By Ahmad Hathout
OTTAWA – Canada’s largest independent internet service provider is urging federal Innovation Minister Francois-Philippe Champagne to block the transfer of Shaw’s wireless spectrum assets to Videotron over concerns that the latter will receive favourable wholesale rates compared to competitors.
The Competition Tribunal earlier this month provided reasons for denying an application to block Rogers from purchasing Shaw, saying Videotron – the regional carrier that is lined up to buy Shaw’s Freedom Mobile as a condition of the deal’s approval – would be a strong competitor in the market and would take market share from the major players in western Canada.
The tribunal noted Rogers’s sweeteners in the Videotron deal, including providing the prospective western Canadian upstart with access to Rogers’s broadband network at below market rates so it can get its footing in the competitive arena.
This fact, according to TekSavvy today, should make the proposed deal a no-go.
“The entire transaction hinges on a side deal where Rogers will rent its broadband network to Vidéotron at special wholesale rates that aren’t available to independent ISPs, such as TekSavvy,” said a press release today, referencing the revelation made during the more than month-long tribunal hearing.
“The CRTC sets wholesale rates paid by independent ISPs who lease access to the larger carrier networks,” the release said. “Those regulated rates indirectly determine what Canadian consumers pay for internet services. When the Competition Bureau argued that the CRTC’s rates are so high that Vidéotron cannot use them to compete, Rogers confirmed that it will grant Vidéotron preferential rates that are below the regulated rates set by the CRTC.”
TekSavvy has been an outspoken critic of the decision by the CRTC in 2021 to scratch proposed lower wholesale rates from 2019. Since the decision to maintain the higher 2016 rates, some wholesale service providers have been gobbled up by larger competitors, including Bell’s acquisition of Ebox and Distributel and Videotron parent Quebecor’s purchase of V-Media.
In an interview with Cartt, former CRTC chairman Ian Scott noted that broadband prices are going up and that the commission is currently looking into the matter.
The Federal Court of Appeal will hear an appeal of the tribunal’s decision starting January 24, after the Competition Bureau filed for an emergency suspension of the decision it initially instigated when it asked the tribunal to block the deal on the grounds that the sale of Freedom to Videotron wasn’t enough to placate competition concerns.
Only after this appeal is resolved will Innovation Canada make its decision about whether to allow the deal to move forward to its completion.
At the time the tribunal’s decision was released, Champagne said in a statement that he will “review that decision in detail and will render my separate decision only after there is clarity on the ongoing legal process.
“Promoting competition and affordability in the telecom sector is one of my top priorities,” he added in the statement. “That position has not changed.”
