Federal Court of Appeal sides with power companies in pole access battle

The cable industry says it will appeal a landmark court ruling that challenges the CRTC's jurisdiction to regulate utility companies, and to mandate what they charge for access to their poles. Released July 13, the unanimous decision by the Federal Court of Appeal represents the latest development in a five-year battle over what cable carriers should pay to attach their wires and equipment to publicly owned hydro poles. The court was responding to an appeal by Ontario utilities challenging a 1999 CRTC ruling (Telecom Decision 1999-13) in which the commission once again affirmed that it does have statutory and constitutional jurisdiction to intervene in any dispute relating to access to support structures, which it views as an "essential facility" under the Telecommunications Act. The decision also established a rate of $15.89 per pole, far less than the $40.53 rate requested by utilities. The appeals court decision means that power companies in Ontario - and possibly across the country - can now freely negotiate prices with cable operators without fear that the CRTC will intervene. The decision could also have implications for other telecom carriers. Leslie Milton, an Ottawa lawyer at Johnston & Buchan, says the ruling is unusual for two reasons. First, the courts are usually reluctant to even hear such cases, and when they do, they usually side with the regulator. "It's certainly true that we don't see the CRTC overturned very often. Now we also don't see the CRTC appealed very often for a number of reasons," she explains. "I guess the CRTC likes to think because its decisions are so solid." Hudson Janisch, a University of Toronto professor specializing in telecom law, agrees it's difficult to overturn CRTC decisions in the courts, usually because they acknowledge the commission's expertise in the area of communications law. In this case, however, he says the appeals court "was not prepared to characterize the CRTC's decision as one involving its expertise." The question of jurisdiction in this case is considered by many to be more important than what rate is charged for pole access. Power companies have always maintained that the commission does not have statutory jurisdiction under the Telecom Act to regulate utilities. An official with the Canadian Cable Television Association claims the written decision by justice Marshall Rothstein doesn't specifically strike down the CRTC's authority in this area. " was just saying they didn't have the jurisdiction to make the ruling that they did in 1999-13," explains CCTA general counsel Lori Assheton-Smith. "Because they interpreted 43(5) in a way that gave them jurisdiction to make the order, but, in fact, in his view that wasn't a proper reading of the section." She says the CCTA will appeal the decision and is contemplating filing for a stay from the Supreme Court, but no final decision has been made yet. Rothstein does question the commission's definition of a transmission line. "The CRTC found that 'transmission line', as defined in ordinary dictionaries, would include lines used to distribute electricity," he writes. "The term was now narrowed, as it was in other subsections of section 43 , as being a transmission line of a Canadian carrier (by definition a telecommunications carrier such as a telephone company) or distribution undertaking (in this case, the undertaking of a cable company)." Rothstein also suggests the CRTC, in justifying its jurisdiction over utility poles, has taken a very literal reading of subsection 43(5) - something he doubts was the government's intention. "Such an interpretation would imply that Parliament was purporting to confer jurisdiction on the CRTC, not only outside Parliament's legislative jurisdiction under the Constitution Act but also, well beyond the mandate of the CRTC to regulate telecommunications and broadcasting under the Canadian Radio-television and Tele-communications Act, R.S.C. 1985, c. C-22. That obviously could not have been the intention of Parliament," he writes. However, that statement appears to contradict a 1998 ruling by the Federal Court of Appeal in which it rejected a motion for leave to appeal by Ontario Hydro of another CRTC decision. The lower court ruling affirmed the commission's jurisdiction to intervene in pole access disputes. Rewrite of Act unlikely How the federal government will react to the court ruling is uncertain. It could preclude a Supreme Court hearing by rewriting the Telecom Act, but most observers dismiss that strategy. "The problem would be that if the Tele-communications Act was rewritten, it might provoke a constitutional battle with respect to authority over telecommunications matters," says Janisch. "I think that it would be unlikely that the federal government would be prepared to provoke the provinces by revising the Telecommunications Act to overcome the interpretation given to it by the Federal Court." It wouldn't just be other governments upset over loss of power, Milton believes. Any attempt to change the federal law would result in another appeal of the original decision. "I could certainly envision that if the drafting was changed to make it absolutely clear that the section did apply to transmission lines of power utilities, we would again see utilities coming back but on the basis solely of the constitutional ground," she predicts. The CRTC is weighing its response to the court ruling. If the decision is upheld by the Supreme Court, it could have a serious impact on several Part VII applications currently before the commission. For more on this story, see the Aug. 2 issue of Canadian Communications Reports.

Federal Court of Appeal sides with power companies in pole access battle

News | 07/30/2001 4:00 am EDT

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