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Decision CRTC 2001-23
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Ottawa, 25 January 2001
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Ledcor/Vancouver – Construction, operation and maintenance of
transmission lines in Vancouver
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Reference:
8690-C12-01/99
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This proceeding arose as a result of a disagreement between the City
of Vancouver (Vancouver) and Ledcor Industries Limited (Ledcor) relating
to the terms and conditions under which Vancouver would grant Ledcor
consent to construct a fibre optic transmission system in Vancouver.
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In this majority decision, the Commission is resolving the dispute
between Vancouver and Ledcor. The Commission is granting permission to
Ledcor to construct, maintain and operate transmission lines that Ledcor
has constructed in 18 street crossings in Vancouver, and is prescribing
terms and conditions related to that permission.
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Background
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Initial applications
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1. |
On 19 March 1999, Ledcor Industries Limited filed a Part VII
application requesting relief pursuant to sections 43 and 61(2) of
the Telecommunications Act (the Act), naming the City of Vancouver
(Vancouver) as respondent. Ledcor requested that the Commission issue
interim and final orders granting it, its affiliate (Worldwide Fiber
(F.O.T.S.) Ltd.), and its customers permission to access street crossings
and other municipal property in Vancouver to install, operate and
maintain Ledcor's fibre optic transmission lines. Ledcor stated that it
had not been able to obtain the consent of Vancouver, required by section
43 of the Act, for access to the street crossings and other municipal
property on terms acceptable to it.
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2. |
Ledcor stated that Vancouver had proposed a number of conditions for
granting access that Ledcor found unacceptable, including:
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a) distance-based access (licence) fees that far exceed the costs of
providing access;
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b) additional licence fees that would require Ledcor to pay Vancouver
a share of its telecommunications revenues in Vancouver;
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c) a requirement to give Vancouver exclusive use of four fibre strands
on its fibre optic system in the Vancouver area;
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d) a requirement that Ledcor provide Vancouver with information on its
customers, in order that Vancouver could impose additional
revenue-sharing licence fees on Canadian carriers that had purchased
fibres, indefeasible rights of use (IRUs), or similar capacity on its
fibre optic system; and
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e) numerous other restrictions and requirements that were far more
costly and onerous than those imposed by other municipalities, railways
and other property owners with which Ledcor had successfully negotiated
access agreements.
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3. |
With its application, Ledcor provided copies of the Municipal Access
Agreement (MAA) and Street Crossing Agreement (SCA) advanced by Vancouver
during the negotiations.
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4. |
Ledcor stated that it had continued to construct its fibre optic
system, including segments of the system located in Vancouver, while
discussions with the city had proceeded.
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5. |
In a ruling dated 8 April 1999, the Commission denied a request from
Vancouver to suspend Ledcor's application pending disposition of an
application to be filed by the city. The Commission noted that the two
applications would, in essence, raise the same issues, namely, the terms
and conditions of access to municipal property in Vancouver for the
purpose of constructing, maintaining and operating transmission lines.
The Commission concluded that it would be in the public interest to deal
with both applications concurrently. The Commission also stated that,
following closure of the record on the two applications, it would issue a
public notice initiating a proceeding to consider the issues raised.
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6. |
Pursuant to the Commission's ruling of 8 April 1999, Vancouver
filed a Part VII application on 17 May 1999. In its application,
Vancouver stated that Ledcor had constructed a fibre cable in the city's
streets without obtaining the city's consent or permission. Vancouver
further stated that, according to press reports, strands on this cable
had been acquired by MetroNet Communications Group Inc., Call-Net
Enterprises Inc., Bell Canada and Canadian Pacific Railway (CPR), while
BCT.TELUS Communications Inc. (TELUS) had either already acquired strands
or was in negotiations to acquire strands. Vancouver named TELUS,
Call-Net and Bell Canada as respondents to its application, stating that
none of these carriers had obtained the city's consent or permission
prior to taking ownership of the fibre, or permitting Ledcor to install
it on their behalf.
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7. |
Vancouver requested an order to establish the terms and conditions of
access by the respondents to street crossings and other municipal
property to construct, maintain and operate transmission facilities.
Vancouver also requested that the Commission make an interim order for a
zero rate of consideration, to enable the Commission to make its final
order in this matter take effect on the date of the interim order.
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8. |
On 27 October 1999, the Commission granted Vancouver's request for an
interim order, pending its final determination. The Commission ordered,
as a condition of access, that each of the respondents forthwith pay $1
to Vancouver.
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Initiation of the proceeding
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9. |
On 3 December 1999, the Commission issued Terms and conditions for
access to municipal property in the City of Vancouver, Telecom Public
Notice CRTC 99-25, to
consider the appropriate terms and conditions of access by Canadian
carriers and distribution undertakings (collectively,
"carriers") to municipal property in Vancouver for the purpose
of constructing, maintaining and operating transmission lines. The
Commission stated that, while the proceeding would be limited to the
terms and conditions of access in Vancouver, it expected that the
principles developed in the proceeding may inform the Commission's
consideration of any disputes that may arise elsewhere.
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10. |
In PN 99-25, the
Commission invited parties to comment on: (a) the scope and nature of the
Commission's jurisdiction to set the terms and conditions of access in
light of sections 42 to 44 of the Act, and any other provisions of the
Act that may be relevant; (b) the terms and conditions, including whether
some form of monetary compensation could and should be ordered as a
condition of access; (c) what form any monetary compensation should take,
including submissions as to costing methodology; and (d) whether any
terms and conditions imposed by the Commission in relation to the
agreements for access in Vancouver that are in dispute could and should
replace the terms and conditions in existing agreements that are not in
dispute, relating to municipal access in Vancouver.
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11. |
Ledcor, Vancouver, TELUS, Call-Net, Bell Canada, AT&T Telecom
Services Company Inc., GT Group Telecom Services Corp. (Group
Telecom), BC TEL, and all affiliates of these entities that are Canadian
carriers with any part of their transmission facility located on
municipal property within Vancouver, were made parties to the proceeding.
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12. |
Pursuant to the procedure established in PN 99-25,
the following parties filed submissions on 28 January 2000: Alberta
Urban Municipalities Association; Bell Canada and MTS Communications
Inc.; City of Calgary (Calgary); Call-Net; Canadian Cable Television
Association (CCTA); Canadian Institute of Public and Private Real Estate
Companies and Building Owners and Managers Association; City of Edmonton
(Edmonton); Federation of Canadian Municipalities (FCM); Halifax Regional
Municipality (HRM); Ledcor; Regional Municipality of Ottawa Carleton
(RMOC); Corporation of the City of New Westminster and the City of
Richmond (New Westminster/Richmond); TELUS; City of Toronto (Toronto) and
Vancouver.
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13. |
Interrogatories were addressed to those filing submissions on 28
February 2000, and responses were filed on 29 March 2000.
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14. |
On 5 June 2000, the Commission issued a letter ruling on requests for
further responses to interrogatories and for disclosure of information
filed under claim of confidence. In addition, the Commission addressed
supplemental interrogatories to Vancouver and set out the procedure for
the rest of the proceeding.
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15. |
Vancouver filed its responses to the Commission's supplemental
interrogatories on 17 July 2000.
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16. |
On 14 August 2000, the following parties filed comments: AT&T
Canada Corp.; Bell Canada/MTS; Calgary; Call-Net; CCTA; Edmonton;
FCM; Futureway Communications Inc.; Group Telecom; New
Westminster/Richmond; RMOC; TELUS; Toronto; WFI Urbanlink Ltd. and Ledcor
and Vancouver.
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17. |
The Commission also received 33 letters, primarily from municipalities
and counties, essentially expressing support for the Rights-of-Way
Principles advanced by FCM in the proceeding.
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18. |
On 5 September 2000, the following parties filed replies: AT&T
Canada; Bell Canada/MTS; Calgary; Call-Net; CCTA; Edmonton; FCM; HRM;
Ledcor; RMOC; TELUS; Toronto and Vancouver.
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19. |
At pages 1 and 2 of its reply in this proceeding, FCM submitted that,
in the comment phase, certain carriers introduced new allegations
contrary to municipal interests. FCM stated that these carriers could
have provided evidence as to these allegations in their initial
submissions of 28 January 2000. FCM submitted that it is not able to
respond to these allegations on the basis that the procedure established
for this proceeding does not allow FCM to obtain particulars or to test
the allegations. Accordingly, FCM submitted that it would be
inappropriate for the Commission to take any such allegations into
account in rendering its decision.
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20. |
The Commission notes with respect to FCM's objections that it has not
taken the allegations in question into account in rendering this
decision, as they are not relevant to the issues being determined.
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Vancouver's proposal
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21. |
In its submission of 28 January 2000, Vancouver argued that
competition in the communications industry is making space in municipal
streets an increasingly scarce societal resource. In addition, other uses
(electricity, gas, storm and sanitary sewers, underground malls, etc.)
increase the demand for space allocation.
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22. |
Vancouver stated that, in a monopoly environment, access to public
property was accorded on a first-come, first-served basis. In such an
environment, the subscriber base to a utility service such as telephony
was virtually identical to the taxpayer base. Therefore, the exercise of
allocating costs to cost-causers was scarcely justified, since the result
would be merely to transfer cost from one bill to another in a virtually
identical customer base.
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23. |
Vancouver submitted that, in the current competitive environment, a
carrier's customer base and the taxpayer base are no longer the same, and
the previous regime no longer makes sense. It further submitted that the
most efficient way to allocate such a scarce resource is to assign the
full costs of the resource to the cost-causer. In this way, users of
public property will have an incentive to make as efficient use as
possible of public property, and those applications that are of the
greatest societal benefit will be more likely to achieve access to public
property.
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24. |
Vancouver argued further that, when public property is scarce and has
market value, it is equitable that the owner be compensated for its use
by others in proportion to its value to others; to do otherwise would be
to subsidize users, such as carriers and their shareholders and
customers, at the expense of the city and its taxpayers.
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25. |
Vancouver proposed that it recover all costs causally incurred by it
as a result of the use and occupation of its public property by carriers.
Vancouver submitted that there are a variety of one-time and on-going
causal costs incurred by the city due to the presence or placement of
telecommunications plant in its streets. Vancouver proposed to recover
one-time costs through up-front charges based on actual incurred or
estimated costs. This category would include costs for the approval of
applications and plans, inspections, costs of transit delays due to
construction, lost parking meter revenues, pavement restoration, etc.
Vancouver proposed to recover on-going costs through annual linear
charges (per metre of transmission line). This category would include
costs of pavement degradation due to cuts during the construction of
transmission facilities, and lost productivity in the city's own
operations in street resurfacing and in sewer and waterworks
construction, etc., due to the presence of transmission facilities in the
street.
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26. |
In addition to the above, Vancouver proposed an annual linear
"land" charge, based on the value of adjacent lands.
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27. |
Vancouver also proposed to apply to its direct and indirect costs: (a)
a "multiplicative factor" to recover variable common costs, and
(b) a contribution to fixed and common costs at a suggested rate of 25%.
These two factors would apply to all but the annual linear land charge.
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28. |
Vancouver also proposed, among other things, that carriers be
responsible for the full cost of relocating their facilities, whenever
such relocation was required for bona fide municipal purposes
(including municipal beautification programs). As well, Vancouver
maintained that it should not be held liable for damage to the plant of
carriers and distribution undertakings resulting from municipal
operations in the street.
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29. |
Vancouver also argued that only the city has the resources and
expertise to co-ordinate the various requirements for, and uses of,
rights-of-way. Vancouver submitted that it should be given the ability
"to facilitate greater co-ordination among the various carriers that
locate in the street." In this context, it stated that it must have
the ability (a) to require carriers to provide extra duct capacity when
the street is dug up initially; and (b) to require this extra
capacity and other third party duct capacity to be used by other carriers
wanting to use the same alignments.
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30. |
Vancouver argued that confirming its mandate to facilitate sharing and
co-ordination would not only maximize the efficient use of crowded
municipal property, but would also minimize duplication of effort and
costs (e.g., cuts to municipal pavement would be reduced, road surfaces
would last longer, and disruptions to the public, business and municipal
works would be decreased).
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31. |
The Commission notes that Vancouver's submission of 28 January 2000
made no mention of the provision of dark fibre or percentage of revenue
fees. In response to interrogatory Vancouver(CRTC)28Feb00-2, Vancouver
confirmed that its January submission constituted the entirety of its
proposal, and that the quantum of payment required from carriers in
Vancouver would be based on the costing methodology it proposed. However,
Vancouver added that, once the quantum is established, the form of
compensation should be freely negotiated between the parties. Vancouver
submitted that some carriers prefer payment to be in the form of
percentage of revenue fees or the provision of dark fibre.
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The Commission's jurisdiction and the scope of the Commission's
decision
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Municipal consent
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32. |
In the following section, the Commission addresses its constitutional
and statutory jurisdiction. It is important to note at the outset that
Parliament has provided in section 43(3) of the Act that "no
Canadian carrier or distribution undertaking shall construct a
transmission line on, over, under or along a highway or other public
place without the consent of the municipality or other public authority
having jurisdiction over the highway or other public place". Where
carriers cannot obtain the consent of the municipality or other public
authority (the "municipality") on acceptable terms, they may
apply to the Commission for permission pursuant to section 43(4) of the
Act. In addition, municipalities can apply to the Commission to settle
disputes under section 44 of the Act.
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The Commission's jurisdiction
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33. |
With respect to constitutional jurisdiction, municipalities argued
that the Commission should only intervene pursuant to sections 42 to 44
of the Act to the extent that the actions of a municipality are
sterilizing a vital part of a federal undertaking. This argument is not
supported by the applicable constitutional principles. The entering on
and breaking up of any highway or other public place by a carrier for the
purpose of constructing, maintaining or operating its transmission lines
is subject to exclusive federal constitutional jurisdiction.
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34. |
In the Commission's view, sections 43 and 44, and this decision,
relate in pith and substance to telecommunications. Any effects on
property and civil rights in the province are incidental. All matters
that are a vital part of the operation of a federal undertaking are
within the exclusive legislative control of Parliament. Whether to
construct and where to construct transmission lines (a vital part of a
telecommunications undertaking) are matters of exclusive federal concern,
as are the design of the transmission lines, the material to be
incorporated and other similar specifications. All terms and conditions
that will be permanently reflected in the structure of the transmission
lines, or have a direct effect on the operational qualities of the
transmission lines, are within exclusive federal jurisdiction. Finally,
the use of property (such as a municipal highway) for the purposes of a
transmission line cannot be divorced from the exclusive federal
constitutional jurisdiction over telecommunications.
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35. |
In the Commission's view, the Act sets out a detailed statutory code
with respect to construction issues involving carriers and
municipalities. In establishing this framework, Parliament has required
that consent be obtained by carriers from such authorities, but has
recognized that carriers may not be able to obtain that consent on
acceptable terms. It has therefore provided mechanisms for the Commission
to resolve disputes regarding appropriate terms and conditions.
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36. |
During this proceeding, carriers asserted that they have an
independent statutory right to enter on and break up a highway for the
purpose of constructing, maintaining or operating their transmission
lines. In the Commission's view, the Act provides carriers a qualified
right to enter on and break up highways for these purposes, i.e., subject
to not unduly interfering with the public use and enjoyment of the
highway and to the requirement for municipal consent (or the permission
of the Commission).
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37. |
Carriers also argued that sections 43 and 44 do not create additional
powers for municipalities beyond those that they would otherwise have.
They further submitted that the Commission can do no more under
subsection 43(4) than a municipality could do under subsection 43(3).
Subsection 43(4) provides that, where consent on acceptable terms has not
been obtained from a municipality, the Commission may grant the
permission "subject to any conditions that the Commission
determines". The only qualification in the subsection is that the
Commission must have due regard to the use and enjoyment of the highway
or other public place by others. The carriers' argument is untenable. The
statute clearly provides the Commission full discretion to determine the
conditions.
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38. |
Carriers submitted that the Commission's authority under sections 43
and 44 for access charges is limited to ensuring that such charges are
subject to the concurrence of the carrier and recover only clearly
identified direct out-of-pocket expenses. As noted above, subsection
43(4) provides that, where a carrier cannot obtain the consent of the
municipality on acceptable terms, the carrier may apply to the
Commission, and the Commission "may, having due regard to the use
and enjoyment of the highway or other public place by others, grant the
permission subject to any conditions that the Commission determines"
(emphasis added). In the Commission's view, this phrase is sufficiently
broad to include conditions as to compensation (costs and otherwise).
Carriers further argued that a series of older decisions, by various
bodies, determine that the Commission cannot in this proceeding make
compensation a condition of its order. In the Commission's view, however,
these cases are not determinative of the issues at hand. In any event, in
addition to the possibility of jurisdiction with respect to compensatory
conditions being located in sections 43 and 44 themselves, section 42
explicitly gives the Commission jurisdiction to make conditions relating
to compensation. The suggestion that the scope of section 42 is somehow
limited to the scope of the powers under sections 43 and 44 (if in fact
these sections do not support conditions as to compensation in and of
themselves) is also to be rejected. Such a suggestion is contrary to the
very purpose of section 42, which is to complement powers that the
Commission has under other provisions.
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39. |
Municipalities also raised the question of expropriation. In the
Commission's view, this decision does not give rise to expropriation.
Rather, it forms part of a valid regulatory scheme that relates in pith
and substance to telecommunications.
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The Commission's decision
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40. |
During the course of the proceeding, several parties urged the
Commission to establish clear principles governing the terms and
conditions under which carriers may be granted access to public property
for the purposes of constructing, maintaining and operating transmission
lines. Some urged the Commission to adopt a standard "template"
agreement with respect to such access.
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41. |
Other parties, notably Toronto, argued that the Commission has no
jurisdiction to rule on terms and conditions of access to public property
for these purposes with respect to non-parties to the proceeding, or on
anything other than the actual dispute before it.
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42. |
In this decision, the Commission, by majority, is granting Ledcor
permission to construct, maintain and operate transmission lines in 18
street crossings in Vancouver, and is establishing terms and conditions
related to that permission. In light of the Commission's conclusions with
respect to Third party issues (see below), the relief sought by
Vancouver against the respondents to its initial application is not
required or appropriate; nor is the municipality's consent or the
Commission's permission necessary for the mere presence of Ledcor's
transmission lines in the conduit of another carrier, such as TELUS.
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43. |
With regard to any future activities (excavation, installing fibre,
etc.) that Ledcor may undertake in relation to the transmission lines in
the 18 street crossings, the Commission considers that the requirement to
obtain consent from Vancouver should be related to Ledcor's obligation to
ensure that there is no undue interference "with the public use and
enjoyment of the highway or other public place." Therefore, where
Ledcor's activities would entail disruption (for example, if excavation
or a disruption to traffic is involved), it is to obtain Vancouver's
consent for those activities. However, the Commission considers that
there is no requirement for prior written consent for excavation or other
disruption in the case of an emergency, provided that Ledcor notifies
Vancouver as soon as possible of the emergency and of Ledcor's activities
in respect of it. In such instances, if excavation is involved, Ledcor
should restore the surface to its original condition, or as close as
possible to its original condition, to the reasonable satisfaction of
Vancouver (see Pavement restoration, below).
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44. |
The Commission is not, in this decision, prescribing terms and
conditions related to the future construction by Ledcor, or any other
carrier, of transmission lines in Vancouver or elsewhere. However, the
Commission has developed principles, as set out in this decision, in
addressing the dispute currently before it. The Commission anticipates
that these principles will also assist carriers and municipalities in
negotiating the terms and conditions under which municipalities will
grant carriers consent to construct, maintain and operate transmission
lines on or in municipal property, without having to resort to an
application pursuant to section 43 or 44. The Commission is not persuaded
that it is appropriate for it to adopt any particular model or standard
agreement to serve as a starting point for discussions between
municipalities and carriers.
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45. |
Section 47 of the Act requires the Commission to exercise its powers
and perform its duties with a view to implementing the Canadian
telecommunications policy objectives set out in section 7 of the Act.
Section 43(4) of the Act specifies that the Commission may grant
permission for a carrier to construct transmission lines, subject to any
conditions that the Commission determines, having due regard to the use
and enjoyment of the highway or other public place by others.
Accordingly, in rendering this decision, the Commission has considered
the policy objectives set out in section 7 of the Act, while taking into
account the concerns of municipalities and others.
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46. |
The Commission notes, as argued by Group Telecom, that greater
demand for rights-of-way derives from a competitive telecommunications
market and the expanded roll-out of modern, high-speed networks. The
benefits of a competitive telecommunications market and greater access to
modern, high-speed networks are not enjoyed solely by the shareholders
and customers of carriers. The economic base that such facilities support
will provide generalized benefits throughout the municipality, attracting
industry, creating jobs, increasing tax revenue, etc.
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Joint planning issues
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The importance of joint planning
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47. |
Vancouver argued that an important dimension of its stewardship of
public property is its ability to encourage sharing and co-ordination,
not only among competing carriers, but all present and future users of
public property.
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48. |
Bell Canada/MTS proposed that the Commission strongly encourage
municipalities and users of municipal rights-of-way to enter into
co-operative joint planning and co-ordination arrangements. Several
carriers submitted that many, if not most, of the concerns identified by
Vancouver regarding the alleged impacts upon road construction and
maintenance costs could be substantially addressed through the
establishment of improved joint planning processes between municipalities
and users of municipal rights-of-way.
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49. |
Bell Canada/MTS provided a template outline of the mandate, goals and
structure of a typical Public Utility Coordinating Committee (PUCC). The
template described the activities of such a committee as: (1)
communication; (2) co-ordination of projects and capital works plans
(with a requirement for all members to provide long range plans for major
capital works, road modification, paving programs, and major maintenance
programs); (3) standardization (including the development of standards
and specifications for joint infrastructure builds); (4) damage
prevention; (5) resolution of conflicts; and (6) development of an
integrated mapping system.
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50. |
In reply, Vancouver stated that it is moving to set up a co-ordinating
committee. However, Vancouver, other municipalities and FCM expressed the
view that joint planning alone could not address all municipal
rights-of-way management issues.
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51. |
The Commission recognizes that municipalities have an important role
to play in the co-ordination of all parties seeking to occupy and use
municipal rights-of-way, especially the larger municipalities whose
downtown cores are experiencing the highest demand for space. In
particular, the Commission agrees with those carriers who advocated
increased reliance on joint planning and co-ordination arrangements such
as PUCCs, involving all users of municipal rights-of-way, not just
carriers.
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52. |
The Commission notes the submissions of municipalities that improved
joint planning is not a "panacea". Nonetheless, the Commission
agrees with parties who argued that the joint planning and co-ordination
process could help to minimize many of the concerns raised by Vancouver,
other municipalities and FCM regarding excessive road cuts, pavement
degradation, congestion, need for relocations, potential liability, etc.
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53. |
Among other things, the Commission considers that a PUCC or similar
body (a) would provide the municipality with a forum to announce its long
range plans as to road construction and maintenance, affording carriers
and other users an opportunity to co-ordinate their construction plans
with those of the municipality; (b) could set up a communications process
to advise all carriers that a particular carrier is installing duct
structure or other buried facilities; and (c) could provide a mechanism
for carriers to exchange information as to the availability of spare
capacity.
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54. |
The Commission expects carriers to participate in joint planning and
co-ordination committees, such as the one discussed by Bell Canada/MTS,
in municipalities in which they have, or plan to have, a significant
presence. The Commission also expects that carriers will be able, in the
context of such committees, to exchange information at a sufficient level
of detail to facilitate the co-ordination process, without compromising
competitively crucial information. Finally, the Commission would consider
it reasonable for carriers to contribute to the costs of any such
committees.
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55. |
The Commission does not consider it necessary to adopt Group Telecom's
approach and establish a task force to consider whether PUCCs could be
made more effective or whether the operations of the most effective PUCCs
might serve as a model for PUCCs elsewhere.
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Extra duct capacity
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56. |
In its submission of January 2000, Vancouver stated that it must have
the ability (a) to require carriers to provide extra duct capacity when
the street is dug up initially; and (b) to require this extra capacity
and other third party duct capacity to be used by other carriers wanting
to use the same alignments. In response to interrogatory
Vancouver(CRTC)28Feb00-3 PN 99-25,
Vancouver stated that the amount and allocation of extra capacity would
be determined jointly by carriers and the city.
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57. |
Several carriers commented that all carriers will provision, as a
matter of course, duct capacity which is designed to meet their future
needs. Thus, it is most certainly the case that carriers will provision
duct space which is surplus to their current needs. They added that a
mandated requirement to provision capacity that is materially in excess
of that required in the future by all carriers will impose costs on
carriers that cannot be recovered.
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58. |
The Commission accepts the submissions of municipalities that the
demand for space in rights-of-way in downtown core areas of major urban
centres is likely to increase. The Commission therefore encourages the
sharing of facilities and support structures to the greatest extent
possible in such areas. However, the Commission does not consider it
appropriate that municipalities impose on carriers a requirement to
construct capacity beyond their needs, or require other carriers to use
this capacity rather than constructing their own facilities. In the
Commission's view, Vancouver's proposal of 28 January 2000 would
intrude on areas under the Commission's jurisdiction, would improperly
affect a "vital part" of the federal undertaking, and would (as
argued by TELUS) add another layer of regulation to the question of
access to support structures.
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Vancouver's costing proposal
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General
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59. |
In its submission of 28 January 2000, Vancouver proposed that it
recover all costs causally incurred by it as a result of the use and
occupation of its public property by carriers.
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60. |
Vancouver asserted that its specific costing proposals were based on
Phase II costing principles, initially established in Phase II of the
cost inquiry, Telecom Decision CRTC 79-16, dated 28 August 1979. The
city also stated (in response to interrogatory Vancouver
(Bell/MTS)28Feb00-10) that it had adopted the philosophy set out at page
28 of the Bell Canada Phase II costing manual that "the cost and
effort expended on the cost estimation activity should be commensurate
with the size and significance of the study."
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61. |
The Commission notes that, for costs to be included under Phase II
principles, they must be prospective (i.e., forward-looking, in that
"sunk" costs are not included) and incremental (i.e., only
costs that change as a result of the project are considered). These
prospective incremental costs are referred to as causal costs. The
Commission considers it appropriate that Vancouver recover the causal
costs it incurs when carriers construct, maintain and operate
transmission lines in municipal rights-of-way.
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62. |
In its second revised response to interrogatory
Vancouver(Bell/MTS)28Jan00-6, Vancouver applied its costing proposal to
an example of a construction project in its downtown core to derive the
charges that would apply. In calculating these charges Vancouver
estimated its direct costs, and then applied a 62% loading to take into
account indirect costs, variable common costs and fixed common costs. The
specific loading for fixed common costs was 25%.
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63. |
The Commission notes that fixed costs, by definition, do not vary with
a particular project. Thus, they are not incremental costs, as defined
above. The Commission has allowed telephone companies to include a
mark-up on their Phase II costs, representing a contribution to fixed
common costs, in the prices they charge for their services. A
municipality differs from a business in that it derives its revenues
primarily from taxes, and the fixed common costs of running the
municipality are appropriately covered by this tax revenue. Therefore,
the Commission considers that fixed common costs should not be recovered
through charges to carriers. Accordingly, the Commission considers it
appropriate to exclude the 25% component for the recovery of fixed common
costs from Vancouver's proposed 62% loading. The Commission finds
acceptable Vancouver's proposed 29.6% loading on direct costs to estimate
indirect and variable common costs.
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64. |
For some of Vancouver's cost elements, the causal costs are small and
the process to determine them accurately would be disproportionately
difficult or complex. The Commission considers it appropriate to
recognize such costs by way of a further 15% loading on plan approval and
inspection costs, which can be more readily estimated.
|
65. |
The various types of costs that Vancouver proposed to recover are
examined below with regard to the above costing principles.
|
|
Elements of the proposal
|
|
a) Plan approval and inspection costs
|
66. |
Vancouver submitted that costs relating to plan approval and
inspections depend on the number of plans received and the length of the
plant installed. Vancouver calculated a base cost of $230 for projects of
20 metres or less, and a base cost of $760 plus a base per-metre cost of
$6 for projects in excess of 20 metres. Vancouver proposed to apply its
62% loading to these costs to arrive at the applicable charges.
|
67. |
The Commission agrees that plan approval and inspection costs are
causal to the specific construction project.
|
68. |
The Commission notes that Vancouver's proposed fee structure is based
on the premise that project approval and inspection is less complex for
projects not requiring plant installations greater than 20 metres. The
Commission considers it reasonable that there be a distinction between
simple and complex projects. While using the trench length of 20 metres
as the delineation between simple and complex projects may be somewhat
arbitrary, it has the advantage of administrative simplicity. The
Commission also notes Vancouver's submission that approvals for projects
of 20 metres or less do not require all of the activities necessary for
larger projects (for example, inspections).
|
69. |
The Commission therefore finds Vancouver's proposed fee structure
reasonable, but considers that the level of the fees should be adjusted.
First, as noted above, the Commission considers that the 25% loading for
fixed common costs should be removed. Second, as noted above and
discussed further below, the Commission considers that there are costs
associated with the construction process that could be disproportionately
difficult or costly to estimate with reasonable accuracy, such as (a) net
revenue losses when parking meters are put out of service; and (b) costs
associated with transit operating delays. The Commission considers that
these costs should be recognized through a 15% loading on the plan
approval and inspection costs. Should the municipality be able to
estimate these costs with reasonable accuracy, the Commission would
consider it appropriate to include them explicitly.
|
70. |
In the case of Vancouver, when the 25% loading for fixed common costs
is removed and the 15% loading is added, the applicable charges for plan
approvals and inspections are: (a) a flat fee of $341.55 for a project of
20 metres or less; and (b) for projects in excess of 20 metres, a
flat fee of $1,127, plus a per metre charge of $8.67.
|
71. |
With regard to the distance-based component of the above charges, the
Commission notes that Vancouver also proposed an annual per-metre charge
intended to recover the market-based value of the land occupied by
carriers in municipal rights-of-way. As discussed below, the Commission
considers such charges inappropriate. The Commission notes that any
distance-based plan approval and inspection charges must be causally
related to the plan approval and inspection process.
|
72. |
As discussed above, the Commission encourages Vancouver, and other
municipalities, to establish utility co-ordinating committees, involving
the municipality and all users of rights-of-way. The Commission would
consider it appropriate that carriers contribute to the costs of any such
committees. In addition, the Commission considers that the activities of
such committees would likely reduce the causal costs that municipalities
would otherwise incur in the plan approval and inspection process.
|
|
b) Construction disruption costs
|
|
(i) Traffic signing costs
|
73. |
Vancouver stated that it incurs traffic signing costs to clear parking
in areas affected by construction, etc. (e.g., to hood traffic meters and
post related signage). The Commission considers that these one-time costs
are causal to the project and that Vancouver should recover them from the
carrier.
|
|
(ii) Parking meter revenue
|
74. |
Vancouver indicated that, when parking meters are taken out of service
due to construction, it loses revenue that would otherwise have been
deposited in the meters.
|
75. |
Vancouver submitted that the amount of lost revenue is dependent on
the hourly rate charged, which varies across the city, and the percentage
utilization of the available parking meter time.
|
76. |
Vancouver proposed that carriers such as Ledcor be billed directly for
this lost revenue, at the time the construction work takes place.
Vancouver submitted that it does not currently charge utility companies
for this lost revenue, but does charge moving companies, construction
companies, film companies and others that require clearance of parking.
|
77. |
For its example construction project, Vancouver calculated an
applicable charge of $27,631.
|
78. |
While the Commission expects that the city would experience some loss
of revenue when parking meters are taken out of service, a reasonable
estimate of the causal impact must represent the net loss, and not the
gross loss. The base cost calculated by Vancouver in its example
represented the gross loss.
|
79. |
In the Commission's view, it may be difficult to reliably estimate the
net loss due to parking meters being taken out of service for a
particular construction project. Should this prove to be the case, the
Commission would consider it a suitable alternative to recognize the
causal impact through the 15% loading on plan approval and inspection
costs.
|
|
(iii) Pavement restoration
|
80. |
There was general agreement that carriers should be responsible for
restoring the road surface to substantially its original condition. The
cost of pavement restoration is a causal cost that municipalities should
be able to recover from carriers placing facilities in municipal
rights-of-way, where the carrier does not perform the work itself to the
reasonable satisfaction of the city.
|
81. |
Vancouver stated that the type of repair depends on the existing
pavement material and the traffic loading of the street. It stated that
it has developed a schedule of rates (per square metre) for the various
types of repair, and that these rates are based on its actual costs.
|
82. |
In its example, Vancouver applied its schedule of rates, with the
addition of its proposed 62% loading, to calculate an applicable charge
of $124,554.
|
83. |
The Commission considers it reasonable that Vancouver rely on a
standard rate schedule for pavement restoration, provided that the
schedule reflects the causal costs of restoration and is applied on a
routine and non-discriminatory basis to all parties performing
construction in the street.
|
84. |
In addition, the Commission considers it appropriate that carriers
have the option of having their own contractors restore the pavement,
with the proviso that the work must meet any reasonable standards set by
the municipality as to time and quality of work. |
|
(iv) Transit operating delays
|
85. |
Vancouver proposed a charge intended to recover the cost of delays to
the public transit system resulting from construction activities. In its
example construction project, Vancouver calculated the applicable
one-time charge to be $3,538.
|
86. |
In the Commission's view, transit operating delay costs would be
disproportionately difficult or complex to determine accurately. The
Commission therefore considers that these costs should be recognized as
part of the 15% loading on plan approval and inspection costs.
|
|
(v) Public delays
|
87. |
Vancouver proposed that it recover costs of delays to the public in
cases of inordinately lengthy telecommunications construction.
|
88. |
As acknowledged by Vancouver, delays to the public do not entail a
cost to the municipality. Therefore, the Commission considers that the
municipality should not be permitted to recover any amount for such
delays.
|
|
c) Lost productivity for city operations
|
89. |
Vancouver proposed to charge an annual amount intended to recover the
additional costs it incurs as a result of lost productivity in city
operations due to carriers' occupancy and use of municipal rights-of-way
(e.g., additional costs in street resurfacing, costs of working around
carriers' facilities in the street).
|
90. |
In its example construction project, Vancouver calculated the
applicable annual charge to be $478.
|
91. |
The Commission notes that it has previously accepted loss of
productivity costs proposed by Bell Canada in the context of determining
rates for support structures.
|
92. |
In the Commission's view, if significant additional costs are incurred
by Vancouver that are identifiable with the presence of Ledcor's
facilities, Vancouver should recover those additional costs directly from
Ledcor, with appropriate documentation and itemized invoicing of costs.
The Commission also considers that there may be instances where it would
be appropriate for Ledcor to perform any required additional work itself.
However, routine lost productivity costs that cannot be directly linked
to a specific carrier should be recognized through the 15% loading on
plan approval and inspection costs.
|
|
d) Drainage of telecommunications company vaults
|
93. |
Vancouver noted that, as part of the installation of fibre optic
networks, carriers place access vaults along their networks. As these
vaults must be accessed from the street surface, removable lids flush
with the street level are placed on these structures. These lids cannot
be made watertight, and drainage from the vaults to nearby sewer drainage
pipes must therefore be provided.
|
94. |
Vancouver stated that the cost of installation of drainage facilities
provided by the city is currently recovered from the company that
requests the drainage. It proposed to continue to recover this up-front
cost based on its actual costs.
|
95. |
Vancouver also submitted that another cost component relates to the
runoff from the access vault. The regional government in Vancouver is
responsible for the collection of storm water drainage and allocates its
costs to member municipalities through a volumetric charge. Vancouver
stated that it currently charges the companies an on-going fee related to
this runoff based on the amount charged by the regional government in
Vancouver. It proposed to continue to recover this on-going cost through
annual drainage fees.
|
96. |
The Commission considers that, to the extent that the city pays the
regional government in Vancouver a volumetric charge for draining water,
the costs are causal and can be passed through (i.e., with no loadings or
mark-ups) to the relevant carrier. Further, when the municipality incurs
costs to connect the vaults to the sewers, these costs can be passed on
to the carrier.
|
|
e) Pavement degradation
|
97. |
Vancouver submitted that cuts in the pavement for utility construction
cause additional on-going repairs to pavement surfaces (e.g., to fill
cracks around utility cuts and to patch pavement). In addition, the road
requires more frequent full-width grind and overlay repairs. Vancouver
presented a study relating to Ottawa-Carleton to support its claim for
the recovery of the related costs from carriers such as Ledcor.
|
98. |
In Vancouver's example construction project, the charge would amount
to $859 annually (including the full 62% loading).
|
99. |
The Commission accepts that utility cuts contribute to the degradation
of pavement. Conceptually, the causal costs would be (a) those associated
with additional repairs (e.g., crack-filling), and (b) the cost of the
advancement of the grind and overlay procedure.
|
100. |
With regard to on-going repairs, the Commission considers that
Vancouver has provided insufficient justification for its allocation of
the associated costs among the various utilities. Further, costs
associated with grinds and overlays should be limited to the costs of
advancement, and be properly substantiated by a study related to the
municipality in question or to a municipality where conditions are
demonstrably similar. Finally, for the sake of ease of application and
administrative simplicity, the Commission considers that these costs
should be recovered through one-time charges, if such charges can be
developed.
|
|
f) Agreement and Utility Management Costs
|
101. |
In discussing its example construction project, Vancouver noted that
it had stated in its initial application that there were certain
administrative costs that could not be related to specific projects, such
as time spent negotiating agreements. It had therefore proposed that
these costs be included through the use of a multiplicative factor
applied to direct and indirect costs. Vancouver stated that it became
apparent that these costs can be readily identified and, in some cases,
assigned to individual companies causing them. Vancouver therefore
proposed that a new direct cost category be created called Agreement and
Utility Management Costs, broken down into up-front negotiating costs and
on-going utility management costs.
|
102. |
Vancouver stated that negotiating costs would be based on staff time
spent in meeting with telecommunications companies and reporting to City
Council, and on clerical support for these functions. Vancouver proposed
to bill these costs to the carrier in question based on a detailed
accounting of staff time spent on each agreement and the various hourly
rates that Vancouver pays for that staff time.
|
103. |
Vancouver stated that a charge for negotiating costs would not apply
in its example construction project, since an agreement has already been
established.
|
104. |
Vancouver stated that utility management costs relate to high level
decisions made reviewing and interpreting existing agreements, developing
policies related to the administration of agreements, etc. It added that,
in future, these costs would include administration of joint
municipal/utility committees to develop better coordination mechanisms
between various activities in the streets, and the management of duct and
trench sharing. Vancouver calculated a base utility management cost of
$0.035 per metre. In its example construction project, the applicable
charge would amount to $39 per year.
|
105. |
In its reply, Vancouver noted its intention to create, at the
completion of this proceeding, a new municipal access agreement that it
would wish to become, in the medium term, a standard for all carriers. In
the longer run, Vancouver stated that it intends to create a by-law to
which all users of street space could refer for all relevant provisions
for their use of street space. Vancouver argued that, by recovering its
costs of negotiation, it would provide an incentive to carriers to
decline to seek terms particular to themselves. In addition, any costs
that were incurred by Vancouver as a result of such negotiations would be
borne by the carrier seeking exceptional treatment, rather than by the
taxpayer.
|
106. |
In the Commission's view, negotiating and utility management are
common costs of operations. Some of these costs would be variable common
costs, and would therefore be recognized through a related loading on
direct costs (for example, Vancouver's proposed 62% loading, minus the
component for fixed common costs).
|
107. |
With regard to explicit negotiating costs, the Commission also
considers that permitting Vancouver to recover such costs would remove an
incentive for it to make reasonable concessions and to bring negotiations
to a timely conclusion. With regard to utility management costs, the
Commission notes Vancouver's intention to set up a municipal/utility
co-ordinating committee. As discussed above (see Joint planning
issues), the Commission encourages such efforts and considers it
appropriate that carriers contribute to the costs of any such committee.
The Commission considers that there is merit to the suggestion that
participants in such committees should have flexibility to determine how
best to share these costs.
|
108. |
Accordingly, the Commission does not consider it appropriate that
Vancouver explicitly recover costs associated with Agreement and Utility
Management.
|
|
g) Land charges
|
109. |
Vancouver and other municipalities were of the view that they should
be entitled to recover "access" fees based on the "market
value" of the rights-of-way occupied and used by carriers.
|
110. |
Vancouver argued that a market-based mechanism is the best way to
ensure that this scarce resource is used efficiently and effectively.
Vancouver submitted that municipal property space suitable for the
placement of telecommunications facilities is limited, and that not
charging for space encourages excessive use of it. Vancouver submitted
that this puts subsurface space at a premium, and results in excessive
disruption of traffic as one competitor after another cuts new trenches
down the street.
|
111. |
Vancouver proposed to charge any competitive commercial user the cost
of the space occupied through an annual charge comparable to what would
be charged if the space were private property. Vancouver added that
charging others for the use of the space will provide an incentive for it
to not be wasteful in its own use, because to do so would block use by
others who would pay.
|
112. |
Vancouver proposed an annual per-metre charge to carriers for the use
and occupancy of rights-of-way based on the value of adjacent lands.
Vancouver's proposed formula is as follows:
|
|
Linear Rate = Land Value (based on land sales data for adjacent lands)
|
|
x Rate of Return (Vancouver's borrowing rate)
|
|
x Occupied Width (includes horizontal clearances)
|
|
x Alienation Factor (adjustment to reflect the actual use, i.e., the
degree to which the land is "alienated" from other uses).
|
113. |
Vancouver stated that, if telecommunications companies co-located
their facilities in a trench, the fee would be calculated in the same
way, but would be shared by the various users of the trench. This would
support the objective of encouraging more efficient use of public space,
as there would be an incentive for telecommunications companies to
co-locate their facilities.
|
114. |
Municipalities and FCM argued generally that failure to charge
market-based rates would constitute a subsidy from taxpayers. They added
that such charges constitute an opportunity cost, in that other users of
right-of-way space are willing to pay such fees.
|
115. |
Carriers argued, among other things, that many of the concerns
identified by Vancouver would be addressed by proper joint planning
processes. While endorsing joint planning, FCM and municipalities
responded that it has its limitations, and is no substitute for sending
"proper price signals".
|
116. |
The Commission notes that the land charges in the example discussed in
response to Vancouver(Bell/MTS)28Feb00-6 would amount to $24,480
annually, for a 680 metre installation in the downtown area, representing
a per-metre annual charge of $36.
|
117. |
The Commission considers that, in most instances, it would be
extremely difficult to establish a "market-based" rate for the
use of municipal property, as there is no "free market",
consisting of totally willing buyers and sellers, for municipal consent
to occupy and use municipal rights-of-way. The Commission is not
satisfied that Vancouver's reference to adjacent lands is appropriate in
these circumstances, given that the land in which the right-of-way is
situate is a public street and in most instances will remain dedicated to
that purpose. By contrast, adjacent lands are largely privately owned,
are dedicated to diverse and essentially private uses and are freely
traded. In addition, the Commission notes that much of the value of the
adjacent land derives from the fact that the land is serviced by
"utilities" such as communications carriers.
|
118. |
Further, the Commission considers that, provided the municipality's
causal costs are recovered from carriers, as discussed above with regard
to other elements of Vancouver's costing proposal, there is no issue of
taxpayers "subsidizing" carriers, in that additional costs
imposed by the construction, maintenance and operation of transmission
lines would be absorbed by carriers, not taxpayers.
|
119. |
Finally, the Commission considers that many of the arguments and
concerns raised by Vancouver and other municipalities in support of such
fees (scarcity, congestion, etc.) can be addressed through improved
planning (see Joint planning issues, above).
|
120. |
In light of the above, the Commission concludes that the blanket
imposition of "market-based" charges is not necessary or
appropriate.
|
121. |
The Commission considers that percentage of revenue fees raise the
same concerns as land-based charges.
|
122. |
Accordingly, the Commission is not including a requirement for Ledcor
to pay a land-based charge in the terms and conditions of its permission
to Ledcor to construct, maintain and operate the transmission lines in
question.
|
|
Application to the 18 street crossings
|
123. |
The record with regard to Ledcor's construction of transmission lines
in the street crossings at issue indicates that no pavement was breached.
Further, Ledcor stated in its initial reply of 27 May 1999 that it had
applied to Vancouver to obtain consent to construct its transmission
lines under one city street that crossed the railway right-of-way where
it was placing its facilities, and that the other 17 "street
crossings" are actually municipal road allowances across that
right-of-way. Accordingly, based on the record, the Commission considers
that many of the cost elements proposed by Vancouver do not apply to the
specific Ledcor case.
|
124. |
Applying the approach set out above to the facts of the particular
case, the Commission concludes that Ledcor should pay Vancouver for the
plan approval and inspection charges that would result from the
application of Vancouver's proposal, with the adjustments discussed
earlier, to the 18 street crossings in question. The resulting charges
are a flat fee of $1,127, plus a per-metre charge of $8.67, for a total
of $7,613.
|
125. |
Given the Commission's conclusion that no pavement was breached, or to
the extent that Ledcor has satisfactorily carried out any repairs itself,
no charges for pavement restoration should apply.
|
126. |
Based on the record, it appears that traffic signing was not necessary
for Ledcor's construction in the 18 street crossings. Accordingly, no
charges for traffic signing should apply.
|
127. |
Similarly, based on the record, it appears that no drainage facilities
were provided by Vancouver. Therefore, no charges for such connections
would apply.
|
128. |
In its comments, Vancouver requested that the Commission order Ledcor
to pay interest, from the date of the Commission's interim order in this
proceeding, on any amount that the Commission might order Ledcor to pay
to the city. The Commission does not consider that interest is warranted
in the circumstances of this case. Accordingly, the Commission denies
Vancouver's request.
|
129. |
As discussed above, the plan approval and inspection charges that
Ledcor will pay to Vancouver pursuant to this decision recognize any
routine losses of productivity that Vancouver may experience due to the
presence of Ledcor's transmission lines in the 18 street crossings. If in
future Vancouver incurs significant additional costs that are
identifiable with the presence of Ledcor's transmission lines, it may
recover those additional costs directly from Ledcor, upon presentation of
the appropriate documentation including an itemized invoice of costs.
Alternatively, it may be appropriate for Ledcor to perform any required
additional work itself.
|
|
Relocation costs
|
130. |
Vancouver submitted that it should not be responsible for the cost of
relocating telecommunications facilities if relocation is required for
municipal purposes. Vancouver added as a caveat on the application of
this principle that the municipal government must act reasonably in
co-ordinating the many uses of the public property in a manner that does
not cause unnecessary or premature disruptions to telecommunications
plant.
|
131. |
Vancouver proposed that relocation costs be incurred directly by the
carrier if it undertakes the work, or be invoiced to the carrier if the
city undertakes the work. It stated that these costs are project-specific
and should be invoiced on a project-by-project basis.
|
132. |
Vancouver stated that much of the work that takes place on city
streets is related to redevelopment of private property for which the
city cannot fully plan or give advance notification. Vancouver also
stated that redevelopment of private property, for example, for a
shopping development, sometimes requires reconfiguring the adjacent
street to accommodate changed traffic patterns. It noted that, in this
case, it requires the developer to pay for the street changes and that it
would be appropriate for the private developer to pay for costs of
relocating the carrier's facilities.
|
133. |
FCM and municipalities supported Vancouver's position on relocation
costs. FCM stated that, where relocation or adjustment is required for bona
fide municipal purposes, the utility should be 100% responsible for
the costs. In response to interrogatory FCM(CRTC)28Feb00-5, FCM stated
that a bona fide municipal purpose is any purpose that is
authorized at common law or by statute, for example, bridge
reconstructions, improvements such as road widenings and municipal
landscaping, infrastructure replacements, transit lane relocations, and
the burial of aerial lines for safety, municipal redevelopment, security
or other reasons.
|
134. |
Carriers objected to Vancouver's proposal, arguing, among other
things, that: (a) Vancouver's approach would eliminate an incentive to
municipalities to behave reasonably and consult properly with respect to
relocation matters; and (b) a satisfactory approach to the
allocation of relocation costs should be sensitive to the facts of a
particular situation.
|
135. |
Bell Canada/MTS submitted that they have not traditionally been
required by municipalities, as of right, to assume costs to relocate
their plant located in public rights-of-way when a municipality requires
it, but have generally negotiated the assumption of such costs on a
case-by-case basis, or if applicable, adopted mechanisms set out in
provincial legislation or regulations. They added that their experience
with case-by-case negotiations is that the process is administratively
burdensome, for themselves as well as for the municipality. They
considered that the existing process could be streamlined to the benefit
of both themselves and the municipalities. Therefore, in their model
municipal consent agreement filed in this proceeding, Bell Canada/MTS
proposed an alternative mechanism which, they stated, Canadian carriers
and municipalities could choose to adopt. They described that mechanism
as follows:
|
|
As municipalities have in place planning "windows" which
typically span five or more years for projects of a scale which would
require the relocation of underground utilities, relocations in the first
five to ten years after construction of Canadian carrier plant are
unusual. After this period, the allocation of relocation costs has
typically been subject to negotiations. The mechanism put forward by the
Companies in the model agreement codifies, on a going forward basis, such
arrangements. Within an initial period which is well within municipal
planning time frames, costs associated with relocation at the initiative
of the municipality are allocated to the municipality. Following this
period, a sliding scale is applied for a period of five years. Following
the 9th year, the Canadian carrier would henceforward assume
all the costs associated with the relocation of its plant. Since
equipment is typically operated in rights-of-way for a period of decades
once installed, the result is that for most of the useful life of its
equipment, the Canadian carrier will be responsible for all costs
associated with the relocation of its equipment in municipality initiated
relocations. The Companies believe that the mechanism they have codified
in the model agreement is fair to all parties, provides certainty as to
the specific terms thereby simplifying administration and provides an
incentive to municipalities to conduct advance planning. The Companies
reiterate that such advance planning by municipalities is routinely
conducted today.
|
136. |
The Commission considers that sections 42 to 44 of the Act give it the
jurisdiction to impose conditions relating to relocation matters, whether
at the time of construction or afterwards. The Commission also notes that
its predecessor bodies have generally declined to impose terms and
conditions relating to relocation at the time of construction, preferring
instead to consider the matter at the time the requirement for relocation
arises, having regard to the circumstances then applicable.
|
137. |
Consistent with the above, the Commission is not prescribing a
mechanism governing the allocation of the cost of any future relocation
of Ledcor's transmission lines. If Vancouver requires the relocation of
these lines at some time in the future, the Commission considers that the
parties should negotiate the allocation of costs, taking into account the
factors noted below, or adopt some administratively simple mechanism such
as that advanced by Bell Canada/MTS. Failing an agreement, either
Vancouver or Ledcor could apply to the Commission to resolve the dispute.
|
138. |
The Commission would generally consider it appropriate to take into
account the following factors in allocating costs between the
municipality and the carrier: (a) who has requested the relocation, i.e.,
the municipality, the carrier, or a third party; (b) the reason for the
requested relocation (e.g., safety reasons, aesthetic reasons, to better
serve customers); and (c) when the request is made vis-à-vis the
original date of construction (e.g., whether the request is made a
considerable length of time after the original construction, or very
shortly after that time).
|
|
Fixed term of agreement, termination provisions, termination on
default
|
139. |
The SCA attached to Ledcor's original application provided that the
rights granted to Ledcor under the agreement would expire in 20 years,
unless cancelled prior to expiry pursuant to provisions related to
default (Article 2.3). The agreement also provided for perpetual renewal
for successive 10-year periods. However, Vancouver could decline to renew
the agreement on written notice to Ledcor.
|
140. |
The MAA provided by Ledcor also specified a 20-year term.
|
141. |
Under the SCA (Article 12), neither party could make use of the fibre
in question where: (a) the city cancelled the agreement for default; (b)
the agreement had expired and the company breached a surviving
obligation; or (c) no new agreement had been reached within one year of
the expiry of the old agreement. In addition, the city could require
removal of the fibre. If the company did not remove it within one year,
the fibre would be deemed abandoned and title would vest in the city. The
MAA contained similar provisions (Article 12), with certain changes
specific to Ledcor's grant of dark fibre to the city.
|
142. |
In its application, Ledcor stated that it requires secure access for a
minimum of 40 years (a 20-year term plus two automatic renewals of
10 years), consistent with the useful life of the telecommunications
system being installed.
|
143. |
Carriers objected to provisions that would limit the term of the
municipality's consent. Generally, they argued that municipal consent,
once granted, cannot be withdrawn. Further, if an agreement were to have
a fixed term, it should be very clear that the expiry of the agreement
would not affect a distribution undertaking's right of access.
|
144. |
As discussed earlier, the Commission considers that carriers do not
have an unqualified right to enter on and break up any highway or other
public place for the purpose of constructing, maintaining or operating
their transmission lines. Similarly, the Commission does not consider
that they have an unqualified right to "remain there for as long as
necessary" for that purpose. The carrier's rights are subject to
both an obligation not to unduly interfere with public use and enjoyment
and to a requirement for municipal consent (or the Commission's
permission). |
145. |
In the Commission's view, changes in circumstances may require that
agreements entered into by municipalities and carriers be renegotiated
periodically. Accordingly, it is reasonable for municipalities to take
the position that any consent for carriers to occupy and use municipal
rights-of-way should be limited to a fixed term.
|
146. |
In the Commission's view, the more important consideration is the
consequence of the expiry of an agreement, of a termination notice or of
a cancellation for default. The Commission agrees with parties who argued
that municipalities must not interfere with the operation of the
carrier's network (e.g., require the carrier to cease operations or
remove its facilities) when an agreement has expired or been terminated
or cancelled, and parties are unable to agree on new terms and
conditions. The Commission notes that such interference could result,
among other things, in an unnecessary interruption of service to the
carrier's customers. The Commission further agrees with those parties who
argued that the appropriate recourse under such circumstances is for one
party or the other to seek the Commission's assistance.
|
147. |
In the case of the 18 street crossings, it is this decision, rather
than an agreement between the parties, that sets out the terms and
conditions under which Ledcor may construct, maintain and operate its
transmission lines. Should changed circumstances require a change to the
terms and conditions of that permission, one or both of the parties may
apply to the Commission.
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Liability, indemnity, insurance
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148. |
In its initial application of 19 March 1999, Ledcor stated that
Vancouver's proposed SCA and MAA provided that Ledcor would be obliged to
indemnify Vancouver against all forms of injury, loss and damage
(including economic losses) arising from Ledcor's activities under the
agreement, while Vancouver would be absolved from liability for all forms
of injury, loss and damage (including economic losses) arising out of
Vancouver's activities, even where the injury or loss occurred as a
result of "the negligence or willful acts or omissions of the city
or its employees." Ledcor submitted that such provisions are
one-sided and unfair, and are not acceptable to Ledcor.
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149. |
Vancouver argued that protection from liability for city interference
with telecommunications facilities is clearly in the public interest. FCM
and the municipalities expressed similar views.
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150. |
The Commission rejects arguments by FCM (and others) as to limitations
on the Commission's jurisdiction under sections 42 to 44 of the Act to
prescribe terms and conditions relating to limitations of liability. As
noted earlier, where a carrier cannot obtain consent from a municipality
on acceptable terms, the Commission may grant the permission
"subject to any conditions that the Commission determines"
(section 43(4) of the Act). The only qualification in the subsection with
respect to the scope of the Commission's jurisdiction is that the
Commission must have due regard to the use and enjoyment of the highway
or other public place by others.
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151. |
The Commission notes that, under section 43, carriers have a qualified
right to enter on and break up any highway or other public place for the
purpose of constructing, maintaining or operating their transmission
lines, subject to a duty not to unduly interfere with the public use and
enjoyment of the highway or other public place. The Commission agrees
with TELUS that one-sided liability provisions such as those proposed by
Vancouver are not necessary in order to ensure that carriers fulfill this
duty. The Commission also considers that there is merit to the arguments
of TELUS, CCTA and others that the ordinary provincial principles of
liability for negligence should apply to encourage all users of
rights-of-way, including municipalities, to take care and ensure that
their activities do not harm others.
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152. |
The Commission notes Vancouver's argument that damage to carriers'
facilities is often occasioned by inadequate protection, such as wooden
ducts placed by BC TEL that are rotting away but are still in use in many
locations in city street space. The Commission considers that such
concerns should also be addressed pursuant to the ordinarily applicable
provincial principles of liability.
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153. |
The Commission considers conditions 27 and 28 of the Bell Canada/MTS
model municipal consent agreement to be appropriately balanced. The
Commission also notes that several participants in this proceeding argued
that parties may wish to exclude consequential or economic losses, which
is the effect of Bell Canada/MTS' proposed condition 29. The agreement
between Group Telecom and Calgary, advanced as a model by Group Telecom,
contains generally mutual liability provisions and excludes damages for
consequential losses, but also adds the following:
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The City shall not be liable to, nor indemnify and save harmless,
Group Telecom, pursuant to subsection (2) where:
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(a) the City has not been advised in writing of Group Telecom's
Installations being placed in a Highway and Group Telecom has, following
a request by the City or any other Party, failed to identify the location
of its Installations; or
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(b) the City has corrected a default of Group Telecom's pursuant to
the provisions of this Agreement provided the City is not negligent in
its corrective action.
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154. |
The Commission sees no reason to object to the inclusion of such
provisions.
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155. |
In light of the above, the Commission is not prescribing terms and
conditions related to liability in this decision. The Commission would
have no objection if Vancouver and Ledcor were to agree to provisions
similar to those in Bell Canada/MTS's model municipal consent agreement
or in Group Telecom's agreement with Calgary. Absent such agreement,
provincial principles of liability for negligence would apply.
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156. |
In light of the above, the Commission would consider it reasonable for
each party to seek assurance from the other that it is adequately insured
or can self-insure, in light of its potential liability.
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General security agreements, letters of credit
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157. |
The SCA advanced by Vancouver during its negotiations with Ledcor
would have required Ledcor to execute a General Security Agreement (GSA)
with respect to its network in favour of the city.
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158. |
In addition, it contains a requirement that, in order to obtain the
city's permission for "new work" (e.g., construction), Ledcor
must submit a letter of credit, valid for at least one year, equal to
100% of the estimated cost of the relevant restoration work, as
determined by City Engineer (applying generally applicable formulas and
principles).
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159. |
The SCA further specifies that the letter of credit be renewed and
replaced as required during the time the work is on-going. After the new
work is satisfactorily completed, the letter of credit would be replaced
with a new letter of credit equal to 20% of the value of the initial
work. This subsequent letter of credit would be valid for at least one
year.
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160. |
Ledcor argued the following with respect to these requirements:
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The Applicant considers these security obligations to be unduly
burdensome, costly and restrictive requirements for municipal consent to
cross a few streets on an existing railway right-of-way. Proper
cost-based municipal access fees for access to such street crossings
should be nominal, and security obligations minimal or non-existent. In
fact, the applicant would consider prepaying the whole of a reasonable
cost-based access charge in advance.
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161. |
The Commission considers a requirement to enter into a GSA to be
unduly onerous, and unnecessary to ensure that Ledcor will meet its
obligations under the terms and conditions of the Commission's order.
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162. |
With regard to letters of credit, the Commission considers it
reasonable that municipalities would request some assurance that
construction work (e.g., pavement restoration) will be completed
satisfactorily. In the Commission's view, that assurance could be
provided by various means, including a letter of credit or, for example,
the deposit of a reasonable sum of money to ensure the satisfactory doing
of the work.
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Applicable law
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163. |
In its original application, Ledcor stated as follows:
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Various provisions of Article 13 of the proposed [street crossing]
agreement would impose provincial legal jurisdiction over matters that
are properly subject to federal telecommunications law. In particular,
disputes over access to municipal property by a Canadian carrier are
subject to CRTC jurisdiction under sections 43 and 44 of the federal Telecommunications
Act.
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Notwithstanding the CRTC's clear jurisdiction over municipal access
disputes with Canadian carriers, Article 13.7 purports to make the entire
SCA subject "in all respects" to the laws of British Columbia.
Article 13.8 provides that disputes under the agreement will be settled
by the courts of British Columbia rather than the CRTC. Article 13.6
establishes a detailed dispute resolution procedure that is one-sided (in
the City's favour) and purports to require access disputes to be resolved
by audit and arbitration proceedings rather than by the CRTC under the Telecommunications
Act.
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164. |
The Commission considers it inappropriate to include in agreements
provisions stating that disputes will be settled only by the courts of a
particular province and only according to the laws of a particular
province. In the Commission's view, relevant provisions should state that
the agreement will be governed by, and construed in accordance with, the
laws of the province in which the municipality is situate and the laws of
Canada applicable thereto.
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Third party issues
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165. |
As described earlier, the MAA advanced by Vancouver in its
negotiations with Ledcor contained provisions requiring Ledcor to pay an
annual licence fee, based on Ledcor's gross revenues from
telecommunications services provided to customers whose equipment or
other apparatus was connected to Ledcor's network in Vancouver and
reasonably allocable to that network (the Vancouver portion of gross
revenues).
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166. |
In support of these provisions, the MAA required that Ledcor provide
information, by affidavit, regarding the Vancouver portion of gross
revenues, including audited financial statements, particulars as to the
calculation of the gross revenues, and a schedule of published rates
charged to customers.
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167. |
Under the MAA, Ledcor would also be obliged to permit Vancouver's
auditors to inspect all Ledcor's financial record, profiles, contracts,
etc., relating in any way to any matter governed by the agreement.
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168. |
The SCA contained provisions which would require Ledcor to provide
extensive details as to parties to whom it granted a
"sub-licence" of its rights and obligations under the agreement
(i.e., a "sub-licence" to acquire IRUs with respect of the
fibre, or to own, operate or use any part of the fibre). Any such
sub-licence would have to provide that the sub-licensee would be bound by
Ledcor's obligations under the agreement, to the same extent as Ledcor.
Ledcor would be required to provide annual reports, by affidavit, as to
the current status of all sub-licences.
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169. |
In its initial application, Ledcor stated that its fibre optic system
in Vancouver consists of fibre optic cable installed in (a) conduits
constructed by Ledcor in a CPR right-of-way that intersects city streets,
and (b) TELUS ducts along a route between the CPR right-of-way and the
Oak Street Bridge in south Vancouver (pursuant to the support structure
tariff).
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170. |
The MAA advanced by Vancouver would require the city's prior written
licence for the installation of Ledcor lines and facilities in the
existing conduit of third parties. Further, it would appear to require
the extension of the terms of the MAA, including percentage of revenue
fees, to lines and facilities that Ledcor had already installed in
conduit owned by BC Hydro and Power Authority or by British Columbia
Telephone Company prior to February 1999.
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171. |
Ledcor objected to these provisions.
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172. |
In its submission of 28 January 2000, Vancouver stated that it would
not require information about purchasers, lessees or other third parties
using fibre or duct space owned by the carrier, unless such parties would
be undertaking work on city streets outside of the duct structures of the
carrier with whom the city has an agreement. Vancouver stated that,
whenever a third party wishes to undertake work on the streets, it would
require a further agreement with that third party.
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173. |
Under the terms and conditions established by the Commission in this
decision, Ledcor is not obliged to pay percentage of revenue fees.
Accordingly, there is no need for Ledcor to provide Vancouver with
information related to the calculation of such fees, or for related audit
requirements.
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174. |
The Commission considers that parties merely occupying Ledcor's
support structures or (like some of the respondents to Vancouver's
initial application) merely acquiring strands on Ledcor's fibre optic
system should not be obliged to pay separate fees to Vancouver. Further,
such parties should not be obliged to seek Vancouver's consent, unless
they are undertaking excavation in the streets or some other activity
that would cause disruption, for example, to traffic. Accordingly, there
is no reason to require Ledcor to provide information to Vancouver with
respect to such parties.
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175. |
Similarly, the Commission finds that Ledcor should not be obliged to
pay separate fees to Vancouver merely by virtue of the presence of its
transmission lines in the support structures of other parties, such as
TELUS.
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176. |
Bell Canada/MTS's model municipal consent agreement (Article 30)
contained the following provision:
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a) the Company's Support Structure License Agreement requires the
third party to comply, at the third parties' sole expense, with all
laws, statutes, by-laws, codes, ordinances, rules, orders and regulations
of all governmental authorities in force, and that the third party shall
obtain and maintain any and all permits, licenses, official inspections
or any other approvals and consents necessary or required for the
placement or operation of the third party's equipment structures ….
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177. |
The Commission considers that, should Ledcor make its support
structures available to others, it is sufficient that its agreements with
those third parties include a provision similar to that cited above,
modified (a) to reflect the fact that Ledcor does not have a support
structure tariff, and (b) by the insertion of the word
"applicable" before the phrase "laws, statutes, by-laws,
codes, ordinances …".
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178. |
As noted above, the MAA and SCA also contained extensive limits on
Ledcor's ability to assign the agreement, in whole or in part. The
Commission sees no reason for the inclusion of limitations as extensive
as those in the MAA and SCA. Rather, the Commission considers that
assignment provisions more consistent with other agreements would be
appropriate. For example, the Commission considers that conditions 36 to
38 of the Bell Canada/MTS model municipal consent agreement would be
sufficient to protect the interests of the municipality, without unduly
constraining the activities of the carrier.
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Existing agreements
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179. |
In PN 99-25, the
Commission requested comment on whether any terms and conditions imposed
by the Commission in relation to the agreements for access in Vancouver
that are in dispute could and should replace the terms and conditions in
existing agreements that are not in dispute, relating to municipal access
in Vancouver.
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180. |
As indicated earlier, the Commission considers that, in enacting
sections 43 and 44 of the Act, Parliament has provided a mechanism
whereby disputes can be resolved when carriers and municipalities cannot
agree on the terms and conditions under which carriers will be granted
consent to construct transmission lines. Consistent with this view, the
Commission considers it inappropriate to replace the terms and conditions
of agreements that are not in dispute before it by virtue of an
application brought pursuant to section 43 or 44.
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Disposition
|
181. |
The Commission, by majority, grants Ledcor, and any of its affiliates
currently operating as Canadian carriers in Vancouver, permission to
construct, maintain and operate the transmission lines at issue in this
proceeding in the 18 street crossings in question.
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182. |
Ledcor is directed to pay forthwith to Vancouver the sum of $7,613.
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183. |
Ledcor is directed to provide to Vancouver, as soon as practicable,
"as-built" drawings sufficient to accurately establish within
the street crossings the exact location, elevation and distance of the
transmission lines, in both paper and electronic form.
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184. |
Vancouver and Ledcor are directed to exchange forthwith lists of
emergency contacts.
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Secretary General
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This document is available in alternative format upon request and
may also be examined at the following Internet site: http://www.crtc.gc.ca |