By Ahmad Hathout
GATINEAU – The CRTC’s second attempt at determining the wholesale costs of internet capacity will determine whether or not third party internet access providers can lower customer rates, if it continues to allow the big telecoms to execute on network investment decisions, or if it elicits yet more appeals.
Striking the right balance on rates for competition and network investment is not only a goal of the Regulator, but it’s a requirement under a cabinet direction from 2020. And Thursday’s upcoming decision – coupled with the CRTC’s decision to force open the big wireless networks to regional carriers – will also likely play a role in determining the response to the looming question of the impact of an approved Rogers-Shaw merger, for Canadians, industry and regulators.
Thursday’s decision will determine the wholesale internet buy rates, as well as the retroactive amount to be paid by the large players to the smaller ones, which is the difference between the temporary wholesale internet purchase rates set by the Regulator in March 2016 and the final rates set in August 2019.
The 2019 rates, which slashed the rates by up to 80% in some cases, were appealed by the big incumbents to the Federal Court, the federal government, and the CRTC itself, which accepted the appeal and never implemented the rates. The retroactive fees owed to the smaller providers is currently around $325 million.
Through an order-in-council, the Innovation Minister at the time, Navdeep Bains, determined that while the rates in some cases were so low that it would negatively impact investment, it didn’t directly send the decision back to the Regulator because it was already reviewing the rates. The Federal Court, afterward, denied the incumbents’ appeal of the case.
Thursday’s rate-setting decision will place a heightened focus on whether TPIA ISPs will again lower prices for their subscribers, as was the case in the immediate aftermath of the August 2019 decision. The smaller carriers, citing the order-in-council, later raised their rates.
If the rates change substantially, questions will emerge as to what decisions the Regulator came to this time around that it didn’t the first time.
In a strategy document from August 2020, Innovation Canada analysts observed the rates may land between the interim and final rates set in 2019, but lower than the current rates. That would impact the amount of retroactive payments owed to the independent ISPs like TekSavvy and Distributel, among others.
It will also be notable in that it comes on the heels of the CRTC’s determination that the wireless networks of the big national carriers must be shared with regional carriers, but only those which have spectrum and will invest in their own infrastructure; and it will determine how muted a response will be to an approved merger between Rogers and Shaw, which is still before the regulators.
Smaller ISPs have been imploring the CRTC to reaffirm the August 2019 rates, which they say would mitigate the impact of an approved Rogers-Shaw merger.
The confluence of these decisions will set the stage for how competition in Canada’s telecommunications space plays out.
The CRTC will release its decision at 4 p.m. Thursday and Cartt.ca will have more on the decision then.
