LILLEY: How the secret TTC-Rogers deal came about

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It’s absolutely embarrassing for Toronto not to have reliable cell service on the subway. Despite being the country’s largest city, Toronto is years behind Montreal and at least a decade behind Vancouver in this regard.

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Even Ottawa’s ailing LRT system, which doesn’t run trains, allows people stuck in the system to use their phones.

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A month ago, Rogers announced that with the TTC subway deal, they would buy out the company’s contract. Last week we found out that they received a secret ten-year contract extension as part of the deal.

It’s a great move for Rogers, but a questionable one for the TTC, who don’t have the best track record in that regard. For that reason, Rogers’ deal to buy out the contract is to some extent welcome, even if the way it came about leaves many unanswered questions.

“Sometimes in politics you have to pick the best option from a bunch of bad options,” a source close to the deal described how we got to this point.

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The shrewd TTC officials agreed to a terrible deal with BAI Communications in 2012. The country’s largest transit agency awarded a contract giving exclusive rights to build a connectivity system on the subway to an Australian company that did not provide cell phone service in Canada.

The only reason for this? BAI offered them more annual payments than any other company; Heck, the service was a source of income for the TTC.

More than ten years after signing that deal, Rogers says the existing system is so bad that Rogers can’t immediately get all of its customers on the TTC network, let alone the other wireless carriers. According to Rogers, the system is so weak that allowing full access to Rogers, Bell and Telus customers at this time would cause the system to crash.

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As a Rogers customer, the best I can hope for is being able to use my cellphone on the subway in late 2023 or early 2024. The company says it will take two years to build a system that supports all major wireless carriers.

Given the poor state of the system, there is an argument that the TTC should have simply terminated the contract with BAI. According to sources, the legal position of the TTC board and management was that the company had done just enough not to be classed as a breach of contract and that trying to dump it and find a new supplier would have cost taxpayers a significant amount of money.

That made it the best of a bunch of bad ones for one of Canada’s largest telecom companies to buy out the contract.

At various points in time, Rogers, Bell and Telus – either individually or as a group – had attempted to buy out BAI. None of them were willing to put their customers on a system that didn’t work across the subway system, and endure the hassle that would come from customers blaming their carriers, not BAI.

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Each time, offers to buy out or replace BAI have been turned down.

At one point, an application to sell was even made to the Canada Pension Plan Investment Board, BAI’s majority shareholder at the time, but was also denied. Things changed last spring, and Rogers began negotiations to buy the company. They also began secret negotiations with the TTC.

In June, Rogers submitted a term sheet to the TTC; In July, the board was presented with a draft offer and asked to delegate authority to negotiate and enter into an agreement with Rick Leary, CEO of TTC, and Michael Atlas, general counsel.

The problem with this is that the public only found out about it on April 11, 2023. She only found out about the ten-year contract extension until the end of 2042 last week.

Public procurement requires a certain level of transparency; They require a level playing field. There are enough red flags to make it seem like this didn’t happen, with the TTC, its board and the city at large, and not with Rogers.