Ottawa Favours Telecoms in Internet Ruling, Decision Slammed by Consumer Advocate

Innovation, Science and Economic Development Canada (ISED) put out a press release on a quiet Saturday morning to announce the federal government has essentially favoured telecom giants with respect to the CRTC’s wholesale internet rates decision from August 2019, aimed at promoting competition.

Last fall, the CRTC decision meant giant telecoms had to pay back rates to smaller independent internet service providers, as the rate decision was retroactive. As expected, incumbents opposed the ruling, while smaller ISPs praised the CRTC.

But now, the Navdeep Bains, Minister of Innovation, Science and Industry, announced on Saturday, “On the basis of its review, the Governor in Council considers that the rates do not, in all instances, appropriately balance the policy objectives of the wholesale services framework and is concerned that these rates may undermine investment in high-quality networks, particularly in rural and remote areas.”

“Retroactive payments to affected wholesale clients are appropriate in principle and can foster cooperation in regulatory proceedings. However, these payments, which reflect the rates, must be balanced so as not to stifle network investments. Incentives for ongoing investment, particularly to foster enhanced connectivity for those who are unserved or underserved, are a critical objective of the overall policies governing telecommunications, including these wholesale rates. Given that the CRTC is already reviewing its decision, it is unnecessary to refer the decision back to the CRTC for reconsideration at this time,” added Bains.

What does this mean? The Governor in Council will not be overturning the CRTC’s August 2019 decision, but is concerned the ruling may impact future telecom investment from incumbents.

Bell, along with Rogers, Shaw, Videotron, Cogeco and Eastlink, took the CRTC to appeals in federal court and the decision was stayed. The case’s decision was heard in June but a final decision is pending still.

Matt Stein, chairman of the Canadian Network Operators Association, which represents independent ISPs, told CTV News the decision was bad news for consumers.

“It’s this kind of decision that causes internet rates to go up and, at the minimum, makes it impossible for them to go down for quite some time,” said Stein.

Rogers told CTV News in a statement, “the CRTC rates do not reflect the true cost of building and expanding Canada’s world-class broadband networks and will impact network investments, especially in rural and remote areas where costs are significantly higher.”

Bell responded similarly by saying, “we trust the CRTC’s review will reflect the government’s objective to drive network investment, especially in rural and remote regions, with wholesale rates that are fair and reasonable.” The company added, “the original CRTC decision actually set wholesale rates below cost, which would certainly have impacted future investment by facilities-based carriers like Bell.”

Consumer advocacy group, OpenMedia, slammed the federal government’s decision. OpenMedia Executive Director Laura Tribe, said the non-profit was “disappointed” with Minister Bains for siding with telecom giants.

“In no way does this morning’s decision help improve Internet affordability, despite Minister Bains long promising it to be a priority. Let’s be perfectly clear on what’s happening here: the government has effectively told the CRTC that they expect the rates to go up because they’re worried about investment. But these increases will most certainly be passed along to customers,” said Tribe.

Tribe went on to say, “Minister Bains talks a good game about affordability, but it seems that’s all it is – talk. Two weeks ago we learned that cell phone prices have not come down, despite repeated promises from the government. Today we see a government decision that will inevitably lead to higher Internet prices for Canadians. This is not what’s needed right now.”

“Canadians and small, independent Internet service providers are already on the ropes due to COVID-19. Internet users across the country have lost their jobs, and small ISPs are fighting for their lives at the Federal Court and CRTC. We need bold action to help Canadians and promote choice and affordability – not weak, half-measures that maintain the status quo and put small providers at risk,” added Tribe.