Also disappointed wholesale rates will not be reversed
By Ahmad Hathout
INDEPENDENT INTERNET SERVICE providers said they are “encouraged” by the direction the federal government is taking in its proposal Thursday for a new policy direction to the telecom regulator, despite the government also denying a request to overturn the Internet access costs on which the direction focuses.
“They’re [CRTC] going to have a very clear roadmap for how the government expects them to regulate this industry,” Matt Stein, CEO of Distributel and the Competitive Network Operators of Canada, a trade group for independent ISPs, said in an interview, adding he is also “very disappointed” the government did not act now on access rates.
“There are many things right throughout this document or provided for the CRTC to adjust to its own volition, to realize that something is wrong and to go proactively make changes rather than wait for them to become dire – these are huge,” he added.
“This is a consumer-focused set of policies,” Stein said. “There is a lot of work that is still necessary, but we’re on the right path finally.”
The new direction, which will open for comments and is expected to come into force by the fall, clearly outlines government goals for the regulator on the wireline and wireless side. On the wireline side, the policy directs the CRTC to make decisions keeping in mind “more timely and improved wholesale rates,” which are the cost to small players of renting broadband capacity from the large players.
Also significant is a directive to keep the aggregated wholesale model, which the CRTC has been phasing out in favour of the 2016 disaggregated model, which would give small provider access to the last-mile fibre infrastructure of the large carriers to allow them to provide their customers much faster download speeds, but at the expense of leasing both the middle-mile and last-mile infrastructure at fewer interconnection points. The new direction would not only keep the aggregated model until a more viable option is available, but it would also afford smaller providers the benefit of last-mile fibre access.
“The federal government says its proposed policy direction is a win for consumers and smaller ISPs, but it is not” – Peter Nowak TekSavvy spokesperson
According to a government backgrounder, the reasoning is to “make the speeds that Canadians are demanding available to competitors.” Third-party providers have often remarked that Canadians want access to those faster speeds but have been constrained by the existing model.
“Getting access to fiber to the prem[ises] over aggregated is going to be extremely important,” said Stein, who has said the current disaggregated model with its many interconnection points makes it economically unfeasible for providers like his.
When Cartt.ca reached out to spokespeople for Rogers and Bell, they said they did not have a comment at this time.
Innovation Minister Francois-Philippe Champagne said in a news release that, “While the progress we have made and witnessed to date on lowering prices is encouraging, more needs to be done. Canadians still pay too much for their Internet and cellphone services.”
Champagne added: “The new policy direction would require the CRTC to support a wholesale Internet regime that is sustainable, effective and fair, because wholesale broadband is a proven regulatory tool for increasing retail competition in the Internet service market.”
While it said the new direction “may encourage the CRTC to promote competition in the future,” TekSavvy focused more in a press release on the fact the government did nothing on its petition to overturn the regulator’s decision that axed its own proposed lower wholesale rates in 2019 and made permanent higher interim rates from 2016. It said the inaction will likely mean more competitors will exit the market, as small Quebec ISP Ebox was purchased by Bell earlier this year.
“The federal government says its proposed policy direction is a win for consumers and smaller ISPs, but it is not,” said 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.”
“I’m not getting my hopes around improved wholesale rates, it’s a bit vague and we may not actually see an improvement to the current regulated rates, but I do like the language” – Jason Speers, Babbl founder
The statement also lambasted the government for not taking action after CRTC chairman Ian Scott – whose term is ending in September – previously said he had a “personal” preference for facilities-based competition, and after a one-on-one meeting he had with Bell CEO Mirko Bibic.
Jason Speers, president and founder of new BC-based third-party ISP Babbl, told Cartt.ca that where he could “see a win, even if small, lives in the language of ‘improved wholesale rates available’ and ‘a new access model.
“I’m not getting my hopes around improved wholesale rates, it’s a bit vague and we may not actually see an improvement to the current regulated rates, but I do like the language,” Speers said. “What interests me and where I have questions is around a new access model that is apparently being introduced. This may be where we see something land on our side. Even a small win is a win.”
University of Ottawa law professor Michael Geist said on Twitter the policy direction “reads like an attempt to distract from the decision to uphold CRTC wholesale rates ruling.
“Putting an end to the Bernier [2006] policy directive provides some certainty and the opening to comments is welcome, but the government’s aversion to big change in the telecom sector to address the woeful state of competition remains the same,” he said.
In an emailed statement, CRTC spokesman Eric Rancourt said the regulator, “await[s] the final version of the policy direction, following the government’s consultation process.”
On the mobile wireless side, the proposed policy also directs the CRTC to “improve” on its decision to allow certain regional carriers that have spectrum and infrastructure to rent wireless capacity from the large carrier networks on a regulated basis.
While the federal cabinet denied a petition last month to reverse the CRTC’s decision to exclude full MVNOs (mobile virtual network operators, which do not have spectrum or infrastructure) from gaining regulated access to large carrier wireless networks, the government noted Thursday, as it has previously, it is willing to take action to grant full MVNOs if the current model does not work.
Dotmobile, a startup full MVNO that submitted the denied petition, said Thursday it supports the government’s new directive.
Despite largely leaving behind the main pillars of the 2006 directive, the new direction still requires the CRTC to balance economic regulation with competition and investment considerations, the latter being a central argument for many issues incumbents have raised when trying to reconcile building and improving their networks with allowing third parties to ride on them.
A government spokesperson said during the briefing that part of the reason for having one new directive was to provide clarity and reduce confusion – when the 2019 directive was released, it did not replace or eliminate the 2006 directive.
Telecom consultant Mark Goldberg said he thought it was confusing to deal with the two directions, which he said, “gave a lot of room for just about any finding by the CRTC to be consistent with some aspect of one of the two policy directions.”
Besides being more specific, the newest policy direction also axes language from the 2006 directive that required the CRTC to make decisions that relied on the maximum extent on market forces, which was a central argument for incumbent challenges to previous CRTC decisions.
When asked about that during the briefing, a government spokesperson said that language is “not relevant in the current context,” adding the overarching goals of the government are to improve competition, lower prices, and provide better services. “Sometimes that involves regulations, sometimes that involves market forces, but the goal of the direction is about results for Canadians,” the official said.
Goldberg pointed to the section 7(f) of the CRTC-administered Telecommunications Act, which says that telecom policy must “foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.” The directives require the CRTC implement the objectives under that section of the legislation.
“In 2006, that objective, 7(f), was put up front, but then the rest of the direction created the implicit balance,” Goldberg said. “In the 2022 proposed direction, the various objectives are all to be considered – in balance,” which he said has been a “consistent theme” for consecutive innovation ministers.
