Commercial MDU exclusivity deals, high riser management fees re-monopolizing telecom sector: Beanfield founder

MISSISSAUGA — Beanfield Technologies Inc.’s founder and CEO Dan Armstrong said the CRTC is allowing the “re-monopolization of the telecommunications industry” by allowing Canada’s telecom companies to sign “bulk deals” with commercial landlords; and criticized the regulator for its lack of action on riser management fees. “The telecommunications industry seems to just want to – it's magnetic – it just wants to monopolize, no matter what. You can pull it apart and it comes back together.” Armstrong made the comments Monday at the 2022 edition of the Canadian Telecom Summit during a forum on regulatory policy with Beanfield vice president of policy and communications Todd Hofley. The internet service provider operates in Toronto, Montreal, and Ottawa, and is now expanding to Vancouver. Armstrong said it is common to see “bulk deals” in urban centres – a deal cut between a larger telecommunication service provider and a developer before a condominium is turned over to the building's ownership group, which gives the company exclusive telecommunications access in the building. The fees will generally be charged to the occupants through their condo fees and serves to lock out any competition. The larger telecoms can afford to pay the developers upfront and wait for a return on their investment while smaller telecoms cannot, the Beanfield pair said. “They do this with this Trojan horse that ‘consumers get a better price.’ But that hasn't proven to be the case. And so we believe that this is essentially just a re-monopolization of the telecommunications industry. And that's a fair way to put it,” Armstrong said. Hofley added that Toronto is now building condos that are 80-storeys tall to keep up with housing demand, which comes out to almost 500 homes that a telecom will have exclusive access to. “What you have is a single source provider within that community. There's no end-user choice anymore,” Hofley said. Hofley, who also happens to be a condominium president, noted that if a condo board wanted to enter into this type of contract after a building was developed, they would have to go to all the owners to make the request. He argued that would constitute a democratic process – as it would require a 90 per cent approval from the owners, as opposed versus developers baking an exclusivity contract into the condos declaration. “I think what's fascinating to me, as a condo president, is that you are being told who you are allowed to have as your ISP,” he said. “We’re worried this is going to become an accelerated thing throughout the country as condos become a defacto thing.” Hofley also noted that having one provider can become a risk when there is a service outage such as the national outage Rogers Communications Inc. experienced in June. Armstrong said it would be incumbent on the regulator to bring the three levels of government together to talk about this issue – the federal government having responsibility for the telecommunications files, the provincial government which deals with condominiums, and municipalities who have to deal with the incumbents digging up the roads multiple times to install their infrastructure. “And they essentially have to say that you can't cut an agreement ahead of a condominium being turned over with a single source provider. Most other things in the condominium act prevent this from happening. But there's just this one weird exclusion which I have a feeling was probably put into legislation many years ago by a man who's now deceased in our industry,” Armstrong said. The CRTC has seen a raft of disputes concerning access in multi-dwelling units (MDUs), including several this fall. In the summer of 2021, the CRTC declined to mandate access to in-building wire in MDUs, prompting an outcry from smaller independent telecoms in the industry. The duo also touched on the issue with riser management company fees – third party consultants that were developed in the 1990s to help landlords manage their telecommunications infrastructure when there were dozens of telecommunications companies building fiber in a single building, making a mess in the property. “It made a lot of sense at the time, but that was years ago. The market is consolidated quite a bit. There's very few left. And of course, the price of the commodity that we're talking about has dropped. Back in those days we were charging $1,000 to $1,200 for internet access so for us to pay a riser management company to let us do a service drop sort of made sense. But fast-forward to now we're charging maybe $60 or $70 and some of these riser management companies are charging $1,500 every time we do a service drop, which is insane,” Armstrong explained. Hofley claimed some riser management companies wanted to charge Beanfield up to $10,000 to come into the building, which would have come out to an $8,000 loss per year for the company. “So that leads to less choice overall,” he said. “So then the only one that's in that building is the only network that's in that building because you just can't make a market out of it.” Armstrong and Hofley said there is no dispute resolution process when it comes to the costs of additional riser management. “I think it would be really fantastic if we had some sort of quicker dispute resolution process where we could produce some sort of a letter from the Commission clarifying their direction and if there was still a dispute, some way to resolve it very quickly,” Armstrong said. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca.

Commercial MDU exclusivity deals, high riser management fees re-monopolizing telecom sector: Beanfield founder

News | November 21, 2022

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Commercial MDU exclusivity deals, high riser management fees re-monopolizing telecom sector: Beanfield founder

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