By Denis Carmel
GATINEAU – Should Northwestel (NWTel) be able to lower its Internet access rates? Intuitively, considering its rates are exceedingly high, we would be inclined to say yes but … it is not that simple.
As NWTel reminds us in its application to the CRTC in December 2021, “We are the only company in Canada to have retail rate regulation of our Internet services.”
BCE owned NWTel, which serves Canada’s North, is regulated differently than other telecom companies – a reflection its own specific circumstances.
Because of the high cost of providing service, it receives significant subsidies from southern telcos but is still price-regulated because it has significant market power, meaning, among other regulations, it has a price floor which does not allow it to offer service under cost.
This became an issue for NWTel with the arrival of Elon Musk’s Starlink in the market, which offers internet retail service at a significantly lower price than NWTel. (150 Mbps for Starlink for $129 against 125 Mbps for $199 for NWTel.)
Although Starlink, a non-Canadian enterprise, has not started providing service where NWTel operates in the North, it has been accepting “pre-orders” since Feb. 11, 2021, which has made NWTel quite nervous and prompted an application where it asked the CRTC to “waive the requirement to satisfy the price floor test for our tariff notices for retail residential terrestrial Internet services.”
“We request that this waiver persist until the Commission issues its determinations in the proceedings initiated by TNC 2020-367,” NWTel went on. The company also requested the application be dealt with in an expedited fashion.
Time seems to be of the essence in this proceeding since the review of Northwestel’s regulatory regime, launched in November 2020, seems to be taking a long time even though the record for the first phase has been closed since May 2021. In his speech at the Telecom Summit, CRTC chair, Ian Scott, said the second phase would be launched soon. The CRTC has not been able to provide timelines though.
The inability to offer service below cost is to prevent NWTel from preventing competition to take hold but NWTel also said the new rates would become the new price cap and indicated this rate reduction would not trigger a new request for subsidies.
In the present context, NWTel can ask for lowered rates and promotional tariffs like the recent one issued in January 2022 on applications filed in October 2020 and April 2021. The process is complex and long and NWTel is requesting a quick and nimble process to deal with similar applications.
The Government of Northwest Territories is supporting NWTel’s application but “is very concerned with the erosion of stakeholder trust in the CRTC’s ability to issue timely decisions on key Northern broadband matters,” reads its submission to the CRTC.
Public Interest Advocacy Centre (PIAC), however, opposes NWTel’s application. “Northwestel also mentioned its different tariff applications and the administrative delays in some detail, while expressing its overall discontent. Procedural delays and wait times are not just faced by Northwestel,” PIAC said in comments filed with the Commission.
“These administrative steps and delays should not provide an excuse to Northwestel to seek removal of an important competitive requirement. In any case, delays in the tariff application process can be addressed through the expedited process, if Northwestel meets the test.”
PIAC also said it is “not against lower rates for consumers and would certainly like to see measures being taken to improve affordability along with higher speeds and more data allowances, but such rates and services should be fair and available to all consumers of different service providers in the North, and not just limited to those who are served by a dominant provider, such as Northwestel.”
Telus said in its intervention it supports the application, “conditional on a guarantee that any revenue reductions driven by competition are not offset by additional subsidy payments to Northwestel.”
SSI Micro, an NWTel competitor in the North, for its part said: “We urge the Commission to recognize, however, that SpaceX’s potential impact in Canada’s north is just that: potential. The Commission must not overreact, permitting Northwestel to abuse its current dominant position out of apprehension of what remains a highly uncertain impact on the ILEC.”
Daniel Sokolov, a Whitehorse resident is opposed to NWTel application: “I am a resident of Whitehorse, Yukon, and a Northwestel internet client. There is no alternative. I am also one of the Yukoners who has paid a deposit for a Starlink device. That does not pose a risk to Northwestel (NWTel) of losing my business. To me, Starlink is no alternative to NWTel’s residential internet service, but a different product for a different use case in a different location.”
Finally, we would offer that with the arrival in the Canadian market of Low-Earth Orbit satellite service (Telesat, Starlink and One Web), if they become a reality, they seriously change the regulatory landscape but also provide Internet access solutions to remote areas, which could make petty disputes over pole attachments almost obsolete. We are not suggesting that the challenge of connecting every household will be solved by LEO technology, but we need to explore where that leads us.
