By Ahmad Hathout
Cabinet has declined to overturn petitions challenging the CRTC’s decision to allow the three largest telecommunications companies access to the wholesale internet framework, arguing the regulator has instituted investment protections and has an opportunity to solidify the balance between that and competition by setting final access rates, which are now expected to be released Friday.
“The Governor in Council considers that bringing down costs for Canadians is a key priority and that restricting larger telecommunications service providers from accessing mandated wholesale high-speed access services, as requested in the petitions, would reduce the level of competition and consumer options in the retail high-speed Internet services market,” said the decision, which is dated April 16 but was only made public Thursday.
“The Governor in Council considers that continued investment and innovation in telecommunications networks are crucial and notes the Commission put in place investment protection measures in the Framework Decision and reiterated them in the Decision, and has set cost-based interim rates which include a profit margin,” the decision added.
The decision also notes that the CRTC has yet to release the final wholesale access rates, which are now expected to be released tomorrow.
“The Governor in Council believes the Commission is well placed to monitor the impact of the Framework and notes the Commission’s commitment to continue to do so and to adjust its approach as necessary, including in response to market impacts that undermine the key objectives of the Order,” the decision stated.
Rogers, SaskTel, Cogeco, Eastlink, the Competitive Network Operators of Canada (CNOC), and TekSavvy filed petitions in September 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 argued categorizing the Big Three 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 argued the final wholesale decision, 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.
Despite the cabinet denial, Cogeco, Eastlink and SaskTel were awarded hearings at the Federal Court of Appeal about their grievances with the final wholesale framework.
TekSavvy, Cogeco and Eastlink declined to comment. Rogers deferred to its first quarter earnings call Wednesday, which outlined that the cable giant is lowering its spending this year and for the “foreseeable future” in part due to the regulatory policy of allowing the Big Three to access the wholesale internet framework.
“We commend the federal government for reconfirming the CRTC’s wholesale fibre framework,” Telus, the only telecom among the Big Three to support the policy, told Cartt. “This decision validates the core principles of evidence-based policy, and powerfully reinforces Canada’s commitment to robust competition and critical, nation-building infrastructure investment. TELUS will continue to support Canadians in their quest for more choice, and we reinforce our commitment to connecting and leveraging technology for the benefit and well-being of all Canadians.”
