Eastlink says it is suspending planned upgrades
By Ahmad Hathout
The federal government will not send back the CRTC’s decision to allow the three largest telecommunications companies to ride on the internet networks of others, pointing to competition and lower costs.
“Canada’s new government has a strong mandate to bring costs down and to build one, strong, Canadian economy – one that aligns with our core values as a nation,” Industry Minister Melanie Joly said in a statement late Wednesday.
“According to the policy direction, the CRTC is responsible for considering how its decisions affect all forms of competition and investment, as well as how they foster affordability and lower prices, amongst other factors,” she continued. “Their decision to uphold the mandatory wholesale access framework was based on extensive consultation with experts, the Competition Bureau, and over 300 public submissions.
“Canadians depend on telecommunications services for every aspect of life,” she added. “By immediately increasing competition and consumer choice, the CRTC’s decision aims to reduce the cost of high-speed Internet for Canadians and will contribute toward our broader mandate to bring down costs across the board.”
The decision comes after the Competitive Network Operators of Canada (CNOC), Eastlink, Cogeco, and SaskTel filed a precautionary petition to cabinet asking it review any future decision by the CRTC to maintain mandated access by Rogers, Bell and Telus to the wholesale internet regime. The commission ruled in its final wholesale internet framework decision last summer that the largest players can access the networks of others, so long they are outside of their own operating footprint.
The CRTC ruled on June 20 that it wasn’t going to exclude the largest players from accessing the wholesale internet regime, which triggered the precautionary petition and a challenge to the Federal Court of Appeal. The decision was the second time it decided same, after it refused to implement a recommendation from then-Industry Minister Francois-Philippe Champagne to consider banning the Big 3 from the regime.
On Thursday afternoon, Eastlink’s Lee Bragg, executive vice chair, announced that the company is “suspending further planned upgrades to many smaller communities across Canada. I have instructed our team to take the next 30 days to identify communities that will become unprofitable and therefore require shutdown as a result of this decision. We encourage consumers to reach out to their local MP to voice concerns about this decision and the unintended consequences of losing, not gaining, sustainable competition.
“We are deeply disappointed in the federal government’s decision to allow the country’s largest telcos to access the networks of smaller, regional providers,” he added. “This will have negative and meaningful impacts on competition, counter to the federal government’s own policy to build a strong, connected Canadian economy enabled by facilities-based investment while encouraging real competition that depends on sustainable networks to create more competition. We had hoped that this government, unlike the previous government, would take a more investment friendly approach to decision making.”
Late last night, Cogeco said it was “dismayed by the federal government’s decision to maintain the CRTC’s broken, nonsensical wholesale Internet regime, and is profoundly disappointed by Cabinet’s failure to ensure economic prosperity,” the regional telecom said in a statement late Wednesday.
“It directly contradicts government efforts to promote sustainable competition and drive economic growth,” added Frédéric Perron, president and CEO of Cogeco, in the release. “The CRTC’s current approach undermines choice and affordability, halting crucial innovation and investment vital for Canada’s future. Unless corrected, this policy will have a detrimental impact on consumers and the broader Canadian economy.”
The telecom said it will continue fighting the decision in federal court.
On the other hand, Telus, the only Big 3 telecom in favour of the CRTC policy, said it is pleased the cabinet’s decision.
“This decision affirms that public policy in our country is guided by due process, a national diversity of voices, evidence and the long-term interests of Canadians,” it said. “It sends a strong signal to consumers, businesses and investors that the Canadian regulatory system is robust, transparent and effective in balancing the needs of stakeholders, and enabling government policy.”
Rogers and Bell have claimed the CRTC policy will cripple investments in networks.
“The decision is a shocking reversal from the federal government’s principled position less than one year ago,” Rogers said in a statement. “The Carney government has declared its priority is to build a strong Canada and this decision does the exact opposite. It does not incent Canadian companies to invest in Canada. “Virtually the entire industry, including small and regional providers, urged our elected officials to reverse the CRTC decision. The impact of this decision will include cuts to capital investment, a loss of network construction jobs, and reduced competition which will mean higher prices for Canadians.
“The government immediately needs to reconsider this deeply flawed decision and needs to make sure the CRTC sets rates that don’t further undercut the government’s own economic agenda for Canada,” Rogers added.
On its second quarter earnings conference call Thursday, Bell President and CEO Mirko Bibic said the telco is “obviously disappointed. You don’t think it’s the right decision. But now the focus is on ensuring that all of us who build networks in Canada get fully compensated for the significant costs of building and for the investment risk taken when we build. And that’s what we’re gonna focus on right now.”
Robert Ghiz, president and CEO of trade group the Canadian Telecommunications Association, whose members include Bell and Rogers, said: “Canada is now an outlier among its peers. In other advanced economies, wholesale access is designed to support smaller competitors and new entrants, without eroding the incentives to build and expand network infrastructure.
“This reversal of principle will reduce meaningful competition, limit consumer choice, and slow progress in connecting underserved communities,” he added. “We urge the government to undo the damage caused by this policy and work with the industry to establish a policy framework that supports sustainable investment, facilities-based competition, and long-term benefits for all Canadians.”
