Quebecor says it cut gig speeds due to new wholesale rates

Quebecor Inc. executives confirmed on Thursday that its previously unexplained move to withdraw its gigabit internet offering was due to the CRTC’s decision to slash the wholesale rate at which resellers purchase bandwidth from incumbents. “With the new regime, we can’t afford it,” Quebecor CEO Pierre Karl Péladeau said of the gigabit service on a third-quarter conference call with analysts. “It requires investments...we have to take decisions. We’ve taken that decision -- it’s probably the most material one that we’ve taken so far, but it’s going to be followed by others.” Last month Videotron, the company’s telecom division, sent a notice to the CRTC saying it intends to cut from its offering the gigabit option going forward. It is an unusual move, as gigabit download speeds are increasingly being adopted by Canadians and becoming more of a mainstay for the telecoms. The new regime was set into motion on Aug. 15, when after three years on interim tariffs the regulator finalized and made retroactive the rates smaller internet providers pay to resell service from the facilities-based incumbents’ networks. It was a decision that was met with sweeping disapproval from the larger incumbents, who revised their investment outlook going forward. The incumbents said the decision would cost them about $350 million on the retroactive part alone. BCE Inc. said it would cut its rural broadband investments, while Rogers Communications Inc. and Shaw Communications Inc. also said it would impact future investment. But smaller players who resell network capacity, like TekSavvy Solutions Inc., Distributel Communications Ltd., and Start.ca ,all committed to lowering their prices in response to what they see as a favourable decision. The decision is currently being appealed in Federal Court, which has put in place a temporary freeze on the new rates. A number of the telecoms have also asked the CRTC to leave the option of filing a review-and-vary open, by asking for an extension to the deadline to do so. They have also indicated that an appeal to cabinet is on the way. Following the August decision, Quebecor issued a press release estimating that the move would cost the company $50 million in retroactive fees. “The company will take time to assess all available options,” it added. Executives on the call said they will fight the decision because the “process and conclusion were and are deeply flawed,” claiming that the resellers would not need to “invest in anything” and are therefore getting a “free lunch.” That aggressive response and approach by the larger telecoms, an internet conference heard Wednesday, may foreshadow what’s to come with the new disaggregated regime, which will allow resellers to purchase fibre-to-the-home service on a mandated basis and whose final rates have yet to be determined by the regulator. Quebecor executives also reiterated their position that no-overage data wireless data plans widely adopted by the other bigger telecoms over the summer were not the way to go, saying — like Bell said before it — that the move was too early and that throttling speeds was not the way to manage consumption. Videotron, in contrast, offers bigger data buckets at full speed instead. In the third quarter that ended on Sept. 30, Videotron added 56,800 new wireless subscribers in the quarter, a 4.6 per cent increase over last year for a total subscriber base in that segment of roughly 1.3 million. It’s average billing per user (ABPU) was up to $50.49 compared to $49.70 in the same period last year. On internet, the company added roughly one per cent more subscribers in the quarter, or 17,400, compared to the same quarter last year for a base of 1.7 million. Over the summer, the company released its new Helix platform, which combines IPTV, WiFi management and its smart home system. It said that it’s already achieved over 30,000 subscribers on the platform as it continues to work to meet demand for it. Executives said that the company hit an installation backlog for the new product, which it said should be rectified by the end of the year. It hopes the Helix platform will halt the cord-cutting, as it continued with a company-reported loss in that segment of 13,200 in the quarter for a total base of 1.55 million by September end. Its Club Illico TV platform base stood at 443,500 by quarter-end as it added 12,500 new subscribers in the quarter, a 2.9 per cent increase over last year. Telecom lifted a slower media division, whose revenues fell 2.2 per cent in the quarter — compared to the same period last year -- to $167.2 million on lower advertising revenues, offset by increased subscription revenues. Videotron revenues were up 2.6 per cent to $876.7 million, while total company revenues were up 1.9 per cent to $1.07 billion over the year. Quebecor's net income decreased over the period to $182.7 million, compared to $191.4 million in the same quarter last year. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Quebecor says it cut gig speeds due to new wholesale rates

News | November 7, 2019

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Quebecor says it cut gig speeds due to new wholesale rates

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