As much as $10 a month more
CHATHAM and LONDON – Two independent ISPs announced this week retail rates are on their way up, thanks to the direction the federal government gave the CRTC on Saturday.
The Governor-on-Council issued an order on Saturday which did not strike down last August’s Commission decision that set new wholesale rates incumbents were to charge broadband resellers like TekSavvy and Start.ca, as well as demanding retroactive payments to the independents, but did say federal cabinet didn’t like those rates “in all instances.” The order effectively told the CRTC to come up with something better during its own Review & Vary appeal of the same decision which is already under way.
Right away on Sunday TekSavvy hiked rates for new customers by $5 and $10 per month, depending on the speed tier and today began telling existing customers their rates are on the way up, too.
“In August 2019 the CRTC announced final rates that companies like TekSavvy are charged by the large telecom carriers. In some cases, those new rates were a reduction of more than 43%. TekSavvy took steps to pass on those savings on by reducing rates for the vast majority of our customers. We saw it as simply the right thing to do,” TekSavvy reminded customers in emails which started going out to them today.
“However, the large carriers petitioned Federal Cabinet to overturn the CRTC’s decision and impose higher rates. In their recent August 15, 2020 statement, the Federal Cabinet effectively directed the CRTC to increase these wholesale rates. Ultimately, in announcing its verdict on the petitions, Cabinet caved to pressure from the large carriers, who threatened to hold back investments in rural Canada unless they were protected from competition. The decision is a reversal from Cabinet’s previous direction that the CRTC place affordability, competition, and consumer interests at the forefront.
“TekSavvy is left with no choice but to interpret this announcement as an expectation from the government that retail prices should be raised, specifically to protect Incumbent investments.”
“After 5 years of cost uncertainty, inflated interim rates, and anti-competitive behaviour by the large carriers, TekSavvy is left with no choice but to interpret this announcement as an expectation from the government that retail prices should be raised, specifically to protect Incumbent investments. We are therefore making a difficult decision in order to continue providing you with the service you have come to expect,” continues the TekSavvy communiqué.
“This is obviously not the news we wish to be delivering to you at a time of increased uncertainty and concern. TekSavvy has long been a strong supporter of transparency and fairness in internet pricing and we will continue to fight for these principles while working hard to provide you, and all our customers, with the quality service you deserve.”
London, Ont.-based TPIA ISP Start.ca (which, like TekSavvy, lowered rates very soon after the August 2019 decision) issued a press release Wednesday afternoon relaying a similar message about the incumbents and the federal government, adding it now must “update our pricing and options to reflect the reality that it has been over a year that we’ve been paying the old rates while offering our services modeled on the new rates which have yet to materialize,” said Peter Rocca, CEO of Start.ca, in its release.
“This is the first time in 25 years of business that we’ve ever raised our prices. We recognize that the timing is terrible but we’re still optimistic that the adjusted rates will eventually be deployed and that this price increase will be temporary. While the changes only affect new customers at this time, Start.ca says it expects the majority of its existing 75,000 customers will likely see their rates go up between $5 and $10 per month in the near future, following a 30-day notice period.
“The 2019 decision was reached after an extensive 5-year investigation was carried out by expert analysts at the CRTC who concluded that the rates were unjustifiably inflated. The decision was celebrated by consumer advocacy and watchdog groups alike, who believed it would lead to fairer internet rates and improved innovation within the industry.
“If you want to support continued efforts to pursue fairer internet rates in Canada, Start.ca recommends reaching out to your area MP to voice your concern.”
Matt Stein, CEO of Distributel told Cartt.ca the company is taking a wait-and-see approach and did not commit to rate increases. However, as chair of the Competitive Network Operators of Canada, he also said his members are facing immense pricing pressure, especially with how the increased network traffic caused by so many Canadians staying at home to work also causes their costs to rise.
“Competitive ISPs have been under intense cost pressure for years because we pay rates the CRTC determined are dramatically higher than is appropriate,” he said. “The ambiguous statements in the (Order in Council) only add more uncertainty to when and if Canadians can expect to see the fair and affordably priced Internet services they deserve, and that the government recently held up as an election promise. It’s already been a year since the CRTC completed a three-year review of costs in which it set new final rates, and we have no clear picture of when the implementation of those fair costs will be. All the government needed to do was support the CRTC’s detailed work and let the process run it’s course.
“Every day, Internet usage goes up, a situation only compounded by the number of Canadians that so abruptly began working and learning from home. The fact that we are paying inappropriate costs only adds insult to injury. Unfortunately, that invariably translates to higher prices for consumers,” added Stein.
Cartt.ca has asked other independent ISPs who purchase access to incumbent networks if they plan to raise prices and will update the story if and when we hear from them. UPDATE: Montreal-based Altima Telecom (which also has customers in Toronto and other regions) said today on Twitter it will be increasing its retail rates as well.
We have also asked ISED for its thoughts on these rate increases and will update the story if and when we hear from the ministry.
