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'Our view was that in certain cases, the rates did not strike the necessary balance,' Navdeep Bains, the Minister of Innovation, Science and Industry, seen here in Ottawa on June 17, 2020, said Wednesday.Sean Kilpatrick/The Canadian Press

The rates that large cable and telephone companies charge smaller internet providers for access to their networks need to take into account the cost of building the infrastructure, Canada’s Industry Minister says.

Speaking Wednesday at the 2020 Canadian ISP Summit, a virtual conference for independent internet service providers (ISPs), Navdeep Bains addressed a recent cabinet decision not to overturn an August, 2019, ruling by the Canadian Radio-television and Telecommunications Commission.

Instead, the federal cabinet deferred to the telecom regulator’s own continuing review of its 2019 decision to lower the rates that large telecoms are able to charge smaller ISPs.

However, independent ISPs were caught off guard by comments from the federal cabinet suggesting that the rates announced by the CRTC in 2019 were too low and would hamper investment in broadband networks.

“Our view was that in certain cases, the rates did not strike the necessary balance," Mr. Bains, the Minister of Innovation, Science and Industry, said Wednesday. “At the end of the day, the rates need to account for the underlying cost of the infrastructure. We want wholesale ISPs to have access to the services they need to compete and grow, while ensuring the incumbents have rates that enable a fair return.”

Canada’s large telecoms are required to sell network access to third-party operators such as TekSavvy Solutions Inc. and Distributel Communications Ltd. Those companies then sell internet service to their own customers.

In August, 2019, when the commission lowered the rates that the larger telecoms can charge independent ISPs, it made the new rates retroactive to 2016. The CRTC also ordered the large phone and cable companies to refund some of the fees that the third-party operators have paid since 2016.

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. (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 CRTC has granted the large telecoms a new temporary stay, until it has completed its review. TekSavvy has appealed that stay at the Federal Court of Appeal, arguing that it is flawed and unreasonable.

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