TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

             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

Transcripts

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

Contents.

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.

Transcription

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

               Telecommunications Commission

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

                 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

                                  Implementation and

                                  Technology

Mario Bertrand                    Acting Director,

                                  Competition Implementation

                                  And Technology

John Traversy                     Executive Director,

                                  Telecommunications

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.

60               Shaw...?

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."

(As read)

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.

‑‑‑ Pause

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."

(As read)

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 ‑‑"

294              Sorry:

"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.

427              John...?

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.