INDU ‘frustrated’ with CRTC’s wholesale rates; recommends revamped rate-setting process

The Industry committee – from the last Parliament – has recommended that the CRTC establish an "affordability standard" and for the government to direct the regulator to "revise its process for implementing and appealing new rates so that incumbent telecommunications service providers stop using the appeals process as a delay tactic." "The Committee believes that the fact that a handful of TSPs control the telecommunications sector has a detrimental impact on the telecommunications industry and on Canadians, and ultimately is impeding the rollout of affordable and accessible telecommunications services in Canada," the committee wrote in a 70-page report tabled Friday. The committee, which dissolved when last year’s election was called, made 16 recommendations to the government. "The Committee notes that the approach of the largest TSPs does not promote these objectives," the report read, adding that in order to prevent delay tactics, the CRTC could implement an interim rate halfway between the old rates and the new rates in the case of an appeal and respect a strict time limit for decisions. Two recent highly-analyzed CRTC decisions issued after the committee's hearings – both the decision for a reduced mobile virtual network operator mandate and the reversal of a 2019 decision on wholesale rates for internet service providers – also caught the MPs attention. "On the one hand, the Committee views the MVNO decision as a step forward, although it is a rather modest step considering the structure of the announced regime. On the other hand, the Committee is very frustrated with the CRTC’s decision to cancel the new wholesale rates," the committee wrote. "During the Committee’s study, independent TSPs repeatedly stressed the importance of implementing these rates to provide affordable services to their customers and thereby put downward pressure on the price of services offered by incumbent TSPs. The Committee questions this change in direction by the CRTC, which had studied the issue for several years before issuing its decision in 2019,” the report noted. The report recommends that the CRTC be ordered to ensure a level playing field for incumbents and competitors to guarantee the development of high quality networks and service and price effects on consumers. The final recommendation states the federal government should consult with other levels of government to devise a national strategy on broadband. Such a strategy should be issued within a year and implemented within the 12 months following, the committee stated. The committee also rehashed an older recommendation. “On 17 April 2018, in its report entitled Broadband Connectivity in Rural Canada: Overcoming the Digital Divide, the Committee recommended that the CRTC regularly review its target speeds for broadband service. In light of the evidence heard during this study, the Committee believes this recommendation is still relevant.” the 2021 study stated. “The target speeds set by the CRTC are used to guide various government programs and initiatives. However, since these targets were put in place in 2016, they may not meet the technological needs of Canadians in 2030 and beyond, particularly as telework evolves quickly and the number of digital services on offer increases. The Committee believes that it is important for CRTC targets to adjust to changing needs and technologies.” To that end, the committee recommended the CRTC regularly review broadband speeds to ensure they keep up with technological advances. A second recommendation suggests the commission require internet service providers (ISPs) to inform consumers about download and upload speeds that can be expected during peak periods. This could improve competitiveness, the report said. “The Committee recognizes that the affordability of telecommunications services is an important issue for all Canadians. While prices have gone down in recent years, they are still too high for much of the population. The Committee is aware that some people have to choose between buying food and paying their bills for telecommunications services. Since no standards have been established to determine what constitutes an affordable rate, stakeholders in the telecommunications sector do not have any guidelines to inform their affordability initiatives. The Committee therefore believes that establishing such a standard could help guide the activities of various stakeholders, particularly in a context where prices may vary significantly from one region to another,” the report states. The committee recommended that the CRTC establish an affordability standard for telecom services, including wholesale rates. The decision should be issued within a year, the MPs added. The fourth recommendation is that rates to some consumers go up by fifty cents to cover the cost of providing services to low-income households. A related recommendation suggests that the Government of Canada create a benefit for large band services until the end of the pandemic for low-income Canadians, seniors or Canadians who have lost their jobs during the pandemic. The Connecting Families program should be changed by altering eligibility criteria, making ISPs participate in the program and fund them directly, and promoting the program so low-income families are aware of it. The government should give top priority to rural areas when allocating spectrum. This could include reallocating unused spectrum to other telecom service providers (TSPs) and ensuring the full deployment of spectrum through partial reimbursements of money spent for licence acquisition. Money from spectrum auctions should be diverted to broadband, another recommendation states. The government should study the benefits of flexible-use licencing with an eye to determining whether it should continue or be changed, the committee recommends. “The Committee notes that many TSPs are still facing delays and significant costs when they apply for access to various support structures, particularly telephone poles. Delays and costs are often significant enough that they prevent TSPs from offering services in the area,” the report said. “The Committee notes that the CRTC is currently looking into this issue, including consultations with industry, but it does not have the authority to address the matter of access to poles which fall under provincial or municipal jurisdiction.” The report recommends the commission address barriers so TSPs can access support structures more easily. A related recommendation said the federal government should work with its provincial and municipal counterparts to alleviate barriers. The feds should prioritize service in rural and remote areas through financial support to build infrastructure where it is not beneficial for TSPs to build on their own. Third-party resellers should be encouraged to establish competition by using the incumbents’ infrastructure. Independent and non-traditional TSPs should be encouraged to take part in the broadband fund. This can be accomplished by simplifying the application process, establishing criteria that favour local and regional providers, setting aside a portion of available funds to those providers, and restricting providers to 50 per cent of government business. Witnesses had called on the committee to make affordability a priority. The Public Interest Advocacy Centre (PIAC) went so far as to ask for a broadband czar. The committee did not respond to the latter request. –Reporting by Paul Park at ppark@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

INDU ‘frustrated’ with CRTC’s wholesale rates; recommends revamped rate-setting process

News | March 4, 2022

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INDU ‘frustrated’ with CRTC’s wholesale rates; recommends revamped rate-setting process

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