UPDATED: CRTC cuts wholesale broadband rates by 10 per cent, launches new rates proceeding, and will expedite review of FTTH access; competitors pleased

The CRTC Wednesday made good on newly-minted chair Vicky Eatrides' January promise to reassess the wholesale broadband market, and launched a notice of consultation that will reopen one of the most contentious issues in the telecom sector in recent years: the rates competitor ISPs pay to incumbents for mandated access to their networks. As an interim step, the CRTC is immediately reducing some rates for aggregated wholesale access, reflecting a 10 per cent decrease in the "costs of traffic-sensitive components used to inform the current rates," according to the notice of consultation. While Wednesday's notice of consultation said the date for the regulator's hearing on wholesale rates is yet to be determined, Eatrides said in an interview with the Wire Report that the commission is aiming for early 2024. "This is about competition, and this is about promoting competition," Eatrides said in the Wednesday interview. "I'm looking to the future, and I'm acting quickly," the chair said. On the issue of interim rates, Eatrides said that "we're looking to be agile," and added that the CRTC could vary the interim rate if needed. Also central to the CRTC's move is an "expedited" effort to address whether or not to mandate competitor access to fibre-to-the-home (FTTH) networks, which would allow competitors to challenge incumbents in the marketplace on the basis of the faster speeds that fibre allows. "The CRTC considers that access to fibre-to-the-home networks is essential to support competition. It will examine on an expedited basis whether large telephone and cable companies should provide competitors with access to their fibre-to-the-home networks," the regulator said in a Wednesday release. Innovation Minister François-Philippe Champagne sought to take credit for the move in remarks to reporters Wednesday afternoon. "I think the new directive is paying off for Canadians," he said according to a transcript, adding that "we’ve been asking the CRTC to make sure that prices go down, that we’d have more competition. And that’s one of the tools in the toolbox to make sure that we would have better prices for Canadians." The move also throws cold water on the disaggregated regime, which has failed to gain traction in the market, with the CRTC admitting in a separate decision that the disaggregated regime has "not fulfilled its mandate and requires reconsideration." The regime will remain, the commission wrote, in Quebec and Ontario along existing tariffs, but will not be expanded. The CRTC will take comments on FTTH access until April 24, and on the larger issue of wholesale rates until June 22. The commission's reassessment of the wholesale regime also comes following the acquisition of several different competitor ISPs by larger incumbent and regional players in recent months. Last month Cogeco Inc. announced that it had purchased Oxio, months after BCE Inc. bought EBox and purchased Distributel. In 2022, Quebecor Inc. took over VMedia. In January Telus Corp. acquired independent ISPs Start.ca and at the same time revealed that it had acquired Altima Telecom in June 2022. Competitive Network Operators of Canada (CNOC) chair and president Paul Andersen said in an interview that the organization was "very positive and very thankful" for the move by the commission, and that the launch of consultations on fibre access and rates demonstrates that there is "a feeling from and fellow commissioners that there's a market failure under way." While declining to comment on the pricing strategy of CNOC member companies, Andersen said that it was entirely possible that competitor ISPs would not jump to incorporate the cheaper wholesale rates into their pricing the way some companies did following the CRTC's 2019 decision to slash wholesale rates. Those lower 2019 rates never came into effect after the Federal Court of Appeal granted incumbent telecom companies a stay while the court considered a judicial review. The rates were eventually axed altogether in 2021 when the CRTC reversed itself in a dramatic decision. TekSavvy Solutions Inc. – one such ISP that dropped its own rates after the 2019 decision, only to raise them again after the CRTC's reversal – said in a Wednesday statement that the company is "encouraged by the regulator’s acknowledgement of the current crisis and its commitment to act swiftly to correct it." "The CRTC appears to understand that previous decisions have decimated the competitive market for internet services and led to higher prices for consumers,” TekSavvy vice-president of regulatory and carrier affairs Andy Kaplan-Myrth said in the release. “While additional interim rate reductions are required to have a meaningful impact, we are pleased to see a proper focus and fast-track toward more competition and better prices.” Meanwhile, National Bank analyst Adam Shine wrote in a Wednesday afternoon note for clients that the move "truly shouldn't come as a surprise to anyone, as the prior pro-industry Commission is giving way to a more pro-consumer one," and pointed to directions to Eatrides in the CRTC mandate letter. When it comes to the immediate rate cut of 10 per cent, Shine wrote that it "could have been worse even if any cut is coming a bit sooner by a couple of months than we otherwise anticipated. "The cut relates to the usage component (i.e., traffic sensitive) and may not prove to be that material for the telcos as it doesn't relate to high-speed fibre which has been their evolving focus amid their fibre rollouts (so more of an issue for the cablecos)," the analyst wrote. – Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca

UPDATED: CRTC cuts wholesale broadband rates by 10 per cent, launches new rates proceeding, and will expedite review of FTTH access; competitors pleased

News | March 8, 2023

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UPDATED: CRTC cuts wholesale broadband rates by 10 per cent, launches new rates proceeding, and will expedite review of FTTH access; competitors pleased

News | March 8, 2023

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