Carriers await Federal Court of Appeal’s decision on CRTC wholesale rates

The Federal Court of Appeal concluded virtual hearings regarding the CRTC’s wholesale rates last week, and carriers now await the court’s decision.

In August 2019, the CRTC lowered wholesale rates that larger carriers can charge internet service providers (ISPs) and also ordered them to make payments to compensate for the previously higher rates.

Rogers, Shaw Communications, Eastlink, Cogeco, and Vidéotron in a joint venture, and Bell independently, appealed the regulatory decision that slashed wholesale rates carriers can charge independent ISPs like TekSavvy and Distributel. Following appeals filed by the carriers, the federal court suspended the CRTC’s wholesale rates decision in November 2019.

Wholesale rates are paid by competitors, like TekSavvy and Distributel, which then get access to high-speed networks from incumbents like Bell, Rogers, and Telus. Rates are set so that incumbents can charge for this access after the CRTC reviews information regarding how much it costs to operate networks.

During the hearings last week, a lawyer for Bell argued the CRTC didn’t consider how the lowered rates would affect its ability to invest in its networks. Further, a lawyer representing the five companies argued the CRTC didn’t keep an open mind when setting the rates.

Andy Kaplan-Myrth, the vice-president of regulatory and carrier affairs at TekSavvy, told MobileSyrup in an interview that the company is “cautiously optimistic” the court is going to “see through” the appellants’ arguments and apply the final rates.

When asked about the carriers’ arguments, Kaplan-Myrth said TekSavvy believes the larger carriers will continue to invest where they have a business case to do so.

“Where they have a business case to invest in networks, they’re going to continue to invest in networks. Where they don’t have a business case to invest, they never will,” he said.

“To be clear, we don’t expect to get access to their networks at below cost. That’s not what this is supposed to be about. The CRTC looks at the evidence, and they set rates that allow the incumbents to be compensated.”

Kaplan-Myrth also stated that the CRTC’s decision was the culmination of a long process, and that the regulator looked at several years worth of evidence.

Since the CRTC ruling on the reduced rates was suspended until final judgement after the appeals from the larger carriers, the ISPs are currently paying the old rates, which Kaplan-Myrth notes is frustrating.

Matt Stein, the CEO of Distributel and CNOC Chair, told MobileSyrup in a statement that: “The court challenge is a delay tactic against a well-reasoned CRTC decision based on an exhaustive and in-depth four year review of the facts. The CRTC made the right decision that gives Canadians more choice and better value.”

Bell did not respond to a request for a statement regarding the hearings since it does not comment on matters before the court. Rogers, Shaw Communications, Eastlink and Cogeco also all declined to comment. MobileSyrup has reached out to Vidéotron.

It’s unknown when the court will release a decision, however, even once the court makes a decision, it may get appealed to the Supreme Court. This indicates that the case could likely go on for quite some time.

It’s important to note this is one of three ways that the companies are using to try to overturn the lowered wholesale rates, as the carriers have also appealed to the Governing Council and directly to the CRTC as well.