CRTC Slashes Wholesale ISP Internet Fees

Citing that Bell Canada, Cogeco, MTS, Rogers, Shaw, Telus and Videotron were unfairly charging high fee access to their broadband networks, the CRTC has chopped the rates those providers were proposing to charge smaller ISPs by as much as 39%.

As a result of the CRTC's move, which it deemed as "temporary," subscribers could eventually benefit from reduced costs, if smaller internet service providers (ISPs) decide to pass their savings onto consumers.

Arguing that competitive ISPs “must have access to these services at just and reasonable prices,” CRTC chairman Jean-Pierre Blais said in a statement that "the fact that these large companies did not respect accepted costing principles and methodologies is very disturbing.”

“What’s even more concerning is the fact that Canadians’ access to a choice of broadband Internet services would have been at stake had we not revised these rates," he added. "As always, we strive to create a dynamic competitive telecommunications market for Canadians.”

Although established Canadian cable and phone companies are required to sell wholesale access of their broadband networks to smaller competitors, such as TekSavvy or Distributel, who then sell high-speed internet service to consumers, as well, in some cases, as home phone and TV services, the CRTC had determined the rates based on evidence the incumbents provided the Commission regarding the costs involved in operating their networks.

But a call by the CRTC for incumbent cable and telephone companies to provide new cost estimates yielded results the Commission was not expecting: mainly "deviation from the established costing principles and methodologies.”

“The CRTC is of the view that the rates proposed by certain of the large companies were not just and reasonable and had to be revised downwards," the Commission stated. "The CRTC is very concerned that certain large companies have not conducted their cost studies in accordance with well-established costing principles and methodologies."

The only company the CRTC felt did not require a rate adjustment for their proposal was SaskTel.

Proposed rates for the transport of internet data were also slashed by 89%, in some cases.

The CRTC has requested further information from the incumbent companies regarding costing estimates and will also conduct further rate analysis before it sets its final rates. The Commission will also give those companies a chance to respond before it makes its final decision.

Distributel CEO Matt Stein, national spokesman for The Canadian Network Operators Consortium Inc. (CNOC), an industry group representing independent ISPs, told the Globe and Mail that the new rates represent “a far more fair reclamation of costs on the part of the incumbent phone and cable companies and it allows us [independent providers] to continue to compete and deliver value.”

He also said individual companies would make their own decisions regarding the lowering of their retail prices.

“I think many providers such as ourselves would be a little reluctant to start adjusting [prices] until we actually do see the final rates,” he said.

“This is a wonderful step because now, rather than just waiting for the day final rates are determined and watching the competitive market become harder and harder, at least we have an interim rate and we can now compete in this reality while still waiting to know what that final rate will be.”

Rogers spokesman Andrew Garas said the company is “disappointed and does not agree with setting arbitrary rates.”

“We believe in an evidence based, fair balance that both covers the cost of building and maintaining Canada’s world-class networks and incents further investments to keep powering our digital economy,” he said.



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