By Ahmad Hathout
OTTAWA – The CRTC met its obligations under the 2006 cabinet directive, was never beholden to requirements for detailed explanation, and the wholesale rate review itself proved the Regulator has been aware of and followed-through on its cabinet and statutory obligations, lawyers for the third party internet access providers said Friday.
The final day of the two-day Federal Court of Appeal virtual hearing about whether the CRTC erred in law when it decided in August to slash the wholesale internet rate for resellers and force retroactive payments to them from the incumbents, featured lawyers for the independent ISPs making pointed rebuttals to the incumbent appellants on matters including whether the regulator balanced its decision with its objectives and, crucially, whether the court has jurisdiction to be deliberating on the matter. Bell and the cable companies appeared Thursday.
“The Commission is not obligated to literally advance all policy objectives and, in fact, did advance some policy objectives,” Rahool Agarwal, lawyer for the Competitive Network Operators Consortium (CNOC) argued Friday, alluding to a previous admission by Bell lawyer Steven Mason that the Commission is not obligated to advance all policy objectives.
Mason said on Thursday that the central question was whether the CRTC did any kind of balancing at all, which the incumbent lawyers disputed. Rogers, Shaw, Videotron, Eastlink and Cogeco made up the cable companies.
“You can’t have it both ways,” Agarwal continued. “It’s incongruous to argue that the Commission failed to consider policy at all and then at the same time concede that it considered some policy objectives.”
Agarwal said the CRTC had fulfilled parts of its statutory obligations under Section 7 of the Telecommunications Act by advancing competition, affordability and innovation when it decided the wholesale rates should be slashed. It also ordered a retroactive payment of about $325 million to be paid by the incumbents to the resellers, which date back to the 2016 interim tariff.
Importantly, Agarwal also argued if the CRTC’s policy considerations are found to exist in its reasons for the decision, then the court should reject the appellants because the question becomes one of policy that should be deliberated by either the CRTC or by petition to cabinet.
“If the Commission did advance some considerations of policy, right then and there we are into an analysis of weight, which is a question of fact that this court should not be entertaining,” Agarwal said, adding the regulator can’t be expected to recite every factor and argument it considered.
The incumbents argued the court has jurisdiction in this case because a fairness issue was breached by the decision as a result of an allegation that the CRTC didn’t weigh expert evidence it presented and did not explain portions of its decision or how it conforms to the 2006 cabinet directive.
The incumbents reiterated some version of that argument again in their reply submissions late in the day Friday.
The 2006 cabinet directive outlines that the CRTC “should rely on market forces to the maximum extent feasible and regulate, where there is still a need to do so, in a manner that interferes with market forces to the minimum extent necessary.” Last year, the Liberal government provided a companion directive that stated the CRTC should also consider all options for enhancing competition, but that directive would not replace the 14-year-old one, just augment it.
Agarwal said the key to understanding whether the decision satisfies the explanatory portion of the cabinet directive is how it’s taken with the related documents attached to the decision. The CRTC often adds associated links with the expectation that a reader who would like to see from where the regulator drew aspects of the decision he or she would click away.
“In this case, delay itself is a victory for the incumbents.” – Colin Baxter for TekSavvy
He argued that the cabinet direction should not be read with a minimal reasons requirement, though judge David Stratas posited that taken without the related links and preceding decisions, could lead to an “inadequate explanation.”
Reiterating some of the points made by Agarwal, TekSavvy’s lawyer Colin Baxter went a step further. Referencing section 1 (c)(II), which requires the CRTC to essentially examine how it could improve wholesale services, Baxter said
“This is a self-initiated, self-started review,” Baxter said. “It is not responding to any specific application or request by regulated party, this is the Commission on its own instance saying, we’ve got to look back at these things.
“In our submission, the very fact that this self-started review is being held is itself proof of the fact of the CRTC complying with the Cabinet direction.”
Baxter went on to reference a number of decisions by the CRTC that showed some reference and analysis of the market factors that were thought out by the Commission, which he said further showed the Regulator was thinking about the cabinet directive.
CNOC also argued the CRTC has wide discretion at its disposal to determine rates. CNOC counsel Crawford Smith said earlier Friday morning previous case law has established that no “utility” can come before a tribunal and “expect full cost recovery… All of its costs are on the table, and they may be disallowed if the board, in determining reasonable rates, finds that its costs are unreasonable.”
Baxter concluded by imploring the justices to make a decision as quickly as possible, echoing calls by wholesale providers urging a fast resolution as they they’ve been struggling to manage operations – especially during the pandemic.
“In this case, delay itself is a victory for the incumbents,” Baxter said. “There has been enough delay – it is your happy chance to reinstate the just and appropriate rates as soon as possible. The time is now – over to you, justices.”
Parties are hoping the court renders its decision prior to the deadline of the incumbents’ appeal of the CRTC ruling to cabinet, which is one year from the first decision, or August 16, 2020.
