TORONTO – Calling it “a vote against fairness,” independent ISP Distributel decried the cabinet decision five days ago which encouraged the CRTC to change the wholesale third party internet access rates it set a year ago.
That Order-in-Council, which we covered this week with a handful of stories, has now caused Distributel to join others and increase what it charges customers, too. However, the company has stopped short of calling it a rate increase and instead will add a $5-$10 surcharge to its customers’ bills to cover costs while awaiting the CRTC’s new final decision on wholesale rates, not to mention a pending decision from the Federal Court.
“Our company is built on affordability and access for all Canadians,” said Matt Stein, CEO of Distributel, in the company press release. “Internet service is more essential today than ever, and the idea of charging more for it runs completely counter to our values. But unfortunately, given the uncertainty and delay that the Federal Cabinet’s announcement has created, we don’t have a choice.”
The company says most TPIA customers (not ones who are customers on Distributel’s own networks) should expect a $5 to $10 surcharge to their monthly price. “The additional fee will need to be in place at least until a final order comes down for wholesale internet rates, which are what the incumbent telecom companies charge independent internet service providers (ISPs) to access certain components of their networks—costs that affect consumer prices directly,” explains the release.
Once a final decision comes, assuming it is in the independents’ favour, that surcharge will be dropped, said the company.
In August 2019, when the CRTC released the results of a three-year review of those rates, setting lower fees as well as retroactive repayments, Distributel lowered its prices, assuming the new wholesale rates would come into effect. Since they did not, the new lower prices offered are no longer sustainable, said Stein.
“The government could have simply allowed the CRTC to proceed with its own review, but by inserting this extra commentary, it’s created more confusion and uncertainty. What’s more, this runs counter to the government’s campaign promises of making life more affordable and helping working Canadians get ahead. Keeping prices high is simply bad for Canadians,” he added.
The company also pointed out when the Covid-19 pandemic struck, Distributel shifted to unlimited access for all customers, to support them as they adjusted to working and learning from home. That drives up costs, since the company is purchasing that growing capacity from incumbent carriers, “and usage is skyrocketing. As long as the wholesale rates the CRTC deemed to be fair are not implemented, our costs will continue to rise,” said Stein.
“Adding fees is the last thing we want to do. But this is unavoidable given our growing and immense cost pressures, and the additional uncertainty from the Federal Cabinet’s announcement. This is a bad day for Canadian consumers.”
Cartt.ca asked to speak with Innovation, Science and Economic Development Minister Navdeep Bains about what he thought about the rate increases announced this week by TPIA independent ISPs. The department responded with the following email (most of it is a repeat of what the department has already said this week, but we’ve highlighted in italics the key point of difference this time):
“Affordable, high quality Internet access is a necessity for all Canadians. These unprecedented times have reinforced this fact, especially for Canadians living in rural and remote communities.
“Setting the wholesale rates correctly is critical to ensuring competitive options for Canadians, while maintaining continued investment in high-quality networks and expanded access for Canadians, no matter where they live.
“Having reviewed the petitions and following consultations, the Governor in Council considered that the CRTC decision set rates that do not, in all cases, appropriately balance the objectives of the wholesale services framework and that would, in some cases, undermine investment. However, the 2019 decision in question has never gone into effect. The wholesale rates available today are the same rates in place dating to 2016.
“The CRTC already had a process underway to review the rates. The government will continue to monitor the CRTC’s public proceeding.”
– Greg O’Brien
