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The Federal Court has agreed to hear TekSavvy Solutions Inc.’s appeal of a controversial ruling by Canada’s telecom regulator on wholesale broadband rates.

In May, the Canadian Radio-television and Telecommunications Commission (CRTC) reversed its own 2019 decision lowering the rates large phone and cable companies can charge smaller internet service providers (ISPs) for access to their networks.

The decision sparked outrage among small internet-service providers including Chatham, Ont.-based Teksavvy, which is also petitioning the federal cabinet to reinstate the 2019 decision and to remove CRTC chairman Ian Scott.

In order to encourage competition in the internet market, the telecom regulator requires larger providers to sell network access to smaller players at regulated rates. The independent ISPs then sell service to their own customers.

In August, 2019, the CRTC slashed the rates that the large telecoms can charge and ordered them to make substantial retroactive payments – at the time totalling an estimated $325-million, according to court documents – to third-party operators to compensate them for the higher, interim rates that had been in place since 2016.

The ruling prompted legal and regulatory challenges from the large telecoms, who argued the new rates were so low that they would stifle network investments. Both the Federal Court of Appeal and the federal cabinet declined to overturn the CRTC’s ruling, leaving the final decision up to the regulator itself.

After a lengthy review, the commission reversed its 2019 decision, saying that it found significant errors. The CRTC opted to largely maintain the interim rates that have been in place since 2016, with some adjustments.

The CRTC’s reversal prompted Teksavvy to scrap its plans to enter the wireless market and to pull out of an auction for 5G airwaves because of insufficient funds.

In court documents, the independent telecom argues that the regulator erred by reverting to the 2016 rates instead of again going through the process of calculating the cost of providing service.

The Federal Court of Appeal on Wednesday granted Teksavvy leave to appeal the CRTC’s decision. A spokesperson for the CRTC declined to comment.

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