Teksavvy lays off staff, increases internet bills

Teksavvy Solutions Inc. has laid off 130 staff and will implement a flat $5 bill increase for its residential internet customers as of May, saying a legal challenge against last year’s wholesale rate reduction, combined with the COVID-19 pandemic, left the company with no option. Teksavvy’s vice-president of marketing Mike Stanford said in a phone interview Thursday that the company had been “running at a bit of a loss” in recent months, following the Federal Court granting an application for a stay, freezing wholesale rates at their current levels until the appeal is heard by the Federal Court of Appeal. Teksavvy had lowered their prices and hired new staff after the CRTC decision which significantly reduced the wholesale rates paid by resellers for access to incumbents’ networks, making the new rates retroactive to March 2016 for nearly all companies. Stanford said Teksavvy had previously had “a line of sight” of a court decision in the spring, but the COVID-19 pandemic meant it was impossible to predict when a decision would be made. In appealing the decision, incumbents claimed the new rates were “below cost,” with a number of providers announcing immediate cuts to investment. The COVID-19 pandemic has led Teksavvy to put a freeze on new orders, while an increase in residential peak traffic consumption of about 20 per cent due to the numbers of Canadians working from home has led it to purchase further capacity. The company has also announced that it had temporarily waived overage fees for home internet users due to the pandemic. Stanford said the impact of COVID-19 over the last couple of months had made it “critical for us to take action because we don’t have a sense of when relief in the courts is going to come and the implementation of this new pricing scheme.” “So what we were doing before, we were content to live with a little bit of a loss on a month by month basis, we now have no end in sight and we’ve taken action to rectify that and reduce the quantum of losses we’re suffering as a company on a month by month basis,” Stanford said. The majority of the laid off staff — about 15 per cent of Teksavvy’s total workforce — are customer service representatives in its Chatham, Ont. office, with the rest working out of its Gatineau office. The $5 bill increase for all residential internet customers will begin on May 1, with Stanford saying it was the “last thing we want to be doing” during a pandemic that was negatively impacting the economy and leading to significant job losses both in Canada and around the world. “We wouldn’t be doing it unless it reached that critical point. Without clarity on when this is going to get resolved in the courts we just have to act,” Stanford said. “Prior to the virus coming along we had a line of sight to a spring court date that gave us a rough timeline on when we thought this might have been settled, but we have no clarity on that now.” Andy Kaplan-Myrth, Teksavvy’s vice-president of regulatory and carrier affairs, said the $5 bill increase was not enough to make the company profitable, but was simply “a way to slow down the losses and put us in a position where we can ride this out a little bit longer.” “Knowing that we have 300,000 customers approximately, I think a little bit less than that number of internet accounts, that gives you a sense of how much we’ve been recording losses since September,” Kaplan-Myrth said in the same phone interview. Asked if Teksavvy regretted lowering bills for customers despite knowing it was likely incumbent providers would challenge the CRTC’s wholesale rate reduction, Kaplan-Myrth said the company was “in too difficult of a competitive decision to be able to make that call.” Kaplan-Myrth said the company thought there would be an appeal in “some way” against the rates decision but said he didn’t expect incumbents to lodge a Federal Court appeal as well as review-and-vary applications with the CRTC and governor-in-council petitions calling for the decision to be reversed. He also said Teksavvy thought the prospect of the Federal Court of Appeal granting a “stay” was not very likely. “I don’t think we knew at the time that we would be in quite as difficult a decision as we are in now having lowered those prices,” he said. “But also even before that decision came, the carriers were undercutting us on prices in the retail market for the most important and popular plans, so we did not really have the luxury of saying we will continue to charge uncompetitive retail rates and see how all this pans out. We really needed to lower prices.” Kaplan-Myrth said there were “too many scenarios” at play for the company to commit to rehiring all staff members and lowering bills if the appeal was thrown out, noting that the decision would be “much more detailed than final rates or no final rates” because there had also been applications for the rate decision to be referred back to the CRTC. “If we go to the hearing in June and the court makes a decision from the bench at the hearing, which I do not expect to happen… if they made a decision there and just threw out the appeals completely we would still have to wait a month to know if the incumbents were going to challenge that in the Supreme Court, and judging them by their record they would, so that would be yet another say, a year process,” Kaplan-Myrth said. — With reporting by Adam Langenberg at alangenberg@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Teksavvy lays off staff, increases internet bills

News | March 26, 2020

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Teksavvy lays off staff, increases internet bills

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