By Ahmad Hathout
Cogeco and Eastlink are challenging cabinet’s decision not to intervene in the CRTC’s refusal to exclude the three largest telecommunications companies from accessing the internet networks of their competitors.
The basis of the judicial review request is simple: that cabinet, through the recommendation of Industry Minister Melanie Joly, allegedly did not provide the legally required justification for declining their petition to reverse a policy that they say creates an “existential” threat to their businesses.
“Instead of explaining and justifying its decision to sit on the sidelines, the [Governor in Council (GIC)] had a Minister send out a five-paragraph press release,” says the judicial review application, dated September 2. “In this laconic decision, the GIC fundamentally misapprehended the matter submitted to it; failed to grapple at all – let alone meaningfully – with key submissions; and failed to acknowledge – still less explain and justify – a startling policy U-turn.
“In manifestly failing to live up to the basics of the culture of justification in favour of blind deference toward the CRTC, the GIC effectively abdicated its responsibilities under s. 12(1) of the Telecommunications Act.”
The applicants more specifically allege that the press release, which touched on the price benefits of more competition, does not address the narrow request made in their petition and does not address the “numerous medium- and long-term harms of an overly broad eligibility to use the Policy, for both consumers and small and regional ISPs.
“It failed to acknowledge or explain its own inconsistency with the 2023 Policy Direction and the 2024 Reconsideration order.”
When cabinet released its August 7 decision, it shocked several telecoms in part because it marked a departure from the position of the previous industry minister, Francois-Philippe Champagne, who specifically asked in a reconsideration order that the CRTC contemplate banning the Big 3 – Rogers, Bell and Telus – from participating in the wholesale internet regime that opponents of the Big 3 access policy argue was intended to enhance competition and market access for smaller players, not provide a leg-up to the incumbents.
“It amounted to a major change from the GIC’s past positions which, at the very least, required explanation and justification – both of which were absent,” the application says.
“The GIC’s refusal to intervene to exclude the Big Three from accessing wholesale aggregated HSA is thus a startling reversal of the GIC’s prior approach to implementing its stated aims of fostering competition against the Big Three, ensuring the long-term viability of small and regional ISPs, and promoting facilities-based competition in the wireline sector,” it says.
It adds that the Telecommunications Act requires the GIC take a “reasoned position on the merits of a decision by the CRTC in response to the issues raised in any petition under s. 12(1). The GIC cannot discharge this obligation simply by indicating that the CRTC’s decision was based on extensive consultation – all while failing to take any position on, or even addressing, the Applicants’ actual submissions or the GIC’s own past decisions.”
Cogeco and Eastlink are requesting a Federal Court order declaring that the Governor in Council decision is unreasonable, quash it, and send the petition back to the GIC for “reconsideration with appropriate directions.”
The cabinet decision came in response to the “precautionary” petition – which includes the contributions of the Competitive Network Operators of Canada (CNOC) and SaskTel – requesting that cabinet revisit the issue in the event the CRTC, which was going to relook at the issue, does not reverse course on the policy that was left in the final wholesale internet decision in August 2024.
The CRTC rejected both the cabinet recommendation and review and vary applications that requested same. By the time of its final decision on the matter in June, there had already been a cabinet shuffle that saw Joly come into the position of industry minister.
Cabinet’s decision not to get involved came a couple of weeks after Cogeco and Eastlink filed a leave to appeal application against the CRTC’s June decision not to reverse course on the access in question, which triggered the precautionary cabinet petition.
Both Rogers and Bell have asked the federal government to reconsider the decision, saying that such a policy will cripple investment in networks – for Bell, it’s billions of dollars in fibre builds; for Rogers, it’s billions in new cable technology and networks (the CRTC has excluded cablecos from the last-mile fibre access regime – for now). Eastlink said it was suspending planned upgrades and reviewing which communities will become “unprofitable and therefore require shutdown as a result of this decision.”
Telus is the sole telecom among the Big 3 that is firmly behind the policy. The telco has been seeking expansion into eastern Canada with a bundling strategy that includes internet services packaged from capacity leased from competitors.
The CRTC, in fact, denied the cabinet reconsideration order in part on the basis that Telus was providing more choice by utilizing the last-mile fibre access regime to deliver gigabit internet services to residents in Ontario and Quebec.
Cogeco asks federal government for CRTC reform
Cogeco is simultaneously recommending in a federal pre-budget consultation submission that there be fundamental reform of the CRTC.
“The CRTC is recklessly implementing and upholding incoherent regulations, erecting barriers that hurt smaller players, while deliberately helping the biggest players get even bigger,” the submission shared with Cartt says.
The telecom is suggesting the government “reorient the regulator” by addressing its “harmful impact on competition and investment,” which it says would require a “full assessment of the CRTC’s record of failing to remove barriers for competitors and investment, and the immediate reversal of the harmful feature of the TPIA policy that allows for Big Three eligibility.”
It adds that the government should compel the CRTC to engage with “current industry realities, moving beyond outdated assumptions and analytical frameworks.”
Paul Cowling, Cogeco’s chief legal and corporate affairs officer, added in a statement that, “The CRTC has become a regulatory quagmire and requires urgent fixing.”
Photo of Industry Minister Melanie Joly, via BC government
