By Ahmad Hathout
Several internet service providers have filed petitions asking cabinet to send back a decision by the CRTC this summer that refused to back down on letting Rogers, Bell and Telus (Big 3) access the wholesale internet regime.
Rogers, SaskTel, Cogeco, Eastlink, the Competitive Network Operators of Canada (CNOC), and TekSavvy filed petitions in September – made public on Friday – requesting that cabinet send back for reconsideration the decision by the CRTC in June refusing to heed their advice to review and vary the commission’s final framework in August 2024.
That framework allows the Big 3 to access the internet networks of their competitors, big and small, outside of where they operate networks, which the commission says makes them “new” entrants that are only expected to take modest market share for increased competition. The only protection is a five-year access moratorium for new Telus and Bell fibre builds, which Rogers says is unfair because it leaves open for access its own next-generation, multi-billion-dollar, multi-gigabit-speed cable networks.
The petitioners argue categorizing the Big 3 as “new” entrants – when they are national incumbents – is an error that will have negative ramifications for smaller service providers, erect barriers for actual new entrants, and make it harder to incentivize, and disincentivize, investments in new networks.
Ultimately, they say the final wholesale decision is, in some form, flies in the face of the 2023 policy direction from cabinet that requires the CRTC to make equitable wholesale regulation and consider reducing, not increasing, barriers for new, regional and smaller telecoms – never mind that the CRTC has yet to set final rates for that access.
“Either current wholesale rates are above cost and too high to sustain competition, or the retail rates of the large providers are below their respective costs, creating a margin squeeze that smaller ISPs cannot compete against,” CNOC and TekSavvy said in their joint submission, concerned that larger players will price smaller competitors out of the market and then raise prices.
“Independent competitors are needed to disrupt the tight oligopoly for the supply of Internet services,” they added. “Without space to compete, the independent competitors – many of which CNOC represents – will find themselves unable to operate and will be forced to sell or shut down service.”
Rogers additionally asks that cabinet extend the five-year access moratorium to its new cable networks or impose a speed cap of 1.5 Gbps on mandated wholesale access.
“The Commission’s decision cannot be allowed to perpetuate years of regulatory asymmetry that has already unjustly distorted markets and delivered an undue preference to one group of HSA providers over the other,” Rogers said, alluding to the fact that cable networks have historically shouldered the bulk of wholesale subscribers.
The petitioners’ arguments are not new; they can be found in those same review-and-vary applications arguing same.
What is new is that cabinet will now have the entire record to comb through. Before the CRTC denied the review-and-vary application, it denied a cabinet recommendation of then Industry Minister Francois-Philippe Champagne to consider banning the Big 3 from mandated access to the aggregated last-mile fibre regime of Bell and Telus in Ontario and Quebec – a CRTC policy that was interim at the time. The basis of the decision was that Telus – the only one of the Big 3 to support the CRTC policy – was using the fibre network of Bell to launch gigabit internet service in Ontario and Quebec.
Less then a month after the regulator denied the review-and-vary applications, cabinet, on the advice of now Industry Minister Melanie Joly, declined a petition – automatically triggered by the CRTC’s decision – asking it to reverse any commission decision that refused to ban the Big 3 from the regime. The decision gave the industry a bit of whiplash because some expected cabinet to take a uniform position on the matter.
Cogeco and Eastlink are now asking the Federal Court of Appeal to look at whether cabinet skimped on its duty to provide sufficient justification for the denial.
In the meantime, the regional competitors were granted an appeal court hearing that challenged the CRTC’s denial of their review-and-vary application.
“Time is of the essence,” Cogeco, Eastlink and SaskTel said in their joint petition to cabinet in September. “Following significant consolidation of independent resellers and regional players in recent years, the Big Three are poised for rapid expansion, leveraging bundles to secure a substantial market share without making a dime of investment. Canadians are already experiencing the negative consequences of this decision, with several carriers regretfully announcing that they can no longer continue investing in expanding broadband services.”
