Quebecor recently acquired Toronto-based VMedia, one of the more prominent independent providers of internet, TV, and phone services in Canada, and fellow independent telecom provider TekSavvy is not happy about it.
“This takeout by one of the country’s giant cable firms is another blow to the market and consumer choice,” Peter Nowak, Vice President of Insight & Engagement at TekSavvy, wrote in a blog post. “It follows Bell’s acquisition of EBOX, the largest indie ISP in Quebec, earlier this year and is the latest indictment of the CRTC’s and federal government’s competition-killing policies.”
According to TekSavvy, VMedia selling out to Quebecor is proof that smaller players won’t be able to survive in Canada’s current telecom landscape, ultimately being forced to bow out of the game and seek acquisitions.
TekSavvy has been warning this will come to pass since the Canadian Radio-television and Telecommunications Commission (CRTC) failed to lower wholesale internet prices in 2019.
In 2019, Canada’s telecom and broadcast regulator lowered wholesale rates. These represent what smaller providers like TekSavvy and VMedia pay national operators for access to their networks and infrastructure. Downstream, the move also reduced retail internet prices by extension.
However, the decision was (controversially) appealed by larger telcos like Bell. Last year, the CRTC decided to hike wholesale internet rates back up to 2016 levels.
TekSavvy and other independent telecoms fought the CRTC’s decision but didn’t get anywhere. In May, the federal Cabinet ruled to uphold the higher wholesale internet rates.
At the same time, Ottawa proposed a new policy direction for the CRTC that the feds believe will eventually encourage competition and introduce a focus on lower prices and positive consumer outcomes.
The new policy direction will take time to bear fruit, though. TekSavvy and other critics believe smaller providers won’t be able to compete in the interim, ultimately being forced to cut their losses and exit the market.
The government is currently seeking comments and suggestions on the draft policy direction, and TekSavvy has filed its recommendations. According to the company, the new policy direction won’t be worth anything if it doesn’t:
- Reduce wholesale internet rates on a temporary basis within one month of its final implementation at a defined discount to what large companies are charging on a retail basis, before reverting to proper rates defined by the actual costs of provisioning services within one year.
- Enforce equitable speed-matching rules within one month that will allow smaller ISPs the actual and practical ability to offer fast fibre services at reasonable retail rates.
- Adopt and adhere to additional timelines that minimize regulatory delay and uncertainty.
- Issue a public ethics code applicable to CRTC commissioners to address, at a minimum, standards for avoiding conflicts of interest, rules for meetings with stakeholders, guidance for recusals and other standards for maintaining the integrity of the institution.
- Report on the feasibility of structural separation in the telecommunications sector between businesses that build infrastructure and those that provide services.
According to a recent study commissioned by the federal government, broadband and wireless internet prices in the country have consistently gone up since the CRTC’s decision to not lower wholesale internet rates in 2019. Canada currently pays some of the highest, if not the highest, prices for internet in the world.
