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BCE Inc. and Canada’s biggest cable companies are heading to court to seek an appeal of last month’s CRTC ruling on wholesale internet rates.

A group of five cable operators – Rogers Communications Inc., Shaw Communications Inc., Quebecor Inc.’s Videotron Ltd., Cogeco Communications Inc. and Eastlink owner Bragg Communications – filed a notice of motion with the Federal Court of Appeal on Friday. Separately, telephone company BCE, which is Canada’s largest communications company, also filed a motion seeking leave to appeal.

The companies are all challenging an Aug. 15 ruling of the Canadian Radio-television and Telecommunications Commission, which set final rates for what large internet service providers (ISPs) can charge smaller players for access to their networks.

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The CRTC requires large telecoms to sell wholesale access to third-party operators − such as TekSavvy and Distributel − who then sell internet service to their own customers. The system is intended to encourage greater competition in the home internet market.

Last month’s ruling set lower final rates for certain wholesale services and also ordered the large providers to make retroactive payments to the third-party operators to account for the higher prices charged since the CRTC set interim rates in 2016.

The decision set off a storm of controversy in the telecom industry as big cable and telephone operators complained about large retroactive payments and said the continuing rates are so low that they would have to reconsider certain network investments.

BCE has specifically said that it was cutting back on rural internet improvements, drawing the ire of Federal Minister of Innovation Navdeep Bains, who said he was “deeply disappointed” by the decision. Smaller players and consumer-interest groups have also fired back at the large telecom companies, in some cases accusing them of holding rural Canadians hostage.

Parties to a CRTC ruling have 30 days from the decision to seek leave to appeal in the Federal Court of Appeal. Friday was the last business day before that deadline.

In a notice of motion, a copy of which was obtained by The Globe and Mail, the cable companies argue that the CRTC made multiple errors of law and exceeded its jurisdiction.

“If allowed to stand, [the ruling] will create significant and irreversible market distortions while serving as a powerful disincentive to innovation and investment by the cable carriers. Ultimately, Canadian consumers will suffer the consequences,” the companies said in the court filing.

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Among other arguments, the companies say that the CRTC followed “outdated guidelines and policies that have no applications to the technologies currently deployed … in the face of strong arguments and evidence demonstrating that those guidelines and policies are unreliable.”

They state that the CRTC engaged in “results-oriented” reasoning and methodologies and failed to take into account a policy direction from the federal government that requires the regulator to encourage companies to invest in their own networks. (That policy direction is from 2006, and the government issued a new one with other goals – including consumer protection and affordability – earlier this year, but both directions are on the books.)

The cable companies said if the ruling stands, they will be required to pay more than $225-million to third-party ISPs in retroactive payments. In their notice of motion, they note that the order does not require the smaller ISPs to pass along any of the repayments to their customers through rebates or discounts.

In a motion seeking leave to appeal, BCE made similar arguments as those of the cable companies. It also called the retroactive payments an “unconstitutional tax,” arguing only Parliament and provincial legislatures can impose taxes.

Also Friday, TekSavvy said it plans to offer 85 per cent of its customers either lower prices or upgrades on their internet plans and cited the CRTC ruling as its reason for doing so.

“Of course they have appealed," Matt Stein, chief executive of Distributel and also chair of the Canadian Network Operators Consortium, a lobby group for independent ISPs, said on Friday. “This is part of their long-standing strategy to delay and to deny Canadians the competitive internet market they deserve.

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“Consumers are already benefiting through lower rates and higher speeds being offered by competitive ISPs that only were able to do this due to this decision. In other words, competitive ISPs have brought this benefit directly to Canadians faster than the incumbents were even able to appeal it,” Mr. Stein said.

The CRTC appeal comes as the telecom industry comes under increased scrutiny during the federal election campaign. NDP Leader Jagmeet Singh said on Friday that a New Democratic government would set a cap on prices for cellphone and internet services.

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