Feds say attachment costs “often prohibitively expensive”
By Ahmad Hathout
TORONTO – The newly-appointed board of directors of the Ontario Energy Board will oversee a review of pole attachment rates in the province, according to a mandate letter sent earlier this month, a priority assignment that is aligned with the province’s efforts to reduce equipment install costs to drive its broadband expansion goals.
Captured in just one line underneath a section on reducing regulatory burdens, the letter requires the “modernized” board to “consider pole attachment policy in the context of opportunities to better serve areas that are currently underserved.”
Ontario has the highest costs in Canada to attach wireline telecommunication equipment, such as fibre optic cables, to provincial utility structures — an annual rate of $43.63 per pole, last set in March 2018. A holdover from the Kathleen Wynne Liberal government, that rate was revised up from the $22.35 set in 2005.
“We’re pleased the Ontario government has recognized that it’s crucial that the industry has reasonable attachment rates,” Rogers said in an emailed statement to Cartt.ca, “so providers can further expand high speed internet to underserved areas across the province, and so communities can access the social and economic benefits of 5G wireless.”
Bell spokesman Marc Choma said in an emailed statement that the company “would be pleased to work with the government on the development of new policies.” The company is currently working with the province of Quebec on just that.
Factors that impact the rate include the number of companies that are attaching to the pole — the fewer the number of attachers, the greater the share of the cost on each company. In 2015, the OEB estimated that there was an average of 1.3 attachers per pole.
The new mandate letter from the Ministry of Energy, Northern Development and Mines is part of the Doug Ford government’s Fixing the Hydro Mess Act of 2019. The new objective is in-line with the province’s Broadband and Cellular Action Plan, which notes that attachment costs present a “financial barrier to expansion in rural, remote and northern areas.”
The letter follows the appointment and installation of a new board of directors at the OEB, which includes John Knubley, the former deputy minister to Innovation, Science and Economic Development (ISED), and Glenn O’Farrell, former president and CEO at Groupe Média TFO and the Canadian Association of Broadcasters.
At ISED, Knubley was lobbied by the largest telecommunications companies in the country, who have called for reforms on pole attachment rates that would see oversight of those fees supplanted by the CRTC to streamline access.
One of the recommendations of the Broadcast and Telecom Legislative Review report, which proposed changes to Canadian communications law and was released in January, said the federal government should “assign operational oversight of the radio communication and broadcasting antenna siting process to the CRTC, including managing the interaction with municipalities and land-use authorities.”
In September 2018, the OEB released a “what we heard” report from stakeholders who submitted comments about the modernization of the OEB. In it, some stakeholders — including large telecoms — recommended that the board remove from its mandate pole attachment rate regulation.
While rate regulation is within the jurisdiction of the provinces, it is up to them whether or not they want to actively govern over it. British Columbia, for example, does not actively regulate pole attachment costs; instead, utilities companies and prospective attachers will negotiate rates without the oversight of the British Columbia Utilities Commission (BCUC), which can become involved if the parties can’t agree to terms.
Similarly, the CRTC has had to manage a number of rights-of-way issues that have arisen when municipalities and telecoms couldn’t agree on terms. The regulator has often taken a laissez-faire approach to such conflicts, pointing to a broad framework in a model municipal access agreement to help guide the parties.
Shaw, which has called on Ontario to force municipalities to cooperate quickly on infrastructure access, and Rogers have both lobbied on the matter — Rogers has also done so in British Columbia, where it rolled out 5G infrastructure earlier this year — and have registered to hold discussions with the OEB.
The pole attachment cost concern has been an issue for telecoms big and small for years, and it has only ramped up recently with the advent of 5G, which will require thousands of small cell attachments on poles and other public furniture.
Over the years, the Ontario Superior Court and the Ontario Court of Appeal upheld decisions by the OEB to incrementally increase rates for attachments on Hydro One and Ottawa Hydro poles, following challenges by some of the largest telecoms.
The language from the federal government surrounding the issue has also somewhat morphed to become more pointed over time. ISED says about pole attachment rates on its website that the government “will engage partners to work to reduce these costs, so that networks are less expensive and can connect Canadians sooner.”
But a January briefing note from Infrastructure Canada to rural economic development minister Maryam Monsef put it as such: “Facilitating access to ‘passive infrastructure’ — telephone poles, radio towers, and other public infrastructure assets managed at the provincial, territorial and local levels remains an issue,” the note said.
“These assets can be necessary to the deployment of broadband technologies, but are often prohibitively expensive to access due to the high fees charged by public utilities,” it added.
The note was intended to encourage collaboration between all levels of government to help reduce those barriers, a nudge to the provinces to consider moving on attachment policy — generally for the telecoms, it should be on a cost-recovery basis.
And the issue isn’t exclusive to Canada. The telecom laws of the United States have allowed states to register their dominion over pole attachment rates, which have led to complaints of delays and bureaucratic barriers.
In a submission to Cabinet appealing the lower wholesale internet rates the CRTC set last summer — which has been on hold pending the outcome of the CRTC’s review — the large cable carriers including Rogers, Shaw, Eastlink, Cogeco, and Videotron used pole attachment rates in Ontario as an illustration of the alleged uneconomic reality of the hypothetical nature of the newer rates.
“In rural areas it is not uncommon to have to attach our fibre to multiple poles to serve one home,” the November 2019 submission said. “This would mean that to serve one customer, our pole attachment rates could be more than $8 per month.
“Pole costs are just one of the many significant costs we incur to operate our network. Deducting the $8 of pole attachment fees (as per this example) from the $16.72 in access fees received from a Reseller leaves less than $9 for Eastlink to be compensated for the rest of our network costs such as fibre, installation, core network and operation costs.
“The business case becomes nonexistent.”
