Explainer: The recent CRTC decision on internet and phone rates
It's a big win for large telecom companies like Bell, but not for smaller operators and consumers
The Canadian Radio-television and Telecommunications Commission reversed their 2019 decision to cut wholesale internet prices last month.
Big carriers such as Rogers, Bell, and Telus will be able to charge their higher rates initially set in 2016 for wholesale access to their broadband networks. Beforehand, when the 2019 decision was on appeal, it would have forced large telecom companies to lower their rates and make payments to smaller operators.
The CRTC said that in their report, they made errors when they told phone and cable companies to cut their wholesale internet rates.
Ian Scott, current chairman and CEO of CRTC, said errors generally result from staff using their judgement to fill in missing data. However, Scott added that the majority of their 2019 decisions were correct.
In addition to the errors, many of the big telecom companies argued the lower rates would harm network investments, including in rural areas where the infrastructure is often limited and dated. As a result, the companies filed court appeals, created petitions to the federal cabinet to override the decision, and asked the CRTC to review the 2019 decision leading up to the new ruling.
Last year, the Federal Court and the Liberal government declined to hear the big telecoms case about the CRTC rates. This gave the CRTC the power to keep or let go of the lower rates.
TekSavvy, one of Canada’s smaller telecom companies, has created a petition for the federal government to overrule the CRTC’s decision on the lower rates and to remove Scott from his positions as chairman and CEO.
Canada ranks as having one of the highest internet and cell phone rates globally, with higher prices than countries like Australia and the United Kingdom. In response, the Liberal federal government pledged in 2019 to lower services by 25 per cent in the following two years.
With the new CRTC ruling, government leaders and critics argue that Canadians will increase their internet bills.
NDP innovation critic Brian Masse said costs have already gone up since late May due to the decision.
Matt Stein, chief executive of Distributel and chair of the Competitive Network Operators of Canada, said he predicts internet prices will go up immediately and there will be fewer smaller companies in the game field.
“This means the competitors have to raise rates just to stay in the game. And when competitors raise their rates, all that does is create more room for the incumbent phone and cable companies to raise theirs,” said Stein to CBC.
With the rise of higher prices on internet bills, other critics worry about how the “Big Three” operators are gaining more control over the telecom market in Canada.
“The CRTC itself actively acknowledges just how concentrated the market is, and yet their decisions continue to not just uphold the status quo, but tip the scales even sweeter in big telecom’s favour,” said Laura Tribe, executive director of OpenMedia which advocates for affordable and surveillance-free internet.
Although Rogers and Telus haven’t made public comments about the recent decision, Bell spokesperson Jacqueline Michelis said in an email statement to the Financial Post, “We’re pleased the CRTC has recognized the critical role that network builders play in connecting Canadians everywhere. It’s a positive decision that enables the major infrastructure investments Canada needs, including Bell’s accelerated capital plan.”
The federal government said they are reviewing the decision to ensure it provides affordability and competition in Canada. They have up to a year to respond to the appeal.
