TekSavvy sticking to lower internet prices despite wholesale rate stay

The temporary nature of the decision by the Federal Court of Appeal to freeze a CRTC order forcing the big telecoms to slash how much they charge resellers of their internet bandwidth means it may be too early to tell how long lower consumer prices will be around, the Canadian Network Operators Consortium (CNOC) said. “As this interim stay will last some number of weeks, it’s probably too early for to decide the impact on their pricing decisions,” Matt Stein, CNOC president and CEO of Distributel Communications Ltd., said in an email, adding the organization will continue to oppose the motions. Friday’s decision by the Federal Court of Appeal only pauses the CRTC’s August 15 order until the court decides if it will hear the case being brought by BCE Inc., Rogers Communications Inc., Telus Corp., Shaw Communications Inc., Quebecor Inc., and Bragg Communications Inc. If the court decides it will hear arguments, the telecoms will seek to make it an interlocutory ban, which would extend the stay until the judge makes a decision in the case. The CRTC’s decision this summer -- finalizing wholesale rates three years after setting interim rental costs -- caused the big telecoms to rethink some of their investment decisions, while it resulted in resellers driving down prices for consumers. TekSavvy Solutions Inc., Start.ca, and Distributel were among those that lowered their internet prices as a result of the decision. TekSavvy said it will keep its reduced prices “for now,” despite having to temporarily revert back to paying the “inflated” interim prices to rent bandwidth as a result of the court’s decision. “It’s clear the carriers are going to use any tactics to draw this out as long as they can, and Canadians can’t keep waiting for competition to deliver lower prices,” Janet Lo, TekSavvy’s vice-president of privacy and consumer legal affairs, said in an email. “We think the CRTC’s decision is clear, and these are more reasonable rates, and so passing on the savings to our customers is just the right thing to do.” In his decision on Friday, Judge Yves de Montigny determined that the respondents did not dispute the seriousness of the issues raised in the wholesale decision. He said the telecoms met the RJR-MacDonald three-part test for a stay of the decision, which requires the applicants to show clear harm, prove the concern is serious and is a matter that meets a convenience test that includes the public interest. “I am also satisfied that the implementation of the CRTC Order could result in a permanent market distortion which could be extremely difficult to remedy afterwards,” de Montigny said in his decision. “I am of the view that the balance of convenience favours the status quo,” de Montigny said, until the court decides whether it should hear the appeal. On Tuesday, Bell sent a letter to the court urging it to hold an oral hearing on the motions the next day, when a CRTC deadline for revised tariffs was set the previous Friday. Bell said in its complaint that if it had to file lower rates before a judicial decision on its motions -- and resellers adjusted their prices according to those rates -- then it would result in “significant and irreparable market disruption and market distortion and will exacerbate the irreparable harm Bell is already suffering.” Justice de Montigny asked the telecoms to show why such a hearing was required and said if a hearing is warranted, it would be held on Friday afternoon. Both CNOC and TekSavvy filed letters opposing the motions, as was required by the judge before any such hearing would be held. But because TekSavvy is not a party in the case -- it had earlier filed an application to be added as a party, as the telecoms did not name them in their leave to appeal application -- de Montigny said in a letter on Monday that he did not take TekSavvy’s opposition into consideration in the stay decision because their motion to be added as a party had not yet been dealt with. “The incumbents want to exclude TekSavvy from participating in these proceedings,” Lo said. “We will continue to fight to defend the CRTC’s final rates decision.” Only Telus Corp. and Saskatchewan Telecommunications Holding Corp. were known to have filed revised tariffs. When asked what will happen to those revised rates, CRTC spokeswoman Patricia Valladao said the regulator is currently reviewing the court’s decision. The CRTC’s decision not only slashed those wholesale rates, but it also made the revised rates retroactive to 2016, when the regulator made an interim decision on those tariffs. That means the large telecoms would have to pay back the resellers the difference between the 2016 rates and the new 2019 rates. That is still on the table, as de Montigny noted in his decision that, should the appeal fail, the telecoms will need to calculate the difference between the 2016 and 2019 rates to be paid, as per the CRTC order. On Monday, some analysts, who expected the reduced investments to come, viewed the decision as a positive for the bigger players. “We understand that until the issue is resolved, Internet wholesale rates in place prior to the CRTC decision will remain in place, and the cablecos will not be required to make the respective retroactive payments to resellers,” Drew McReynolds of RBC said in a Monday note. “Over the next few months, we expect the cablecos to pursue a Full Stay on the CRTC decision.” National Bank analyst Adam Shine said that the decision will mean a temporary reprieve for the companies from having to inevitably lower future growth expectations when it comes time to report their earnings. Rogers deferred to the decision and Bell did not respond when asked for comment. Both those companies, as well as Shaw, will release their latest earnings next month. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca and Michael Lee-Murphy at mleemurphy@thewirereport.ca

TekSavvy sticking to lower internet prices despite wholesale rate stay

News | September 30, 2019

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TekSavvy sticking to lower internet prices despite wholesale rate stay

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