Bell, big cable networks ask government to overrule CRTC on wholesale rates

TORONTO — Canada's largest telecommunications companies formally asked the federal cabinet on Wednesday to overturn a regulatory decision that slashes what they can charge their smaller competitors for access to their high-speed fibre networks.

BCE Inc.'s Bell Canada and a group of other carriers want the government to restore interim wholesale rates and order a further review by the Canadian Radio-television and Telecommunications Commission.

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They also want the government to overrule the CRTC's decision to make the new, lower wholesale rates retroactive to 2016 — a decision that would force them to repay hundreds of millions of dollars collected from wholesale customers.

Those wholesale customers — labelled "resellers" by their detractors and "independent" service providers by their supporters — include TekSavvy, Distributel and VMedia, among others.

The mid-sized and small internet service providers — which collectively serve about one million Canadian households —argue the lower wholesale rates are fair and will help reduce what retail customers pay for their internet.

After years of review, the CRTC set final wholesale rates in August that are up to 43 per cent lower than the interim rates for monthly capacity, and up to 77 per cent lower for access rates.

The big carriers countered that the CRTC's process was flawed and its wholesale rate decision will undermine confidence required to risk billions of dollars to build high-quality networks.

Bell, which has already threatened to reduce its spending on expanded rural coverage because of the CRTC's decision, says in its petition that the rate reductions raises investor concerns to a new level at a critical time for the industry.

"In summary, carriers, industry commentators and the investment community agree that the (Aug. 15) order threatens much-needed investments in broadband infrastructure, with negative consequences for rural and more remote communities, for the timely and widespread deployment of 5G infrastructure, and for the transformation to a greener economy."

A separate but similar petition filed later Wednesday by Rogers, Shaw, Videotron, Cogeco and the owner of Eastlink states, "The promotion of access to high-speed broadband services by all Canadians, the future of Canada’s wireline network infrastructure, and Canada’s place at the leading edge of the digital economy depend on achieving a more appropriate and effective regulatory regime that takes into account the need to foster all forms of competition as well as the importance of incentivizing investment."

The big carriers' latest tactic — an approach to the prime minister and his cabinet through a petition to the "governor in council" — follows a hard-fought election that reduced the Liberals to a minority government.

Although the Liberals campaigned on their record of working towards more affordable prices for telecommunications services — including wireless as well as internet — Trudeau's new cabinet will have to get support from at least one of the opposition parties to push through its future agenda.

The Prime Minister's Office was not immediately available for comment Wednesday on the petitions.

A spokesman for a group representing independent ISPs said in a statement that the large telecom companies are attempting "to slow the progress the CRTC has made for Canadians in terms of choice and lower prices."

Matt Stein, who is chairman of the Canadian Network Operators Consortium and CEO of Distributel, said in an email that he thinks Bell and others have are making a "low-probability play" to prevent a decision they don't like.

"The government and the CRTC are doing the right things to promote more competition in this and other markets," Stein said in an email.

"They should stay the course notwithstanding this typical and unjustified reaction from the incumbents, who seek to limit choice and competition to the detriment of Canadians."

A spokeswoman for the Canadian Radio-television and Telecommunications Commission said it wouldn't have a comment Wednesday but noted that the carriers can also ask for changes through the CRTC's own review process.

The commission advised the various parties on Tuesday that it has extended the deadline for requests to review and vary its decision to Dec. 13. It also noted that the matter is before the Federal Court of Appeal, which is another route for challenging the CRTC's decisions.

This report by The Canadian Press was first published Nov. 13, 2019.

Companies in this story: (TSX:BCE, TSX:QBR.B, TSX:RCI.B, TSX:SJR.B)

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