Property Fees for Canadian Telecommunications Carriers Rejected

On March 13, 2007, the Federal Court of Appeal released its decision in Edmonton (City of) v. 360Networks Canada Ltd., [2007] F.C.J. No. 340, which upheld a 2005 Canadian Radio-television and Communications Commission (CRTC) decision to reject property fees for Canadian telecommunicationes carriers.

Over the last ten years, Canadian municipalities have attempted to impose significant fees on Canadian telecommunications carriers and distributors for their access to municipal property. This case is the latest in a series of cases in which Canadian courts have addressed questions about the power of municipalities to impose such fees and the amount of fees that can be imposed pursuant to Part III of the Telecommunications Act.

In this case, MTS Allstream Inc. had already installed transmission lines on municipal property with the consent of the City of Edmonton. The parties' fee agreement expired in May, 2002. The parties attempted to negotiate an extension of their agreement. They had agreed on all the terms except the fees to be paid in respect of the transmission lines in the City's LRT tunnels. Edmonton took the position that the LRT tunnels were not a public place and, therefore, the fees that it could demand were not subject to the restrictions imposed by the CRTC exercising its powers under Part III of the Telecommunications Act.

Allstream decided not to renew its access agreement with the City. In response, the City extended its by-law on occupancy fees for transmission lines on city property to cover the LRT tunnels and increased the fees payable. Edmonton subsequently brought an action to recover these fees and Allstream brought an application to the CRTC asking the Commission to determine Allstream's right of access to the City's lands and challenging the amount of fees that Edmonton was seeking to charge on it. The CRTC granted Allstream's application. In doing so, it rejected Edmonton's claim that the CRTC did not have jurisdiction where a carrier already had access to public lands, as opposed to where a carrier was seeking access to public lands.

Edmonton appealed the CRTC's decision to the Federal Court of Appeal. The Federal Court of Appeal affirmed the CRTC's decision. It took a pragmatic approach to the issue of statutory interpretation. While the court acknowledged that the Act did not expressly cover the facts of this case, the court held that the right to construct (which the CRTC had express power to grant) would be of no value in ensuring telecommunications services to the public if the land owner could remove the lines after they are constructed. The court was of the opinion that maintaining or operating the lines should be seen as integral to their construction. To come to the opposite conclusion, the court held, would be “at odds with the administration of the Act in a manner that attains the statutory objects”, including “encouraging the orderly development of communications networks in Canada.”

The court also held that the LRT tunnels were “public places” for purposes of Part III of the Act. Again, the court held that the interpretation of this phrase “should be informed more by its contemporary setting” in the Act than by its historical antecedents. Consequently, the LRT tunnels, although accessible to the travelling public through LRT operated vehicles only, were nevertheless “public places” for purposes of Part III of the Act.

Finally, the court upheld the CRTC's decision that the only fees that Edmonton could charge had to reflect the City's costs in providing access to its property (“causal costs”) in accordance with the Commission's earlier Ledcor decision.

Andrew Roman of Miller Thomson LLP appeared for the City of Edmonton. The City of Toronto was represented in-house by Kirsten Franz and The City of Vancouver was represented in-house by Patsy Scheer. McCarthy Tétrault LLP represented Aliant Telecom Inc., Bell Canada, Canadian Cable Telecommunications Association, TELUS Communications Inc., including Thomas Heintzman, Q.C. and Eric Gertner. MTS Allstream Inc. was represented by Goodmans LLP with a team that included Michael Koch, Dina Graser and Lauren Cappell. Leslie Milton of Johnston & Buchan LLP, now of Fasken Martineau DuMoulin LLP, represented the CRTC.