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February 8, 2001
Get ready for major traffic delays, Toronto!
Torontonians all know that we have only two seasons -- winter and construction.
Actually, road construction has only been a nuisance until now, but get ready.
We're in for slower traffic, lengthier delays and more closed streets.

The Canadian Radio-television and Telecommunications Commission (CRTC) has
issued a decision permitting telecommunications companies to lay their fibre
optic cable beneath municipal streets in the City of Vancouver. It's a decision
that could end up costing local taxpayers in Toronto in excess of $20 million a
year in lost compensation and result in endless traffic tie-ups.

Today, the City of Toronto announced its intention to appeal the principles
established by the CRTC in the Vancouver decision of January 25, 2001 as a
clearly unreasonable incursion into the municipal right to make policy with
respect to the use of its own property.

The ruling gives large, private fibre companies the right to dig up city
streets in Vancouver, lay their cable and just patch the hole they dug through
the pavement. "The next day, another company can come back to the same spot and
once again dig it up to access the underground to lay their company's cable,"
says Howard Moscoe, Toronto Councillor and Chair of the National
Telecommunications Committee of the Federation of Canadian Municipalities.
"Toronto roadways will become a patchwork of broken and uneven roads," he says.

"If you think it can't happen here, take a look at Washington, D.C.," says
Moscoe. In March 2000, The Washington Post reported that the real costs of each
trench dug for fibre optics cable weakens a street and takes years off its
life-span. "Although Los Angeles and other cities charge telecommunications
companies for long- term damage, the District (Washington) does not -- instead
passing those costs on to taxpayers," the newspaper reported.

Municipal taxpayers should carry the cost

"A municipality differs from a business," the CRTC decision states, "in that it
derives its revenues primarily from taxes" and in the CRTC's view, the costs
attributable to telecom carrier use are appropriately covered by this tax
revenue. "Therefore . . . costs should not be recovered through charges to

Free use and occupation of public property by carriers is justified, in the
opinion of the CRTC, because telecommunications facilities will "provide
generalized economic benefits throughout the municipality, attracting industry,
creating jobs, increasing tax revenue, etc." The decision provides no facts,
reasons or analysis to support this conclusion.

Although some members of the CRTC panel apparently dissented from the majority
opinion, the CRTC has not provided the reasons for dissent.

Toronto's CAO concerned by decision

"In the CRTC's attempt to resolve a dispute between the City of Vancouver and
Ledcor about 18 specific crossings, the commission has made some sweeping
policy declarations potentially affecting all municipalities," says Michael
Garrett, Chief Administrative Officer for the City of Toronto. "These new
policies effectively set taxation and land use policies for municipalities
across Canada so as to benefit the shareholders of the telecommunications
industry, at the expense of municipal taxpayers, through foregone municipal

The decision ignores the fact that all levels of government have for years been
making a clear distinction between social programs that should be supported
from the general tax base and profitable commercial activity, which should be
funded by cost recovery from the individual user of government services or
property. This decision basically requires municipalities to extend free
social services to companies making billions of dollars a year. Obviously, this
is contrary to basic government policy that private companies should not have
the free use of public property without appropriate compensation to the

Garrett's reaction is echoed by some industry analysts. "This decision is also
contrary to the recent trend toward government dealing with commercial
interests on a more businesslike basis," says John Todd, president of
Econalysis Consulting Services, Inc., a firm that specializes in
telecommunications and energy regulation.

"The federal government, for example, is making airwave capacity available to
telecommunications companies through Industry Canada's spectrum auction. The
commission's decision is a clear setback to the efforts of municipal
governments to use commercial alternatives for recovering related costs, rather
than increasing municipal taxes, as is done in many jurisdictions in the United

The City of Toronto's appeal of the CRTC's decision will challenge the right of
the CRTC to preclude a municipality, on behalf of its taxpayers, from
recovering reasonable compensation for the services and use of public land
provided to the telecommunications companies.

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