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ABRIDGED

File Nos. 8638-C12-201014620


8638-C12-201016882

2011 03 28

To: Mr. John Traversy


Executive Director, Telecommunications
Canadian Radio-television and
Telecommunications Commission
Ottawa, Ontario
K1A 0N2

Subject: Associated with Bell Aliant Tariff Notice 345B and Bell Canada Tariff
Notice 7290B

Dear Mr. Traversy,

1 Attached for the Commission's approval are revisions to Bell Aliant Regional
Communications, Limited Partnership's (Bell Aliant's) and Bell Canada's (collectively, the
Companies') Tariff Notice (TN) 345 and TN 7290 respectively.

2. In TN 345 and TN 7290 the Companies proposed to introduce Item 5440 – Gateway
Access Service - Fibre to the Node (GAS-FTTN) and Item 5450 – High Speed
Access Service - Fibre to the Node (HSA-FTTN), in response to the Commission's
directives 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 to
the previous usage-based billing (UBB) proposals in TNs 345 and 7290.

3. Certain cost information contained in this tariff notice letter is being provided in
confidence to the Commission pursuant to section 39 of the Telecommunications Act
(the Act). Release of such information would provide existing or potential
competitors with detailed information on the Companies' cost structure, enabling
them to develop more effective business strategies and to focus on specific market
segments. Thus, release of such information could prejudice the Companies'
competitive position, result in material financial loss and cause specific direct harm to
the Companies. An abridged version of the TN letter is provided for the public
Bell Aliant record. Bell Canada
Denis Henry David Palmer
Floor 19 Floor 19
160 Elgin Street 160 Elgin Street
Ottawa, Ontario K2P 2C4 Ottawa, Ontario K2P 2C4

Telephone: (613) 785-6361 Telephone: (613) 785-6280


Facsimile: (613) 560-0472 Facsimile: (613) 560-0472
regulatory@bell.aliant.ca bell.regulatory@bell.ca
2011 03 28 ABRIDGED 2

The New Aggregate Volume Pricing Proposal

4. The Companies have created an aggregated volume pricing (AVP) proposal, to


replace the previous UBB model, with the following principles in mind.

- Flexibility: AVP is not linked to individual user thresholds and should have no impact on
how wholesale Internet Service Providers (ISPs) market their retail.
- Fairness: AVP ensures that those who use the least are not subsidizing those who use
the most.
- Predictability: 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 in
augmenting and building access networks, and
- Transparency: Last but not least, the economic ITMP transparently matches wholesale
ISPs' willingness to pay in proportion to their usage of the network thus putting them in
control of the economic ITMP.

5. Under the AVP proposal, GAS (both legacy and FTTN) would be composed of two
components;1 a flat-rated access fee and the AVP. The AVP can be pre-purchased
in blocks of single terabytes (TB). The Companies note that under the new AVP
proposal, AVP charges will apply to legacy and FTTN Residence GAS, but not to
legacy and FTTN Business GAS.

6. 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 level
of 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 an
approach encourages an ISP to monitor and manage its traffic and pre-purchase its
intended usage. However, the ISP still pays a low fee on a GB basis (not a TB
basis) for each GB that exceeds its pre-purchased estimate.

7. For GAS-FTTN, each ISP will be charged an access rate in conformity with the
Commission's determinations in TRP 2010-632. However, in recognition that the
cost 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 are
proposing 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 cost
components. Under the AVP proposal, each ISP would instead pay for the total
usage its customers collectively generate each month through the AVP. A detailed
explanation of AVP is provided in the Companies' comments submitted in Telecom
Notice of Consultation CRTC 2011-77, Call for comments, Review of billing practices
for wholesale residential high-speed access services (TNC 2011-77), filed
concurrently with this application, under separate cover.

8. In accordance with paragraph 78 of TRP 2009-657, the application of economic ITMPs


on wholesale services is to be evaluated using the ordinary pricing principles for rate
approvals. At paragraph 137 of Telecom Decision CRTC 2008-17, Revised
regulatory framework for wholesale services and definition of essential service
1
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 ABRIDGED 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 with
such services, as originally established in Telecom Decision CRTC 2002-34,
Regulatory framework for second price cap period (Decision 2002-34) was
maintained. As such, pricing for GAS services is not strictly cost based. The
Companies' 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, the
Companies' 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.

9. Although the AVP tariff proposal does not provide as clear an incentive for wholesale
ISPs to control usage by their top end-users as the Companies' previous wholesale
UBB proposal, it would nevertheless link wholesale ISPs' costs to their aggregate
usage of the shared network. Conceptually, very heavy users would therefore
generate more costs for wholesale ISPs on the shared network as they do for the
Companies who must actually manage the shared network.

10. The Companies submit that this proposal provides a fair and simple solution to the
principles raised in this proceeding and addresses the reservations parties have
raised with regard to wholesale UBB. Specifically, the AVP plan is an economic
ITMP that:

- Provides flexibility by not linking charges to individual end-user thresholds thus allowing
wholesale ISPs to devise their own business models,
- Is fair by ensuring that those who use the least are not subsidizing those who use the
most,
- Is designed such that all ISPs have an incentive to manage usage of the shared
network,
- Is designed such that it will promote investments, and
- Is transparent.

11. For all of these reasons, the Companies request the Commission to approve the
AVP plan as proposed by the Companies.

12. Attachment 1 provides a price floor test in support of the proposed tariff amendments
which demonstrates that the revised access rates for GAS-FTTN Residence satisfy
this test. In accordance with section 39 of the Act, Attachment 1 is submitted in
confidence as it contains revenues, cost and demand information which is
consistently treated as confidential by the Companies and, if made public, could
enable existing and potential competitors to develop more effective business
strategies and to focus on specific market segments. This could prejudice the
Companies' competitive position; result in material financial loss and cause specific
direct harm to the Companies. An abridged version of Attachment 1 is provided for
the public record.

13. Bell Aliant has very limited FTTN infrastructure in its Ontario and Québec serving
areas. For this reason Bell Aliant has not undertaken its own costing study but is
using the Bell Canada costs as a proxy for the proposed GAS-FTTN Residence
options that it will make available in its Ontario serving area.
2011 03 28 ABRIDGED 4

# Filed in confidence with the CRTC.


2011 03 28 ABRIDGED 5

The Commission should approve both the Companies' proposed Residence GAS-FTTN
access rates and Aggregate Volume Prices together, on an interim basis.

14. The Companies' wholesale UBB tariffs were filed more than two years ago, yet
wholesale ISPs continue to have access to the Companies' shared GAS network on
a flat-rated basis. Further, the Companies' proposed FTTN rates were made in
accordance with the requirements of Decision 2010-802. In order to reduce the
incentives wholesale ISPs have with regard to further gamesmanship intended to
forestall the implementation of a pricing plan that would make them accountable for
their Internet usage which, most immediately could appear through ploys to delay the
outcome of this proceeding, and to accelerate the deployment of FTTN speed tiers
for the Companies' GAS, the Companies request the Commission to approve the
AVP proposal on an interim basis for an effective date of 29 May 2011, and that final
rates be retroactive to the date of interim approval. The Companies emphasize that
in providing interim approval, the Commission must provide interim approval for the
proposed AVP charges in addition to the revised Residence GAS-FTTN monthly
access rates proposed in this TN. As established above, the Companies' proposed
AVP (i.e. economic ITMP) rates of $0.195/GB for pre-purchased TBs and $0.295/GB
for post-use aggregate traffic are just and reasonable. Moreover, the Commission
had always intended to couple Residence GAS FTTN access with some form of
usage based compensation for the ILECs, because the use of UBB as an economic
ITMP for Residence GAS had already been approved in principle when
Decision 2010-802 was issued in August 2010. In consideration of this, it would now
be highly inappropriate for approval and implementation of one tariff element to
precede the other.

15. Further, there is already a more expensive wholesale Internet alternative in the
market today. The approved additional usage charges for Videotron's Ultimate
Speed 15, Ultimate Speed 30 and Ultimate Speed 60 offerings are $0.00146 per
additional MB2, or $1.495 per additional GB, almost five times the Companies'
corresponding charge.

16. Most importantly, as the Companies have discussed above, the proposed new
access rates for Residence GAS-FTTN are lower than those previously filed and are
based on costs which exclude the usage cost component. Significant network cost
components are usage-driven and, consequently, are not recovered in the proposed
monthly access rates but are instead appropriately recovered in the proposed AVP
charges. Notably, the costs associated with provisioning of routers and servers are
reflected in the proposed AVP charges and are not included in the proposed new
access rates for Residence GAS-FTTN. Consequently, if the Commission were to
provide interim approval for the proposed revised FTTN access rates but not for the
proposed AVP charges, the Companies would not recover those usage-driven costs
for components such as routers and servers, and would not be able to recover them
on a retroactive basis pursuant to final approval by the Commission. In
consideration of this, should the Commission provide interim approval for the
proposals in this application, that interim approval must reflect both the proposed
GAS-FTTN access rates together with the proposed AVP charges.

17. For convenience, the Companies are providing at this time a complete set of
proposed tariff pages for Item 5440 – Gateway Access Service - Fibre to the Node
(FTTN). Additionally, it is the Companies' intention that subsequent to the
2
See Videotron Tariff Notice 38 dated 22 December 2010 and approved by the Commission on a final basis
in Telecom Order CRTC 2011-47, dated 26 January 2011 (http://www.crtc.gc.ca/eng/archive/2011/2011-47.htm).
2011 03 28 ABRIDGED 6

conclusion of the TNC 2011-77 proceeding, the Companies will file for approval tariff
pages to implement AVP for legacy GAS. The attached tariff pages are being filed in
English only. It is the Companies intention to provide a fully translated version of the
tariff pages to the Commission upon approval.

18. Please direct all inquiries or correspondence regarding this application to David
Palmer at (613) 785-6280 or e-mail to bell.regulatory@bell.ca.

Yours truly,

[ Original signed by D. Henry ] [ Original signed by D. Palmer ]

Denis E. Henry David Palmer


Bell Aliant Bell Canada
Vice-President – Regulatory, Government Affairs and Director - Regulatory Affairs
Public Law
Attachments
c.c.: Parties to TNC 2009-261
DH/sm
2011 03 28 ABRIDGED 7

In compliance with the requirements of the Telecommunications Act and Section 29 of the
CRTC Telecommunications Rules of Procedure, Bell Aliant and Bell Canada apply herewith for
approval of the following tariff amendments:

Bell Aliant Tariff Notice 345B

Tariff CRTC Proposed Effective Date Description

21562 29 May 2011 Original Page 741 ,


Original Page 741.1 ,
Original Page 741.2 ,
Original Page 741.3 ,
Original Page 741.4 ,
Original Page 741.5 ,
Original Page 741.6 ,
Original Page 741.7 ,
Original Page 741.8 ,
Original Page 741.9 ,
Original Page 741.9.1 ,
Original Page 741.10 .

Bell Canada Tariff Notice 7290B

Tariff CRTC Proposed Effective Date Description

6716 29 May 2011 Original Page 741 ,


Original Page 741.1 ,
Original Page 741.2 ,
Original Page 741.3 ,
Original Page 741.4 ,
Original Page 741.5 ,
Original Page 741.6 ,
Original Page 741.7 ,
Original Page 741.8 ,
Original Page 741.9 ,
Original Page 741.9.1 ,
Original Page 741.10 .