Federal Court of Appeal dismisses incumbents’ appeal regarding CRTC wholesale rates

The court has ruled in favour of TekSavvy, Distributel and other independent carriers

The Federal Court of Appeal has unanimously ruled in favour of independent carriers and has dismissed the incumbents’ appeal of the CRTC’s lowered wholesale rates.

The incumbents had argued that the CRTC erred in law or jurisdiction when it introduced lowered wholesale rates in August 2019. However, the court says it has not found evidence for this claim.

“The appellants have not demonstrated any error of law or jurisdiction arising out of any breach of procedural fairness or arbitrary decision-making,” the court outlines in the 3-0 ruling. 

“Their concerns center in largest part on the methods chosen by the Commission and the Commission’s conclusions when it applied those methods to the evidence before it. The Commission may adopt and apply any method it considers appropriate for determining rates.”

The court has now stated that the appeals have been dismissed and has ordered the appellants to pay the costs of the appeal to TekSavvy and the Canadian Network Operators Consortium (CNOC).

Further, the court notes that “the Cable Carriers’ assertion that the Commission ignored evidence is unfounded. Their real complaint is with how the CRTC interpreted and applied the facts before it.”

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.

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.

Rogers, Shaw Communications, Eastlink, Cogeco, and Vidéotron in a joint venture, and Bell independently, appealed the regulatory decision.

During the hearings that took place in June, Bell argued the CRTC didn’t consider how the lowered rates would affect its ability to invest in its networks. The five cable companies had argued the CRTC didn’t keep an open mind when setting the rates.

The decision comes as Innovation Minister Navdeep Bains recently released a statement siding with the larger telecoms 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.

It’s important to note that the Federal Court appeal isn’t the only way that the incumbents appealed the wholesale rates decision, as they also filed a separate appeal directly to the CRTC, which still awaits a decision.

With this recent decision, it’s also possible that the incumbents will now take the fight against the lowered wholesale rates to the Supreme Court.

ISPs have responded to the ruling and applauded the court’s decision, and say it is a step closer to affordability for Canadians.