Little support for CRTC forbearance policy review following Part 1 application

The Forum for Research and Policy in Communications (FRPC) is the only intervener in a CRTC proceeding that supports a Toronto-based attorney’s request to consider whether the CRTC’s general policy of forbearance remains applicable. Monday was the deadline to submit interventions responding to a March 11 Part 1 proceeding in which John Philip Roman asked the CRTC to review its determinations regarding forbearance, and to conduct a reassessment every five years thereafter. “The CRTC’s decision to forbear from regulating retail local exchange services remains unchanged to this day, while the conditions of operation of wireless and internet services have changed fundamentally,” Roman wrote in his Part 1, arguing that prices are unaffordable due to a lack of competition. The FRPC argued to the commission that “up-to-date data describing the affordability of telecommunications in Canada over time are not readily obtained.” The organization said that the word “affordability” cannot be found in the 50 infographics, figures and tables describing mobile telecommunications in the CRTC’s information packages hosted on the federal government's Open Data portal, and which were updated at the end of the year. “Data from Statistics Canada, however, show that across all household-income quintiles expenditures on the 'Cell phone and pager service' and 'Internet access services' have grown significantly over the past decade, at times by more than ten times the growth in expenditures on health care,” the FRPC argued. The FRPC urged the commission to open a public proceeding on its approach to forbearance in order to examine: what the regulator's current tests are for determining whether a telecom service is affordable; what criteria is most appropriate for evaluating affordability in Canada; whether the CRTC’s approach to forbearance has been effective in implementing its policy direction; if the CRTC’s approach to forbearance “in an industry sector characterized as a strong oligopoly” has failed to achieve its policy objectives; if rate regulation is more effective; and how long will it take for affordability to be achieved if forbearance is found to be the best approach. The Public Interest Advocacy Centre (PIAC) and TekSavvy Solutions Inc. told the CRTC that launching a public hearing to review its 2006 Forbearance Policy is unnecessary, despite their agreement that there is a lack of affordability in the marketplace. “While PIAC in principle supports a reconsideration of the commission’s current regulatory approach of forbearance for internet services, we presently believe such a proceeding would be premature and counterproductive,” PIAC wrote in an April 11 intervention. PIAC argued that the CRTC would not be able to conduct a meaningful review “without an extensive evidentiary record of retail rates collected by the commission.” “There currently seems to be no internal mechanism or commitment at the commission to assess whether forbearance, or other policy measures in the place of retail rate regulation, is even working to provide affordable internet for consumers,” PIAC wrote. TekSavvy told the commission that it supported Roman’s claims that wireline and wireless internet services are unaffordable for Canadians, but disagreed with his assertion that the regulation of broadband internet and mobile wireless retail rates offers the best solution for achieving affordability. Retail rate regulation “would only narrowly address the issue of affordability, while neglecting many other pro-consumer factors that exist when a balanced, competitive market can be achieved,” TekSavvy wrote, citing consumer choice, product quality and better connectivity as those additional factors. “Moreover, affordability would only be appropriately addressed if the commission were to set appropriate rates, a task they have struggled with in the wholesale context. Setting balanced and affordable retail rates can only be expected to take the commission a long time to achieve; this will take valuable time and resources that must instead be spent addressing the many pending decisions affecting the wholesale regime,” the company added. In their own interventions, Telus Corp., Rogers Communications Inc., and BCE Inc. responded that there has been no decrease to competition, therefore, a review would be inappropriate. According to Bell there is no sufficiently persuasive evidence to “demonstrate that the circumstances that justified the original forbearance determinations are no longer present.” “With respect to fixed internet, the market has been sufficiently competitive to ensure that ISPs continue to invest in their networks, bringing consumers greater speeds and more data capacity while prices respond to competitive pressure,” Bell wrote. The incumbent claimed that smaller competitors have grown their market share from 8.4 per cent in 2013 to 14.1 per cent in 2020. Both Bell and Telus also cited both a CRTC review (which led to the regulator’s 2019 Internet Code of Conduct) and the Competition Bureau’s 2018-2019 study on Canada's Broadband Industry. Each concluded that the best way to safeguard consumers was through wholesale regulation and improving how customers access and benefit from the internet from their contracts. Roman argued in his Part 1 that "it is reasonable to estimate that somewhere below $80 both Rogers and Bell can provide internet in unlimited quantities at no additional cost to themselves." "In effect, there is a point beyond which, when data supply becomes far greater than demand, there is no additional incremental cost to the carriers in providing unlimited plans,” Roman wrote. Roman used Toronto, Ont., as a case study, claiming that in the downtown core Rogers offers only one basic plan for $50 per month which provides 100 gigabytes (gb), 10 Mbps download and one mbps upload (10/1). The company's next cheapest plan offers unlimited usage with 50/1 speeds at $90 per month. He noted that Bell charges $50 per month and $84 per month for similar plans respectively. Roman argued these plans are worse than what was offered in 2015, and added that overage fees should no longer exist because there “is no longer any real scarcity when it comes to home internet.” “Given these facts, it is reasonable to ask why contemporary plans for internet service offer less for more than they did in 2015,” he wrote. “Why should lower-income Canadians still need worry about data usage when data have no incremental cost to the companies providing internet service?” Bell refuted that point by arguing that in Toronto there are 70 different providers, at least nine of which are separate facilities-based internet service providers (ISPs), offering service. Bell added that the incumbents’ flanker brands and resellers such as TekSavvy offer cheaper plans that can save customers up to 35 per cent. Rogers also rejected Roman’s claims that the incremental costs of data would nullify once it reaches a certain price point, arguing that carriers are investing billions in building wireless and wireline networks which can only be recovered through retail rates. Cogeco Inc. also said that mobile wireless consumers pay more for less service compared to other countries. However, the company argued that the regulator needs to first give its mobile virtual network operations (MVNO) framework a chance. The seven year mandated access will begin once the commission finalizes the national mobile network operator (NMNO) wholesale MVNO access service tariffs. “As the commission is well aware, regional carriers are currently preparing to take advantage of the mandated wholesale MVNO regime. Before the commission can even contemplate further regulatory intervention in this market, it ought to allow the regulatory remedy mandated… to be implemented prior to determining whether additional regulatory intervention is warranted,” Cogeco wrote, which represents similar arguments made by the national incumbents. Shaw Communications Inc., Quebecor Inc. and several other interveners further claimed that Roman was conflating a 2006 policy direction emphasizing free market forces in CRTC-decision making with its 2006 decision on forbearance from the regulation of local retail services. The latter “is the commission's basic policy decision on forbearance from regulation of the local telephony market (and not of the market for internet or mobile wireless services),” Quebecor wrote in its intervention according to a translation. Shaw added that the “application must be denied because the commission does not have the authority to grant the relief sought” under the 2006 order which also limits the CRTC’s use of regulatory measures. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca.

Little support for CRTC forbearance policy review following Part 1 application

News | April 12, 2022

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Little support for CRTC forbearance policy review following Part 1 application

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