Gov. issues new CRTC policy direction with guidance for wholesale regime

The federal government is seeking to issue a new policy direction to the CRTC, ordering the regulator to promote, encourage, and foster competition, affordability, consumer interests and innovation. The new policy replaces existing policy directions dating from 2006 and 2019, which directed the regulator to prioritize free market solutions and competition, respectively, to the maximum extent feasible. The order also directs the regulator on how to proceed in a number of key areas, including wholesale internet access, wireless competition, and consumer interests. Under the order, the government is directing the CRTC to continue to mandate the provision of aggregated wholesale high-speed internet access “until it determines that broad, sustainable and meaningful competition will persist if the service is no longer mandated,” and at the same time set the interim and final tariffs “more expediently” by “reforming the tariff-setting process and considering external expertise or international best practices.” The CRTC had been phasing out the aggregated wholesale regime in favour of a disaggregated model which has been slow to roll out and plagued by a lack of uptake. The policy direction also represents the government’s response to a trio of petitions asking cabinet to overturn or send back a May 2021 CRTC decision to reverse course on dramatically lowering access rates for wholesale third-party internet providers. According to officials from the department of Innovation, Science, and Economic Development, the department does not have the power to reinstate the CRTC’s 2019 lower wholesale internet access rates. The CRTC’s 2021 reversal will stand in the immediate. The policy direction creates a series of new binding rules upon which the CRTC must assess the wholesale regime going forward, including in an ongoing proceeding about the rate-setting approach. Under the directive, the CRTC will have to "proactively monitor" the competitive effectiveness of its wholesale internet access framework going forward, and "adjust the framework as necessary and in a timely manner, including by making proactive adjustments." Wholesale-based ISPs have also long-complained about the delays involved in the rate-setting process and the uncertainty created by the regulatory delays around the industry. The order also directs the CRTC to “monitor and assess the effectiveness of its approach” to the limited (or "hybrid") mobile virtual network operator (MVNO) framework established in April 2021. It must pay specific attention to whether or not the framework lessens competition. If the competition is "lessened" under the existing model, the policy directs the CRTC "to encourage broader service-based competition.” According to background documents, the government is still prepared to move to a full MVNO model, "if needed." The federal government is also directing the regulator to increase the operational capacity of the Commission for Complaints for Telecom-television Services (CCTS). The government will be accepting comments and interventions on the policy direction before it goes into effect. The new policy direction is not the only pro-competition move made in the telecommunications sector this month. In early May, the Competition Bureau filed an application with the Competition Tribunal seeking a “full block” of the proposed acquisition of Shaw Communications Inc. by Rogers Communications Inc. Competition Bureau commissioner Matthew Boswell addressed the merger Thursday in a speech delivered to the Centre for International Governance Innovation (CIGI). He reiterated his bureau’s commitment to blocking the proposed $26 billion acquisition to protect Canadians from higher prices and lower service quality. “Eliminating Shaw would remove a strong, independent competitor in Canada’s wireless market – one that has driven down prices, made data more accessible, and offered innovative services to its customers,” he said. “We are taking action to block this merger to preserve competition and choice so that Canadians can have access to affordable and high quality wireless services.” Boswell noted that there is an “important conversation” that is taking place around the role of competition in Canada “occurring against a backdrop of increasing concerns about the rise of corporate titans and the changing nature of our digital marketplace.” He praised the work that has been done over the past several months as “meaningful progress in a short period of time,” such as amendments made to the Competition Act through the budget, and Innovation Minister François-Philippe Champagne announcing that his department won’t increase the transaction-size threshold of $93 million for the advance notification of mergers for 2022. Boswell also took note of the bureau's February submission to Senator Howard Wetston's consultation on the Competition Act, in which the bureau recommended significant changes to the review process of mergers and acquisitions. At the time the bureau wrote that the act “may permit anti-competitive mergers when the private benefits of merging outweigh the broader economic harm of the merger.” It called for the elimination of the efficiencies exception which allows a merger to proceed on the basis of gains in efficiency that will “be greater than, and will offset, the effects of any prevention or lessening of competition.” – Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca, with files from Jenna Cocullo at jcocullo@thewirereport.ca.

Gov. issues new CRTC policy direction with guidance for wholesale regime

News | May 26, 2022

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Gov. issues new CRTC policy direction with guidance for wholesale regime

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