Copyright 2010, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Communications, December 2010
On December 9, 2010, the Canadian Radio-television and Telecommunications Commission (the CRTC) issued Decision 2010-930 which clarifies whether foreign-owned resellers are permitted to light leased dark fibre without violating the foreign-ownership restrictions in the Canadian Telecommunications Industry.
The fundamental issue under consideration was whether AboveNet Canada Inc., which is a foreign-owned reseller, could attach and operate its own optical equipment, in order to light dark fibre which AboveNet had leased from TELUS Communications Company, a Canadian carrier. TELUS had opposed AboveNet's registration as a reseller arguing that, by engaging in such activities, AboveNet would function as a "telecommunications common carrier". Only Canadian-owned and -controlled telecommunications common carriers are permitted to own or operate terrestrial transmission facilities in Canada.
Several definitions in the Telecommunications Act (the Act) are important to the decision. A "telecommunications common carrier" is defined to mean a person who "owns or operates a transmission facility used by that person or another person to provide telecommunications services to the public for compensation." For its part, "transmission facility" includes "any wire, cable, radio, optical or other electromagnetic system, or any similar system, for the transmission of intelligence between network termination points, but does not include any exempt transmission apparatus" (emphasis added). AboveNet's position was that it would operate only "exempt transmission apparatus" (ETA), discussed further below, and therefore would neither own nor operate a "transmission facility".
In its decision, the CRTC identified two primary issues that needed to be resolved in answering this question. The first was whether optical equipment used by a service provider to operate leased dark fibre falls within the definition of "exempt transmission apparatus". The second issue was whether attaching the optical equipment to the fibre constitutes "operation" of a "transmission facility."
The CRTC decided that, in respect of the first issue, the conversion of electromagnetic signals into light signals, which the CRTC identified to be the function of the optical equipment, constitutes a change in format of the transmission of intelligence which falls within the definition of the ETA.
With regard to the second issue, even if optical equipment were not considered ETA, operating such equipment would not, by itself, be operation of a "transmission facility." Having regard to the definition of "transmission facility" in the Act, the Commission ruled that optical equipment cannot by itself transmit intelligence between network termination points. Consequently, it cannot be considered to fall within the relevant definition. The CRTC found that Parliament intended the term "transmission facility" to include the basic transmission medium, and not devices attached at the ends thereof.
As a result of this decision, foreign resellers are permitted to own and operate optical equipment, which is used to light leased dark fibre, in order to offer telecommunications services to the public, without offending Canada's foreign-ownership restrictions.
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