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Peterson Stark Scott

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C.R.T.C. rejects communications right-of-way licence fees
February 14, 2001

The Canadian Radio-Television Commission has recently released a decision dealing with a dispute in Vancouver over licence fees for access to communications rights-of-way placed within municipal streets.

The dispute began more than two years ago over a planned installation of a fibre-optics cable within the City of Vancouver. The developer was Ledcor Industries Ltd., now known as 360networks Inc. Ledcor's project utilized a railway right of way through the City but it required the City's consent for several street crossings. The City imposed a number of conditions on its consent, many of which Ledcor found unacceptable. Ledcor then applied to the C.R.T.C. pursuant to s. 43 of the Telecommunications Act, S.C. 1993, c. 38, which gives the C.R.T.C. jurisdiction to regulate access to public streets.

Vancouver's conditions included a demand that Ledcor pay a licence fee for use of the municipal property that was far in excess of the cost of providing the access, additional licence fees based upon the revenues Ledcor generated in Vancouver, a demand that Ledcor provide the City with exclusive use of four fibre strands on its fibre-optic system and a requirement that Ledcor provide it with information about Ledcor's customers to enable Vancouver to charge licence fees to those customers.

The C.R.T.C. decision orders Ledcor to pay Vancouver for several items which would have been direct costs to the City caused by construction and which Ledcor appeared to have been prepared to do initially. This included lost parking meter revenues, costs associated with restoration of the streets after construction, etc. However, most of the other conditions demanded by Vancouver were rejected.

The significance of this case became apparent when Ledcor's position was supported by a number of Canadian telecommunications companies. In addition, a number of municipal governments, including Toronto, Edmonton, Ottawa and Halifax, lined up in support of Vancouver's position. It seems clear that many of them were hoping that communications right of way licence fees would become an important new source of municipal revenue. However, absent a successful appeal, the C.R.T.C. decision appears to end any such plans.

The Commission considered one interesting municipal objection, namely that the C.R.T.C.'s order would effectively allow communications companies to expropriate municipal property. This objection was dismissed by the Commission with the observation that the C.R.T.C.'s order was simply regulation of a federal undertaking, namely communications. Nevertheless, the language of s. 43 of the Act clearly gives the C.R.T.C. power to authorize installation of communications facilities over the objections of municipalities.

Another interesting expropriation issue was avoided by the C.R.T.C.'s approach. Vancouver had proposed a licencing fee based upon the value of the municipal property in which the works were to be installed. However, valuation of municipal streets would have been a difficult exercise. Vancouver had proposed a complex formula for determining the licence fees which was based on the market value of adjacent parcels. Since the whole concept of licence fees was rejected, this formula became irrelevant.

The decision was released on January 25, 2001. The full text of the decision may be viewed on the Internet at http://www/crtc.gc.ca/eng/archive/2001/DT2001-23.htm.

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