GATINEAU – Canada’s major cable carriers (Eastlink, Cogeco, Rogers, Shaw and Videotron) Wednesday made the point to federal cabinet that all the CRTC decision on new third party internet access aggregated wholesale rates does is disincentivize needed investment in high-speed networks, which is contrary to public interest.
November 13th was the deadline to file petitions to Cabinet (technically to the Governor-in-Council with cabinet) on the August CRTC decision to set lower final rates for TPIA – and force the incumbents to pay three years of retroactive overpayments to independent ISP resellers – and as the cable carriers argue, “by reducing wholesale rates payable by Resellers to Cable Carriers by 15 to 77%, the decision reallocates industry revenues away from network builders to resale marketers,” reads its submission.
“The Cable Carriers therefore ask the Cabinet to order the CRTC to reconsider its August 15, 2019, decision in conjunction with the CRTC’s previously announced review of the entire wholesale regulatory framework,” their petition reads. This mirrors Bell’s cabinet petition and would seem this may be the main thrust of the delayed Review & Vary applications which will now be filed on December 13th. Bell and Cable Carriers successfully argued for an extension, as we reported.
A petition to the Governor-in-Council remains a legal challenge, where applicants must demonstrate the CRTC Decision derogates from the policies spelled out in Section 7 of the Telecommunications Act. While the “CRTC surely did not intend such a result, the CRTC Order undermines significantly the Government’s own policy goals and the objectives set out in section 7 of the Telecommunications Act and is inimical to the long-term interests of Canadians,” reads the cablecos’ petition. “It is particularly damaging to the interests of rural, remote and Indigenous communities, whose future access to broadband wireline internet is jeopardized by the CRTC Order.”
“Wholesale rates have to be set at a level that strikes an appropriate balance between all of the Government of Canada’s policy objectives: affordability, competition, investment, innovation and expansion to rural, remote and Indigenous communities. The Cable Carriers are not suggesting that incentivizing investment be prioritized at the expense of affordability. Rather, establishing just and reasonable wholesale rates will help ensure that both of these objectives (as well as the others) will be met in the short—and long-term.”
The cablecos go on to argue if facilities-based carriers like them must provide their services below costs, as they contend the CRTC decision does, they will have no choice but to stop investing in deploying high-speed networks.
“For example, an article published in the Wall Street Journal just days before the CRTC Order was issued noted the German economy is paying a high price for past failures to promote diverse facilities-based competition in wireline internet infrastructure. In particular, slow speeds are impeding the digitization of numerous industries in Germany, negatively affecting their domestic and international competitiveness. This is not the future we want for Canadian industry,” they argue.
Of course, just the interim rates set in 2016 were hurtful to some of them serving rural areas like Eastlink.
“Eastlink’s concerns about the low interim rates established by the CRTC were not and are not theoretical in nature. In one Ontario community where Eastlink had previously made significant investments to upgrade its network, a Reseller was able to capitalize on the interim rates by reselling access to Eastlink’s network at prices that Eastlink could not match. The Reseller now has more subscribers in that community than Eastlink does, with the result that Eastlink has very little opportunity to realize returns on its investments,” the petition states.
“The wholesale rates established in the CRTC Order are based on incorrect assumptions about the architecture of the Cable Carriers’ wireline networks.”
“The wholesale rates established in the CRTC Order are based on incorrect assumptions about the architecture of the Cable Carriers’ wireline networks. If wireline infrastructure were built and expanded based on the CRTC’s model, the scale and quality of broadband internet access networks would be dramatically diminished,” state the Cable Carriers.
Finally, they argue that “The damaging effect of the CRTC Order on the Cable Carriers and their networks is further aggravated by the fact that the Order does not apply to Telephone Companies’ fibre-to the-home high-speed internet services. This regulatory asymmetry will allow the Telephone Companies—against which the Cable Carriers compete fiercely—to enjoy a significant competitive advantage, particularly in Western and Atlantic Canada,” reads the cablecos’ petition.
“In Ontario and Québec, the CRTC has established interim wholesale rates for fibre-to-the-home services, but wholesale access to those services is not yet operational. Outside of those provinces, Telephone Companies are free to sell their most cutting-edge high-speed internet service to retail consumers while refraining entirely from granting wholesale access to Resellers if they choose, with the result that Telephone Companies can earn full market rates for their highest-valued services.”
Officials form Innovation, Science and Economic Development Canada (ISED) will analyze the petitions after they are published in the Canada Gazette, which will allow parties to voice their opinions. It should be mentioned that those officials will be able to access to confidential data filed by various parties in the CRTC process, following a request from the Minister to the CRTC to do so.
All of this said, there is a decision still to come from the CRTC over the rates and speeds for disaggregated services, where resellers would be able to access new fibre to the premises builds. This is thanks to a Review & Vary filed by the Canadian Network Operators Consortium in November of 2018.
https://staging.cartt.ca/article/commission-sides-cnoc
There will be much more to come on these files.
