Independent internet providers are calling on Canada’s telecom regulator to finish its review of what they argue are “inflated rates” that large companies charge for access to their networks, after the Supreme Court declined to hear an appeal filed by Bell and five cable operators.
Canada’s top court on Thursday dismissed an appeal of the Canadian Radio-television and Telecommunications Commission’s decision in August, 2019, to lower wholesale broadband rates, part of a continuing effort to encourage competition and reduce prices in the internet market.
The final say on how much large telecoms can charge smaller internet service providers (ISPs) for network access now rests with the regulator, which is in the midst of reviewing its own ruling.
“The CRTC needs to step up and get this finished,” said Matt Stein, CEO of Distributel Communications Ltd. and chairman of the Competitive Network Operators of Canada (CNOC), an industry group for independent ISPs. “The competitive market isn’t working right now.”
Large telecoms are required to sell network access to third-party operators such as TekSavvy Solutions Inc. and Distributel at regulated rates. These ISPs then sell internet service to their own customers.
In August, 2019, the CRTC lowered the rates the large phone and cable companies can charge and ordered them to make retroactive payments – at the time totalling an estimated $325-million, according to court documents – to third-party operators to compensate for the higher interim rates set in 2016. The large telecoms have said the new rates are too low and would affect their ability to invest in network expansion.
The telecoms pursued every avenue available to them in a bid to have the decision overturned, including appealing to the federal court and to the CRTC. The companies also petitioned the federal cabinet, which declined to overturn the CRTC decision but commented that the reduced rates could stifle investment in networks. The large telecoms have not had to make any retroactive payments or lower their rates because the decision was stayed, first by the federal court and later by the CRTC.
The Federal Court of Appeal dismissed the case last fall and said that the issues presented by the phone and cable providers were of “dubious merit.” The court said the companies failed to demonstrate that the telecom regulator erred or exceeded its powers when it slashed wholesale broadband rates.
Bell and a group of five cable operators – Rogers Communications Inc. , Shaw Communications Inc. , Quebecor Inc.’s Videotron Ltd., Cogeco Communications Inc. and Eastlink Inc. owner Bragg Communications Inc. – applied to the Supreme Court last November for leave to appeal the ruling. They argued that the CRTC, in its August, 2019, ruling, didn’t make proper reference to guidelines the federal cabinet has set out for the regulator’s decisions.
The top court on Thursday dismissed the leave to appeal, awarding costs to the respondents, which include TekSavvy and CNOC. John Lawford, executive director of the Public Interest Advocacy Centre (PIAC), a consumer advocacy group, said the decision “signals to the large players that the courts will not look kindly on appeals.”
Kent Thomson, a partner at Davies Ward Phillips & Vineberg LLP and lead counsel for the cable companies, said the companies raised “significant administrative law issues that called for guidance from the Supreme Court” in their application.
“While the cable carriers are disappointed with the court’s decision not to hear their case, they respect it,” Mr. Thomson said in a statement. He added that the decision is completely separate from the CRTC’s review of its August, 2019, ruling, which is still continuing.
Bell spokesperson Marc Choma said the company is looking forward to the outcome of that review “in the near future.”
“While we’re disappointed in the court’s decision, 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,” Mr. Choma said in a statement.
TekSavvy says it is struggling financially because it is paying inflated rates for network access.
“We’re really just squeaking by,” said Andy Kaplan-Myrth, the company’s vice-president of regulatory and carrier affairs.
When the CRTC announced in 2019 that it was lowering wholesale broadband rates, TekSavvy reduced its own prices for many of its customers. But as time has passed and the lower rates have failed to materialize, the Chatham, Ont.-based ISP has had to raise its prices back up.
“Ultimately the longer this takes, the more of a win this is for the big guys,” said Mr. Kaplan-Myrth. “They get to keep charging us inflated rates. … As long as they can do that, we have to keep our prices high enough to justify those costs, and so we don’t effectively compete with them.”
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Alexandra Posadzki