The Canadian Radio-television Telecommunications Commission (CRTC) has proposed new rules to purportedly help make Internet services in Canada more affordable and lower the exorbitant costs Canadians pay for wireless service. However, the Commission would not overturn a decision made in 2021 that reversed its earlier 2019 decision to reduce fees that large telecom companies can charge smaller Internet service providers (ISPs) to access their broadband networks.
That decision made in 2019 saw the lowering of wholesale Internet rates as the result of detailed cost analysis that found them to be inflated by big telecom and cable providers.
“The government had a real opportunity to act on those appeals and mandate lower wholesale rates,” says Matt Stein, CEO of independent communications provider Distributel Communications Ltd., “which would have put money back into the pockets of Canadians. That would have had an immediate impact.”
Independent telecom service company Teksavvy, which has been one of the most vocal and outspoken against current wireless service pricing rules and tactics in Canada, says the new policy direction could encourage the CRTC to promote competition in the future if it is adopted, but it also rejects the appeal by Teksavvy and others to immediately put back into place those lower rates that were set in 2019. Distributel agrees, noting that while it is “encouraged by the new telecom policy directive,” it is “disappointed that the government chose not to act on appeals that would have immediately lowered Internet rates for all Canadians.”
The new CRTC decision does mean that smaller ISPs must be granted access to the networks of bigger telecom companies to use them for their own often more affordable service offerings. The federal Government says the CRTC “must take action to have more timely and improved wholesale rates available.” The decision will be reviewed by industry players who have 60 days to return with comments. “It’s critical that this proposed draft not be watered down,” says Stein, who adds that once a final directive is issued, the CRTC and industry on the whole must “put the new guidance into place quickly.”
Teksavvy, however, isn’t so hopeful about what the directive means, saying the decision by the federal Cabinet outright “endorses higher Internet prices and misconduct by the head of the CRTC.”
“The federal government says its proposed policy direction is a win for consumers and smaller ISPs, but it is not,” says TekSavvy spokesperson Peter Nowak. “Instead of immediately lowering prices by overturning a bad CRTC decision, it is asking us to hold out hope that the CRTC will do better in the future. This lack of action and faith-based policy approach is why competitors will continue to exit the market and Canadians will continue to pay some of the highest telecom prices in the world.”
“In the short term,” adds Distributel, “the decision to keep rates high only ensures that Canadians will continue to overpay for Internet services.”
The Government has also ordered the CRTC to improve its hybrid mobile virtual network operator (MVNO) model, supporting wireless providers that purchase cell phone network services from the bigger carriers at a wholesale rate and sell access to customers more affordably. Ottawa says it will move to a full MVNO model to support competition if that becomes necessary.
The CRTC was also urged to address its “unacceptable sales practices” and deliver clearer rules around service pricing as well as changing and cancelling services. Mandatory broadband testing will also be a new requirement, so Canadians have better transparency of the services they pay for.
Nonetheless, Teksavvy believes the decision that approves the reversal of 2021 “transfers hundreds of dollars from smaller companies to former monopolies such as well, which crushing their ability to compete moving forward.
Stein, however, is hopeful. “I’m optimistic about the impact this new directive will have in the mid- to long-term,” he says. “If implemented swiftly, this will bring tremendous benefits to Canadians in terms of choice, innovation, competition, and affordability in the long term.” This, of course, is a big “if.”
“Yesterday’s decision does nothing to stem those higher costs,” adds Teksavvy, “and more companies are likely to exit the market, leaving Canada’s biggest telecom companies free to continue raising prices.”
Adds Stein: “…the Government missed a very real chance to bring immediate, tangible benefits to Canadian consumers.”