Telecom also wants high court to revisit bias allegations against former chair Scott
By Ahmad Hathout
TekSavvy is asking the Supreme Court of Canada this month to help define the meaning of the terms “method or technique” that were at the centre of a decision by the Federal Court of Appeal (FCA) to side with the CRTC in its 2021 determination to quash lower wholesale access rates proposed two years prior.
In simple terms, this is a case about whether the CRTC must follow the rigidness of an established costing methodology to set and justify the rates competitors pay to lease internet capacity from other providers or if the regulator has broader discretion beyond calculations to make those decisions.
The lower court from which TekSavvy appeals ruled this summer that the “plain meaning of ‘method’ and ‘technique’ is broader and more general than Teksavvy’s constrained meaning that requires rigid concreteness, calculability and a solely objective basis. A ‘method’ is just a way of doing something. And a ‘technique’ is nothing more than a particular way of doing something.”
The lower court further argued that the regulator must deal naturally with a host of other considerations that cannot be pigeonholed by mathematical equations.
“How to arrive at a rate involves more than the processing of information objectively and logically against fixed, legal criteria,” the FCA said. “Rather, it is a complex, multifaceted decision involving sensitive weighings of information, impressions and indications using criteria that may shift and be weighed differently from time to time depending upon changing and evolving circumstances and regulatory experience.”
TekSavvy challenges this reasoning. It argues that interpreting the “method” and “technique” “in a virtually meaningless manner … removes the statutory guardrails on the CRTC’s rate-setting obligation.”
The large independent service provider piggybacks off an argument Rogers makes in its appeal to the FCA against the CRTC’s decision to pick Quebecor’s rate to ride on the cable giant’s wireless network. In the appeal, which the FCA will hear, Rogers alleges the CRTC’s process to set rates has become a “purely policy-driven exercise.”
“If the CRTC simply disregards its duty to set just and reasonable wholesale rates by employing a method or technique, wholesale-based ISPs can have no confidence that they will have access to wholesale services at reliable, evidence-based rates, and by extension no confidence they will be able to viably compete in the internet market,” TekSavvy says in its leave application.
The legal drama began days after the CRTC ordered in April 2021 that the proposed rates it determined two years earlier were made with errors in the Phase II costing methodology, which relied on the economic studies of the service providers over a three-year period. Instead of fixing the errors and recalculating, the regulator decided – in part because it needed to focus the intensive resources on the disaggregated regime – to revert to much higher rates that were made interim in 2016 as it embarked on establishing new ones.
TekSavvy swiftly appealed on the grounds that the regulator allegedly hadn’t done a proper review of the 2016 rates to which it reverted, despite the CRTC’s claim that it based them on the Phase II methodology. TekSavvy argues that while the capacity portion of the 2016 rates were adjusted, the CRTC didn’t apply the same examination to the larger network access part of the rates – hence the “less than fully comprehensive” review had no method or technique grounding it, it argues.
“The CRTC merely adopted the various access rates that happened to be in place when the 2016 consultation was launched, a consultation the CRTC found was necessary precisely because those rates were ‘likely not just and reasonable,’” TekSavvy says.
If the SCC elects to hear the case, TekSavvy would like the court to address the following questions:
“What is the meaning of the words ‘any method or technique’ in s. 27(5) of the [Telecommunications] Act and what, if any, guardrails exist to circumscribe the CRTC’s jurisdiction and authority to select a method or technique in setting rates?”
Revisiting allegations of bias against Ian Scott
TekSavvy is also not letting go of allegations that Ian Scott, the chair of the CRTC at the time of the 2021 wholesale rate reversal, compromised himself when he said he had a personal preference for facilities-based competition at an online event and when he met Bell CEO Mirko Bibic alone at an Ottawa pub a week after the telco filed an appeal against the CRTC’s 2019 decision that dramatically reduced those wholesale rates.
The meeting was memorialized in a photo showing the two sitting together without a third party there to ensure there wasn’t a conflict of interest.
On the matter of personal preference for facilities-based competition, the FCA ruled that, “The Chair was doing nothing more than setting out the longstanding and frequently expressed policy position of the CRTC in general terms. As the Chair of a high-profile regulatory body, it was appropriate for him to communicate the policies of the regulator, as had been adopted in CRTC decisions and notices.”
TekSavvy further argued that there were 10 other such meetings between chairman Scott and incumbent representatives while the rates appeal process was ongoing.
While the FCA warned about the dangers of regulators meeting with their regulatees, it noted that Bell filed a lobby communication – as it’s required to do with such a meeting – that said the pub meeting was about broadcasting-related matters, not a telecom one – thus having no relevance to the matter of wholesale rates.
More pertinent for TekSavvy’s appeal to the highest court in the land is that the FCA said the telecom had opportunities to address any appearance of bias far sooner, as this pub meeting was in December 2019.
“I cast no aspersions on Teksavvy here, which genuinely and in good faith pursued this submission — it is unseemly for a party to notice that a mistake or oversight has been made and then hide in the weeds, ready to pounce should the case go against it,” the court wrote in its decision. “Such a party has no real interest in correcting the mistake or oversight but rather wishes, for tactical reasons, to take out some insurance against an adverse result.”
But TekSavvy argues in its application that this “constellation of facts” only emerged after the decision on the appeal, the photo of the meet emerged when the Toronto Star published a story on it later, and it said it only discovered other facts about the meetings when it received a response to a freedom of information request in 2021.
In other words, it took some time to aggregate these allegations of bias, so the first opportunity it had to present them was to the FCA.
On that issue, TekSavvy would like the SCC to answer: “When does a party waive the right to allege bias, when that allegation stems from a constellation of facts, taken together?” And, “Should reviewing courts set aside administrative decisions on grounds of bias where required by broader interests of justice, despite a private party’s purported waiver in raising bias?”
