TekSavvy wants concrete actions in CRTC policy direction, PIAC argues for directive language

The Public Interest Advocacy Centre (PIAC) says the government’s proposed new policy direction for the CRTC is “severely out of touch” with the competition issues facing Canada’s telecommunications industry, while TekSavvy Solutions Inc. says it does nothing concrete to address the “crisis” of the wholesale internet broadband regime. In its Tuesday submission to the Governor in Council, TekSavvy proposed that the 2022 Policy Direction should “direct the CRTC to achieve specific key deliverables within certain timelines.” The new policy direction, proposed in late May, replaces the existing – and somewhat competing – policy directions from 2006 and 2019, which direct the CRTC to promote free market solutions and competition, respectively. One of the deliverables requested by TekSavvy is a mandate to reduce existing wholesale rates by setting final rates within a year from when the policy direction comes into force, and interim-rates, on a retail-minus basis, within a month. A retail-minus approach would establish rates based on the current retail rates for similar services, minus a predetermined percentage. TekSavvy argued to the Governor in Council that an interim retail-minus pricing approach is not a novel one, noting that in 1999 the CRTC required cable carriers (with exception to Bragg Communication Inc.’s Eastlink) to make high-speed retail internet service for resale available at a 25 per cent discount from the lowest retail internet service rate charged by the carrier until they provided third party internet access (TPIA) service pursuant to an approved tariff. In 2016 the commission also mandated that Eastlink use that approach in anticipation of its deployment of TPIA service. “Linking wholesale rates to the lowest retail rates charged by an incumbent on a temporary basis directly prevents the incumbents from engaging in predatory pricing. Since it would only be on an interim basis (subject to retroactivity pending the CRTC’s determination of final rates), and in response to the demonstrated, exigent need for this type of relief, such a direction would not interfere with the CRTC’s overall jurisdiction to set wholesale rates,” TekSavvy argued. “Once the CRTC concluded its review of wholesale rates based on guidance from the issued direction, the CRTC’s chosen method of setting just and reasonable rates would take over.” TekSavvy also recommended that the CRTC be mandated to enforce equitable speed-matching rules, including fibre-to-the-premises (FTTP), within one month from when the direction comes into force. “The CRTC’s own restrictions and inflated rates effectively deprive competitors of regulated access to essential FTTP facilities. This means that for seven years and counting (during which the last direction to the CRTC was issued), incumbents have had an extended anti-competitive head start to FTTP technology during which time they are insulated from competition; the CRTC has openly acknowledged this is an anticompetitive head start that will lead to a substantial lessening or prevention of competition; yet the CRTC has done nothing to provide any sort of interim, exigent relief to competitors to promote access.” TekSavvy said the CRTC failed to enforce its own rules, established in a 2006 decision, in which incumbents are required to offer the same speed tiers to TPIA customers and to avoid delays for TPIAs that “significantly prejudiced competition” in the retail internet market. Under what has become the status quo, an incumbent carrier will file a tariff application on the day it makes a new speed tier service available to its retail customers, but not to TPIA customers until after a commission approval of the tariff application, according to TekSavvy. Such approvals can take over a year, TekSavvy argued to the Governor in Council and in a recent Part 1 application filed with the CRTC. TekSavvy also recommended the CRTC be forced to issue a public ethics code applicable for commissioners. The Chatham-Kent, Ont.-based company argued there is a “real public crisis of confidence in the integrity of the CRTC,” after CRTC chair Ian Scott was found to have had a meeting in an Ottawa bar with BCE Inc.’s then-chief operating officer, now-CEO, Mirko Bibic in 2019. The 2022 Policy Direction also represents the government’s response to a trio of petitions asking the 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. The new direction was announced on the same day the government declined to overturn the CRTC’s decision. “The significant impacts of the government’s refusal to overturn the decision was largely obfuscated by the policy direction announcement, which PIAC views as a smokescreen against consumers who are calling on the government to actively rein in a CRTC that is failing them,” PIAC wrote in its Tuesday submission. PIAC requested that the government amend its policy direction to “‘mandate a wholesale facilities-based mobile virtual network operator access service’ that does not require ownership of spectrum or facilities, in line with the true definition of MVNOs accepted worldwide.” PIAC argued that the policy direction is too permissive to adequately address the telecommunications market which it stated has become increasingly anti-competitive and “frankly, hostile to consumer accessibility, reliability and affordability.” “Most of the provisions only help to entrench the status quo, in which telecommunications service costs are extremely high and increasing for both consumers and wholesale-based competitors,” PIAC said. PIAC said the language of the policy direction (“should” implement) is worded in a way that leaves it up to the discretion of the CRTC to implement the regulatory principles of transparency, predictability, and efficiency outlined in the document. “PIAC’s main issue with this policy approach is that the commission is already failing to implement these permissive principles in key cases, and the government is repeatedly failing to reverse CRTC decisions that are arguably contrary to them.” PIAC recommended that the government replace “should” in the policy direction with “shall” to make it more “directive” rather than suggestive. For example, “the commission shall conduct proceedings and issue decisions within one year” and “the commission shall adopt new processes and engage external experts to reach this objective.” PIAC also recommended adding that the commission “must ensure” its decisions promote competition, affordability, consumer interests and innovation. PIAC wants the government to reinstate a provision from the 2019 policy direction which mandated that the CRTC, in its decisions, demonstrate compliance with the policy direction and how its decisions promote affordability and competition. In addition, it would like the government to mandate the commission to write an annual report on how it has “complied with and advanced” the policy direction, so that the cabinet may issue additional directions if necessary. PIAC fully supported Sections 9, 10 and 11 of the policy direction which, in its view, “work together to preserve a wholesale access framework that promotes wholesale competition and by extension, affordable retail internet services.” Earlier this week, the Competitive Network Operators of Canada (CNOC) threw its support behind the new policy direction, with a few changes proposed. CNOC requested that the government provide “for competitive access to FTTP-based facilities over all mandated wholesale high-speed access platforms.” CNOC further recommended the government add explicit language that ensures the CRTC maintains a regulatory framework for mandated wholesale access and proactive monitoring. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca.

TekSavvy wants concrete actions in CRTC policy direction, PIAC argues for directive language

News | July 20, 2022

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TekSavvy wants concrete actions in CRTC policy direction, PIAC argues for directive language

News | July 20, 2022

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