MONTREAL and TORONTO — Independent internet service provider Distributel has agreed to be acquired by Bell for an undisclosed amount, the companies said in an announcement today.
Distributel will continue to operate independently after close of the deal — which is subject to standard regulatory approval — and Matt Stein, the CEO of the company, will remain at the helm, a press release said.
“With this announcement, Distributel is better positioned to compete and deliver on our decades-long commitment to bringing choice and affordability to Canadians from coast to coast to coast,” Stein said in the release. “We hope Canadians are as excited as we are about the many benefits that will result from this partnership. Our teams remain focused on serving our customers with excellence across all our brands as we leverage Bell’s resources to expand and enhance our product offerings.”
Blaik Kirby, Bell’s group president of consumer and small and medium business, said in the release that Distributel “will enhance its innovative services for residential and small and medium business customers, backed by Bell’s resources and technology.”
If the deal closes, it will be the latest independent telecom to be gobbled up by a giant. Bell had already agreed to acquire Ebox, while Quebecor scooped up VMedia — both earlier this year. Meanwhile, the Competition Tribunal is working through the biggest deal of them all — Rogers Communications potentially acquiring Shaw Communications.
“This is the third major independent to fall into the hands of a major player recently,” said Geoff White, executive director and general counsel at the Competitive Network Operators of Canada, which represents independent ISPs, including Distributel. “Like the first two acquisitions, this changes absolutely nothing in terms of our commitment to advocating for more competition in the Canadian telecom market.
“The loss of independent competitors to large incumbents who have relentlessly attacked and weakened the CRTC’s wholesale access framework is worrisome, because home internet prices have been on the rise, and we expect that trend to continue and worsen with each acquisition,” White continued. “It is absolutely critical that the Government quickly implement its new policy direction to the CRTC, directing it to fix and improve the wholesale access framework, or else more independent players are going to have to sell. At the end of the day, I hope politicians of all stripes are paying attention to this issue, because this one hits Canadians’ bank accounts hard.”
In a tweet today, Innovation Minister Francois-Philippe Champagne said, “Like many Canadians, I learned this evening of the proposed transaction for Bell to acquire internet provider Distributel. I trust the Competition Bureau will ensure this transaction protects the interest of Canadians when it comes to affordability and competition.”
The Liberal government’s recently proposed policy direction to the CRTC puts at its heart the need for the regulator to make decisions with a mind to “more timely and improved wholesale rates,” which are the cost to small players of renting broadband capacity from the large players. Those rates, which the CRTC initially proposed be lowered in 2019, were eventually left untouched after appeals from the larger telecoms.
Independent internet service providers had warned that they would not be able to operate for long with the existing wholesale rates, and saw the 2019 ones not just as a reprieve but a just one at that. But following the decision not to adopt the lower rates, independent ISPs had to make strategic decisions that impacted their businesses, including independent ISP TekSavvy backing out of a wireless spectrum auction.
The news comes just over two weeks after TekSavvy asked the Competition Bureau to investigate “anti-competitive activity” in the industry. That type of activity allegedly includes “a sustained strategy of predatory pricing in the retail market for internet services using their flanker brands Virgin (Bell), Fido (Rogers) and Fizz (Videotron).”
