Telecom Decision CRTC 2003-45, Provision of telecommunications services to customers in multi-dwelling units, issued on June 30, 2003, sets out the CRTC’s rules governing the relationship between landlords and telecom service providers. The decision follows a three year long paper process, initiated by Telecom Public Notice 2000-124.
Background
Despite the rhetoric of customer choice, this has been an issue of money: what will carriers pay to be in the buildings. Also, in many cases, building owners have sought partnerships for providing advanced telecom services as a competitive differentiator in offering new amenities to tenants while increasing revenues derived from the property.
The problems that led to the regulator’s intervention originally began at the height of the dot-com and telecom boom, when many new entrant service providers were seeking access to buildings. Landlords witnessed a continuing stream of new carriers, large and small, seeking access to limited space in telecom closets. In addition, building owners were required to pay for inside wiring for new buildings and found carriers unwilling to compensate them. At the same time, building owners have been faced with similar requests for access from broadcast distributors, using satellite or fixed wireless technologies, as well as data service providers seeking rooftop access for antennae. Other than with respect to broadcast distribution undertakings (upon which the CRTC has already ruled), the CRTC did not find any reason to address access by non-wireline carriers at this time.
Setting rules on access
In yesterday’s Decision, the CRTC has declared that:
- it is illegal for Local Exchange Carriers (LECs) to enter into exclusive or preferred access arrangements with building owners, although the CRTC has recognized that preferred marketing arrangements have consumer benefits and should be permitted.
- building owners have the right to manage the use of space and supervise the installation of wiring and equipment in their buildings. However, LECs that want to install or upgrade in-building wire should, subject to the building owner’s reasonable acceptance of the wiring plan, be given access to the any “pathways” required to do so. LECs that exercise this option will be responsible for paying the associated costs, including those reasonably incurred by the building owner.
- where there is insufficient space available to install additional in-building wiring, the building owner must either permit the carrier to construct additional risers, or allow upgrading or replacement of the existing in-building wire to make more efficient use of the riser space available.
Where a building owner and a LEC cannot agree on terms for access consistent with CRTC guidelines, or on a timely basis, the CRTC has indicated that it will take further action, including (depending on the circumstances) an order under Section 42 of the Telecommunications Act, which purports to provide the CRTC with expropriation-like powers concerning private property.
New Buildings
Since 1999, new building owners have been required to install and maintain responsibility for in-building wiring, often at high cost, and frequently without compensation by carriers. This Decision rescinds that requirement and permits building owners, either to install and retain control of in-building wiring or to enter into arrangements with LECs, whereby they would install and control the wiring.
Compensation
The CRTC recognized that some building owners have already incurred costs to acquire or install copper in-building wire (such as in new buildings), or have upgraded in-building wire in order to provide superior facilities, such as fibre-optic cable or shielded cable, and may not have had the opportunity to recover their investment. Accordingly, the CRTC finds it appropriate for building owners to charge a fee for the use of in-building wire to recover any capital costs reasonably incurred for in-building wire. By corollary, the CRTC considered it inappropriate for building owners to charge a fee for the recovery of costs of in-building wire where the building owners acquired responsibility and control at no cost.
While the CRTC acknowledges that carriers should pay for space occupied and the power consumed by telecom facilities in the buildings, it does not believe building owners should be compensated for the construction of utility infrastructure (equipment rooms, risers, wiring runways, etc.). This could become an issue for negotiation under the terms of master access agreements for builders.
Building owners will be allowed to recover costs incurred for provision, installation, construction and supervision where additional floor space, ventilation or other building facilities must be constructed, at the request of a carrier. While the CRTC does not approve of “admission” or “entry” fees, building owners can pass along costs incurred for providing the approval of plans, or for safety and security measures and similar services reasonably required for installing and operating telecommunications facilities.
Disclosure issues
The CRTC is requiring that the terms and conditions of all access agreements between a LEC and building owner must be posted on the LEC’s website. For safety and privacy reasons, no customer specific information, nor wiring diagrams are to be disclosed, but the financial terms, whether written or unwritten, are to be open to examination by other carriers. In addition, the CRTC is requiring that LECs disclose agreements to install wiring for buildings under construction, in order to facilitate other companies that wish to install their own facilities at the same time. It will be interesting to see the impact on construction timetables potentially caused by multiple wiring crews.
Summary
Builders may have received relief from the costs of installing the wiring, subject to successfully negotiating reasonable terms with at least one carrier – likely, the local incumbent. Existing building owners have an opportunity to begin charging all carriers, including incumbents, for the space and power being consumed in their buildings and the security associated with controlling access to their premises.
While incumbents have now won access to the few buildings that had signed exclusive deals with new entrants, they may find that there are monthly fees to be paid that had never before been part of their budgets. In addition, carriers will have to choose whether to pay upfront capital for wiring in new construction or pay recurring monthly fees to builders or riser management companies.
Companies seeking to use alternate technologies, such as fixed wireless access, or broadband services have been left in the cold, with no help for mandated access or guidance for negotiations with property owners.
In order for building owners to protect their private property rights, they should take a firm but fair approach to new requests for building access. LECs must resist the temptation to abuse this Decision by making unreasonable demands on building owners, such as establishing mini-switching centres within buildings, absent an appropriate lease.
At the end of the day, the CRTC regulates telecom carriers, not landlords. Some of the areas covered in this Decision may be open to a court challenge in respect of the CRTC attempting to overextend its jurisdiction. The timing of a court challenge will depend on the reasonableness of carriers and building owners alike – presumably, both parties operating with a view to providing quality service and value to their mutual client: the tenant.