20 May 2011

Our Reference: 8661-C12-201102350

8611-C12-201016882

BY E-MAIL

To Distribution List

Re: Interim rates for wholesale residential and business high speed access services

Dear Madam/Sir,

In December 2010, the incumbent local exchange carriers (ILECs) and the cable companies filed
proposed tariffs to implement speed matching and point of interconnection (POI) aggregation
services, as required by the Commission in Telecom Regulatory Policy 2010-632. Some of these
proposed tariffs have subsequently been refiled and/or modified because of the launch of
Telecom Notice of Consultation 2011-77 (NoC 2011-77) and the Commission staff letter of
13 April 2011. In that letter, Commission staff indicated that the issue of implementing interim
rates for these services would be addressed shortly.

Commission staff notes that, as stated in NoC 2011-77, the Commission’s approach with regard
to these services is based on two principles:
i. As a general rule, ordinary consumers served by small Internet Service Providers
( ISPs) should not have to fund the bandwidth used by the heaviest retail Internet
service consumers.
ii. It is in the best interest of consumers that small ISPs, which offer competitive
alternatives to the incumbent carriers, should continue to do so.

Commission staff recognizes the importance of providing competitors with access to the higher
speed and increased POI aggregation services as soon as possible and notes that any delay
impacts the competitors’ ability to provide consumers with more choice. However, Commission
staff also recognizes that the underlying structure of the proposed tariffs, including how usage
should be measured and its costs recovered, are at the very heart of this proceeding. As such, in
Commission staff’s view, it would not be appropriate to commit to any particular model by
providing interim approval to any of the tariffs as filed.
 -2-

As an alternative, Commission staff is proposing a simplified approach for interim rates for both
residential and business1 high speed access services as explained below. Such an approach does
not require any determinations, even on a preliminary basis, regarding the structure of the
proposed tariffs, nor does it signal any change from the principles outlined above. Instead, in
staff’s view it relies on market forces in the retail and business high speed services markets as a
benchmark for interim rates that allow for competitive pricing in the retail and business market
while still allowing for recovery of costs.

It should be noted that the approach identified below does not reflect a final determination by the
Commission but rather, reflects an expedient approach to provide competitors access to the
higher speed and increased POI aggregation services with as minimal a delay as possible. In
particular the issue of whether there should be a usage component, and if there is a usage
component how will it be calculated and imposed, will be the subject of the July hearing. No
inferences of any kind should be drawn from the fact that this interim tariff, given its short
transitory nature, contains no separate usage component.

Parties are invited to provide their views on Commission staff’s preliminary view on the method
to establish the interim rate approach for these services. Parties are also invited to provide their
views on how the Commission should approach any retroactive adjustment to rates back to the
date interim rates were established.

Proposed Interim Rate Approach2

 Set wholesale access rates based on the company’s lowest3 retail access rates for the
corresponding speed options, minus $7.50 to recognize activities pertaining to retail that
either do not apply or do not apply to the same extent to wholesale (e.g. back-end Internet
connectivity, billing, help desk, advertising and sales, offset by additional costs which would
apply only to wholesale). Where this resulting wholesale access rate is higher than the
company’s proposed wholesale access rate, set the wholesale access rate equal to the
company’s proposed wholesale access rate.4

 No usage rate would apply.

All parties may file written comments with the Commission, serving copies on all other parties,
by 30 May 2011. Comments from the ILECs and cable carriers should also identify, with
supporting rationale, the earliest date by which they could implement the interim rates under the
proposal.

1
Note that the NoC 2011-77 proceeding is limited to residential wholesale services. The business wholesale
services are addressed separately in the Speed Matching proceeding (file 8611-C12-201016882).
2
The proposed interim rate approach would apply to both residential and business services, as applicable. It relates
to the ILEC’s new matching speeds and the cable carriers’ POI aggregation.
3
Where a company offers lower retail rates through contracts or bundles, these would be the applicable rates.
4
This condition does not apply to the services provided by Bell Aliant Regional Communications, Limited
Partnership (Bell Aliant) in Ontario and Quebec and Bell Canada (collectively, the Bell companies). Unlike the
other tariff filings, the Bell companies have not filed a proposed wholesale access rate that includes usage costs.
 -3-

All parties may file reply comments with the Commission, serving copies on all other parties, by
1 June 2011.

The above material must be received, not merely sent, by the dates specified. Copies of the
documents should also be sent to Tom Vilmansen (tom.vilmansen@crtc.gc.ca), Richard Pagé
(richard.page@crtc.gc.ca), and Mohammed Omar (mohammed.omar@crtc.gc.ca).

Yours sincerely,

Original signed by

Lynne Fancy
Director General
Competition, Costing and Tariffs
Telecommunications

cc: Yvan Davidson, yvan.davidson@crtc.gc.ca;

Richard Pagé, richard.page@crtc.gc.ca;
Tom Vilmansen, tom.vilmansen@crtc.gc.ca;
Mohammed Omar, mohammed.omar@crtc.gc.ca
 -4-

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