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Telecom Decision
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Ottawa, 22 June 1995
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Telecom Decision CRTC 95-13
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ACCESS TO TELEPHONE COMPANY SUPPORT STRUCTURES
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I BACKGROUND
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On 25 March 1991, BC TEL filed Tariff Notice 2342 requesting an increase in the rates for attachment by cable television undertakings to the company's support structures. The application included a cost study in which the company estimated that its costs for jointly owned poles had risen substantially from those estimated in its previous cost study. In Telecom Letter Decision CRTC 91-8, 28 August 1991 (Letter Decision 91-8), the Commission found that BC TEL's methodology with regard to the treatment of jointly owned poles was inappropriate, and approved rates less than those proposed by the company.
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On 29 July 1992, BC TEL filed an application pursuant to section 66 of the National Telecommunications Powers and Procedures Act, since replaced by section 62 of the Telecommunications Act (the Act), requesting that the Commission review and vary that part of Letter Decision 91-8 relating to the treatment of jointly owned poles.
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On 10 September 1992, the Commission issued Review of Cable TV Support Structure Arrangements, Telecom Public Notice CRTC 92-54 (Public Notice 92-54), requesting comment with respect to (1) BC TEL's request to review and vary Letter Decision 91-8, (2) aspects of Support Structures and Related Items - Public Proceeding on Rates, Telecom Decision CRTC 86-16, 15 August 1986 (Decision 86-16), specifically, the use of the fairness factor (related to pole ownership) and the treatment of strand in aerial system cost calculations, and (3) whether AGT Limited (AGT), The Island Telephone Company Limited (Island Tel), Maritime Tel & Tel Limited (MT&T) and The New Brunswick Telephone Company Limited (NBTel) should base their rates for cable support structures on the methods established in Decision 86-16, as may be modified as a result of the proceeding initiated by that Public Notice.
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In addition, the Commission stated that consideration of NBTel Tariff Notice 153 (filed by the company on 8 April 1992) proposing revisions to rates and construction charges for cable support structures, and a ruling in the proceeding established in Northwestel Inc. - Rates, Terms and Conditions for Cable Support Services, Telecom Public Notice CRTC 92-39, 9 July 1992 (Public Notice 92-39), would be deferred until after a decision was issued in the proceeding initiated by the Public Notice. AGT, BC TEL, Bell Canada (Bell), Island Tel, MT&T, NBTel, Newfoundland Telephone Company Limited (Newfoundland Tel) and Northwestel Inc. (Northwestel) were made party to the proceeding.
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During the proceeding initiated by Public Notice 92-54, three interveners requested procedural changes. On 16 October 1992, the Canadian Cable Television Association (CCTA) requested that the proceeding be delayed and expanded to include consideration of the right of cable television undertakings (1) to perform plant extensions, repairs and upgrades on plant attached to strand or placed in conduit of telephone companies, (2) to place their own strand on telephone company poles, (3) to place fibre optic cable on either telephone company or cable television undertaking strand, and (4) to provide both programming and non-programming services over their distribution systems. On 9 November 1992, Unitel Communications Inc. (Unitel) requested that the proceeding be expanded to consider the appropriate terms and conditions by which it could have access to telephone company support structures. Finally, on 19 April 1993, Fundy Cable Ltd. (Fundy Cable) requested that the Commission grant it access to NBTel's support structures for the purpose of installing its own cable, including fibre optic cable.
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On 17 August 1993, the Commission issued Review of the Use and Sharing of Costs of Telephone Company Support Structures, Telecom Public Notice CRTC 93-50 (Public Notice 93-50), initiating a new proceeding to expand the process commenced in Public Notice 92-54 to include the issues raised by CCTA, Unitel and Fundy Cable. The Commission invited comment with respect to: (1) access to telephone company support structures by cable television undertakings and telecommunications carriers, (2) the appropriate method or methods of establishing rates for the use of telephone company support structures, (3) the ability of cable television undertakings and telecommunications carriers to construct, maintain and operate their plant and equipment on or in telephone company support structures, (4) the types of plant that can be installed using telephone company support structures, and (5) constraints on the provision of telecommunications services by cable television undertakings and telecommunications carriers using telephone company support structures.
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On 21 February 1994, Shaw Communications Inc. (Shaw) and Videotron Communications Ltd. (Videotron) requested, pursuant to subsection 43(5) of the Act, that the Commission direct Edmonton Telephones Corporation (Ed Tel) to permit them to install, maintain, repair, etc., their own communication cable on Ed Tel support structures. By letter dated 12 April 1994, the Commission included the application in the proceeding established in Public Notice 93-50.
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Fifty-one parties registered to participate in the proceeding, including telephone companies, cable television undertakings, cable television associations, governments and others.
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The Commission does not consider it necessary, as envisioned in Public Notice 92-54, to defer further its rulings with respect to NBTel Tariff Notice 153 and Northwestel's provision of cable support services. Accordingly, in this Decision, the Commission is setting out basic principles regarding access to the support structures of AGT, BC TEL, Bell, Ed Tel, Island Tel, MT&T, NBTel, Newfoundland Tel and Northwestel (the telephone companies). The Commission is also prescribing rates for access to the cable support structures of the telephone companies, with the exception of Ed Tel. In addition, the Commission is establishing further procedures to consider the applicability of the rates prescribed in this Decision to Ed Tel, and the applicability of all the rates, terms and conditions to Manitoba Telephone System (Manitoba Tel), Télébec ltée (Télébec) and Québec-Téléphone.
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The Commission notes that, in this proceeding, AGT argued that the Commission should not render a general decision with regard to access to telephone company support structures. Rather, the question of access should be left to negotiation between the relevant parties. In this context, AGT submitted that access to telephone company support structures does not constitute a "telecommunications service" within the meaning of the Act, and should only be governed by a specific regime applying to such access pursuant to subsection 43(5) of the Act.
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In the Commission's view, access to telephone company support structures is a "telecommunications service" within the meaning of the Act. Accordingly, the Commission rejects AGT's argument that its jurisdiction with respect to such access is governed only by subsection 43(5) of the Act. Rather, in prescribing the rates, terms and conditions set out in this Decision, the Commission can rely on the provisions of the Act generally applicable to telecommunications services, including sections 24, 25, and 27.
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II ACCESS TO SUPPORT STRUCTURES
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A. General Right of Access
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CCTA argued that cable television undertakings have an historical entitlement to access telephone company support structures, based on three principles: (1) support structures are a public utility asset, (2) there should be no unjust discrimination with respect to access, and (3) access would be consistent with the policy objectives of the Telecommunications Act and the Broadcasting Act. CCTA submitted that cable television undertakings should enjoy the same freedom to use support structures as the telephone companies, and should be involved in joint planning regarding the use of support structures.
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Unitel submitted that the Commission should issue an order to direct the telephone companies to provide any telecommunications carrier or cable television undertaking with access to aerial and underground support structures; further, the telephone companies should file general tariffs providing for such access.
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Stentor Resource Centre Inc. (Stentor), on behalf of BC TEL, Bell, Island Tel, MT&T and Newfoundland Tel, stated that its member companies have provided the cable television industry with access to their support structures for many years, and that they intend to continue to do so in the future. Stentor noted that, over three years, Bell and BC TEL approved 98.7% and 99.8%, respectively, of the applications they had received from cable television undertakings for attachment to their support structures. However, Stentor indicated that access problems are anticipated, particularly in downtown urban areas and major business districts where the greatest number of requests for the use of support structures will occur. Stentor stated that its members must retain priority rights for the use and control of their support structures, and that such rights include the right to retain sufficient unused support capacity to meet anticipated future requirements. Stentor opposed CCTA's demands for unrestricted equal access, noting that cable television undertakings have not contributed any of the capital investment to construct support structures and are not paying an equal portion of the annual costs of the structures. However, Stentor recognized that it is in the public interest for all parties with support structures to work cooperatively to minimize disruption by engaging in joint planning of support structures and by permitting other parties to have access to their support structures, where spare capacity is available.
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Shaw argued that spare capacity should be equally available to both the telephone companies and cable television undertakings on a current needs basis.
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The Commission finds it reasonable that the telephone companies be required to provide access to their support structures where spare capacity is available. Accordingly, the Commission directs the telephone companies to make their support structures available to telecommunications carriers and cable television undertakings, where spare capacity is available. Should it prove necessary, the Commission will adjudicate disputes as to access on a case-by-case basis.
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The Commission is of the view that it is in the public interest to minimize the number of support structures (poles and conduit) through joint use of those structures, regardless of their ownership. Moreover, the Commission expects that maximizing the use of support structures (in terms of the number of companies using each structure) will help facilitate interconnection and interoperability between Canadian carriers and cable television undertakings. However, the Commission does not consider appropriate CCTA´s request that cable television undertakings should be given priority over third party telecommunications carriers when there is a conflicting demand for service. The Commission considers that this would constitute an undue preference in favour of cable television undertakings.
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With respect to the issue of joint ownership of support structures, the Commission notes that, historically, many telephone companies and power companies in Canada have participated in arrangements where each partner contributed to the capital investment. Thus, in some arrangements, the partners have joint ownership of the structure. In such situations, each participant has had a measure of control and influence over the provisioning of the structures. The Commission is of the view that these arrangements appear to have functioned adequately, and sees merit in parties, including cable television undertakings, seeking access to a large number of structures entering into arrangements where they would share in the capital investment and maintenance costs.
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In order to maximize the availability of spare capacity, the Commission encourages all parties to continue to participate in joint planning regarding the use of support structures.
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Stentor argued in this proceeding that requiring telephone companies to provide access to their support structures without requiring reciprocal access to the support structures of other parties is inequitable and discriminatory against the telephone companies. The public interest would be best served, in Stentor's view, by a single regulatory regime that would address the issue of access to all support structures within federal jurisdiction, rather than one restricted to the support structures of the telephone companies. The Commission is of the view that Stentor´s submission raises issues that are beyond the scope of this proceeding.
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B. Placement of Facilities
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CCTA argued that support structures should be made available in a flexible manner (pole alone, strand and dedicated duct), with cable television undertakings using the configuration of their choice and with work being carried out, at their option, by their own employees, independent contractors or telephone company employees. Furthermore, CCTA submitted that there should be no restrictions on the type of plant installed, noting that many telephone companies have refused cable television undertakings permission to install fibre optic cable. Similarly, Shaw submitted that cable television undertakings should have the ability to install, maintain, and operate their own plant on telephone company support structures; further, cable television undertakings should have the right to temporarily detach telephone company equipment, where necessary, in order to construct and maintain their cable plant on telephone company support structures.
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AGT indicated that it would not restrict placement of any type of plant, except devices that would encourage bypass, jeopardize safety conditions or affect the security of the network. Stentor argued that, on a going-forward basis, customers should be required to use a separate strand for their cable, and that cable placement on telephone company strand should be done by telephone company employees. Stentor submitted that guidelines should be developed for the size and type of cable, strand and equipment that can be installed on structures, and that equipment such as cable television amplifiers should not be placed on poles or in manholes, but on or in adjacent structures.
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The Commission is of the view that the owners of support structures have the right to set and enforce construction standards, provided that those standards are based on safety and technical requirements and do not unreasonably impede access by other telecommunications carriers and cable television undertakings. The Commission considers that there should be no restrictions on the type of plant placed, unless those restrictions relate to safety and technical requirements. In addition, the rates established in this Decision are such that, where feasible, a customer will have the option of using its own strand on aerial support structures.
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With respect to the concerns expressed by some parties regarding the types of services that should be provided using facilities placed on or in telephone company support structures, the Commission considers that there should be no restrictions on the type of services provided by companies using support structures, as long as those services are provided in accordance with applicable legislation, regulations and Commission decisions.
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Finally, the Commission directs the telephone companies, with the exception of BC TEL, to permit cable television undertakings and telecommunications carriers to construct, maintain and operate their own plant and equipment on or in telephone company support structures using their own labour force or contractor. The Commission is excluding BC TEL from this direction at this time, as the matter of the Commission's jurisdiction to issue such a direction with respect to BC TEL is currently before the Supreme Court of Canada.
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III RATES FOR SUPPORT STRUCTURES
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The Commission first addressed the matter of appropriate rates for support structures in Bell Canada, Tariff for the Use of Support Structures by Cable Television Licensees, Telecom Decision CRTC 77-6, 27 May 1977 (Decision 77-6). In that Decision, the Commission stated the policy that rates for these structures should be sufficient to recover the causally attributable costs and provide an adequate contribution to common costs, calculated in some reasonable manner.
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Subsequently, in Decision 86-16, the Commission determined that the rating of support structures should, at a minimum and consistent with Decision 77-6, provide for the recovery of causally attributable costs, determined in accordance with Inquiry into Telecommunications Carriers' Costing and Accounting Procedures; Phase II: Information Requirements for New Service Tariff Filings, Telecom Decision 79-16, 28 August 1979. In addition, the Commission determined that it would be appropriate to identify fixed structure costs, computed on an embedded basis, to establish the maximum contribution to be incorporated into the rates for support structures. Further, the Commission found that the maximum contribution, or contribution ceiling, should be determined based on a formulaic approach, so as to assure an attribution of these costs that minimizes subjective assessments. In Decision 86-16, the Commission set out formulae applying to the various types of support structures for the purposes of determining the contribution ceiling for each.
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In this proceeding, various parties have expressed dissatisfaction with Decision 86-16. CCTA argued that the implementation of the Decision 86-16 rating methodology has, through "creative costing", resulted in unreasonable rates. Further, a report prepared by D.A. Ford and Associates Ltd. and filed by CCTA, Analysis and Discussion of the CRTC's Decision on Support Structures (Decision 86-16), noted the complexity of the different approaches used by various companies to implement the Decision. Shaw stated that, while it supports the principle of Decision 86-16, the methodology is overly complex, time-consuming and allows for excessive rates.
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BC TEL, in the application to review and vary that led, in part, to the initiation of this proceeding, submitted that Decision 86-16 contains an error that leads to an understatement of the contribution ceiling.
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Stentor submitted that changes to the Decision 86-16 rating methodology are required in order that costs may be shared more equitably among the users of the support structures. Stentor argued that any rating methodology that permits a cable television undertaking or telecommunications carrier to obtain access at a small fraction of the costs is clearly inequitable. In Stentor's view, such a methodology creates a situation in which joint planning of support structure construction is undermined, as all parties have an incentive to avoid being the first to construct new support structures.
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The Commission agrees that the application of the rating methodology established in Decision 86-16 has become unduly complex. As noted by Stentor in its comments regarding the Ford report, the differences in approaches used by the companies are due in part to the differences in their accounting and information systems. Further, across the country, different arrangements exist between the telephone companies and power companies, a fact that is reflected in the Decision 86-16 formulae and contributes to their complexity. Moreover, the formulae in the Decision have not been entirely successful in minimizing subjective assessments.
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On the basis of the record of this proceeding, the Commission concludes that it would not be appropriate to require the continued application of the Decision 86-16 formulae by those companies subject to the Decision, or to require that other companies apply those formulae. Similarly, the Commission does not consider it appropriate to adopt any formulaic approach (such as that proposed by Stentor) for identifying embedded costs for the purposes of determining the reasonable contribution to be included in support structure rates.
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The Commission remains of the view that rates for support structures should, at a minimum, exceed the causally attributable Phase II costs. In the Commission's view, the identification of those causal costs is dependent on whether the telephone companies would be required to make additional investment, or advance planned investment, in order to serve the requirements of the cable television undertaking or telecommunications carrier seeking access to support structures. If no additional investment is required, and no advancement is required, the costs associated with the structures themselves can be viewed as fixed.
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As indicated above, the Commission considers it reasonable that access to the telephone companies' support structures be provided where spare capacity is available. Therefore, with respect to the use of support structures by cable television undertakings or telecommunications carriers, there are no causal costs associated with the structures themselves.
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In this proceeding, Stentor argued that the emergence of competition between cable television undertakings and telephone companies provides a reason for support structure costs to be shared more equitably, so that competing parties are not advantaged or disadvantaged. Stentor noted that some cable television undertakings are providing services that compete with telephone company services, and that the degree of competition will increase in the future as cable television undertakings replace their coaxial cable systems with fibre optic transmission systems.
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The Commission considers competitive equity a valid factor to consider in the determination of appropriate rates. However, in light of the limited extent of competition at this time, the Commission is of the view that the sharing of support structure costs, as proposed by Stentor in this proceeding, is not justified, particularly given that the telephone companies will have priority access to support structures in order to meet current and anticipated future service requirements.
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In this proceeding, Shaw supported the use of Bell rates as a bench mark in an effort to achieve national uniform rates. In the specific case of support structures, the Commission considers that there is merit in adopting uniform rates. First, the Commission notes that, given the size of the causally attributable costs (there are none associated with the structures themselves), the requirement that the rates recover the causally attributable costs for each company is not a significant constraint. Second, the Commission considers that the adoption of uniform rates would serve to reduce the requirement for company-specific proceedings, thus reducing the regulatory burden for all concerned. Accordingly, below, the Commission is prescribing uniform rates to apply to the support structures of the telephone companies, with the exception of Ed Tel.
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The Commission notes that the support structure rates of those telephone companies subject to Decision 86-16 have increased by approximately 65% to 95% since that Decision was issued. The Commission considers that the uniform rates established in this proceeding should not significantly alter, for the companies subject to Decision 86-16, the overall level of contribution currently derived from support structure rates. The Commission notes that, for all of the telephone companies subject to this Decision, overall company revenues will not be significantly affected.
Based on the foregoing, the Commission approves, effective 1 August 1995, the following monthly rates for support structures provided by AGT, BC Tel, Bell, Island Tel, MT&T, NBTel, Newfoundland Tel and Northwestel:
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Pole: $0.80
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Strand: $0.20
(per 30 metres,
or equivalent)
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Conduit: $2.25
(per 30 metres,
or equivalent)
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Under this rate structure, aerial configuration rates are unbundled into separate pole and strand rates. This reflects the Commission's finding that aerial configuration customers should have the option, where feasible, to use their own strand on new aerial support structures and major rebuilds.
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If a telephone company constructs or reinforces support structures for the use of a customer, the Commission considers it reasonable that charges based on the costs incurred continue to apply.
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IV FURTHER PROCESS
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The telephone companies, with the exception of Ed Tel, are directed to issue, by 14 July 1995, tariff pages implementing this Decision with an effective date of 1 August 1995.
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The Commission notes that BC TEL's tariffs for conduit reflect Types A, B, C and D facilities. The rate approved above for conduit, i.e., $2.25, applies only to Type A facilities. BC TEL is directed to file, by 24 July 1995, proposed tariffs for its Types B, C and D facilities, and to provide its justification for each of the rate levels proposed. Copies are to be served on parties to this proceeding, also by 24 July 1995.
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As noted above, Ed Tel was made party to this proceeding as a result of an application filed by Shaw and Videotron on 21 February 1994 requesting that the Commission direct Ed Tel to permit them to install, maintain, repair, etc., their own communication cable on Ed Tel support structures. The terms and conditions governing access to support structures set out in Part II, above, apply to Ed Tel. Ed Tel is directed to file, by 24 July 1995, any reasons why its support structures should not be provided at the rates established in this Decision. Copies are to be served on parties to this proceeding, and on any person who requests a copy, by the same date. Parties and interested persons may file comments with the Commission, serving a copy on Ed Tel, by 8 August 1995. Ed Tel may file a reply, serving copies on all those who filed comments, by 21 August 1995.
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Manitoba Tel, Québec-Téléphone and Télébec are directed to provide, by 24 July 1995, any reasons why each should not be subject to all the terms and conditions, including rates, established in this Decision with regard to support structures. Copies are to be served on parties to this proceeding, and on any person who requests a copy, by the same date. Parties and interested persons may file comments, serving copies on the companies, by 8 August 1995. The companies may file replies, serving copies on all those who filed comments, by 21 August 1995.
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V OTHER MATTERS
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During the period 1 April 1992 to 31 December 1994, the Commission dealt with various tariff notices filed by BC TEL, Bell, NBTel and Newfoundland Tel in connection with support structures. The Commission gives final approval to the tariff revisions granted interim approval in (1) Telecom Order CRTC 92-1082, 24 August 1992 (NBTel), (2) Telecom Order CRTC 93-132, 18 February 1993 (BC TEL), (3) Telecom Order CRTC 94-996, 26 August 1994 (BC TEL), (4) Telecom Order CRTC 93-131, 18 February 1993 (Bell), and (5) Telecom Order CRTC 94-1504, 29 December 1994 (Newfoundland Tel). NBTel Tariff Notice 153, dated 8 April 1992, and Bell Tariff Notice 5376, dated 2 December 1994, are denied.
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With regard to BC TEL's application to review and vary Letter Decision 91-8, the Commission notes that, pursuant to this Decision, the treatment of jointly owned poles to which the company objected will no longer apply. Accordingly, this Decision disposes of BC TEL's application.
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Allan J. Darling
Secretary General
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