Canada’s large telephone and cable companies are requesting that the CRTC reconsider an August ruling that orders them to lower the rates they charge smaller internet service providers (ISPs) for access to their networks.
The Canadian Radio-television and Telecommunications Commission requires larger telecom companies with their own networks to sell wholesale access to third-party operators such as Distributel and TekSavvy, who then sell internet services to their customers. The system is intended to foster competition in the internet market.
Last summer, the CRTC lowered the final rates that larger telecom providers are allowed to charge third-party operators for access to their networks. It also ordered the telephone and cable operators to make large retroactive payments – totalling an estimated $325-million, according to court documents – to make up for the higher prices that had been charged since the commission set interim rates in 2016.
In an application to the CRTC, BCE Inc.'s Bell Canada argues that the commission’s approach to setting rates for wholesale high-speed access is “irrevocably broken” and yields rates that are below the company’s costs. If allowed to stand, the CRTC’s order will have a detrimental impact on future investment, particularly in rural areas, and stifle innovation in new technologies such as 5G, Bell argues.
The company is asking the commission to reinstate the previous rates and do away with the retroactive payments. 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. – have also asked the CRTC to reconsider the rates and retroactive payments.
Friday’s request to the CRTC is just one of several avenues the cable and telephone companies are pursuing in an attempt to quash the August ruling.
BCE and the cable operators have also filed notices of motion with the Federal Court of Appeal, which has agreed to hear their appeals. The court has granted them a stay on the ruling, which means that for the time being they won’t have to make retroactive payments to ISPs.
Separately, the telephone and cable companies filed petitions last month asking the federal cabinet to intervene in the decision.
Matt Stein, chief executive officer of Distributel and chair of the Canadian Network Operators Consortium, a lobby group for independent ISPs, said the incumbents are “clogging up the regulatory system with yet another hollow delay tactic.”
“After delaying and gaming the regulatory process for 3.5 years, the incumbents will stop at nothing to add more time and delay,” Mr. Stein said in an e-mail.
“The effect of these tactics is to prolong the period of time where the big phone and cable companies continue to overcharge Canadians and stall the competitors who aim to lower prices.”
Telus Corp. filed its own application to the CRTC on Nov. 13, at the same time as it submitted its federal cabinet appeal. The Vancouver-based telecom company said in its filing that the CRTC’s August ruling “ultimately results in regulatory uncertainty, which is extremely detrimental for a heavily capital intensive industry such as telecommunications.”
The large operators have said they would have to reconsider some of their planned network investments if the new, lower rates stand. BCE said it would scale back its planned rural internet improvements by 200,000 households, while Rogers said it would re-evaluate its investments in rural broadband.
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