Canada’s large telephone and cable companies are asking the federal cabinet to intervene in a CRTC ruling that requires them to lower the rates they charge smaller internet providers for access to their networks.
BCE Inc. filed a petition to the Governor in Council on Wednesday, arguing that the August ruling by the Canadian Radio-television and Telecommunications Commission would hamper investment in infrastructure, particularly in rural and remote areas. The telephone company is asking cabinet to overturn the decision and reinstate the previous rates.
Meanwhile, a group of five cable operators – Rogers Communications Inc., Shaw Communications Inc., Québecor Inc.’s Videotron Ltd., Cogeco Communications Inc. and Eastlink owner Bragg Communications Inc. – filed a separate petition to the Governor in Council on Wednesday. They’re asking cabinet to send the decision back to the CRTC for reconsideration and to cancel any retroactive payments that are owed to independent internet service providers (ISPs).
Telus Corp. is also petitioning cabinet to send the decision back to the CRTC.
The CRTC requires large telecoms to sell wholesale access to third-party operators such as Distributel and TekSavvy, which then sell internet services to their own customers. The system is meant to encourage competition in the market.
In August, the commission lowered the final rates that the larger players are allowed to charge third-party operators for access to their networks and ordered the larger companies to make retroactive payments to compensate for the higher prices that had been charged since the commission set interim rates in 2016.
The phone and cable companies filed a notice of motion with the Federal Court of Appeal and last month were granted a temporary stay on the ruling. That means that, for the time being, they won’t have to make retroactive payments to ISPs, which the phone and cable operators estimate would total $325-million, according to court documents. The court appeal and the cabinet appeal are distinct, parallel processes that seek different relief from different bodies, a Shaw spokesperson said in an e-mail.
The large operators have complained that the new rates are so low that they would have to reconsider some of their planned network investments. Rogers said it would re-evaluate investments in rural broadband, while BCE said it would be scaling back its planned rural internet improvements by 200,000 households.
The appeal to cabinet comes shortly after a federal election campaign in which several political parties made promises to reduce cellphone and internet bills. The Liberal Party vowed to bring cellphone bills down by 25 per cent within four years if re-elected, while the New Democrats pledged to cap cellphone and internet bills at the global average of countries in the Organization for Economic Co-operation and Development.
Matt Stein, chief executive officer of Distributel and chair of the Canadian Network Operators Consortium, a lobby group for independent ISPs, called the appeal a delay tactic that’s unlikely to succeed.
“The incumbents are trying everything they can to delay a decision they don’t like,” Mr. Stein said in an e-mail.
He added that Canadians have become skeptical of the incumbents’ threats to withhold broadband connectivity from rural communities. “They have suggested calamity before and it’s in their interests to do it again here.”
BCE argued in its petition that it’s the ISPs, and not Canadian consumers, that benefit from the CRTC’s August ruling. The smaller internet providers were already flourishing under the previous rates, offering consumers services that are 15 per cent to 35 per cent cheaper than larger providers and building their market share, BCE said.
After the CRTC’s announcement in August, TekSavvy made the decision to offer 85 per cent of its customers either lower rates or upgrades to their internet plans.
The five cable operators argued in their petition that if the CRTC ruling is upheld, it will threaten the successful implementation of next-generation 5G wireless networks in Canada.
In 2015, BCE asked the federal cabinet to review a CRTC decision forcing it to allow small internet providers to access its highest-speed fibre broadband services. The company argued that the ruling would lead to lower investment, but the government rejected the appeal.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.