Shaw fights back in wholesale Internet pricing dispute

Shaw Communications Inc. is fighting back against accusations from small ISPs that its new pricing proposal for third-party Internet access is exorbitant, saying in a recent filing with the CRTC that higher costs are necessary to deal with “dramatic” growth in Internet usage. Last week the Canadian Network Operators’ Consortium (CNOC) cried foul at the rates Shaw proposed to the CRTC on Jan. 6, with one operator calling them “egregious” because of increases that approximately double rates on certain service tiers. In a Jan. 19 response filed with the regulator, Shaw said it values its third-party Internet access (TPIA) customers, yet it needs to raise rates in order to pay its costs. “Shaw’s proposed TPIA rates take into account the costs of meeting dramatic growth in demand for our Internet services from our own customers and our TPIA customers’customers,” the company said in the filing. “The cost of providing reliable, high-quality Internet services today are not the same as they were five years ago when Shaw’s wholesale rates were last reviewed.” The company said its new proposal is supported by a cost study, and that some of the previous rates were too low because not all were calculated using such a study. Part of CNOC’s submission was a request that the CRTC use its discretion to approve interim rates closer to the previous prices Shaw was charging. Shaw said that makes little sense because the company has supported its proposal with a cost study and the CRTC has only taken such action previously when no such study was available. “While CNOC acknowledges Shaw’s cost study, it does not explain why this key distinction should be ignored, in favour of applying a measure that has only been imposed by the Commission in the absence of a Phase II cost study,” the company said. If the CRTC accepts CNOC’s reasoning, it would cause “prejudice and harm” to Shaw, the company said, adding that economic-efficient entry for third parties is a fundamental principle of the CRTC. “It would undermine this principle to disregard Shaw’s costing study and arbitrarily deem below-cost wholesale rates to be appropriate, notwithstanding support for the proposed rates as evidenced in a costing study,” the company said. “Adopting CNOC’s proposal would provide independent ISPs with a competitive advantage in the market,” it added. “Wholesale rates must be cost based to ensure carriers are compensated for their costs of providing the wholesale service.” Parts of the study cited by Shaw were filed in confidence with the CRTC and not publicly available. Shaw said its proposed prices are based on the “costs of providing the service plus a mark-up of 30 per cent,” and if approved would take effect Feb. 6. In another Jan. 19 filing to the CRTC, ISP Juce Communications Inc. sided with CNOC in decrying the new-cost proposal. “The access costs described this tariff application represent only one part of our total cost of providing internet service to end-users,” the company said. “When the TPIA access rates are set too high leaving us no margin to recover essential costs …even without adding our own markup, the business model of TPIA becomes obsolete. The prices being proposed …are at such level.” — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Shaw fights back in wholesale Internet pricing dispute

News | January 23, 2015

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Shaw fights back in wholesale Internet pricing dispute

News | January 23, 2015

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