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Telecom Order CRTC 2025-195

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Reference: 8638-C12-200805906

Gatineau, 1 August 2025

Public record: 1011-NOC-2020-0131

Follow-up to Telecom Decision 2023-196 – Review of the approach to rate setting for wholesale telecommunications services – Cable carrier Regulatory Economic Studies Manuals

Summary

Canadians need reliable, affordable, and high-quality telecommunications services for every part of their daily lives.

One of the ways that the Commission helps make telecommunications services more affordable for Canadians is through access to wholesale services. Wholesale services allow competitors to sell services to consumers using the networks of Canada’s largest telephone and cable companies. These companies are known as incumbents. Wholesale services increase competition between service providers and provide consumers with more choice for telecommunications services.

Regarding its frameworks for wholesale services, the Commission, in most cases, sets the wholesale rates that incumbents charge competitors to obtain access. The Commission’s primary approach to setting wholesale rates is the “Phase II” methodology. Under this methodology, the Commission determines wholesale rates using the incremental costs of providing a service over the long run, with the addition of an associated markup to contribute to a company’s fixed and common expenses. This methodology is detailed in the Regulatory Economic Studies Manuals (Manuals) for each company.

In this order, the Commission approves the Phase II Manuals for the cable carriers, subject to the modifications outlined in Appendix B of the Manuals.

Background

  1. In Telecom Decision 2008-14, the Commission determined the appropriate expenses to include, and the related approaches and methods for estimating the causal expenses to be included, in Phase II regulatory economic studies for the large incumbent local exchange carriers (ILECs).Footnote 1 The Commission also determined the appropriate capital asset livesFootnote 2 to be used in these studies. The Commission required that each ILEC file for approval certain costing methodologies documented in a Regulatory Economic Studies Manual (Manual), reflecting the determinations in the decision.
  2. Pursuant to Telecom Decision 2008-14, each ILEC filed its own Manual for Commission approval. The Manuals were approved in Telecom Order 2008-237. In Telecom Regulatory Policy 2019-69, the Commission directed Northwestel Inc. to file its own Manual for Commission approval, which was approved in Telecom Order 2020-327.
  3. Since then, various modifications to the ILEC Manuals and their submission directives were made through Commission decisions and staff letters.Footnote 3

  4. Each company’s Manual consists of the following:

    • sections 1.0 to 5.0 and Appendices A to F, describing the Commission’s general framework for conducting regulatory economic studies (common Manual component); and
    • company-specific Appendices G through Z, providing the capital and expense methodologies and study parameters, as well as additional documentation pursuant to Telecom Decision 2008-14.
  5. Historically, the requirement to file company-specific Manuals only applied to the ILECs. However, in numerous decisions and orders,Footnote 4 the Commission has required Bragg Communications Incorporated, carrying on business as Eastlink; Cogeco Communications Inc., on behalf of Cogeco Connexion Inc.; Québecor Media Inc., on behalf of Videotron Ltd.; and Rogers Communications Canada Inc. (Rogers) [collectively, the cable carriers] to apply the Phase II costing methodology to their wholesale high-speed access services, and in the case of Rogers, to its wholesale domestic roaming service.Footnote 5
  6. In Telecom Decision 2023-196, the Commission directed the cable carriers to develop and file company-specific Manuals for the Commission’s approval within nine months of the date of the decision.
  7. The cable carriers filed their proposed company-specific Manuals on 8 April 2024, which include a common Manual component as well as company-specific Appendices G through Z.
  8. On 23 September 2024, the Commission requested additional information regarding the Manuals. Responses to the Commission’s requests for information were filed on 8 November 2024.

Commission’s analysis

  1. The cable carriers filed Manuals that generally follow the approved ILEC Manuals from Telecom Decision 2008-14, as modified through subsequent Commission staff letters. The Commission considers that the cable carrier Manuals should have the same content as the Commission-approved ILEC Manuals, with the exception of the changes approved in this order.
  2. The cable carriers proposed a number of deviations from previously approved common Manual components. These deviations are addressed in the sections that follow.

Removing text from the Commission-approved Manual

  1. The cable carriers removed certain paragraphs from the Commission-approved Manual, including paragraphs on retail service tariffs and wholesale support structure tariffs. The cable carriers noted that these components are only relevant for ILECs and should not apply to the cable carriers since they do not have any retail service tariffs or wholesale support structure tariffs.
  2. The Commission considers that these deviations are appropriate, since the removed paragraphs relate to services that are not offered by the cable carriers.

Adding text to the Commission-approved Manual

  1. The cable carriers added text on treatment of the capacity cost methodFootnote 6 and working fill factorsFootnote 7 (WFFs) in the Manual and Appendix B. This text consisted of a “Quality of Experience” factor. The cable carriers submitted that this additional factor results in WFFs that more accurately reflect the way the cable carriers’ networks are provisioned.
  2. The Commission is of the view that these proposed deviations should be considered during the follow-up proceeding on the Commission’s directives regarding the information and calculations to be used in rate-setting studies. Accordingly, the Commission directs the cable carriers to remove these proposed deviations in their Manuals and Appendix B.

Inconsistencies and omissions in certain company-specific appendices

  1. In Telecom Decision 2023-196, the Commission stated that it would be important and necessary to hold a follow-up proceeding to determine whether its existing directives regarding the information and calculations to be used in rate-setting studies are adequate or require future revision. The Commission also stated that the appropriate time for such a follow-up proceeding would be after the receipt and approval of the cable carriers’ Manuals, since this would allow the Commission to identify key issues for consideration in that proceeding.
  2. The Commission notes that these appendicesFootnote 8 contain company-specific calculations, details, and procedures that are often dependent on the tools and information sources available to and specific for each company. The inclusion of this company-specific information is consistent with the approach used for the ILECs in Telecom Order 2008-237 and for Northwestel Inc. in Telecom Order 2020-327. The Commission notes that company-specific information has not been subject to the Commission’s approval, consistent with Telecom Order 2008-237.Footnote 9 Accordingly, the Commission does not take issue with this company-specific information at this time, including the calculations and procedures documented in the regulatory economic studies.
  3. The Commission further notes that, consistent with the process of analysis for each regulatory economic study by each company, the inputs and parameters are analyzed on a study-by-study basis. The applicability and reasonableness of these company-specific inputs are analyzed on their own merit with each individual costing submission. Furthermore, some items contained in these appendices, such as WFFs, are often raised in various Commission proceedings separate from the Manual review. These matters will be reviewed as part of a future proceeding on the Phase II cost components, as outlined in Telecom Decision 2023-196. For the remaining company-specific appendices,Footnote 10 the Commission has not identified any issues and therefore approves them.

Conclusion

  1. The Commission considers that the cable carrier Manuals should have the same content as the Commission-approved ILEC Manuals, with the exception of the changes approved in the appendix to this order. The Commission directs the cable carriers to remove their proposed deviations to the Commission-approved capacity cost method and WFFs in their Manuals and Appendix B. The Commission also directs the cable carriers to make the minor adjustments to their Manuals outlined in the appendix to this order.
  2. In light of the above, the Commission directs the cable carriers to file updated Manuals by 2 September 2025. Subject to these directions, the Commission approves the common Manual component of the cable carriers’ Phase II Manuals. The Commission also approves the company-specific Appendices J, M, N, O, Q, V, and Z, except for the informationFootnote 11 in the tables to Appendix V, which contain data that is periodically updated by the companies.

Secretary General

Related documents

Appendix to Telecom Order CRTC 2025-195

Summary of the Commission’s adjustments to proposed cable carrier costing Manuals

Manual reference Proposal from cable carriers Commission’s determination Rationale
Paragraph 1-1 Proposed removal of the text “or price reduction.” No adjustment is required. The text refers to price reductions regarding retail rate regulated tariffs, the need to reduce prices, and associated cost studies (price floor tests), which is not applicable to the cable carriers.
Paragraph 1-2 Proposed removal of the text “or Commission staff” from the sentence “Regulatory economic studies are developed in accordance with generally accepted economic concepts and methods and incorporate the prospective incremental costing principle and methodologies set out in Decision 79-16, as amended in subsequent Commission or Commission staff determinations described in this manual.” Revert to the text in the Commission-approved Manual. Commission staff may at times update the Manual, appendices, and tables when appropriate. For example, the Commission staff letter dated 30 September 2013, directed the ILECs to file updated Manuals, appendices, and tables.
Paragraph 3-20 Proposed removal of the text “switching equipment” from the sentence “When a new service, a rate reduction, or a change in the service functionalities is introduced, the provisioning requirement of customer premises equipment, access facilities, switching equipment, inter office facilities, or other hardware and software used to determine the capital expenditure impacts are identified.” No adjustment is required. In response to a request for information from the Commission, the cable carriers indicated that they do rely on equipment that routes and directs packets which could be associated with switching equipment as a category and reverted to text in the Commission-approved Manual.
Paragraphs 2-1 to 2-15, 2-18 to 2-32, 3-10, 3-11, 3-61, 3-62 Proposed removal of several paragraphs relating to price floor tests, retail service tariffs, and blended expenses. No adjustment is required. These paragraphs are not applicable to the cable carriers.
Paragraph 3-9 Proposed inclusion of the text “geography.” No adjustment is required. The word “geography” was included in the revised wording to replace “exchange” which is a term that does not apply to cable networks.
Paragraph 3-43 Proposed inclusion of the text “If information is not available to develop the explicit costs of these facilities.” Revert to the text in the Commission-approved Manual. The wording in the approved Manuals already allows for the use of a proxy when it is inappropriate to explicitly estimate the casual costs of the facility.
Appendix B Proposed inclusion of a revised capacity cost method. Revert to the text in the Commission-approved Manual. The Commission considers that adjustments to the capacity cost method should be considered in a future proceeding on the various costing components used in rate-setting studies.
Appendix S and T (Rogers Communications Canada Inc. [Rogers] only) Rogers’ Appendix S and Appendix T did not include the tariffs for one-way domestic wireless roaming service in Appendix S and Appendix T. Include the tariff for one-way domestic wireless roaming service in Appendix S and Appendix T. As tariffs relating to one-way domestic wireless services are still in place and have not been withdrawn, Rogers should include the tariffs in Appendix S and T.
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