorized. So we shouldn't be confusing those two elements.
1067 MR. FLEIGER: And we shouldn't lose sight of the fact that Shaw was the one that put this 50 per cent ratio on the table. TELUS has clearly stated that it does not believe that there was that significant double cable going on.
1068 So let's just be clear about the positions.
1069 COMMISSIONER MOLNAR: Right.
1070 MR. FLEIGER: We do not believe that double cabling was anywhere near 50 per cent of these systems in an overall sense.
1071 MR. BISSONNETTE: Just to reinforce that, we didn't know what was or wasn't double cabled in the systems that we didn't own in 1995. We I think have gone backwards now in today's time. We have gone back and said how much of that cable would have been double counted ‑‑ sorry, would have been double cabled at that time?
1072 That is the answer we are getting now. We did know that the time.
1073 COMMISSIONER MOLNAR: Thank you. I understand.
1074 MS YALE: Sorry, it's Janet.
1075 If I could just add one thing, that if in fact, as we have discussed, there was a double cable put on a separate strand, then the 1:1 conversion would have caught it.
1076 So the only way that that explanation works is not only that you believe that there was a lot of double cabling, but also that it was done contrary to TELUS' policy by having that extra cable go on the first strand rather than the second strand.
1077 If in fact it was done, as we say, on a separate strand, the billing conversion on a 1:1 basis would have captured it. There would not have been that discrepancy.
1078 MR. BISSONNETTE: Well, if I can just respond to that, the practice at the time was BCTel would use, say, one strand to accommodate more than one cable. That was their practice.
1079 THE CHAIRPERSON: Mr. Bissonnette, you will get your opportunity to comment in the 20‑minute period that is assigned to you in a few minutes.
1080 MR. BISSONNETTE: Thank you.
1081 COMMISSIONER MOLNAR: I would like to talk just for a minute about records.
1082 Let's assume that the decision is that TELUS provides Shaw with the records to identify what they view to be unauthorized and then it's up to Shaw to identify what in there they have authorization or approvals to proceed with.
1083 A couple of questions.
1084 The information you have, would it be able to identify plant which was placed pre and post 1995?
1085 You mentioned ‑‑
1086 MR. BISSONNETTE: Well, Commissioner, I don't know if you are asking TELUS or Shaw because I can't see.
1087 From the Shaw side, that is one of the difficulties we have had, is in fact identifying through permits or P408s in all cases where cable is or is not ‑‑ has or has not been authorized, because the records have either been lost or they weren't kept when we acquired some of those small cable systems. They didn't always have the same kind of record keeping vigilance that we may have had.
1088 MR. BRAZEAU: Just to add, Commissioner Molnar, it is certainly our position that the vast majority of the cable would have been installed pre 1995 and therefore installed by BCTel, and therefore the installation by BCTel would make, by definition, that cable authorized.
1089 COMMISSIONER MOLNAR: I understand your position, Mr. Brazeau. My question was: Your position is that 95 per cent was installed by BCTel in the period prior to 1995.
1090 Do you have plant records that can prove out the date of installation? Do you have vintage‑based records?
1091 Mr. Bissonnette spoke of your mapping system, your construction maps. Do they identify your plant by vintage?
1092 MR. BRAZEAU: It would be a challenge to get that information, and I am assuming it would also be a challenge for TELUS given that rating pre 1995 wasn't based on aerial cable.
1093 MR. BISSONNETTE: And, Madam Commissioner, many times ‑‑ I mean, we do have CAD/CAM systems and to the extent that when we acquire cable systems that we have some semblance of systems that show all their meterages, et cetera, we will put those into our CAD/CAM systems.
1094 In some cases we will actually go and we will reroute ‑‑ we will look at the route of the cable, but it's not ‑‑ I don't know that we could rely fully on that as being able to say with these exceptions, you know, we, BCTel or TELUS, don't show you with a permit and that we could go into our records and say "Well, here is our permit."
1095 I mean, we have tried to I think go through that exercise leading up to today's hearing.
1096 COMMISSIONER MOLNAR: Fair enough. Again, I was just wondering if we put permits aside because there has been a lot of emphasis placed on the process that is changed, both because of ‑‑
1097 MR. BISSONNETTE: Yes.
1098 COMMISSIONER MOLNAR: ‑‑ the change in who could install facilities on support structures pre and post '95 and as well as the billing conversion that occurred in 1995.
1099 So if we put aside the permits and said if you had other ways of validating that cable was installed prior to the 1995 time, would you have that available? Could you do that? Do you have any kind of evidence that this plant was installed before that date?
1100 I recognize it could be a lot of work, but it is a lot of money.
1101 MR. BISSONNETTE: Yes. To be honest, those deductions ‑‑ I mean, when we acquired a cable system ‑‑ let's say we acquired a cable system in 1995. Any work that was done subsequent to '95 would more than likely be put into a system, into our CAD system because we would have had to have done the design, and we would have permits to reflect that.
1102 The challenge is pre 1995 where we didn't own the cable system.
1103 COMMISSIONER MOLNAR: Okay. I would like to ask TELUS about their position on unauthorized; that this cable has been placed unauthorized.
1104 Again, I would like to talk about the two periods of time, pre 1995 versus post, and particularly pre 1995 in the situation where it was BCTel and TELUS who were the only ones who were authorized to place ‑‑ you know, legally authorized, if you will, to place cable onto these support structures.
1105 Tell me how you could see cable amounts of this quantity practically being installed by Shaw without it becoming obvious to TELUS.
1106 MR. FLEIGER: I think there are a couple of issues here that we need to address.
1107 First of all, pre 1995 ‑‑ and I think Mr. Woodhead mentioned it earlier ‑‑ Shaw in fact did have the ability to put cable on BCTel, at that time, infrastructure and there were a series of regulatory and court proceedings that led up to a Supreme Court decision that in essence allowed that from a legal perspective.
1108 But prior to '95, for probably a significant period of time before that, Shaw did have the opportunity to do their own work. They always had the ability to do their own maintenance work.
1109 So they would have been up and on TELUS' support structures, most visibly on the pole structure.
1110 I don't think that you can draw a conclusion that all of this cable, all of this additional cable, somehow got in before 1995. Clearly from 1995 on Shaw has also had an opportunity, and it is pretty common knowledge that they do do their own work. They do hire contractors to do their own work, importing support structure up on TELUS' support structure.
1111 Invermere, the one we talked about, which is a 14 kilometre run, yes, TELUS did the make ready work on that 14 kilometre run, but Shaw put the cable up. I think they hired a contractor and had that cable put up.
1112 So for somebody ‑‑ you know, for people to try to paint this picture that TELUS is doing all the work is not accurate. That is not a fact.
1113 I believe that cable could have been put up in an unauthorized manner prior to '95 and post '95.
1114 COMMISSIONER MOLNAR: I believe that ‑‑ and I would need to find the reference. But I believe the TELUS submission says that TELUS does not dispute that cable placed prior to 1995, if authorized, was placed by BCTel.
1115 MR. FLEIGER: Yes, if authorized.
1116 COMMISSIONER MOLNAR: So we are talking that they are placing this unauthorized.
1117 MR. FLEIGER: Yes.
1118 COMMISSIONER MOLNAR: Now, some of this is conduit and the thought that you would have somebody within TELUS' manhole unauthorized and it not come to the attention of the telephone company is a bit surprising.
1119 Could you tell me, in these 12 locations were there, in 1995, BCTel or TELUS employees in those locations?
1120 MR. FLEIGER: Not all of them.
1121 Ron, if you want to add to that.
1122 MR. BUZIOL: Yes, if I may.
1123 The areas, it is a vast area, a very rural area, so it was not uncommon to see Shaw or other ‑‑ well, Shaw in this particular case, in our manholes doing maintenance work, or in our splice boxes, again doing maintenance work or adding drops, expanding their services, and so on, nor was it uncommon to see them on our aerial structure.
1124 We had centralized crews in those days in Cranbrook, as we do today. Those crews and the INR people too would be out doing their TELUS work. They wouldn't necessarily stop because Shaw was working on our structure and ask any questions. They would be more focused on getting our customers and dealing with our work as opposed to having a look to see what the licensee was doing.
1125 COMMISSIONER MOLNAR: Only one more question. Elizabeth touched on this, and I just want to be clear.
1126 When the application was made, TELUS was requesting direction that Shaw repair or remove its non‑conforming attachments.
1127 I heard Mr. Bissonnette just say that yes, Shaw would repair all that it installed.
1128 Is there any question here that Shaw will repair the non‑conforming attachments or are we still in this issue of pre or post 1995?
1129 MR. BISSONNETTE: I don't ‑‑ I'm sorry.
1130 I guess that is a really excellent question. If BCTel had placed it prior to 1995 and they didn't install it in conformity and they are saying that anything that was dual cabled on a strand doesn't conform, then we would have a real issue with this.
1131 But if they are talking about a loop coming into a lateral, you know, which I think is the case, or something within an underground conduit which we know in all A and B and C ducts that BCTel has placed, because we can't even place them there today, then I think we would have to assess that.
1132 But if there was something that was done by Shaw post 1995 and it was done by a contractor, which would be almost minimalist in terms of the number of those kinds of jobs, then we would look at those and we would bring them into conformity.
1133 My concern in raising this is I didn't realize that BCTel took the position that having two cables versus three on the same strand would not be considered conformity.
1134 MR. MIELKE: If I may, that was not labelled as a deficiency.
1135 MR. BISSONNETTE: Yes. So from what I understand, Madam Commissioner, is that the number of those non‑conformities is very minimal. If that is the case, then we are prepared to deal with those, if we haven't already.
1136 MR. FLEIGER: I believe it's on the record, but the number of non‑conformed installations was approximately 628.
1137 Now, Shaw today has said that they believe that some of those are not Shaw facilities themselves. So we are happy to work with them on that to come up with whatever the real number is.
1138 But clearly if you looked at pictures ‑‑ and we have tons of pictures which I'm sure you don't want to see ‑‑ you would know quite readily that these installations do not conform to TELUS' standard operating practices.
1139 You know, putting amplifiers within reach on a pole instead of having it on the strand up at the top of the pole, which is the standard practice, TELUS would just not do that.
1140 So we are happy to work with Shaw on that to get that rectified.
1141 MR. BISSONNETTE: Yeah.
1142 COMMISSIONER MOLNAR: Those are my questions.
1143 THE CHAIRPERSON: Thank you, Commissioner Molnar.
1144 We will now move to our counsel, Regan Morris, to finalize any other questions that we have from the Commission staff at this time.
1145 MR. MORRIS: Yes, hi. I will also try to be brief.
1146 My first set of questions are for TELUS.
1147 I would like to turn to the support structure licence agreement that the Commission approved in Order 2000‑13, I believe.
1148 Section 10 deals with unauthorized attachments. It provides that when the company discovers an unauthorized attachment, it shall notify the licensee. The licensee then has 30 days to apply for a permit.
1149 Section 10.2 provides that if there is spare capacity and the attachment is in conformity, the company may approve the application.
1150 Section 10.3 provides that if there is no spare capacity, the company can decide to upgrade their facilities, or if the licensee refuses to pay for the upgrade the company can require that the unauthorized attachment be removed.
1151 Now, it seems to me that sort of implies that the attachment in question has been precisely identified, or at least to some degree of precision. I would like to know, using the audit method, how would these provisions work, given that you haven't actually done it by the specific unauthorized attachments?
1152 MR. WOODHEAD: You would have a permit that is ultimately approved and the application that forms the foundation of that permit would identify a facility from point A to point B and it would touch structure all along the way from point A to point B.
1153 If it was unauthorized because there was no permit that attached to it, all of that facility from point A to point B would be unauthorized and that would be how you would apply section 10.
1154 MR. MORRIS: Right. But in this case you haven't actually in a particular region said which facilities are unauthorized and which ones are authorized.
1155 MR. WOODHEAD: We have a permit or an application where the cable company asks us to go from, just for the sake of the argument, 100 Maple Street to 200 Maple Street. The facility, all of that work is done, the make ready, all of the rest of the stuff we have been talking about, and, you know, the cable company or somebody else goes and places the facility.
1156 If we have a permit for it, we inspected. If we go out and there is a permit for 100 Maple Street to 200 Maple Street and it continues from 200 Maple Street to 300 Maple Street but there is no permit, it is not authorized.
1157 MR. MORRIS: Let me try to get at it another way.
1158 This says you notify the licensee, right, of the unauthorized attachment. And then it says you identify whether there is spare capacity.
1159 How have you notified the licensee in this case what the unauthorized attachment is and how would you assess whether there is spare capacity if you haven't identified the specific facility that is unauthorized?
1160 MR. WOODHEAD: Well, I think there are two things going on there.
1161 In the first one, if you go to 10.1, it said, you know, the company ‑‑ it is a positive thing. The company will issue a permit once an application is submitted.
1162 Then it goes on and asks where, you know, we find licensees' facilities are installed without a permit, we notify the licensee, and so on and so forth, as you discussed.
1163 Then in 10.2 it says once you have found that there is ‑‑ I believe this is what it says.
1164 In 10.2 it says where you find one that there are facilities with no permit, if there is spare capacity available ‑‑ because a whole part of this thing was about spare capacity ‑‑ if spare capacity is available, you will issue a proper permit given the whatever make ready work would be done.
1165 It's all driven off the permit process. This whole thing is a permitting process.
1166 And the permit captures the route upon which the cable is laid or installed.
1167 MR. MORRIS: So if Shaw were to pay all of the unauthorized attachment charges in this case, what would the permit be for? Would it be for the entire region?
1168 You haven't identified the specific, as far as I can tell, the specific facility. So how would you issue a permit for that particular facility?
1169 MR. WOODHEAD: Well, I can't say, for example ‑‑ to just go back to my example of Maple Street, I couldn't say that they would have given us an application for 200 to 300, if that's what you're asking, because they haven't.
1170 So your question is: How would I know what they might have applied for if they had applied?
1171 I'm just telling you that our records show that for a given system ‑‑ I mean, typically what we are dealing with here in these rural areas and smaller systems which Shaw has acquired, our billing records, every ILEC or telephone company in the land operates these off the billing systems because that is what captures the data from the job and network orders.
1172 This tariff operates by virtue of everyone who wants access to them applying and a permit being issued.
1173 So I guess what I'm saying is that for each ‑‑ and if you go to the ‑‑ for everything that doesn't have a permit attached to it is an unauthorized attachment, and it would go pursuant to the tariff per rental unit.
1174 MR. MORRIS: But have you identified which ‑‑ so your audit identified all of Shaw's facilities.
1175 MR. WOODHEAD: Correct.
1176 MR. MORRIS: Have you matched those facilities with the permits that you have in your records?
1177 MR. WOODHEAD: We are able to show, yes, that, for example, if we went through a network package or whatever it is that you call it, it would provide that living document that I'm telling you where they would say it goes from here to here and it would be ‑‑ sorry, searched, make ready if required, make ready. It would be signed off by Shaw to get those non‑recurring charges, to accept those non‑recurring charges of us doing that, so on and so forth, up to the point at which it is finally approved by the company. And we can match ‑‑ that package, those permits explain where those facilities are.
1178 MR. MORRIS: But have you done that in this case? Have you showed which facilities to Shaw are unauthorized?
1179 MR. WOODHEAD: It's everything but those other ones.
1180 MR. BUZIOL: If I may use the Bowen Island audit as an example that was resolved with Shaw, we did an audit, we had a pre‑audit number that was in our billing system and we discovered that there was a discrepancy between what were billing and what we actually found in the field.
1181 That delta we then negotiated with Shaw. We went through the negotiation process and Shaw did their due diligence on it. They came to accept the difference between our pre audit number and our post audit number. An application was then signed by Shaw for the additional cable on Bowen Island.
1182 A release document was then signed that basically stated ‑‑ and I believe it is on the record here as well. It stated that there is X number of metres of cable on Bowen Island and payment was made for X number of dollars for the unauthorized attachment charges. And you are now released. Shaw was then released from that.
1183 In addition, the Invermere area, through the negotiations with Mr. Atkinson, we did resolve the fact that the audit was accurate and Shaw did in fact sign off on an application accepting the additional rental units ‑‑ pardon me, Invermere.
1184 That was updated in our billing system
1185 MR. MORRIS: Right. But other than Invermere it has all been based on the delta, as you say, between audit results and the billing records. Right?
1186 So it seems to me that is not identifying which facilities in particular. You haven't said this stretch of highway is unauthorized or this road and subdivision. You have just said the delta is what is unauthorized, but you haven't actually ‑‑ is that right?
1187 MR. BUZIOL: That is correct.
1188 MR. MORRIS: Okay.
1189 MR. BUZIOL: Yes.
1190 COMMISSIONER MOLNAR: I'm sorry, I just want to clarify because I thought I understood this part.
1191 But you are willing to share with TELUS the maps that will identify the difference. Is that correct?
1192 MR. BUZIOL: We are willing to share with ‑‑
1193 COMMISSIONER MOLNAR: And I think I heard you say as well in fact go out and tour those premises, if necessary, to identify that which is unauthorized.
1194 MR. BUZIOL: Yes.
1195 COMMISSIONER MOLNAR: Thank you.
1196 MR. BRAZEAU: But that would not identify unauthorized versus authorized attachments.
1197 COMMISSIONER MOLNAR: It would identify what TELUS states is authorized versus unauthorized, wouldn't it?
1198 MR. BRAZEAU: TELUS is a delta. That's all they are providing.
1199 MR. JOHNSON: The problem is it's a global picture; it is not specific to TELUS what the problem is. So we can't go back and verify the information.
1200 MR. BUZIOL: If I may, on a quarterly basis when we send out our invoice for our rental charges for the rental units, the invoice is accompanied by two spreadsheets. One spreadsheet shows the pre‑audit numbers, the additions and deletions that were made in that quarter, and then it shows a total of the actual cable or billing units, if you will, that are in each given area.
1201 The other spreadsheet shows a breakdown of each network package that was created by TELUS, along with the additional or the deletions of any rental units.
1202 So they do have, on a quarter by quarter basis, a detailed record of all our approved applications.
1203 MR. BISSONNETTE: Can I say something to that question?
1204 Even if we had that information, so the question isn't whether or not the cable exists, it is whether or not it is unauthorized. That is the determination that the Commission is going to have to come to grips with, because what we are saying is it is not unauthorized.
1205 And even if there is a delta, TELUS has taken the position any delta is unauthorized and therefore it attaches the $100 charge to it. We are saying it is not unauthorized because we didn't place it; you did.
1206 THE CHAIRPERSON: Regan, do you want to continue?
1207 MR. MORRIS: Just one more question to TELUS about the pole count that was done in 1995.
1208 You have said that overall the difference between your records and the pole ‑‑ sorry, what was found in the audits was very minimal. You said it was ‑1.5 per cent.
1209 But you are applying the unauthorized attachment charge on an audit region by audit region basis. From what I can tell from the sheets that were submitted, there are some regions where the difference is quite small, but there are other regions where the difference is actually quite large.
1210 So sometimes it is greater than 70 per cent.
1211 So to me that suggests that there are actually ‑‑ that there could potentially be some inaccuracies in the pole contact estimate that was done in 1995.
1212 MR. WOODHEAD: I think that would be an arithmetical inaccuracy. I believe Mr. Bissonnette was talking about this before. In the aggregate, it is a 1.5 per cent differential.
1213 You could go into a specific region, and there may be ‑‑ and Ron or Gary, jump in here.
1214 But there might be areas where there are longer spans, so there is more pole contacts being assumed by the proxy. There could be other ones where the spans are quite shorter, and in those cases the count or estimate would be different.
1215 So yes, you can look at ‑‑ you can go through and look at various subsets of areas and find different characteristics, but in aggregate they came out roughly, you know, within 1.5 per cent.
1216 MR. MORRIS: But as I understand it, if you have a difference in one region of 70 per cent between pre‑audit and post‑audit, then that's a lot of unauthorized attachment charge that is getting applied. Right?
1217 That is the basis of the charge.
1218 The difference between the audit and the billing records is the difference between the charge. Right?
1219 So if in some regions you have way more poles than what you had in your billing records, there is a lot of unauthorized attachment charges for those poles. So I'm not sure that just because overall the difference isn't that big, that doesn't mean in each region there are some problems; that the pole approximation in that region may not have been accurate.
1220 MR. WOODHEAD: Fair enough. But we have always billed on a region by region basis.
1221 The point is, the only remedy to I think what your concern is would be to go and physically identify 1.2 million poles and count each one and, you know, I think we have answered why we think that it's improbable.
1222 MR. JOHNSON: So they are asking us to do that for them.
1223 MR. WOODHEAD: No, we are not.
1224 MR. MORRIS: I guess I'm just wondering, how do you know that the approximation that was done in 1995 was accurate for each region?
1225 MR. BUZIOL: It was an approximation. Across the aggregate there is only a 1.5 per cent difference in what we have discovered.
1226 In terms of the additional poles that we may have discovered in one particular area as opposed to maybe matching up the poles in another area, there could be numerous reasons why that happened.
1227 Perhaps the cable network has expanded without authorization by TELUS, so there are additional poles that they have been attached to. Perhaps they have removed some cable.
1228 So again the pole count would be decreased.
1229 But we have done, I think as an accurate job as we could at that time in 1995 in terms of that calculation.
1230 MR. MORRIS: Thank you.
1231 I just have a few questions for Shaw.
1232 As I understand your position, it is that TELUS should not only have to identify the specific attachment that it considers to be unauthorized, but it has to establish that Shaw installed the facilities.
1233 Is that right?
1234 MR. JOHNSON: For the unauthorized attachment charge to apply, yes. If you look at the language of course, it says the licensee has installed the facility.
1235 MR. MORRIS: In the case of an attachment that was put up without TELUS' knowledge, just hypothetically, there is a cable that goes up and TELUS doesn't know about it, how would TELUS prove who installed that cable?
1236 MR. BRAZEAU: Well, I think they would make the licensee aware that there was concern and they would ask for the licensee to show evidence that that specific installation was authorized or not, and then the licensee would have to go through their records and demonstrate that the specific attachment was authorized.
1237 MR. MORRIS: So the burden would shift to the licensee then. Is that what you are saying?
1238 MR. BRAZEAU: I think that's correct.
1239 MR. MORRIS: Thank you. Those are all my questions.
1240 THE CHAIRPERSON: It is now 10 minutes to 1:00. I'm going to suggest we forge ahead, give each party 20 minutes. We will take a five‑minute break.
1241 What I want to do is take a five‑minute hygiene break, come back, give each party 20 minutes, and not more than that, to ask questions of the other party, after which we will take a 15‑minute break to allow you folks to finalize your arguments, come back and give each one of you 10 minutes and we will be complete, hopefully, by 2:15, if that works with everybody.
1242 Okay, a five‑minute break.
‑‑‑ Upon recessing at 1254 / Suspension à 1254
‑‑‑ Upon resuming at 1300 / Reprise à 1300
1243 THE CHAIRPERSON: By my watch it is now 1 o'clock.
1244 Pursuant to our process the applicant goes first for 20 minutes, which is TELUS, and then at 1:20 we will move to Shaw, complete at 1:40, take a 15‑minute break and then have wrap‑up.
1245 I'm not sure who on the TELUS side is leading, but Mr. Rogers.
EXAMINATION / INTERROGATOIRE
1246 MR. ROGERS: Yes, I will lead. Thank you, Mr. Chairman.
1247 I will start by directing my questions to you, Mr. Brazeau, but of course you are free, as you consider appropriate, to have anybody on the Shaw group respond.
1248 I would like to go back as we start to the case which has been referred to this morning called the Invermere case. In fact, it came up in the discussion with Commissioner Duncan and also the Vice‑Chair considered as well.
1249 That was essentially the case ‑‑ and I'm not going to go into the great details because my question is fairly high level.
1250 The record showed in that case that prior to the audit being conducted in that area, there were 12,000 units, billable units, that were in the billing system and which Shaw was paying for. I think you are in accordance with that.
1251 And then post audit there were 29,000 units discovered and you were quite clear about this this morning. You accept that 29,000 number. In fact, you are going ahead and paying for those facilities, so you accept that those are your Shaw facilities in place.
1252 So we have gone from a pre‑audit number of 12,000 rental units, and that had been in place for some years, and now you are up to 29,000.
1253 Doesn't the large difference ‑‑ in fact in this particular example more than double ‑‑ call for at least some explanation by Shaw as to how we got to that difference?
1254 I would suggest to you that as you think about that answer, you know and you agree that Shaw is required to have permits or to get permits to place equipment and to maintain and retain those permits. And you have a CAD system for mapping your own network.
1255 So I would have thought that you wouldn't recoil and reject entirely the notion that Shaw has no responsibility to give any answer to the difference between 12,000 and 29,000 units.
1256 MR. BRAZEAU: I'll start and then maybe Peter Bissonnette and Chris may want to add a few comments.
1257 I think again we are getting caught up by, you know, the audit did find additional aerial cable. The question is: Were those unauthorized?
1258 Again, the basis of the audit was post 1995 and there was no, we believe, accounting for what was there pre '95. That is part of our argument, is that the basis under which the audit has been carried out as post '95, which does not include all of the extra cable that was there pre '95, and therefore not surprising the audit would find more cable there than TELUS expected, and is finding more cable than we expected.
1259 Again, if the audit would have been performed in '95 by BCTel, I think you would have come up with similar numbers than you come up with in Invermere.
1260 I don't know if you want to speak, Chris or Peter, to the specifics of Invermere.
1261 MR. EWASIUK: Yes. We can certainly add that initially the TELUS audit started off with a pre‑audit metres of 6,800 metres and then fallen to 2,900 and we were able to show permits that brought the ‑‑ that doubled actually the pre‑audit meters up to 12,600 metres.
1262 So we were able to show permits for that growth in the pre‑audit metres.
1263 And part of the reason for that ‑‑ and this goes back to the Invermere fibre examples ‑‑ is where we are given specific locations of alleged unauthorized attachments, then we can go back to various records, whether it is our TELUS P408 permitting process records, whether it is invoicing records for make ready work and other work. We can try to determine on a specific basis some form of authorization for the placement of those facilities.
1264 The fact that with the Invermere fibre we did find a permit for I think it was 5,800 metres, which is a significant portion, 5.8 kilometres that was not in TELUS' records, unfortunately we were only able to find the one permit. But there may be others that aren't in the TELUS records for similar sizes.
1265 I mean, that seems unusual given the size, but nonetheless it shows that TELUS' own records did not capture all the permits.
1266 So yes, we haven't been able to substantiate all these, but it is certainly not the case that there aren't more outstanding permits there that didn't get into the TELUS billing system.
1267 MR. ROGERS: The nature of the permit system that we have been talking about came up earlier in the discussion.
1268 The permits are required by the licensee. Permits aren't for the benefit of the telco. The permits are for your benefit. They are a means of demonstrating that you have gone through the process, that you are authorized and, furthermore, in the event of any contest, you have a first right of claim against any other third party that might want to be into that space.
1269 So the permit is something that is there for your benefit, for you to retain, both vis‑à‑vis any dispute over your right to be there or vis‑à‑vis any other claims by some other party.
1270 So it seems to me that every time you put up equipment when we are talking about that growth, that is an area of growth. We all acknowledge it went from 12,000 rental units to 29.000. You have some responsibility to not only obtain them in advance, but to retain them and be able to show that you can account for the 29,000, because you now acknowledge that the 29,000 units are yours and you are quite prepared to pay for them.
1271 But you can only account, through a process that you have described with TELUS, to come up with 12,000 units supported by permits. We still have more than double that which are not accounted for and you are saying well, I don't have any permits, but I have no responsibility to speak to that.
1272 MR. JOHNSON: Let's be very clear that Invermere is an anomaly in the whole process in that in Invermere TELUS actually specifically identified a 14 kilometre stretch where they had an issue.
1273 What TELUS has done is they have given us ‑‑ they have broken down by system admittedly, but they have told us there is 479,000 metres that they can't explain through TELUS' billing system.
1274 The challenge is that if you look at how are we to respond when they tell us that ‑‑ if you look at Chilliwack, there is 20,000 metres that are unaccounted for, and how would we possibly respond to that by saying well, it is this street, Maple Street, to use Ted Whitehead's example, Maple Street between point A to point B. We cannot do that. They have not come back to us and said specifically where the location is. They have just told us a community the size of Chilliwack.
1275 MR. BRAZEAU: Specifically for your example, I come back to the point that a permit is one piece of evidence to demonstrate that the facility has been authorized. And even though there is a difference in cable meterage here that we still ‑‑ there might be no permits that were found, again I come back to the '95 conversion that may explain that difference, and therefore it would be very difficult for us to find the information.
1276 MR. JOHNSON: And the other thing to note, too, is that permits themselves ‑‑ you know, you seem to be suggesting that permits would be ‑‑ the onus would be on the licensee to keep those records.
1277 The permits themselves, first of all, as Jean says, they are not the only form of authorization in terms of the actual, the intention or the implicit or explicit consent by TELUS or BCTel to put our facilities up there.
1278 But the permits themselves don't have a lot of value in the long term because they don't describe quality of the plant. They don't help in terms of, you know, giving any sort of greater value in terms of what the benefit is of the cable, the specifics of the cable.
1279 The other thing too is we would just add that it strikes us that TELUS has also had some value ‑‑ TELUS has used the permits for flowing through to their billing system, and so presumably it would be in TELUS' interest to maintain records along those lines as well.
1280 MR. ROGERS: Well, okay, we don't want to pursue that too much further, Mr. Johnson.
1281 But TELUS is not going to flow through permits to the billing system if it doesn't have permits. You know, equipment that is out there that you don't know about, you don't create a permit, so it is not going to flow through.
1282 You only bill for permits you know about. So it is not going to have any effect if you don't know about it.
1283 Secondly you say the permit isn't all that valuable to anybody really. It is just a right to be there. It doesn't say anything about the quality of the system.
1284 Well, I would suggest to you that the permit is extremely important because it represents a demonstration of conformity by your company and ours with the Commission's regulatory system.
1285 The Commission didn't put this regulatory system in for the benefit of only one party. It put it in for the benefit of regulating a series of regulated companies, all of whom are expected to conform equally.
1286 So it's not just a free ticket or a free pass for one player. The Commission is expecting to see compliance on both sides and would expect to see the same thing with regard to all the other support structure users in Canada. So it's not just something that you can stick in the drawer like a baseball card; it has inherent value.
1287 MR. BISSONNETTE: Yes. But I think we both agree there is a mutual benefit from the permit. You benefit because when you have a permit you can bill for it. We have a benefit because we can quantify and demonstrate that we have permission to be doing what we're doing.
1288 But clearly there is a void between those two areas. There is 497,000 metres of cable where there either aren't permits or we have been able to demonstrate that we have permits for some of it. We can't demonstrate that we have permits for all of it.
1289 But you are then going and taking that and making a conclusion that therefore it is all unauthorized, when again a majority of that cable was actually placed by your own company.
1290 MR. ROGERS: All right. I would like to change areas here because we are time‑limited at this point.
1291 I would like to ask you, gentlemen, to turn to the written submissions of Shaw, April 7th, paragraph 13.
1292 This is a discussion about the timing of installations and who put them in at that time.
1293 You will see, if you have that paragraph 13 in front of you, it is a pretty clear statement. It is consistent with what you have said this morning.
1294 It says:
"Instead, all cable was installed by TELUS employees." (As read)
1295 And it is speaking about the period in the 70s, 80s and 90s and up until the middle of the 1990s, a frank statement that it was all installed by TELUS employees.
1296 And on the same point, basically same issue, if you flip over in the same document to paragraph 26, paragraph 26 refers to the Supreme Court of Canada decision which you are well aware of. It is the BCTel versus Shaw case.
1297 You will see the statement there:
"Prior to the Supreme Court of Canada decision in 1995, all cable installations on TELUS' support structures in British Columbia were performed by TELUS employees." (As read)
1298 Do you see that statement?
1299 I would ask you to refer now to a Commission decision which I provided to your counsel earlier today, and that is Telecom Decision 92‑4.
1300 I believe, Madam Secretary, that we provided copies as well for the Commission.
1301 I would ask you to refer to the first paragraph, in the first paragraph in the third sentence.
1302 This is a decision of the Commission dealing with support structures. In fact, Shaw is a party to this case. It is between BCTel and Shaw.
1303 It says:
"BCTel stated that as a result of a labour award, the 1991 award with respect to a grievance filed by the TWU, it could no longer permit anyone other than its employees to attach equipment to the facilities." (As read)
1304 The words "no longer permit anyone" else to do so would certainly imply that the Commission was finding as a fact in that case that there were others other than BCTel employees who were attaching up until that grievance.
1305 Isn't that a fair conclusion from that statement, unless you are prepared to say at this point that you think the Commission was wrong when it made that conclusion.
1306 MR. BRAZEAU: For which part of the ‑‑ is there any specific area or region that we are talking about? Is it the 12 ‑‑
1307 MR. ROGERS: No. We are talking about the practice of support structures in British Columbia during that time. It is BCTel versus Shaw, your company.
1308 MR. BRAZEAU: And is that significant?
1309 MR. ROGERS: Well, I'm asking you to remember ‑‑ you recall that I read from your statement of April 7th where you said that prior to 1995 no one other than BCTel employees ever attached equipment to the BCTel structures.
1310 MR. JOHNSON: That is given in the context of the 12 systems that we were talking about, whereas we believe that this particular case was referring to a separate situation, a separate municipality.
1311 MR. ROGERS: This judgment is referring to the whole BCTel system. This is the entire BCTel system, of which would of course cover all of the territories, including the 12.
1312 There is no qualification here to say that the judgment of the Commission only applies to some pockets of British Columbia.
1313 MR. BISSONNETTE: I think, just to clarify, what we said was we take the position that 95 per cent of the cable in question was placed by BCTel. So 5 per cent could be placed by somebody else.
1314 With respect to the jurisdictional issues, Shaw went to arbitration with the IBW who was claiming jurisdiction over cable placement and Shaw won the right to use BCTel to place its cable as a result of that arbitration.
1315 We didn't do that just to say that we had the right. We wanted to use that right, which we had up until that time, to use BCTel exclusively for our company, with the exception of emergencies that we talked about, to place our cable.
1316 MR. ROGERS: Well, if you chose voluntarily to use, that's not an issue. The question is whether or not there were others entitled to apply and install cable.
1317 You had made the statement that it was only BCTel employees that were entitled to do so. That is the language and we have another case here ‑‑
1318 MR. BRAZEAU: And we also said that our view was that 95 per cent of the cable was installed by BCTel.
1319 So as Peter pointed out, there is that 5 per cent and this could be in relation to that; and maybe it was 6 per cent or 7 per cent.
1320 MR. ROGERS: All right. Now, just to close off on this, we have a Supreme Court of Canada decision, the very one which is cited ‑‑ we read it earlier ‑‑ in your submission. I provided a copy to your counsel. I don't know if you have a copy of the handy.
1321 MR. BISSONNETTE: I don't, so if there is a particular paragraph that you would like to read from that so that I can get a reference point, we would appreciate it.
1322 MR. ROGERS: We are reading from paragraph 8 of that near the beginning.
1323 MR. BISSONNETTE: I don't have that document, so I'm sorry.
1324 MR. ROGERS: And I will read an excerpt from that.
1325 If you turn to paragraph 8 it says ‑‑ this is the Supreme Court of Canada decision reciting the set of facts of the case:
"Following installation work done by a cable company pursuant to the SSA, the TWU initiated labour arbitration proceedings leading to the Williams Award of January 1983." (As read)
1326 Then it describes the Williams Award in which it described that a cable company had installed its coax in a manner that had to do with the maintenance repair and construction of BCTel plant.
1327 So what I'm suggesting to you is we now have the Supreme Court of Canada confirming as a fact in one of its judgments, a case in which you won, that cable companies were installing their plant on BCTel structures as far back as 1983.
1328 MR. BISSONNETTE: Yes. So do you want my comment on that then?
1329 MR. ROGERS: Well, I'm just asking whether Shaw generally is ‑‑ do you accept that that is true or are you saying the Supreme Court got it wrong?
1330 MR. BISSONNETTE: Well, I'm saying that Shaw had a practice to use BCTel, as did Rogers at the time, as did Western Cable at the time, to use BCTel almost exclusively, up to 95 per cent of the time, to place cable on their behalf.
1331 Now, in terms of an entitlement, we were entitled to do more of that, but we didn't. We relied on BCTel to construct and place our cable, as also to do the make ready work prior to that work.
1332 So our practice was to do that.
1333 I think if you look at the P408s, that is reflected in those P408s.
1334 MR. BRAZEAU: And I think our position is not that 100 per cent of the cable was installed by BCTel. I think our position is that it is 95 per cent, and so there has to be some percentage of the cable that was installed by someone else.
1335 MR. ROGERS: Okay.
1336 I would like to leave that aside now and I would like to ask you to turn to the Shaw response to CRTC Interrogatory No 3.
1337 MR. ROGERS: If you have that, gentlemen, in that interrogatory the Commission essentially asked Shaw: Given the quarterly billing statements issued by TELUS, and given that Shaw has in its own records ‑‑ it has records of its own plant and equipment ‑‑ why weren't there any differences between Shaw's own records and TELUS' billing amounts reported to or at least raised by Shaw?
1338 Your response reviews a number of issues in response to that question and in the end, the bottom line is:
"Shaw has not considered it cost effective to conduct detailed monitoring of TELUS' support structures."
1339 So you say no detailed monitoring was occurring. I would have thought that over the course ‑‑ you are a large company. Shaw is a pretty big company. At some point Shaw's internal or external auditors would have done at least some review of this aspect of Shaw's operations in order to try to match expenses on support structures with the actual use of support structures. That is kind of what auditors do.
1340 Are you suggesting that there were no audits even on a spot basis of any of this kind of expenditure?
1341 MR. BRAZEAU: Luckily for us we have an auditor with us at this point.
1342 MS BASHNICK: So just to respond to your question, when we are ‑‑ to go back to what TELUS was billing us for versus what was out there, TELUS was billing us in accordance with how they said they were going to bill is on the original conversion when they converted the units on a 1:1 basis. That was very clear.
1343 On the transition from '95 to '96 all of the cable meterage out there was not fully being counted, and that was apparent to everybody that was party to that back in '95.
1344 MR. ROGERS: Including you.
1345 MS BASHNICK: Well, I wasn't there in '95.
1346 MR. ROGERS: Shaw.
1347 MR. BRAZEAU: Including BCTel, because it was a BCTel decision to do so.
1348 MS BASHNICK: That was the letter that came out that said we are not ‑‑ basically we are not doing an audit; we are going to count this on a 1:1 basis.
1349 Since that time in these particular systems there has been about 150,000 I think units added on the billing, which represents about 10 per cent, which is about 1 per cent per year.
1350 So we monitor that growth as we know that we are building out our systems, and we review the invoices on a quarterly basis to make sure that that jibes with what we think we see.
1351 The other issue that we have is invoices ‑‑ we get billed for things. It is added on to our invoice potentially two to three years after it is actually completed. So in order for us to actually do detailed tracking on that, we would have to employ 150 people and we are not prepared to do that for increases of 1 per cent per year.
1352 We monitor it more on making sure the increase is reasonable in accordance with how we know our business is growing.
1353 MR. ROGERS: All right. Well, there is a distinction between the growth and the base. You said you monitor the growth and let's leave that aside.
1354 MS BASHNICK: Yes.
1355 MR. ROGERS: But when you say you began with a base and you indicated basically that you knew at the time that the base was being improperly recorded in terms of what you thought ‑‑
1356 MS BASHNICK: We never said it was improperly recorded.
1357 MR. ROGERS: You said you were being billed.
1358 MS BASHNICK: We said it was being billed in accordance with how BCTel said they were going to bill it.
1359 MR. ROGERS: Right, which you knew ‑‑
1360 MS BASHNICK: There was no reason to question it.
1361 MR. ROGER: No, no.
1362 MS BASHNICK: There was nothing for us to question.
1363 MR. ROGERS: There was nothing for you to question in those bills, but you knew that they did not conform, at least with your understanding of the equipment that Shaw actually had out there.
1364 MS BASHNICK: That's not the reason. The billing is the whole situation here.
1365 It is we were being billed for authorized attachments. BCTel told us this is how we are converting your authorized attachments on a 1:1 basis.
1366 We had no reason to challenge that. Why would we?
1367 MR. ROGERS: Well, of course it wouldn't be in your interest to do so, because if you felt that the bills should actually be 50 per cent higher you are not going to go out and complain, are you?
1368 MS BASHNICK: Well, that was BCTel's decision ‑‑
1369 MR. ROGERS: Exactly.
1370 MS BASHNICK: ‑‑ to implement that way and it was open to change that, you know, as the ‑‑ if somebody could on an audit, which is what has been done now.
1371 MR. ROGERS: Right.
1372 THE CHAIRPERSON: Mr. Rogers, your time is just about up.
1373 MR. BISSONNETTE: Let's be clear at the time ‑‑ no, I would like to answer, too.
1374 At the time we were not aware that the ratio was one cable or two cables to 50 per cent of the plant. Many of these systems we didn't even own. We relied on BCTel having factual and accurate records.
1375 They were aware of the tariff and BCTel said we have decided, rather than doing anything else, we are quite happy to bill without support structures at this rate, and going forward that became the baseline.
1376 There was no chicanery here or anything else.
1377 MR. ROGERS: Can I have one last question?
1378 THE CHAIRPERSON: One last short question, sure.
1379 MR. ROGERS: Okay.
1380 The same response that we are talking about ‑‑ this is the interrog response to No. 3, Commission question 3. If you look at your own description that starts at the bottom of page 1 and runs to the top of page 2, it describes the billing details that Shaw receives in its invoices from TELUS, and it includes in the bullets at the top of the page ‑‑ it references the project identifiers. Then you go on to say the geographic area.
1381 Then three paragraphs from the bottom of the page you say:
"To determine the location of the licensee's facilities, the licensee must access the specific project file involved..."
1382 That's your file.
"... and then construct maps and permit applications archived in the project file. This is a time consuming process." (As read)
1383 What I would take from that is that you actually have the detail; that you know from your project files what you did, what you got authorized for and where it is. That is what those project files are about.
1384 And if you had any reason to believe that there was a problem with the billing system, that you were under‑billed, you could have verified it. But of course you didn't because there is no reason to.
1385 You had every reason to believe that you would not object. There is no point in objecting when you are being under‑billed.
1386 MS BASHNICK: I will just go back to we weren't being under‑billed.
1387 We were being billed as BCTel said they were going to bill us. So I'm not sure what more I can add to that.
1388 THE CHAIRPERSON: All right.
1389 MR. ROGERS: Mr. Chairman, I will leave it at that.
1390 THE CHAIRPERSON: Thank you, Mr. Rogers.
1391 Mr. Kerr‑Wilson...?
EXAMINATION / INTERROGATOIRE
1392 MR. KERR‑WILSON: Thank you, Mr. Chairman.
1393 Again I will direct my questions to Ms Yale and she can ‑‑ okay?
1394 So prior to Decision 95‑13 the rental charge on two or more cables along a single 30 metre strand would have been the same as a rental charge on one cable along the same 30 metre strand. Is that correct?
1395 MR. WOODHEAD: Do you want the appropriate person to answer that question?
1396 Yes would be the answer.
1397 MR. KERR‑WILSON: I guess probably better is you want the appropriate person to answer the question.
‑‑‑ Laughter / Rires
1398 MR. WOODHEAD: Yes. We all want the same thing.
1399 MR. KERR‑WILSON: And once the Commission approved rates based on individual cables, BCTel needed to change its billing system to account for multiple cables lashed to the same strand.
1400 Isn't that correct?
1401 MR. WOODHEAD: Yes.
1402 MR. KERR‑WILSON: And BCTel never conducted an audit to identify all the locations where there was multiple cables lashed to the same strand, did they?
1403 MR. WOODHEAD: No.
1404 MR. KERR‑WILSON: Isn't it true that these ‑‑
1405 MR. FLEIGER: No, we didn't conduct an audit because we didn't believe there were any. That's correct.
1406 MR. BUZIOL: And in fact that calculation was to determine the pole count. It had nothing really to do with the cable; it was to determine the pole count.
1407 MR. KERR‑WILSON: I wasn't actually talking about the pole count approximation.
1408 But isn't it true that BCTel sent a letter to cable systems indicating it was going to convert route meterage count to total meterage count on a 1:1 basis?
1409 MR. FLEIGER: Yes.
1410 MR. KERR‑WILSON: Then between June 2006 and December 2006 TELUS audited the 12 systems. Correct?
1411 MR. BUZIOL: Yes.
1412 MR. KERR‑WILSON: And this audit revealed a discrepancy between the information in the billing system and the actual number of Shaw facilities attached to TELUS' support structures. Correct?
1413 MR. BUZIOL: Sorry, can you repeat the question?
1414 MR. KERR‑WILSON: Sure. The audit revealed a discrepancy between the information in the billing system and the actual number of Shaw facilities that was observed.
1415 MR. BUZIOL: That's correct.
1416 MR. KERR‑WILSON: In conducting the audit, TELUS did not attempt to cross‑check Shaw facilities it counted against permits that it issued to Shaw, did it?
1417 MR. BUZIOL: No, that's correct.
1418 MR. KERR‑WILSON: In its application TELUS attributes the entire amount of the discrepancy between the billing system and the results of the audit to unauthorized attachments. That's correct?
1419 MR. BUZIOL: That is correct.
1420 MR. KERR‑WILSON: But will you agree that if BCTel did not properly account for all situations where two or more cables are lashed to a single strand, that would explain some of the discrepancy?
1421 MR. BUZIOL: We presented the results to Shaw and we gave Shaw the ability or the opportunity to produce the approved applications. We would have then cross‑referenced them against our findings and adjusted the billing accordingly.
1422 MR. KERR‑WILSON: Okay. But if you had not accounted for all of the instances of multiple strands, that would have shown up as a discrepancy between the billing system and the audit?
1423 MR. BUZIOL: We did a complete count of the cable on TELUS' structure.
1424 MR. KERR‑WILSON: In the audit?
1425 MR. BUZIOL: In the audit, correct.
1426 MR. KERR‑WILSON: In the conversion, if you had not captured all of the multiple strand in the '95 conversion, that would be a discrepancy between the audit and the billing system?
1427 MR. BUZIOL: Pre‑1995 we were under the belief that there was one cable per strand.
1428 MR. KERR‑WILSON: Okay. So is it your testimony that in no circumstances would BCTel ever authorize multiple cables on the same strand pre '95?
1429 MR. FLEIGER: Yes, that's correct.
1430 MR. KERR‑WILSON: So there would be absolutely no work order permits that would show BCTel approving multiple cables on a single strand, in no circumstances?
1431 MR. FLEIGER: I'm sure there is an exception or two that is likely out there, but the standard practice was not for two cableco cables to be on the same strand.
1432 MR. KERR‑WILSON: So now it is possible that there could have been approved multiple cables on the same strand?
1433 MR. FLEIGER: In exceptional circumstances.
1434 MR. KERR‑WILSON: And whether it's an exceptional circumstance or not, to the extent that multiple cables weren't picked up in the conversion but were picked up in the audit, that discrepancy would show up even if BCTel had done the installation itself, wouldn't it?
1435 MR. BUZIOL: I guess the real question here is: When was that cable, if it is in fact ‑‑ if there is double cable on that single strand, when was that cable placed?
1436 That is something that ‑‑
1437 MR. FLEIGER: And by whom.
1438 MR. BUZIOL: And by whom, yes.
1439 And that is something that TELUS does not know because it is unauthorized ‑‑ or that delta is considered as being unauthorized.
1440 MR. KERR‑WILSON: Well, if there are work orders that show BCTel approving placement of multiple cable on strand, that would answer the question of by whom and when, wouldn't it?
1441 MR. BUZIOL: Shaw has not produced those work orders, as you say, or those applications to TELUS.
1442 MR. KERR‑WILSON: In its responses to interrogatories, Shaw did provide a list of the permits as requested by the Commission.
1443 Did you review those list of permits to see whether there was any instances of multiple strands being approved by BCTel?
1444 MR. BUZIOL: I did review those applications against the network numbers or the job order numbers on our billing system, and we did compare the total meterage of those systems. But nowhere in it did it tell us how many cables were on the strand.
1445 We just had total meterage.
1446 MR. KERR‑WILSON: But did you go back to your own documents that would have been produced at the time?
1447 MR. BUZIOL: We cross‑referenced all of your documents, or the spreadsheet, against the TELUS billing system.
1448 MR. KERR‑WILSON: Against the TELUS billing system or against the TELUS permit record?
1449 MR. BUZIOL: The TELUS billing system.
1450 So the answer to your question is no.
1451 MR. KERR‑WILSON: Now, I have handed out the extracts from the TELUS interrogatory responses. These are simply taken straight from the record.
1452 The only addition we have made is to put a page number on them so people don't have to dig through binders. So if we could have those available.
1453 If we could just refer to the first page, this is a copy of a BCTel invoice to Shaw for support structure rentals in Chilliwack.
1454 Is that right?
1455 MR. BUZIOL: No. This is a copy of a document that accompanies the invoice.
1456 MR. KERR‑WILSON: Okay. Would the information on this document be reflected in the invoice?
1457 MR. BUZIOL: The invoice itself would have a total dollar meterage associated to it and this would be the detailed breakdown for that dollar amount.
1458 MR. KERR‑WILSON: So is the information on this document accurate?
1459 MR. BUZIOL: It is accurate based on the permits that were submitted or signed off on by TELUS, yes.
1460 MR. KERR‑WILSON: Okay. And this document pertains to the first quarter of 1995.
1461 Is that correct?
1462 MR. BUZIOL: Yes, January 1st to March 31st.
1463 MR. KERR‑WILSON: So this is the period before the changes to the support structure tariff approved by the Commission.
1464 MR. BUZIOL: Yes.
1465 MR. KERR‑WILSON: Okay. If we look down to the bottom, we can see a cable metre rate of $.85 per 30 metres. That's correct?
1466 MR. BUZIOL: That's what I see here, yes.
1467 MR. KERR‑WILSON: And a pole contact rate of zero?
1468 MR. BUZIOL: That is correct.
1469 MR. KERR‑WILSON: So this invoice reflects the fact that BCTel charged a bundled rate for cable and for poles prior to decision 95‑13?
1470 MR. BUZIOL: TELUS was charging the tariffed rate at that given time, yes.
1471 MR. KERR‑WILSON: But it was a bundled rate for pole contacts and strand?
1472 MR. BUZIOL: Yes.
1473 MR. KERR‑WILSON: Which is why we have a zero for the pole count?
1474 MR. BUZIOL: Correct.
1475 MR. KERR‑WILSON: And on this invoice BCTel was charging Shaw for slightly more than 275,000 route metres of cable in Chilliwack. Is that right?
1476 MR. BUZIOL: That is correct.
1477 MR. KERR‑WILSON: And this total route metre amount would not have reflected circumstances where more than one cable was lashed to the same strand, would it, because it was a strand rate not an individual cable rate?
1478 MR. BUZIOL: It is a total meterage count on TELUS' structure.
1479 MR. KERR‑WILSON: Because prior to Decision 95‑13, BCTel charged the same amount per strand regardless of the numbers of cables attached to the strand, didn't it?
1480 MR. BUZIOL: That is correct.
1481 MR. KERR‑WILSON: Okay.
1482 If we could flip over to page 2, this is also a document that would have accompanied the invoice to Shaw for Chilliwack?
1483 MR. BUZIOL: Correct.
1484 MR. KERR‑WILSON: It's the second quarter of 1995?
1485 MR. BUZIOL: That's correct.
1486 MR. KERR‑WILSON: If we look down at the bottom, we see that the rate charged for cable has changed to $.20 per 30 metres?
1487 MR. BUZIOL: That is correct.
1488 MR. KERR‑WILSON: There is now a pole contact rate of $.80 a pole?
1489 MR. BUZIOL: Correct.
1490 MR. KERR‑WILSON: So this document appears to reflect the new rates approved by the Commission in Decision 95‑13?
1491 MR. BUZIOL: It does.
1492 MR. KERR‑WILSON: If we look at the top of the invoice, we see that 4,000 new metres of cable was added to the billing system since the previous invoice.
1493 Is that right?
1494 MR. BUZIOL: That is correct.
1495 MR. KERR‑WILSON: And the total metres of cable charged on this invoice is now slightly more than 279,000 metres?
1496 MR. BUZIOL: That is correct.
1497 MR. KERR‑WILSON: So it appears as if BCTel took the 275,000 metres of cable from the first invoice, added the 4,000 metres of new cable, to generate a new total of 279,000?
1498 MR. BUZIOL: That is right.
1499 MR. KERR‑WILSON: Okay. So except for the addition of the 4,000 metres of new cable, there was no other changes to the total metres recorded in the BCTel billing system in this document.
1500 Is that right?
1501 MR. BUZIOL: No, that's incorrect. There is a change in the duct meterage, the A duct, the D duct, as well as a pole count.
1502 MR. KERR‑WILSON: Okay. Sorry, I was referring to the aerial cable.
1503 There is no other change to the amount of aerial cable recorded, except for the 4,000 new?
1504 MR. BUZIOL: That's true.
1505 MR. KERR‑WILSON: Okay.
1506 Now, with the implementation of the new tariff, BCTel's billing system should have been revised to reflect those circumstances where two separate cables were lashed to the same strand.
1507 Isn't that right?
1508 MR. BUZIOL: If it existed, that would be correct, but it was TELUS' belief that it did not exist at that time.
1509 MR. KERR‑WILSON: So if there were any instances, exceptional or not, in Chilliwack of more than one cable attached to the same strand, it is not reflected in the total metres reflected in this document, is it?
1510 MR. BUZIOL: True.
1511 MR. KERR‑WILSON: But instances of two or more cables lashed to the same strand in Chilliwack would have been picked up in the 2006 audit. Correct?
1512 MR. BUZIOL: Again, we wouldn't know the date of when that cable was actually placed, so I'm not sure really understand your question.
1513 MR. KERR‑WILSON: No, no. During the audit you would have counted two cables on a strand.
1514 MR. BUZIOL: If there was two cables on the strand, we would have counted two