By Ahmad Hathout
OTTAWA – The Supreme Court of Canada will not hear a big telecom appeal about the alleged incorrectness of the CRTC’s decision to reduce the cost for internet capacity purchased by smaller service providers.
The decision, announced Thursday, exhausts the legal routes for a challenge of the August 2019 rates that dramatically reduced the amount that smaller providers would need to spend to purchase network capacity from the larger players. The rates were never implemented because it was almost instantly appealed to the federal government, the courts, and the CRTC, which granted a pause on its own decision pending a second look (a.k.a. Review & Vary).
The SCC does not give reasons for why it allows or denies a leave to appeal application.
What’s left now is a new set of final rates to be delivered by the CRTC.
The Competitive Network Operators Consortium (CNOC), an organization that represents third party internet access (TPIA) providers and other independent operators, said in a statement Thursday: “We urge the Commission to stand behind the Order [and] recognize, as the [appeal court] did, the incumbents’ thinly-veiled attempt at delay.”
The organization is also asking the regulator to quickly announce a decision on the R&V, force the final wholesale rates on the large players, and provide the roughly $325 million in retroactive fees the CRTC ordered the big players must give back to the TPIA players to make up the difference between the interim rates set in 2016 and the final rates announced in the summer of 2019.
“Competitors have been under incredible strain as a result of the delayed (to the very last minute on every limitation period) implementation of the Order’s just and reasonable rates,” CNOC said in its statement. “As a consequence of not receiving Commission-determined refunds, and continuing to pay inflated interim rates, competitors are in a severely weakened, dire state, leaving aside our inability to access incumbents’ FTTP, which is the subject of our outstanding, emergency application.”
In an interview, head of CNOC Matt Stein said the decision means the time for lower wholesale rates is near and although the decision for those rates ultimately rests in the hands of the CRTC, Stein said the long road that led to this point will have meant something because the large carriers may think twice about going the court route if they decide to challenge the CRTC’s second decision in the matter.
That’s especially so, Stein said, because the Federal Court was emphatic about its decision against the large carrier arguments: it was of dubious merit, wasn’t worth hearing and warranted the return of the respondents legal fees at the SCC.
Jean-Philippe Béïque, CEO of small Quebec-based internet service provider Ebox, said in a statement that the decision is “very important,” paves the road for a competitive future for internet rates, and “puts an end to the legal manipulation of the system.”
“Now all eyes are on Ottawa and the CRTC, which must lift the suspension of its own decision.” – Jean-Philippe Béïque, Ebox
“Now all eyes are on Ottawa and the CRTC, which must lift the suspension of its own decision,” he said.
While the federal government said in response to petitions that the rate in some instances would reduce investments in networks, the Federal Court of Appeal ruled that the regulator took into consideration policy considerations that fulfilled its obligation under the Telecommunications Act.
The large carriers including Rogers, Bell, Shaw, and Quebecor said in court submissions they were hoping to get a clarification about the new December 2019 Vavilov ruling, which gives courts greater latitude to make determinations on correct applications of the law rather than defer to a regulator’s ability to make decisions on reasonableness.
They argued that they weren’t sure how the lower court extrapolated a policy line of reasoning from the CRTC’s decision. The challengers argued that a list of links to previous policy decisions does not give a full explanation about how the regulator reasoned through the decision, which they said they are owed.
“The leave application of the cable carriers raised significant administrative law issues that called for guidance from the Supreme Court of Canada,” Kent Thomson, the large cable companies’ lead lawyer on the case, said in a statement.
“While the cable carriers are disappointed with the court’s decision not to hear their case, they respect it. Today’s development does not affect, and is completely distinct from, the CRTC’s review of its Order from August 2019 establishing wholesale rates that the cable carriers are permitted to charge to resellers for high speed internet services. The CRTC’s review of its Order remains pending.”
Bell spokesman Nathan Gibson said in an emailed statement that the company is “disappointed in the Court’s decision,” but noted “the wholesale rates at issue remain under review by the CRTC, guided by the federal cabinet’s direction that the original rates were too low. We look forward to seeing the outcome of that process in the near future.”
What’s now up in the air is when the CRTC releases the R&V decision – and as they had done when the August 2019 rates were released, Stein said his members are ready to lower their prices for customers when the regulator pulls the trigger for a second time.
