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Telecom Decision CRTC 2006-45
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Ottawa, 28 July 2006 |
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Part VII application by Rogers Cable Communications Inc. regarding
Aliant Telecom Inc.'s termination and assignment of a support
structure agreement
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Reference: 8690-R28-200512534 |
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The Commission finds that
Aliant Telecom Inc. (Aliant Telecom) could terminate its
Support Structure Agreement (the SSA) with Rogers Cable Communications
Inc. (Rogers) at any time, without cause, after providing one year's
prior written notice to Rogers. Accordingly, the SSA terminated on 1
February 2006. The Commission further finds that Aliant Telecom could
not assign its obligations under the SSA. Therefore, Aliant Telecom
remained liable for non-performance of its obligations under the SSA
until 1 February 2006, and these obligations included the obligation
to provide Rogers access to NB Power poles at the rate of $9.60 per
pole per year. |
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The application
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1. |
On 2 November 2005, Rogers
Cable Communications Inc. (Rogers) filed an application pursuant to
Part VII of the CRTC Telecommunications Rules of Procedure,
sections 24, 25, and 32 of the Telecommunications Act as well
as section 11 of the Support Structure Agreement (the SSA) between
Rogers and Aliant Telecom Inc. (Aliant Telecom). |
2. |
In its application, Rogers
sought a declaration from the Commission that: |
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- the SSA and any permits granted thereunder could not be
terminated without cause prior to 31 May 2007;
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- notwithstanding assignment of all or any part of the SSA by
Aliant Telecom, the terms and conditions of all permits issued by
Aliant Telecom or any assignee under the SSA, including the pole
access rate, were as set out in the SSA and item 901 – Support
Structure Service of the National Services Tariff (the NST);
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- notwithstanding assignment of all or any part of the SSA by
Aliant Telecom, Aliant Telecom remained liable for non-performance
of its obligations under the SSA;
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- in the event that Aliant Telecom wished to introduce changes to
the SSA or the NST, Aliant Telecom had to seek prior approval from
the Commission; and
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- Aliant Telecom could not modify its joint-use arrangements in a
manner that prejudiced existing rights of third-party attachers.
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Process
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3. |
By letter dated 5 November
2005, Commission staff advised Rogers that it understood that Rogers
had already requested that the New Brunswick Board of Commissioners of
Public Utilities (the Board) establish a rate for cable attachments to
the electric power poles of the New Brunswick Power Distribution and
Customer Service Corporation (NB Power), and that the Board had
subsequently determined on 27 October 2005 that it had jurisdiction to
set the pole attachments rate charged by NB Power to Rogers. At that
time, Commission staff further advised Rogers that Rogers' request
regarding the terms and conditions of the SSA between Rogers and
Aliant Telecom need not be addressed in view of the fact that the
Board was seized with this matter. |
4. |
By letter dated 15 November
2005, Rogers advised the Commission that it disagreed with the
proposition that the Commission's jurisdiction with respect to the
relief requested in its application was affected by the Board's
decision. At that time, Rogers stated, however, that in the interest
of expediency and on the understanding that the Commission would deal
with all other aspects of the relief requested in its application,
Rogers would not object to the proposal that the Commission not deal
with the relief identified in Commission staff's letter of 5 November
2005. Rogers reserved the right to revisit its position in light of
any comments filed with respect to its application. |
5. |
In light of the above, the
Commission will not address Roger's request for a declaration that,
notwithstanding assignment of all or any part of the SSA by Aliant
Telecom, the terms and conditions of all permits issued by Aliant
Telecom or any assignee under the SSA, including the pole access rate,
were as set out in the SSA and item 901 of the NST. |
6. |
The Commission received an
answer from Aliant Telecom dated 2 December 2005, reply comments from
Rogers dated 12 December 2005, as well as additional comments from
Aliant Telecom dated 16 December 2005. |
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Background
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7. |
On 11 July 1996, the former
New Brunswick Telephone Company (now part of Aliant Telecom) entered
into a Joint Sub-Agreement: Support Structure – Third Party
Attachments (the JUA) with NB Power for the provision of third-party
access to, and use of, their facilities. The JUA took effect 1 April
1996. |
8. |
Subsection 1(b) of the JUA
indicated that all requests by a third party to place attachments for
communications purposes on joint use poles owned by Aliant Telecom or
NB Power were to be directed to Aliant Telecom.1 |
9. |
Subsection 2(a) of the JUA
indicated that Aliant Telecom would collect the revenues from third
parties on behalf of itself and NB Power. |
10. |
In Rates set for access to telephone
companies' support structures, Order CRTC 2000-13,
18 January 2000 (Order 2000-13),
the Commission approved the support structure tariff, NST item
901 and the SSA (in form). The provisions of the support structure
tariff are expressly incorporated by reference in the SSA. |
11. |
In light of the JUA, on 31
May 2002 Rogers entered into the SSA, which provided it access to and
use of the poles owned by either Aliant Telecom or NB Power. The pole
rate for such access was $9.60 per year and there was no charge or
gross-up for clearance poles. |
12. |
In 2004, NB Power notified
Aliant Telecom that it was terminating certain provisions of the JUA
relating to the parties' agreement on the administration of joint-use
poles owned by NB Power. In addition, NB Power assumed the
responsibility for administering billing for third-party access to the
poles it owned. According to Aliant Telecom, NB Power took these
actions in light of the ruling of the Supreme Court of Canada in
Barrie Public Utilities v. Canada Cable Television Assn., [2003] 1
S.C.R. 476 (Barrie) that the Commission does not have
the jurisdiction to regulate the terms of access to supporting
structures owned by provincially regulated electric power companies. |
13. |
In or about October 2004, NB
Power started invoicing Rogers for 108,904 poles, which included a
markup of 20 percent for clearance poles on NB Power's estimated
90,754 joint-use poles. NB Power invoiced Rogers at a rate of $18.91
per pole per year. NB Power also indicated that the annual rate would
rise to $23.50 and $28.05 on 1 May 2005 and 1 May 2006, respectively. |
14. |
By letter dated 31 January
2005, Aliant Telecom provided Rogers notice of the termination of the
SSA, effective 1 February 2006, pursuant to section 8.1 of the SSA. In
that letter, Aliant Telecom also confirmed that it had assigned the
administration of NB Power-owned poles to NB Power and that NB Power
would be billing and collecting the amounts owed for those poles from
Rogers, beginning as of 1 September 2004. |
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Issues
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15. |
The issues considered in this
Decision are discussed below in the following sections: |
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A. Term of the SSA
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B. Assignment of the SSA
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C. Approval of changes to the SSA or to the NST
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D. Modification of the JUA
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A. Term of the SSA
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16. |
Section 8.1 of the SSA
states: |
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Subject to the termination provisions of [the SSA], [the SSA]
shall be effective from the date it is made and shall continue in
force for a period of five (5) years from the date it is made, and
thereafter for successive five (5) year terms, unless and until
terminated by one year prior notice in writing by either party.
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Positions of parties
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17. |
Rogers submitted that the
words of a contract were to be given their plain and ordinary meaning
unless this resulted in ambiguity or absurdity. Rogers also submitted
that it was a fundamental principle that the interpretation of a
contract was governed by the specific intent of the parties and that
such intent should be determined by examining the words of the SSA
together with the subject matter and circumstances surrounding the
signing of the SSA. |
18. |
Rogers submitted that the
plain and ordinary meaning of section 8.1 of the SSA was that such
agreement could only be terminated at the end of the five-year
(current or renewal) term. Furthermore, Rogers submitted that such an
interpretation was consistent with the intention of the parties as
well as the inherently long-term nature of support structure
arrangements. |
19. |
Rogers submitted that if
Aliant Telecom could terminate the SSA at any time upon one year's
notice to Rogers, then the express agreement by the parties to a
five-year term was effectively meaningless, and all of the following
words of the section would be mere surplusage: "…for a period of five
(5) years from the date it is made, and thereafter for successive five
(5) year terms." |
20. |
In its answer, Aliant
Telecom submitted that section 8.1 of the SSA was clear and
unambiguous on its face, and when given its plain and ordinary
meaning, that section could only be interpreted as to allow the
termination of the SSA, by either party, after providing one year's
prior notice at any time. In particular, Aliant Telecom submitted
that, based on grammatical rules of punctuation, since the comma in
section 8.1 closed the clause "and thereafter for successive five (5)
year terms", the subsequent qualifier "unless and until terminated by
one year prior notice in writing by either party" qualified all of the
preceding section. Aliant Telecom added that, had the intention been
to limit the right to terminate to the end of the five-year term,
there would have been no comma placed before the word "unless" and
clear wording would have been included specifying by what date the
notice was required. |
21. |
Aliant Telecom also submitted
that the one-year length of the termination notice was considerable,
which supported the interpretation that the right to terminate could
be exercised at any time. Aliant Telecom further submitted that the
right to terminate had been given to both parties, which indicated
that it was distinct from other termination rights in the SSA. |
22. |
Aliant Telecom submitted
that the terminology used in the SSA provided the parties a right to
"terminate" upon one year's prior notice, not merely to give one
year's prior notice of expiration. Aliant Telecom argued that if the
latter had been the intent of the parties, it would be clear and
explicit in section 8.1; that is, the word "termination" would have
been replaced with the word "expiration" and additional words would
have been necessary to clearly articulate that the notice to be
provided would be one year's prior notice "before the end of the
current term." |
23. |
In its reply comments,
Rogers submitted that Aliant Telecom's proposed interpretation of
section 8.1 was inconsistent with the unambiguous agreement of the
parties to an initial term of five years, followed by renewal terms of
five years each. Rogers stated that a one-year notice period was not
excessive. Rogers submitted that even if it could build its own pole
line to replace Aliant Telecom's and NB Power's poles, which was not
the case, it would require well in excess of one year to do so. Rogers
added that, given the nature of the subject matter of the SSA, it was
highly unlikely that the parties would have contemplated granting to
each other the right to terminate the SSA at any time on one year's
notice. Rogers submitted that stable access to support structures was
essential to the operation of cable distribution undertakings and
telecommunications common carriers, and long-term support structure
agreements were therefore necessary to ensure the on-going operation
of these types of undertakings. In Rogers' view, providing a party
with the ability to terminate the SSA every five years was not a long
period of time in this context. |
24. |
Rogers submitted that if the
parties had intended to have the ability to terminate the SSA on one
year's notice, they would have expressly stated so in the SSA or would
have limited the term of the SSA to one year. |
25. |
In response to Rogers' reply
comments, Aliant Telecom submitted that it had terminated the SSA at
NB Power's request, in order to grant NB Power the rights conferred to
it in Barrie. Aliant Telecom submitted that to hold NB Power to
the terms of the SSA would be against the spirit of Barrie,
since it would extend the Commission's regulation to a power utility. |
26. |
Aliant Telecom further
submitted that the parties' intentions were clear within the words and
the structure of the clause in section 8.1 of the SSA. Aliant Telecom
submitted that, had the parties wanted to ensure that the SSA would
not be terminated before the five-year term, they could have easily
expressed their intention explicitly, which they had not. |
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Commission's analysis and determinations
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27. |
The Commission is of the
view that the wording in section 8.1 of the SSA is clear and
unambiguous. The Commission notes that based on the rules of
punctuation, the comma placed before the phrase "unless and until
terminated by one year prior notice in writing by either party" means
that that phrase qualifies both the phrases "[the SSA] shall be
effective from the date it is made and shall continue in force for a
period of five (5) years from the date it is made" and the phrase "and
thereafter for successive five (5) year terms". |
28. |
The Commission further notes
that the phrase "unless and until terminated by one year prior notice
in writing by either party" does not specify any triggering event from
which to give notice. The Commission agrees with Aliant Telecom that
had the intention been to limit the right to terminate to the end of
the current and any renewal term of the SSA, clear wording would have
been included specifying by what date the notice was required. The
Commission considers, therefore, that notice of termination under
section 8.1 of the SSA is not limited to any specific period in time.
In light of the above, the Commission is of the view that the plain
and ordinary meaning of section 8.1 of the SSA allows for the
termination of the SSA at any time, without cause, upon one year's
written notice. |
29. |
The Commission considers that
the above interpretation does not bring about an unrealistic result or
a result that would not be contemplated in a commercial environment. |
30. |
In light of the above, the
Commission finds that the wording in section 8.1 of the SSA is clear
and unambiguous, and when given its plain and ordinary meaning, allows
the termination of the SSA, by either party at any time, after
providing one year's prior written notice. |
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B. Assignment of the SSA
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31. |
Section 12.5 of the SSA
states: |
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This Agreement may be assigned, in whole or in part, by either
party upon thirty (30) days written notice, provided that any
assignment by [Rogers] shall be subject to [Aliant Telecom]'s prior
written consent that shall not be unreasonably withheld. […]
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Positions of parties
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32. |
Rogers submitted that it did
not dispute that Aliant Telecom could assign its rights under the SSA.
However, Rogers submitted that such an assignment did not alter the
terms of the SSA or Aliant Telecom's obligations. In particular,
Rogers submitted that the assignment of contract did not operate to
transfer the obligations under the contract unless the parties
expressly agreed to the new arrangement. Rogers indicated that the
process by which contractual liability was transferred was referred to
as novation. Rogers submitted that novation had not occurred and the
SSA remained in place. Further, Rogers indicated that if a party to a
contract could assign liability for performance with impunity, then a
party could escape its contractual obligations by transferring
liability to an entity with no assets or ability to perform.
Therefore, Rogers submitted that Aliant Telecom remained liable for
non-performance of its obligations to provide access to joint-use
poles in accordance with the terms and conditions of the SSA. |
33. |
In its answer, Aliant
Telecom submitted that section 12.5 of the SSA allowed it to assign
the SSA, in whole or in part, upon notice to Rogers, without Rogers'
consent. Aliant Telecom submitted that it had assigned the
administration for NB Power-owned poles to NB Power in response to
that company's request. Aliant Telecom submitted that the assignment
was not for the purpose of avoiding its contractual obligations.
Aliant Telecom added that the assignment had allowed the party that
owned the assets to administer access to them, and that NB Power's
decision to administer its assets was related to, and consistent with
Barrie. |
34. |
In reply, Rogers submitted
that Aliant Telecom's assignment of the SSA, although permitted, had
not absolved it of its contractual obligations, including its
obligation to provide access to the poles at the rate of $9.60 per
pole per year. |
35. |
In response to Rogers' reply
comment, Aliant Telecom submitted that although it would need Rogers'
consent to assign the SSA in common law, the SSA specifically allowed
Aliant Telecom to assign without seeking Rogers' consent. Aliant
Telecom submitted that, therefore, it was no longer responsible for
the assigned portion of the SSA. |
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Commission's analysis and determinations
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36. |
The Commission notes that a
contract is a mixture of rights and obligations. One party to a
contract, the assignor, may assign the rights of the contract in his
or her favour to a third party, the assignee. The assignor may not,
however, assign his or her obligations and release himself or herself
from his or her primary liability for the obligations under the
contract without the express consent of the other contracting party.
This principle seeks to ensure that a party cannot escape its
contractual obligations by transferring liability to an entity with no
assets or ability to perform. |
37. |
In light of the above, the
issue becomes whether the language in section 12.5 of the SSA
constitutes express consent to the transfer of obligations. In this
case, section 12.5 of the SSA indicates that "this Agreement may be
assigned, in whole or in part […]". This section only references the
word "Agreement." It does not specifically reference the assignment of
"burdens," "obligations," or "liabilities," absent wording which the
Commission considers is key in determining whether Rogers has
expressly consented to the assignment of obligations. |
38. |
In light of the above, the
Commission finds that the word "Agreement" in section 12.5 of the SSA
is not sufficiently clear to indicate Rogers' express consent to have
permitted Aliant Telecom to assign its obligations to NB Power.
Therefore, the Commission concludes that Aliant Telecom remained
liable for the non-performance of any of its obligations under the
SSA. Such obligations included providing access to NB Power poles at
the rate of $9.60 per pole per year until the SSA was terminated. |
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C. Approval of changes to the SSA or to the NST
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Positions of parties
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39. |
Rogers requested that the
Commission declare that in the event that Aliant Telecom wished to
introduce changes to the SSA or to the NST, it must seek prior
approval from the Commission. |
40. |
In its submissions, Aliant
Telecom stated that it was not seeking to make any changes to the form
of the SSA or the NST. Aliant Telecom stated that if it sought any
changes to the SSA or to the NST, it would seek the required approval
of the Commission. |
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Commission's analysis and determinations
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41. |
The Commission notes that
Aliant Telecom is not proposing any changes to the NST or to the SSA
and that it has agreed to seek the Commission's approval should any
changes be sought. Therefore, the Commission's approval of any
amendments to the SSA or to the NST is not required in this case at
this time. |
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D. Modification of the JUA
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42. |
Item 901.3(g) of the NST
states: |
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Nothing contained in this [NST] item limits, restricts or
prohibits the Company from honouring existing or entering into
future joint-use or joint ownership agreements regarding Support
Structures used or offered under this [NST] item and the SSA,
provided that the existing rights of a Licensee shall not be
prejudiced by a joint-use or joint-ownership agreement entered into
by the Company after the Licensee has been granted access to Support
Structures. The one exception to this provision is a circumstance in
which the Company is forced to move a Support Structure by a
property owner, in which case a Licensee must move its facilities at
its own expense.
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Positions of parties
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43. |
Rogers submitted that if
there was any doubt about the interpretation of the SSA, item 901.3(g)
of the NST made it clear that Aliant Telecom could not modify its
joint-use arrangements and enter into new joint-use arrangements that
prejudiced the existing rights of Licensees, such as Rogers. |
44. |
In its submissions, Aliant
Telecom stated that it did not dispute Rogers citing item 901.3(g) of
the NST as precluding Aliant Telecom from entering into future
joint-use agreements that prejudiced the rights of existing Licensees.
Aliant Telecom argued, however, that its termination of the SSA did
not constitute Aliant Telecom entering into a new joint-use agreement.
Aliant Telecom stated that it was merely acting in accordance with the
terms of the SSA and responding to NB Power's request that it govern
third-party access to its own support structures, in accordance with
Barrie. |
45. |
In its reply comments,
Rogers agreed that the termination of the SSA was not a new joint-use
agreement. Rogers submitted, however, that the joint-use arrangements
that were pertinent were the arrangements between NB Power and Aliant
Telecom. Rogers argued that it was revisions to these arrangements
that had motivated Aliant Telecom's assignment to NB Power of parts of
the SSA as well as its position on termination of the SSA. Rogers
submitted that, as indicated in its application, if there were any
doubt about the interpretation of the SSA, the NST made it clear that
Aliant Telecom could not modify its joint-use arrangements in a manner
that prejudiced the existing rights of Licensees, such as Rogers. |
46. |
In reply, Aliant Telecom
stated that the termination of a portion of the JUA between
Aliant Telecom and NB Power had been requested by NB Power and was in
accordance with the terms of the JUA. Aliant Telecom asserted that NST
item 901.3 was clear in its application that it restricted Aliant
Telecom from entering into any future joint-use agreements that would
prejudice Rogers' use of Aliant Telecom's poles. Aliant Telecom
submitted, however, that the termination by a third party of a portion
of an existing joint-use agreement was not a contravention of NST item
901.3(g). |
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Commission's analysis and determinations
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47. |
The Commission notes that
item 901.3(g) of the NST clearly indicates that the protection of a
licensee's rights afforded under that provision is triggered by the
Company (Aliant Telecom) entering into a joint-use or joint-ownership
agreement after the Licensee (Rogers) has been granted access to
support structures. Therefore, in order for the protections of item
901.3(g) to apply to this instance, Aliant Telecom must have entered
into a new joint-use or joint-ownership agreement after Rogers had
been granted access to the support structures. |
48. |
The Commission notes,
however, that although NB Power has terminated a portion of the JUA,
and Aliant Telecom has terminated the SSA and assigned a portion of
the SSA to NB Power, Aliant Telecom has not entered into a future
joint-use or joint-ownership agreement with NB Power. In light of the
above, the Commission concludes that the facts of the case before it
do not trigger the operation of item 901.3(g) of the NST. |
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Commission's conclusions
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49. |
Based on the above, the
Commission finds that: |
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- Aliant Telecom could terminate the SSA at any time, without
cause, after providing one year's prior written notice to Rogers.
Therefore, the SSA terminated on 1 February 2006, one year following
the date of written notice of termination to Rogers;
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- Aliant Telecom could not assign its obligations under the SSA
without Rogers' express consent. Therefore, Aliant Telecom remained
liable for non-performance of its obligations under the SSA until 1
February 2006, and these obligations included the obligation to
provide Rogers access to NB Power poles at the rate of $9.60 per
pole per year;
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- There are no amendments by Aliant Telecom to the SSA or the NST
before the Commission that would require its approval; and
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- Aliant Telecom's termination of the SSA, its assignment of a
portion of the SSA to NB Power, and NB Power's termination of a
portion of the JUA are not circumstances that would trigger the
operation of item 901.3(g) of the NST.
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Secretary General |
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This document is available in alternative
format upon request, and may also be examined in PDF
format or in HTML at the following Internet site: http://www.crtc.gc.ca
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Footnote:
Subsection
1(b) of the JUA stated:
Any request by a third
party for attachment to poles or to share in the use of a conduit
system owned by either of the parties, or for extension of any
existing use by such third party of poles or underground facilities
owned by either of the parties, shall be directed to [Aliant Telecom]
if the proposed attachments or use are intended for communication
purposes, and to [NB Power], if intended for transmission of electric
power or energy. |