Canada’s telecom regulator has granted large cable and telephone companies a temporary stay on a ruling that would have forced them to lower the rates they charge smaller internet providers for access to their networks.
The Canadian Radio-television and Telecommunications Commission said Monday that the temporary stay will be in place until the regulator completes a review of its earlier decision to reduce wholesale broadband rates.
Canada’s large phone and cable companies are required to sell network access to third-party service providers such as TekSavvy Solutions Inc. and Distributel Communications Ltd., who then sell internet service to their customers. The system is meant to encourage competition in the internet market.
In August, 2019, the CRTC lowered the rates that the larger telecoms can charge independent internet service providers and made the new rates retroactive to 2016. The commission also ordered the large telecoms to refund some of the fees that the ISPs have paid since 2016. (The phone and cable companies estimated at the time of the decision that these retroactive payments would total $325-million, according to court documents.)
The large telecoms appealed the decision to the Federal Court of Appeal, which granted them a temporary stay on having to implement the new, lower rates and make retroactive payments to the smaller ISPs. That stay was lifted when the court dismissed the large telecoms' appeal on Sept. 10.
Since then, TekSavvy, Distributel and the Competitive Network Operators of Canada, an industry group representing independent ISPs, have been pushing for the lower rates to be implemented and the retroactive payments to be made.
The federal cabinet sided with the major telecoms when it commented last month that the reduced rates could stifle investments in networks, but left the final decision up to the CRTC.
Desjardins analyst Maher Yaghi said the CRTC’s decision to grant a stay suggests the rates are likely to change once the regulator has completed its review.
“We further anticipate that these rates will be higher than those mandated in [August, 2019], consistent with the pressure the government has put on the commission recently,” Mr. Yaghi said in a note to clients Monday.
“The decision published today by the CRTC is also consistent with our view that regulatory scrutiny could be lighter amid/following the pandemic as telecom companies were significant players in helping the population and the government cope with COVID-19,” Mr. Yaghi wrote.
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