Wholesale rate appeal could go ahead as scheduled

The Federal Court appeal of the CRTC’s lowered wholesale internet rates could still include a hearing in June as originally scheduled, despite the COVID-19 pandemic that has ground most of the country to a halt. A notice from the judge in the case said if the parties “foresee no logistical difficulties in meeting” the original May and June deadlines for documents to be filed, the hearing could still take place in June. “If such an order is made and the reinstated deadlines are met, the hearing might still be possible during the June 24-26, 2020 period. Whether that hearing actually goes ahead at that time depends on the circumstances,” judge David Stratas said. “The parties are directed to confer and advise the Court as to their preferences on these matters. I will remain seized for this purpose and will make any necessary orders and directions in response to the advice supplied by the parties." Last August, the CRTC retroactively lowered the rates wholesale-based internet service providers pay to access incumbents’ networks. BCE Inc., Telus Corp., Rogers Communications Inc., Cogeco Inc., Bragg Communications Inc., and Quebecor Inc. are appealing the decision. The incumbents have not only challenged the new rates in Federal Court, but also through an appeal to cabinet and at the CRTC as well. Last week, wholesale-based provider Teksavvy Solutions Inc. laid off 130 staff and implemented a $5 bill increase. A company representative told The Wire Report on March 26 the company had been “running at a bit of a loss” in recent months, following the Federal Court freezing wholesale rates at their current levels until the appeal is heard by the Federal Court of Appeal. Teksavvy’s vice-president of marketing Mike Stanford said the company 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. While Teksavvy could previously live with the loss, the uncertainty, combined with the effects of the pandemic — including an increase in residential peak traffic consumption of about 20 per cent — meant it could no longer do so. In a research note issued Monday, Scotiabank analyst Jeff Fan said wholesale-based ISPs have been harder hit by the ongoing pandemic than facilities-based providers. “We think the wholesale ISPs business model has been very challenged during COVID-19 because rising broadband usage in a variable cost model which have significantly squeezed their margins,” Fan wrote. He noted that in addition to the layoffs and price increase, Teksavvy has also stopped taking new customers. “Based on the price increase implemented on a little less than 300K broadband subscribers, the math suggests Teksavvy is losing approximately $1.5M per month, which for a privately-held company is significant,” Fan estimated.

Wholesale rate appeal could go ahead as scheduled

Brief | April 3, 2020

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Wholesale rate appeal could go ahead as scheduled

Brief | April 3, 2020

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