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PROPOSED - TN BA345B-BC7290B - Letter_ABR

PROPOSED - TN BA345B-BC7290B - Letter_ABR

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Published by: Mark Goldberg on Mar 29, 2011
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ABRIDGEDFile Nos. 8638-C12-2010146208638-C12-201016882
2011 03 28To: Mr. John TraversyExecutive Director, TelecommunicationsCanadian Radio-television andTelecommunications CommissionOttawa, OntarioK1A 0N2Subject:
Associated with Bell Aliant Tariff Notice345B and Bell Canada Tariff  Notice7290B 
Dear Mr. Traversy,
Attached for the Commission's approval are revisions to Bell Aliant RegionalCommunications, Limited Partnership's (Bell Aliant's) and Bell Canada's (collectively, theCompanies') Tariff Notice (TN) 345 and TN 7290 respectively.
In TN 345 and TN 7290 the Companies proposed to introduce Item 5440 – GatewayAccess Service - Fibre to the Node (GAS-FTTN) and Item 5450 – High SpeedAccess Service - Fibre to the Node (HSA-FTTN), in response to the Commission'sdirectives in Telecom Regulatory Policy CRTC 2010-632,
Wholesale high-speed access services proceeding 
(TRP 2010-632) dated 30 August 2010. The purpose of the revisions in this application is to introduce a usage sensitive pricing alternative tothe previous usage-based billing (UBB) proposals in TNs 345 and 7290.
Certain cost information contained in this tariff notice letter is being provided inconfidence to the Commission pursuant to section 39 of the
Telecommunications Act 
). Release of such information would provide existing or potentialcompetitors with detailed information on the Companies' cost structure, enablingthem to develop more effective business strategies and to focus on specific marketsegments. Thus, release of such information could prejudice the Companies'competitive position, result in material financial loss and cause specific direct harm tothe Companies. An abridged version of the TN letter is provided for the publicrecord.
Bell Aliant Bell Canada
Denis Henry David Palme
Floor 19 Floor 19160 Elgin Street 160 Elgin StreetOttawa, Ontario K2P 2C4 Ottawa, Ontario K2P 2C4
Telephone: (613) 785-6361 Telephone: (613) 785-6280
Facsimile: (613) 560-0472 Facsimile: (613) 560-0472regulatory@bell.aliant.cabell.regulatory@bell.ca
2011 03 28
The New Aggregate Volume Pricing Proposal
The Companies have created an aggregated volume pricing (AVP) proposal, toreplace the previous UBB model, with the following principles in mind.-
AVP is not linked to individual user thresholds and should have no impact onhow wholesale Internet Service Providers (ISPs) market their retail.-
AVP ensures that those who use the least are not subsidizing those who usethe most.-
AVP is an economic Internet Traffic Management Practice (ITMP)designed such that all ISPs have an incentive to manage usage of the shared network.-
Promoting investment:
The economic ITMP is designed to incent investments inaugmenting and building access networks, and-
Last but not least, the economic ITMP transparently matches wholesaleISPs' willingness to pay in proportion to their usage of the network thus putting them incontrol of the economic ITMP.
Under the AVP proposal, GAS (both legacy and FTTN) would be composed of twocomponents;
a flat-rated access fee and the AVP. The AVP can be pre-purchasedin blocks of single terabytes (TB). The Companies note that under the new AVPproposal, AVP charges will apply to legacy and FTTN Residence GAS, but not tolegacy and FTTN Business GAS.
The proposed rate for a single TB is $200 (which effectively approximates a rate of $0.195 per GB). If the ISP's total aggregate monthly traffic volume exceeds the levelof TBs it pre-purchased, the ISP will be charged $0.295 per GB of usage in excess of the pre-purchased TBs. Consistent with the principle of predictability, such anapproach encourages an ISP to monitor and manage its traffic and pre-purchase itsintended usage. However, the ISP still pays a low fee on a GB basis (not a TBbasis) for each GB that exceeds its pre-purchased estimate.
For GAS-FTTN, each ISP will be charged an access rate in conformity with theCommission's determinations in TRP 2010-632. However, in recognition that thecost study filed on 30 November 2010 for FTTN speeds included certain costs of usage in accordance with Telecom Decision CRTC 2010-802,
Bell Aliant Regional Communications, Limited Partnership and Bell Canada – Application to review and vary Telecom Decision 2010-255 concerning usage-based billing for Gateway Access Services
(Decision 2010-802) dated 28 October 2010, the Companies areproposing new access rates for GAS-FTTN that are lower than those previously filed.The revised access rates are based on costs which exclude all usage costcomponents. Under the AVP proposal, each ISP would instead pay for the totalusage its customers collectively generate each month through the AVP. A detailedexplanation of AVP is provided in the Companies' comments submitted in TelecomNotice of Consultation CRTC 2011-77,
Call for comments, Review of billing practicesfor wholesale residential high-speed access services
(TNC 2011-77), filedconcurrently with this application, under separate cover.
In accordance with paragraph 78 of TRP 2009-657, the application of economic ITMPson wholesale services is to be evaluated using the ordinary pricing principles for rateapprovals. At paragraph 137 of Telecom Decision CRTC 2008-17,
Revised regulatory framework for wholesale services and definition of essential service
Charges such as Installation, Dry Loop, service charges (one time or monthly recurring charge) and AHSSPI(the port charge) continue to apply with no changes to their rates.
2011 03 28
3(Decision 2008-17) the Commission found that GAS is a
conditional mandated non-essential service
and the current case-by-case pricing treatment associated withsuch services, as originally established in Telecom Decision CRTC 2002-34,
Regulatory framework for second price cap period 
(Decision 2002-34) wasmaintained. As such, pricing for GAS services is not strictly cost based. TheCompanies' cost studies reflect costs per GB of usage for GAS-FTTN of # per GB and for legacy GAS of # per GB with a weighted average of # per GB. As such, as can be seen, theCompanies' proposed AVP (i.e. economic ITMP) wholesale rates of $0.195/GB for pre-purchased TBs and $0.295/GB for post-use traffic, on an aggregate GB basis,are just and reasonable.
Although the AVP tariff proposal does not provide as clear an incentive for wholesaleISPs to control usage by their top end-users as the Companies' previous wholesaleUBB proposal, it would nevertheless link wholesale ISPs' costs to their aggregateusage of the shared network. Conceptually, very heavy users would thereforegenerate more costs for wholesale ISPs on the shared network as they do for theCompanies who must actually manage the shared network.
The Companies submit that this proposal provides a fair and simple solution to theprinciples raised in this proceeding and addresses the reservations parties haveraised with regard to wholesale UBB. Specifically, the AVP plan is an economicITMP that:- Provides flexibility by not linking charges to individual end-user thresholds thus allowingwholesale ISPs to devise their own business models,- Is fair by ensuring that those who use the least are not subsidizing those who use themost,- Is designed such that all ISPs have an incentive to manage usage of the sharednetwork,- Is designed such that it will promote investments, and- Is transparent.
For all of these reasons, the Companies request the Commission to approve theAVP plan as proposed by the Companies.
Attachment 1 provides a price floor test in support of the proposed tariff amendmentswhich demonstrates that the revised access rates for GAS-FTTN Residence satisfythis test. In accordance with section 39 of the
, Attachment 1 is submitted inconfidence as it contains revenues, cost and demand information which isconsistently treated as confidential by the Companies and, if made public, couldenable existing and potential competitors to develop more effective businessstrategies and to focus on specific market segments. This could prejudice theCompanies' competitive position; result in material financial loss and cause specificdirect harm to the Companies. An abridged version of Attachment 1 is provided for the public record.
Bell Aliant has very limited FTTN infrastructure in its Ontario and Québec servingareas. For this reason Bell Aliant has not undertaken its own costing study but isusing the Bell Canada costs as a proxy for the proposed GAS-FTTN Residenceoptions that it will make available in its Ontario serving area.

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