CRTC sides with small ISPs on Shaw Internet pricing dispute

The CRTC ruled against Shaw Communications Inc.’s proposed new prices for third-party Internet access on Monday, approving interim wholesale broadband rates that are roughly half what the company was seeking. In a decision posted on its website, the regulator said Shaw’s proposal didn’t contain enough information to justify the new wholesale prices, which small ISPs had protested were “egregious” after the original Jan. 6 tariff filing. “Given the significant increases in the proposed rates for the five new service speeds relative to the approved rates for the existing nearest lower-speed services, the Commission cannot determine whether Shaw’s proposed rates are appropriate without additional information on the record of the proceeding,” the CRTC said Monday. Instead, the CRTC has imposed its own interim rates for Shaw’s new plans, most of which include a minor bump in speed, that are closer to the third-party Internet access (TPIA) prices the company already was charging. Shaw originally asked for $51.11 per month for its 30 Mbps downstream monthly plan, and the CRTC’s decision sets that price at $22.45. For the 5 Mbps connection, the interim TPIA price is $11.07 per month, down from the proposed $22.89. The regulator set the price for the 15 Mbps plan at $20.97, as opposed to the $38.63 the company sought. In its responses to the CRTC and the interveners, Shaw had said that the new prices were necessary to deal with skyrocketing demand for bandwidth. The company filed a cost study to the CRTC that it said laid out the economic justification for the proposed rates. “This Costing Study … demonstrates the necessity of aligning TPIA rates with actual costs in the current environment, based on speed designations, traffic growth and related changes in the underlying cost characteristics in the broadband market,” the company said in a Feb. 19 filing. Shaw spokesman Chethan Lakshman said in an email on Monday that the company is “disappointed” in the decision. "We are disappointed the CRTC has decided to approve interim rates that do not take into account the detailed cost study we filed,” he said. “However, we note that this process is ongoing. The rates that Shaw proposed are just and reasonable and supported by detailed evidence. We plan to continue to seek CRTC approval for our proposed rates, which have been developed based on CRTC approved methodologies and reflect our actual costs." Bill Sandiford, president of the Canadian Network Operators Consortium (CNOC), said in a phone interview he was happy about the decision and hopeful that the final decision on the TPIA costs, when it comes, will be in line with the interim rates. "CNOC's position is always that we believe the rates should be set properly and that the incumbents and the cable carriers should be compensated for their true costs plus a reasonable markup," he said. "As long as their cost studies are reflecting their actual true costs, we're fine with that." VMedia Inc. director George Burger said that in asking for more information, the CRTC appears to be responding to concerns raised by CNOC that outside parties do not see most of the numbers in TPIA providers’ costing studies because the information is filed in confidence with the regulator. “If the CRTC is alluding to that, then this might be a in a direction of less confidentiality and more disclosure,” he said in a phone interview. “The problem any intervener has in trying to analyze the legitimacy of the numbers is the fact that there aren't enough. It makes it impossible to engage in any credible analysis.” The process needs to “get some transparency,” he said, to let all parties participate equally in the process of setting TPIA rates for every company. “There's nothing available to us on the record that allows us to assess the legitimacy of any of the numbers that any of the incumbents put forward,” he said. The CRTC has yet to issue a decision in its process examining the wholesale wireline market as a whole, for which a hearing wrapped up in December with Sandiford asking the regulator to develop a new formula for TPIA rates. — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

CRTC sides with small ISPs on Shaw Internet pricing dispute

News | March 2, 2015

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CRTC sides with small ISPs on Shaw Internet pricing dispute

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