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CNOC petitions gov on wholesale rates

News | 07/15/2021 5:42 pm EDT
CRTC logo displayed at public hearings on Oct. 26, 2018. / Photo by Andrew Meade.

Fed up with the CRTC’s May decision to overturn its 2019 decision on wholesale internet access rates, the Competitive Network Operators of Canada is turning to the federal government for help. 

In a petition to the Governor in Council filed Thursday, the trade group — which represents a number of wholesale-based internet service providers — argues that in deciding to make permanent the interim rates established in 2016 and tossing the lower rates outlined in the 2019 decision, the CRTC “compromised the foundation for broadband competition and affordability in Canada.” 

“The CRTC’s decision is fundamentally incompatible with this Government’s consistent messaging to Canadians about the importance of competition and affordability of telecommunications services,” the petition reads. 

In a release accompanying the petition, CNOC executive director and CEO of Distributel Ltd. Matt Stein said the “CRTC’s flip-flop will, without a doubt, harm competition, reduce consumer choice, and increase the prices all Canadians pay for home internet.”

“If the Government doesn’t step in, the promise of affordable choice for telecom services will be broken.”

The petition goes on to assert the CRTC’s decision “is the latest product of a Commission that has fallen out of touch with the needs of Canadians,” linking the reversal on wholesale rates to the commission’s rejection of a broad-based mobile virtual network operator (MVNO) mandate and an ongoing proceeding on disaggregated wholesale internet access. 

“These files reveal a pattern of mismanagement and decisions that are plainly out of touch with the Government’s mission to make affordable and high quality telecommunications services available to Canada’s middle class and the people working hard to join it, and which are of benefit only to the Big Telecoms,” the petition reads.  

Like a recent TekSavvy Solutions Inc. application to the Federal Court of Appeal for leave to appeal the rates decision — as well as that company’s own petition to cabinet — CNOC also points to what it argues is evidence of bias on the part of CRTC chair Ian Scott. An alleged December 2019 meeting between Scott and then-BCE Inc. chief operating officer (and now CEO) Mirko Bibic in an Ottawa bar, CNOC wrote in the petition, “is bias manifested.” 

The threats of decreased investment from big telecom companies in response to the 2019 wholesale rates decision are not consistent with the companies’ messaging to their investors,  CNOC’s petition also argues, while pointing to the increased dividends and share buybacks that indicate a healthy financial profile.

Pointing to investment cuts of $200,000 by Bell in 2019 as a direct result of the wholesale rates decision — juxtaposed with comments made by the company’s then-CEO George Cope in a 2019 quarterly earnings conference call in which Cope said “wholesale subscribers are not strategic for us. It is not a market we approach. It is not a market that we have, frankly, any interest in pursuing, other than regulatory requirements” — CNOC wrote that Bell was contradicting itself. 

“Bell can’t have it both ways. Wholesale subscribers cannot simultaneously be strategically irrelevant and yet also a critical factor that informs Bell’s investment decisions,” CNOC wrote.

CNOC’s Thursday petition to cabinet means the federal government now has three distinct petitions before it related to recent CRTC decisions. While CNOC filed its petition Thursday, and TekSavvy filed a similar petition on wholesale rates last month, MVNO hopeful Data on Tap Inc. in May asked the government to review the regulator’s decision to restrict mandated-MVNO access to regional competitors with spectrum assets. 

— Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Hannah Daley at hdaley@thewirereport.ca 

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