On the morning of July 8, 2022, beginning around 5 a.m. eastern time, 12 million Rogers subscribers and more than 25 per cent of our nation’s population lost all wireless and wireline connectivity. Some businesses couldn’t take payments, families couldn’t reach their loved ones and many government functions – including the arms-length CRTC who oversees our national telecommunications policies – couldn’t be reached.

Additionally, if you were part of a growing cohort of condominium corporations who inherited a single service provider contract for your internet communications infrastructure from your developer (otherwise known as bulk contracts) – and that contract happened to be with Rogers – your entire community was disconnected. So ubiquitous and vital has our internet connectivity become, being without it brings many of our lives to a standstill. Especially post-pandemic with many working from home, not being able to connect meant loss of income and potential disaster if responsible for critical issues.

While having no internet, TV, or news could be considered a blissful respite from the constant stream of information we consume, for condo corporations that are increasingly using internet connected sensors to monitor water leaks, the internet to connect fire panels and VOIP emergency phones in elevators, this bliss could very quickly become life-endangering and a significant crisis in the making.

Policies and choice

Until relatively recently it was standard development practice to have the major telcos in each region build into every new condo at the telco’s expense. This ensured that: a) each resident had their choice of provider; and b) the building had redundant networks as part of its infrastructure, which provided a level of resiliency the community could count on as outages occur.

Additionally, if a resident wanted a telco that hadn’t built in, the corporation had an obligation to work with that resident’s telco of choice and get an appropriate access agreement in place, so the telco could service that resident and community—the end user choice being primary.

Over the past 10 years, however, developers have shifted away from this practice. The reasons for this even being allowed in telecom policy and condo law are complicated but the way it works is simple. In exchange for a significant upfront fee from the telco, developers turn to a single provider for all internet communications services, not only for the common areas, but for individual unit owners (and their tenants) as well. The cost for this service is then passed on through common element fees.

Normally this type of bulk deal for service would require a bylaw and vote by a condo board as it’s usually considered a “substantial change”. By embedding this in the declaration and the common element fees from inception, this democratic provision is avoided. The question remains, however, is this a good thing?

The benefit to the developer is clear. They get a significant extra boost of cash they wouldn’t otherwise receive from the telco. They also reduce their administrative and building costs slightly by not having to build infrastructure to accommodate numerous telcos.

For the telco who has been selected, there is also a huge benefit. While they will lose money for the first few years, they have a guarantee of cash flow and profit at some point in the contract and, effectively, a monopoly. Most consumers are resistant to moving providers so even when bulk contracts are over (if not renewed), then chances are the incumbent will retain the vast majority of subscribers in perpetuity.

From a consumer standpoint, there is also a benefit in that these bulk internet fees are lower than what would typically be available in the marketplace, potentially saving them money if this was a service they wanted anyway.

So far so good. What’s the problem then?

Bulk contracts: an overview of issues

First, as was made evidently clear from the Rogers outage, it means an entire condo community – sometimes the size of a small town – can be without connectivity and, if this happens, their safety systems will be affected. This brings into sharp focus numerous liability issues should something go wrong. Outages occur to every telco and if these systems were on another telco’s network that had one, you’d end up with the same result. However, not having other networks available removes the corporation’s choice to divvy up these services amongst various telcos to minimize an outage’s detrimental effects.

Second, buildings and individual condo units are increasingly being valued based on their communications resiliency and options. Having a single network feed into a building lacks this in spades and potentially lowers its value.

Third, “end user choice” is denied. Most people like to choose the businesses they work with. By inheriting this deal, the condo board is now responsible for locking all their residents into a deal they neither agreed to nor might want. A house owner would never accept a mayor of a town telling them they have to buy from “x”, so why should a condo owner have less autonomy because of the built form of the home they have?

Fourth, as time and innovation marches on, a corporation could be stuck with less than ideal service and no way out.

Finally, while another telco could build into the community if a resident or the condo board requested, there is no incentive for them to do so. What most people want is access to the internet so they can work, browse the internet and stream their favourite shows. If everyone is already paying through their common element fees, a new telco has no hope of making back its investment to bring its network to the community as there’s no market to compete for.

Additionally, most bulk contracts have clauses that allow the incumbent to match or beat any new telco’s offer once the initial agreement has expired. Since the incumbent has already sunk its costs and become profitable, they can do this easily and retain the contract – ensuring a lack of resiliency continues.

Condo boards have a duty to their residents and are always having to balance the good of the collective versus the rights of the individual. Boards are also bound to ensure the ecosystem of their buildings is as resilient as possible. Determining what kinds of services we provide for our residents requires carefully reviewing the opportunity, the risk, the economics and the dexterity with which we can change those decisions as innovation progresses.

Todd Hofley is the president of Toronto Standard Condominium Corporation 2164. He is also the VP of Policy and Communications at Beanfield Metroconnect.