By Ahmad Hathout
CHATHAM, Ont. – Canada’s largest independent third party internet access ISP TekSavvy said today it will lay-off 130 employees and raise internet prices by $5 per month due to the effects of Covid-19 as well as the uncertainty surrounding the wholesale rate appeal that resulted in reduced prices it has maintained since.
In an email to Cartt.ca, TekSavvy’s vice-president of regulatory affairs Andy Kaplan-Myrth confirmed the layoffs and said the price increase will go into effect in May – all in an effort to “keep things going,” he said.
The 130 people account for a significant chunk of the company’s staff (just under 20% by our estimation). It also represents a dramatic change since the Chatham-based company said it would maintain reduced prices despite the success of the big telecoms to get a temporary Federal Court stay on a decision by the CRTC that slashed the rates internet resellers like Teksavvy pay the big incumbents for network space.
“We were already under tremendous pressure because of the rates and appeals, and now with the impact of the pandemic effect on our network all of that pressure is more acute,” Kaplan-Myrth said. “We were already operating at a loss and were prepared to sustain that for as long as we could in the hopes that the appeals would be resolved in a timely way, but now that is all up in the air.”
Kaplan-Myrth did not follow-up with additional details as to the composition of the laid-off staff, whether the company has been able to handle the increased network traffic as more people work from home, and if the company has added or lost subscribers during this time. It’s worth noting independent ISP industry association Canadian Network Operators Consortium is one of three organizations appealing to the big streamers to take steps which would lessen the impacts the increased traffic is having on their networks. (Correction: An earlier version of this story said TekSavvy is a member of CNOC. They are no longer a member.)
The company proudly stood behind its decision to continue offering customers the reduced prices following the CRTC’s August decision, even after the federal appeal court granted the large carriers a temporary pause on the regulator’s decision. That decision, which reduced wholesale prices between 15% and 43%, included a retroactive payment worth at least $325 million to be paid by the big incumbents to the resellers – essentially, the difference between the interim rates set in 2016 and the final wholesale rates imposed that summer.
But a concern always lingered since the interim stay: How long would it take to get a final determination from the court, especially as some companies say they are hemorrhaging money?
All parties in the appeal of the wholesale rate decision requested that the court’s ruling be made on an expedited basis, but the pandemic’s impact has disturbed the functioning of the court. The Federal Court of Appeal, where the file currently resides, said that it has suspended hearings until at least mid-April, except for urgent matters, which would be dealt with by teleconference.
The wholesale rate hearing is currently scheduled for June, but the parties have filed an urgent plea with the court this week to clarify whether that is still a go.
“It’s in everybody’s interest to clear this up as soon as possible,” Kaplan-Myrth said. “The issue is that we don’t know yet if that expedited timeline means we’ll still get a hearing in June, or if all of that will be delayed given the court’s notice extending timelines.”
The court registry placed a note in the file Wednesday stating that it has passed a request to the court for clarification on “whether the expedited appeal Order or the notice to the professions takes precedence in this case.”
Beside the courts, the wholesale case has also been appealed to Cabinet by carriers of all stripes. In January, TekSavvy asked Canadians to voice their support for the CRTC decision in a survey called paylesstoconnect.ca.
