ARCHIVED—Gazette Notice - DGRB-005-08

Department of Industry
Radiocommunication Act

Posted on Industry Canada website: November 24, 2008
Publication Date in Canada Gazette: November 29, 2008

Gazette Notice No. DGRB-005-08 – Release of Industry Canada's Arbitration Rules and Procedures for Mandatory Roaming and Antenna Tower and Site Sharing

Industry Canada is hereby releasing Industry Canada's Arbitration Rules and Procedures, which are being published as CPC-2-0-18 and incorporated by reference into the Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements (being officially published as CPC-2-0-17). With the release of this notice, the new conditions of licence come into effect.

It is anticipated that most roaming as well as antenna tower and site-sharing disputes can be resolved by the parties through negotiation within the required timelines. Under the conditions of licence, the requesting and responding operators are required to enter into discussions, share information and exchange proposals. In the event that negotiations fail and the dispute goes to arbitration, these Rules will be applied by the arbitral tribunal ("the arbitrator") and the parties to the dispute.

Background

In February 2008, following a public consultation, Industry Canada released Gazette Notice DGRB-002-08, Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements. In addition to amended licence conditions, the notice provided the next steps in the process for ensuring that an arbitration mechanism was in place, if required, to facilitate the completion of roaming agreements and site-sharing agreements.

Process

• Stakeholders' consultation session was held in Toronto in May 2008;
• Draft arbitration rules were sent to participants and other interested parties prior to the session. Deadline for written comments was June 23, 2008;
• Record of the stakeholders' session and comments received from all interested parties were posted on the Department's website following the close of the comment period;
• Interested parties were provided an opportunity to submit reply comments (deadline July 18, 2008); and
• Feedback from the session, as well as all comments and reply comments received, were then considered by the Department in formulating the final Rules.

Main Issues Raised by Stakeholders

The Department considered the comments received from all stakeholders and established a process that endeavours to address stakeholder concerns and allows sufficient time for submission and consideration of the relevant facts in order to increase the likelihood of an outcome that is suitable for both parties. Keeping time, cost and administrative burdens for the parties to a minimum were also considerations. The Rules suggest a default process to follow, but also provide for flexibility in certain areas should the parties involved and/or the arbitrator determine that it would be appropriate to modify procedures or timelines in coming to a resolution.

Final Offer Arbitration (FOA): The draft proposal suggested a system of FOA whereby each party would submit a Term Sheet and the arbitration would conclude by the arbitrator choosing one Term Sheet or the other. Some stakeholders questioned the adequacy of FOA to deal with the potentially complex issues surrounding tower sharing and roaming disputes. The Department notes that FOA has been used in extremely complex situations and has therefore decided that FOA will be the default method of decision making. The arbitrator has, however, been provided with the flexibility of selecting portions from each Term Sheet in making the final decision. It is expected that the use of FOA will encourage parties to submit reasonable offers up front, thus avoiding delays and minimizing costs. In addition, the Department has provided a reply period of up to five business days for counter offers once the initial Term Sheets have been submitted. Subsequent hearings are then held and the Final Term Sheets are submitted for consideration by the arbitrator.

The issue of one vs. three arbitrators: Comments varied widely on this issue, with some preferring the efficiency of a single arbitrator and others preferring the benefits of having three arbitrators consider the positions. It is noted that many critical and complex arbitrations are decided by a single arbitrator and there are significant efficiencies to be gained. Industry Canada has therefore set one arbitrator as the default unless both parties agree to a three-arbitrator tribunal, or the Appointing Committee, at the request of one of the parties and after hearing submissions from the parties, determines that three arbitrators should be appointed as the arbitral tribunal.

The use of short form vs. long form procedures: In general, new entrants supported options that result in an expedited process. Others argued the importance of allowing sufficient time to fully present arguments and relevant data. The Department has established a single timeline which will allow the opportunity for consideration of the critical issues. It should be noted, however, that the timelines attributed for each step of the process are expected to be maximums and the rules encourage the arbitrator to set the timelines for each step so that the dispute can be resolved as expeditiously as possible.

The Law of Ontario as the default: Although there were some diverging views on this issue, most stakeholders agreed with using the Law of Ontario as the default in situations where the parties cannot agree on which provincial law shall apply. As originally proposed, the Law of Ontario will be the default applied to the arbitration hearings if the parties have not agreed to apply the laws of a different province (e.g. the province where the tower in question is located). This decision does not, however, affect the location of the hearings, which will be determined by the agreement of the parties and, if agreement cannot be reached, by the arbitrator.

The issue of confidentiality: An issue clearly identified as being of importance to many stakeholders was that of confidentiality. In general, arbitrations are private proceedings and all parties are required to keep the proceedings confidential. However, the Department must also ensure that arbitrators have the information required to make informed and efficient decisions.

Section 6.5 of the Rules provides that summaries or extracts from final decisions will be recorded and retained by ADR Chambers to assist future arbitral tribunals. When information from past arbitrations is deemed relevant to another arbitration by an arbitral tribunal, it may be released to the parties involved in the other arbitration, with commercially sensitive information removed, so that the parties may review it and make submissions thereon.

Defining ancillary equipment and services: The Department agrees with stakeholders who suggested that the term ancillary equipment and services needed to be defined in the Rules. A definition has been added.

The scope of the Rules: Many comments were received regarding the scope of information to be considered by the tribunal. In response, the Department has revised this section of the Rules to state that the tribunal shall consider market information and relevant economic data from Canada and may consider international market information and economic data. Also, it has been clarified that any interpretation of the Rules will be subordinate to the conditions of licence.

Technical feasibility: The Department expects that roaming and sharing will be technically feasible in the vast majority of cases. Where parties disagree as to the technical feasibility of sharing a site, they may request that Industry Canada make a ruling on the issues prior to arbitration. Accordingly, the Rules are intended to be used to solve business disputes and arbitrators can proceed on the basis that technical feasibility is not an issue.

Conclusion

The Department has designed these Rules to balance the requirements of all stakeholders. The Department recognizes the need for an expeditious process in order to minimize the cost to each party while allowing sufficient time to produce a well-reasoned decision.

The conditions of licence for all radiocommunication carriers currently authorized under the Radiocommunication Act are hereby amended. The new conditions of licence contained in CPC-2-0-17 will take effect and form part of the conditions of licence for all radiocommunication carriers effective on the date of publication of this notice in the Canada Gazette.

Original signed on November 21, 2008

_________________
Michael D. Connolly
Director General
Radiocommunications and Broadcasting Regulatory Branch