Canadian telcos and cable companies have reputedly been bad neighbors for leaving local governments with a $646 million bill racked up since 2001 for street repairs when they expanded and upgraded their networks underground. And the Canadian federal government has let this happen by not allowing cities and towns to recover road management and repair costs.

 

The Federation of Canadian Municipalities (FCM) released a study, “Highway Robbery: How Federal Telecom Rules Cost Taxpayers and Damage Public Roads” that said that these costs are adding to local governments’ financial woes.

 

Many governments are faced with upgrading aging infrastructures and paying for services, which often have been downloaded to them by provincial governments, and with limits to the abilities and the willingness of their taxpayers to shoulder those costs.

Fixing up roads damaged by the communications firms costs $107 million a year, which the FCM said is tantamount to subsidies to profitable private businesses, which municipalities and taxpayers can ill afford.

 

In response the FCM is asking the federal government to rewrite its Telecommunications Act, administered by the Canadian Radio-television and Telecommunications Commission (CRTC), to allow greater management of municipal rights-of-way by local governments as well as greater cost recovery.

 

“Our issue is not with the telecommunications companies, it is with successive federal governments that have swept this problem under the rug,” said FCM president, Sherbrooke, Que. Mayor Jean Perrault. “We are calling on the current government to break with the past and fix the problem. If it doesn’t, it will be telling Canadians that their property taxes should be subsidizing profitable telecommunications companies.”

 

The issue has its roots at the dawn of the telecommunications industry. In 1899, the Parliament of Canada amended the Railway Act to grant telegraph and telephone companies the “power to enter” municipal lands.

 

Municipalities have been chafing under the Ledcor decision by the CRTC in 2001. The agency ruled that Ledcor Industries, which had been building cable ducts beneath streets in Vancouver, BC without city consent, did not have to pay the city occupancy fees.

Instead, the CRTC set up a model that the FCM said in principle supported cost recovery but in reality turned out to be too complex and expensive even for large cities (like Vancouver) to implement. It also said the ruling did not provide any clear precedents that could be applied elsewhere.

 

 “We've heard very clearly today about the national cost of this broken system, but it’s also taking a major toll right here in Toronto,” reports Toronto city councillor Howard Moscoe, chair of FCM´s telecommunications committee. “The report also said the CRTC has not hesitated to expand its mandate or rewrite local access agreements, despite the fact that it isn’t equipped to understand municipal issues. Its decisions are ad hoc and unclear and, as a result, uncertainty and animosity now often characterize municipal-telecom relations. This contributes to prolonged and costly negotiations, which often end up before the CRTC and the courts.”

 

In fairness if the FCM is successful in its policy drive it is not clear what the impacts will be on voice/data costs to customers.

 

There is also the question of equity: road transportation does compete with communications services for travel (driving and transit versus telecommuting and conferencing) and information (trucks and vans for documents and catalogs versus electronic delivery and Web commerce).

 

There are studies that show that highway user fees do not cover all incurred costs, which means roads too are subsidized. There have been calls in Canada for more user-pay for roads. Canadian municipalities are moving to a user-pay system in areas such as trash collection where residents in many cities and towns must buy garbage tickets to have non-recyclable refuse picked up.