Petition to cabinet also coming; Telus ramps up public relations campaign
By Ahmad Hathout
Cogeco and Eastlink have filed Friday a legal challenge to a CRTC decision that allows the three largest telecoms to use the wholesale internet regime, a move that was teased in the aftermath of the June 20 ruling.
The legal arguments center on the decision’s alleged friction with the 2023 policy direction from cabinet: that the CRTC allegedly erred in characterizing Rogers, Bell and Telus – the Big 3 – as “new” service providers because they would be riding on competitor networks outside of their operating footprint; that it failed to consider the alleged barriers it the policy erects for smaller competitors; and that the commission allegedly ignored “key arguments and evidence” they submitted in support of their review and vary application against the final internet framework, which the CRTC rejected.
“The CRTC perversely considered how to make things easier for the Big Three, threatening their much smaller competitors’ ability to compete, to invest, and ultimately, to stay in business,” the leave to appeal application reads. “It simultaneously reduced the Big Three’s incentives to invest in their own wireline infrastructure as they can simply grow by offering their services over Big Three peer and smaller competitor networks – at a time when network investment is critical to the Canadian economy.”
Cogeco and Eastlink have long maintained that allowing the Big 3 to access the wholesale internet framework – which they say was intended to assist only smaller entrants – would be devastating to their businesses. Over the past couple of years, wholesale internet service providers have been gobbled up by larger ones, which the smaller competitors blame on wholesale rates that are too high to compete with the very service providers from which they lease capacity.
“The Internet services market is … concentrated, increasingly so since 2019,” the applicants write. “This has coincided with a ‘dramatic decline’ in the presence and market share of service-based competitors, caused in part by the acquisition of these competitors by the Big Three in particular.”
The CRTC noted in its June decision that it expects the incumbents to grow only moderately as a result of the ruling.
The commission “acknowledged that permitting the largest incumbents to offer wireline-wireless bundles out-of-territory ‘may represent an increased challenge for some companies’ and even accepted that the Big Three were projected to grow their market share as a result of the Policy,” the applicants write.
The applicants are hoping the court sees some contradictions between the CRTC’s decision and what cabinet wrote to the commission when it asked it to reconsider allowing the Big 3 to access the last-mile fibre regime.
In order to ignite high-speed internet competition in Ontario and Quebec, the CRTC ruled in November 2023 that competitors should have interim mandated access to the bundled last-mile fibre networks of Bell and Telus, which was then expanded across the country with the final wholesale ruling in August 2024.
Bell, in the meantime, petitioned cabinet, arguing that the decision would torpedo its investments in these fibre networks. Later that year, cabinet agreed with the telco on one thing: that maybe the CRTC shouldn’t allow the Big 3 access to the regime, in part out of concern for smaller providers.
The reconsideration recommendation outlined that the Big 3 are disproportionate in size relative to other service providers; that they collectively exercise market power in the mobile wireless market; and that these services are often bundled with internet.
The CRTC would reject the recommendation, but not before it triggered the review and vary applications, including from Rogers, the Competitive Network Operators of Canada (CNOC), and TekSavvy. The asks included a careful examination of what this type of access will do to investments and wholesale competitors.
“As the court process unfolds, there remains an urgent need for the Cabinet to intervene immediately to fix the CRTC’s flawed policy,” Paul Cowling, Cogeco’s chief legal and corporate affairs officer, said in a statement.
Cogeco said there will also be a cabinet petition forthcoming.
“At this critical time, Canadians need more competition, more affordable services, more choice in the market – beyond the Big Three. Critically, Canada needs more investment in our networks so that we have the digital infrastructure to power our economic ambitions,” Cowling added.
Telus stands alone among the Big 3 in its support of the CRTC policy. In light of the last-mile fibre decision, the Vancouver-based telecom quickly started riding on Bell’s network to launch gigabit internet services in Ontario and Quebec, which the CRTC used to justify its decision not to implement cabinet’s recommendation.
And Telus continues to aggressively push the narrative that the policy is good for competition. On Thursday, the telco said 400,000 Canadians and counting have signed a public campaign to combat competitor challenges to the CRTC policy.
“The resounding voices of 400,000 Canadians – a number that is increasing by the day – cannot be ignored,” Telus president and CEO Darren Entwistle said in a press release. “Their clear desire for increased internet choice underscores the importance of offering customers a diversity of services and providers.”
Also Thursday, Telus told media that Cogeco is riding on its wireless network – something not disclosed by the competitor – to launch its mobile virtual network operator (MVNO) business.
In light of that, it called Cogeco’s opposition to wholesale internet access a “noteworthy irony.”
