Rogers-Quebecor TPIA arrangements in Shaw merger violate Telecom Act: TekSavvy to CRTC

One of Canada’s largest wholesale-based internet service providers (ISPs) is making a last ditch appeal to the CRTC to stop certain elements of the pending merger of Rogers Communications Inc. and Shaw Communications Inc. The move comes weeks after the merger cleared a significant hurdle when the Competition Tribunal rejected the Competition Bureau's attempt to block the merger, and less than a week before the Federal Court of Appeal is set to hear the bureau's case. In a Part 1 application filed with the regulator Thursday, TekSavvy Solutions Inc. argued that the wholesale arrangements between Rogers and Quebecor Inc.'s Videotron – arrangements that are meant to help the Quebec-based company launch its western brand following its putative acquisition of Shaw's Freedom – constitute an "undue preference" and thus a violation of section 27(2) of the Telecommunications Act. In the application, TekSavvy specifically requests "relief from the underlying causes that enable unduly preferential off-tariff agreements (OTAs)"; a review of all the incumbents’ use of OTAs; and "alternative interim relief" from particular OTAs. "The current wholesale regime has resulted in wholesale high-speed access (HSA) rates that are so high that wholesale-based competitors are unable to viably compete using the CRTC’s tariffed rates," TekSavvy wrote in the application. "The regime has also denied tariffed access to fibre-to-the premises (FTTP) technology." "The foregoing has created, among numerous other issues, an incentive for independent competitors to sell themselves to incumbents to obtain off-tariff wholesale arrangements." While the details of the arrangement between Rogers and Quebecor are not public, lawyers representing Rogers before the tribunal revealed that there are several agreements in place to facilitate Quebecor's expansion into western Canada – including discounted roaming on Rogers’ networks, multi-year access to fibre backhaul for all of Freedom’s cell sites, a multi-year discounted TPIA arrangement, and combined spectrum to launch Freedom’s 5G service. This set of arrangements, TekSavvy wrote, is "not arrived at through negotiations based on natural market forces, but is instead an effort by Rogers to remove regulatory hurdles to its acquisition of Shaw." "The arrangement with Videotron is specifically designed to allow Videotron, through its wholesale based affiliate, VMedia, to better compete." The CRTC approved Quebecor's purchase of VMedia Inc. in July, 2022, and Quebecor CEO Pierre Karl Péladeau was up front about saying that the acquisition was partly in order to sweeten the Freedom deal in the eyes of regulators. TekSavvy's Part 1 complaint also takes aim at BCE Inc.'s arrangements with its recently acquired subsidiary EBox Inc. Bell, TekSavvy argued, is offering "wholesale FTTP services that are not also available to competitors and for which there is no wholesale tariff." "The services also appear to be provided at rates well below any comparable tariff that Bell does have," TekSavvy wrote. The end result of these OTAs, the Chatham, Ont.-based company continued, is that the status-quo "leaves wholesale rate-setting in the hands of the Incumbents, rather than the commission." Earlier this month, TekSavvy called on Innovation Minister François-Philippe Champagne to block the merger, specifically citing Rogers' TPIA agreement with Quebecor. In order to address the "underlying causes" of off-tariff agreements like the ones between Rogers, Quebecor, Bell and Ebox, the CRTC could revert to dramatically lower wholesale rates first established – and then overturned – back in 2019. These rates were, the company added, "the last rates that involved a full review by the commission." Alternatively, the CRTC could institute aggregated wholesale rates on a retail-minus basis, a structure in which rates are determined based on the current retail rates for similar services, minus a predetermined percentage – a long-standing call from some in the wholesale-based ISP sector. The Part 1 application could end up being the first high-profile test for newly-minted CRTC chair Vicky Eatrides, who comes into the regulator after stints at the Competition Bureau, a resume that has encouraged advocates for more consumer protection at the CRTC. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca .

Rogers-Quebecor TPIA arrangements in Shaw merger violate Telecom Act: TekSavvy to CRTC

News | January 19, 2023

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Rogers-Quebecor TPIA arrangements in Shaw merger violate Telecom Act: TekSavvy to CRTC

News | January 19, 2023

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