Telecoms discussing CRTC wholesale rate appeal: Videotron chief

Quebecor Inc.’s Videotron is in talks with other telecom companies about potentially appealing the CRTC’s new rates for wholesale internet service, CEO Jean-François Pruneau told The Wire Report. “We’re in discussions currently with our industry counterparts. The plan has not been defined yet,” he said in an interview in Montreal following the company’s press conference to launch its Helix IPTV platform Tuesday. After the CRTC lowered in mid-August the rates wholesale-based internet service providers pay to access other companies’ networks, Canada’s largest telecoms protested the move would cost them millions. BCE Inc. said it would have to cut back its fixed wireless rollout in rural areas as a result of the $100-million hit, while Rogers Communications Inc. said it would review future investments in rural and remote areas because of the $140 million the new tariffs would cost the company. Pruneau said Videotron is in the process of determining whether it will have to cut back on infrastructure spending. “We’re currently looking at all of our options to maybe fight against the decision, but obviously we’re going to have to look at our investment plans. There’s no doubt about it, $50 million is a lot of money,” he said, referring to the amount Videotron said the new tariffs would cost it. “We may have to cut back.” National Bank analyst Adam Shine said in a note this week that he expects an “aggressive appeal” to be launched by the companies. Last November, Pruneau’s predecessor Manon Brouillette outlined in her last quarterly results that Videotron would count on its Fizz flanker brand to fight competition from wholesale-based ISPs, which were starting to gain market share in Quebec. Pruneau said that the recent CRTC decision now makes the Fizz brand a “bigger asset.” While other telecoms have also launched flanker-branded internet service in recent years, Videotron hasn’t joined in on this summer’s industry trend of moving away from the traditional wireless device subsidy model in favour of device financing plans, which reduce or eliminate the amount telecoms subsidize phones. The CRTC is currently reviewing whether the 36-month timeframe of some those plans is offside the Wireless Code. “Obviously, we want to stand out, and with our competitors launching those 36-month plans, we thought we still had a play with the standard subsidy model,” he said, noting that Videotron responded by dropping prices on some plans but mostly by increasing data offers. He said the subscriber growth the company reported in its last-quarter results shows “Quebecers are still looking for those kinds of plans.” Pruneau also suggested Videotron deserves some of the credit for the increased competition in the industry. “We’ve grown our market share; we’re currently at 18 per cent market share in Quebec in only eight years… so some of the changes that are introduced by our competitors are really as a result of our success in the market,” he said. Another ongoing issue affecting the industry is whether the Liberal government will choose to ban Huawei Technologies Co. Ltd.’s equipment from next-generation networks. The Wire Report reported this week that Telus Corp. told the federal government if there was a ban on Huawei equipment from the radio portion of 5G networks, it would have to replace Huawei equipment in its current 4G networks, greatly delaying the deployment of 5G. Telus and Bell would be most significantly affected should the government prohibit Huawei equipment. Pruneau said Videotron wouldn’t be affected by a Huawei ban “at all” because it doesn’t currently use any of the Chinese company’s equipment. “We have no component of our network that is related to Huawei whatsoever,” he noted. Videotron hasn’t chosen who it’s going to partner with on its 5G rollout, and if the government opts not to implement a ban, Huawei would “absolutely” be an option as a partner, Pruneau said. “In terms of the partner with whom we’re going to work with, at this stage we’re still looking for which one is the best for us, so working with all the partners, doing some testing, obviously getting some quotes and whatnot.” Another issue that’s been making headlines in recent months and days -- and will likely continue to do so through the imminent federal election campaign -- is the pricing of telecom services. Reuters reported Tuesday the Liberals were considering introducing a telecom price cap as part of their upcoming election platform, while the NDP has also previously suggested the idea. Pruneau said discussions of price caps are “very dangerous.” “Obviously, you have to recognize the money that we spend to make the networks effective… reliable and to make the networks very solid,” he said. “So when the government or the CRTC or whoever is mandating some prices that might be below fair market value, I think it’s very dangerous for the investments.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Telecoms discussing CRTC wholesale rate appeal: Videotron chief

Broadcast | August 28, 2019

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