ISPs and advocacy groups respond to Cabinet’s decision regarding CRTC wholesale rates

TekSavvy says that Cabinet caved to pressure from the large carriers

Carriers and advocacy groups are responding to the government’s decision to support Canada’s largest telecoms’ appeal of the CRTC’s lowered wholesale rates.

Over the weekend, Innovation Minister Navdeep Bains released a statement saying the Governor in Council believes that the CRTC’s lowered rates from August 2019 do not balance the policy objectives of the wholesale services framework and that the rates may undermine investment, particularly in rural and remote areas.

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.

Chatham, Ontario-based TekSavvy says that Cabinet’s decision backtracks on affordability and creates uncertainty and rewards anti-competitive behaviour. The carrier states that Cabinet caved to pressure from the large carriers.

“Cabinet’s decision is bad news for consumers and for competition. The government bowed to pressure from the large carriers who used their investment threat to keep prices high and competition low,” said Andy Kaplan-Myrth, the vice-president of regulator and carrier affairs at TekSavvy, in a press release.

“This is about a government protecting huge profits of already extremely profitable companies at a time when fair pricing for internet is needed by consumers more than ever.”

TekSavvy outlines that it has gone five years without cost certainty and paying inflamed interim rates, and that it is left with no choice but to interpret this decision as an expectation from the government that retail prices should be raised.

The Competitive Network Operators of Canada, which represents over 30 telecommunications providers, says although it’s disappointed that the cabinet did not fully endorse the 2019 CRTC rates decision, it acknowledges that the cabinet didn’t rescind the decision either.

“The uncertainty around the government’s support of the Commission’s original decision on internet rates will cause further delays and likely result in price increases for Canadians in the imminent future,” said Matt Stein, CNOC Chair and CEO of Distributel, in a press release.

Stein outlines that CNOC fully supports the CRTC’s rate correction and looks forward to the Commission upholding its original decision following its review.

“Affordability, consumer choice and a competitive industry hang in the balance, three elements that are essential to building a vibrant Canadian economy and a strong middle class,” Stein continued.

Consumer advocacy group OpenMedia released a statement saying the Cabinet’s decision will not help improve internet affordability.

“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,” OpenMedia executive director Laura Tribe said in a new release.

Minister Bains has said the government will continue to monitor the CRTC proceedings closely to ensure its frameworks have the right incentives for investment and competitive choice.

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