Ottawa-based telecom Distributel is the latest independent internet service provider to be acquired by market giant Bell Canada BCE-T.
In a statement late Friday, the companies said the deal would support Distributel’s growth strategy in the residential and business segments for internet services. Bell said the acquisition will further its efforts to provide customers with more service options.
“Our teams remain focused on serving our customers with excellence across all our brands as we leverage Bell’s resources to expand and enhance our product offerings,” said Distributel chief executive officer Matt Stein, who will remain in charge of the company after the purchase.
The financial details were not disclosed. The acquisition is subject to regulatory approvals. Bell declined to comment further.
Representatives of independent communications companies said the deal reflects what they called the anti-competitive nature of policies set by the Canadian Radio-television and Telecommunications Commission.
“Distributel has vocally opposed Bell in terms of wholesale rates and other arenas, like site blocking,” said Andy Kaplan-Myrth, vice-president of regulatory and carrier affairs for TekSavvy Solutions Inc., a telecom based in Chatham, Ont. “This acquisition is a clear loss of independence that will prevent them from taking those positions in the future.”
Distributel and TekSavvy are among the country’s largest independent service providers.
In a recent letter to the CRTC, TekSavvy renewed its warnings that small telecommunications companies would go out of business or be acquired in the current telecom landscape, leaving consumers with fewer options and higher bills. The company alleged in its letter that the big telecoms engage in predatory pricing, selling internet to their own flanker brands at cheaper rates than they charge independent competitors.
“It is clear that the incumbents’ predatory pricing strategy is having its desired effect: Wholesale-based competitors are unable to compete on price and their businesses are therefore unsustainable, so they are exiting the market,” Mr. Kaplan-Myrth wrote in the letter.
Geoff White, executive director and general counsel of the Competitive Network Operators of Canada, said recent CRTC rulings have led to a string of takeovers of small providers.
In February, Bell Canada acquired EBOX, an internet, telephone and television service provider based in Longueuil, Que., and in July, Quebecor Inc. bought VMedia, an independent internet and television provider with most of its customers in Toronto.
Mr. White called on Ottawa to direct the CRTC to provide a more competitive landscape for small telecoms after Friday’s announcement.
“The loss of independent competitors to large incumbents who have relentlessly attacked and weakened the CRTC’s wholesale access framework is worrisome, because home internet prices have been on the rise, and we expect that trend to continue and worsen with each acquisition,” Mr. White said in a statement.
The deal arrives in the midst of Rogers Communications Inc.’s contested takeover of Shaw Communications Inc. Given those ongoing proceedings, “this has to be a wake-up call about telecommunications and affordability,” Mr. White said in an interview.
The criticism stems from a CRTC ruling last year that set the rates for wholesale internet services at a price some observers called untenable for small providers.
In 2019, the CRTC reduced the maximum wholesale internet rates big telecoms would be able to charge smaller internet service providers for access to their broadband networks in an attempt to stimulate competition. After appeals from the incumbents, the CRTC reversed its decision last year, saying the reduced rates included errors and that it would be “irresponsible” to implement them.
In May, the federal cabinet upheld the CRTC’s final decision. However, it said the CRTC “must take action to have more timely and improved wholesale rates available.” Independent telecoms said Ottawa was putting too much faith in the regulator.
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Irene Galea