SSi Canada says decision ‘makes no real world market sense’
By Ahmad Hathout
The CRTC has approved slightly lower rates for competitor access to Northwestel’s internet transport network, called the Wholesale Connect Service, to balance lower prices Northwestel is offering residential customers.
“The proposed reductions to Northwestel’s Wholesale Connect service rates pass the price floor test and will promote competition,” the regulator said Tuesday. “Moreover, consumers in Northwestel’s serving area will benefit from additional Internet service options and rates.”
In August 2024, Northwestel lowered prices for its 500 Mbps and 300 Mbps internet packages (it also proposed a 700 Mbps speed tier, introduced that September). Because it is the dominant service provider in the far north – and to ensure its competitors are not crushed by undercutting – Northwestel was required to propose corresponding price reductions for competitor access to its internet transport network, which — Northwestel proposed and the CRTC approved — came out to a decline of 0.8 per cent.
Since 2022, the CRTC has allowed Northwestel to reduce its retail prices without having to file new studies justifying them to the commission, so long as they don’t dip below an established price floor. The CRTC acknowledged at the time that Northwestel needed a faster way to modify prices to adapt to a new market reality that involved a formidable new entrant in SpaceX’s Starlink satellite broadband alternative.
“In its review, the Commission considered the corresponding rate reductions to Northwestel’s forborne 300 Mbps cable Internet service, 500 Mbps cable Internet service, and FTTP residential Internet service,” the CRTC said in Tuesday’s decision. “The Commission confirmed that the rate reductions to the Wholesale Connect service correspond to those of the concurrent forborne residential Internet service.”
But in an opposing intervention, SSi Canada – a competitor in the region that also includes Iristel and New North Networks – said the reduction was not enough to match the reduced prices the dominant player was offering, which it said is exacerbated by the commission-approved winback rate reduction. That winback reduction, according to SSi, ranges from 23 per cent for Northestel’s 700 Mbps tier to 38 per cent for its lowest-speed cable and fibre internet services for six months of any year that the customer subscribes.
“The minuscule rate reduction proposed in TN 1228 fails to provide a just and reasonable basis on which SSi, or other competitive Telecom Service Providers (TSPs) in the Western Arctic that rely on wholesale access to Northwestel’s monopoly terrestrial facilities, might respond to retail rate reductions of these magnitudes.”
SSi, which has proposed that the CRTC mandate access to Northestel’s last-mile fibre network, further complained that the CRTC has afforded Northwestel the ability to file the data and methodology it used to come to the 0.8 per cent, robbing competitors of the ability to challenge the calculations. Northwestel has said it calculated the rate reduction by taking the average of reductions it proposes to its customers weighted by the revenues it generates for those services.
In a familiar dissenting opinion, Ontario Commissioner Bram Abramson said the CRTC fixated on whether Northwestel met its obligation to make a corresponding reduction in the wholesale rates and did not objectively look at whether the rates themselves are “just and reasonable” to satisfy the policy objectives and ensure its consistency with the Wholesale Connect Service’s competitive purpose.
“I would have asked whether a 0.8% reduction in Wholesale Connect rates, in a market where the record included allegations of Northwestel promotions and winbacks that reduced the price of unlimited retail packages by 23% to 38%, reasonably fosters consumer choice by helping existing and prospective competitors to enter and compete,” Abramson said.
Dean Proctor, chief development officer at SSi, told Cartt that he echoes Abramson’s opinion, adding the decision is “very disappointing” and “makes no real world market sense.”
