CRTC rules in Vancouver’s favour on rights of way, but Ledcor wins financially

The ongoing saga over public rights of way hit a critical turning point last Thursday when the CRTC ruled that Vancouver has the right to recover costs, but not as much as the municipality proposed. The Federation of Canadian Municipalities (FCM) says it will appeal to the Federal Court on the grounds the CRTC does not have jurisdiction over municipalities. A review and vary application to the commission is also a possibility. Telecom Decision 2001-23 is the regulator’s final word on an attempt by the City of Vancouver to recoup costs, and possibly even make a profit, from telecom companies that tear up its streets and use its rights of way to lay fibre and other equipment. In this specific case, Ledcor Industries Ltd, which has been building a network for four years now, balked at some of the conditions and terms demanded by Vancouver (NL, Nov. 8/99). In last week’s decision, the CRTC accepted Vancouver’s right to charge money; it just disallowed most of the levies assessed. The attorney for the city is disappointed with the ruling. "The lion’s share of the dollars aren’t there. It’s all very well to win on your theoretical arguments but if the dollars aren’t there it’s not so pleasing," Greg van Koughnett told Network Letter. "The dollars are not simply to aid the City of Vancouver’s coffers, the dollars are there because those are real costs that have to be borne by somebody. They’re not new costs and if they’re not fully passed on to the carriers then it’s a question of municipal taxpayers subsidizing the new carriers." The subject had been a contentious one, with various telcos and municipalities from across the country filing submissions. The CRTC surprised many by limiting the ruling to this individual case. "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," it writes. In October 1999, the CRTC granted Vancouver an interim order, 4760-357, which saw telcos Bell Canada, BCT.Telus Communications Inc and Call-Net Enterprises Inc each pay the city a token dollar for rights-of-way when laying fibre. Telus had proposed using the same formula in its negotiations with the City of Toronto (NL, Mar. 27/00), a suggestion that Toronto rejected. The narrowness of the most recent judgement astounded Ledcor. "It came as a bit of a surprise to us," Michelle Gagné of Ledcor subsidiary 360networks Inc stated to Network Letter. "There is some language in the decision that suggested it could be applied to other municipalities but it’s somewhat vague." Not so vague was the slashing of projected revenues to the B.C. city. While a telco is permitted to include a 25 per cent mark-up on Phase II costs, a municipality is judged to be different since its revenue derives from the tax base. The CRTC disallowed Vancouver’s 25 per cent component for the recovery of fixed common costs. "I had hoped the commission would be more comfortable establishing broad principles for the whole country. It is a relatively narrow decision," van Koughnett asserts. "There’s a big continuum here, it must be admitted, where they spent a lot of time addressing the Ledcor application which was quite small potatoes really in terms of the big picture that’s at stake here. And the result is they haven’t given maybe quite as much guidance as they could have on other matters." Causal costs are small for some of the cost elements and it would be complex or difficult to determine them accurately. "The commission considers it appropriate to recognize such costs by way of a further 15 per cent loading on plan approval and inspections costs, which can be more readily estimated," the CRTC ruled. The commission found Vancouver’s fee schedule appropriate but said the levels should be changed. It assessed the levies at a flat fee of $341.55 for a project of 20 metres or less. Projects exceeding 20 metres will be charged a flat fee of $1,127 plus a per metre levy of $8.67. The CRTC tinkered with construction disruption costs. It granted Vancouver the right to recover the costs of traffic signing, but put transit operating delays under the 15 per cent loading on plan. Delays to the public were deemed not chargeable. Ledcor will be forced to pay for the restoration of road surfaces. Vancouver filed a proposal to charge $124,554 for pavement restoration, which the commission determined was reasonable. It added the proviso that the carriers could use their own contractors for repair work, provided that work met the municipality’s standards. Vancouver had wanted to be reimbursed for loss of parking meter revenue. It said Ledcor should pay $27,631 to make up for the loss of income. The CRTC agreed with the principle, but dismissed the city’s formula. Only net losses, not gross, should be assessed. The commission says losses are too complex to determine, so the 15 per cent loading on plan applies. "The thing is the 15 per cent loading is nowhere near the cost of lost parking meter revenues that Vancouver put in," van Koughnett complains. "Vancouver put in a very detailed study of lost parking meter revenue. The commission, rather than addressing that and saying there’s a slight tinkering that would be appropriate here, has in effect said that it’s left for an ongoing proceeding." Even though Vancouver only won a symbolic victory, the city’s lawyer was happy with the exercise. "I would say a great deal of credit goes to the commission’s public process in itself," says van Koughnett, who spent more than a decade at the CRTC before moving into private practice. "I think the very fact that there’s one of these heavy duty commission proceedings underway forces people to think through issues that they might just leave in the in basket and not get around to." Ledcor realizes appeals may drag out the discussion but still endorses the ruling. "This is a contentious issue," Gagné offers. "It may not be settled immediately but we’re glad at least the CRTC made this decision."

CRTC rules in Vancouver’s favour on rights of way, but Ledcor wins financially

News | 01/29/2001 5:00 am EST

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