Competitors unhappy, incumbents closed-lipped about CRTC’s interim wholesale rates

The CRTC’s recent decision on interim wholesale fibre rates is supposed to open up competition in the market. Some smaller competitors aren’t seeing it that way. The regulator on Friday announced the interim rates that BCE Inc., Telus Corp., and Saskatchewan Telecommunications Holding Corp. (SaskTel) an charge competitive local exchange carriers (CLECs) for access to their networks, after the commission mandated aggregated wholesale access to fibre networks across Canada in August. The plan expands on national level rates which earlier applied to Ontario and Quebec. One Quebec-based firm was unimpressed with last week’s rates decision. "As an independent ISP founded in 2016, IVC Telecom has gained consumer trust by offering excellent services at affordable rates. However, high wholesale rates set by dominant telecom providers leave little margin for smaller ISPs to operate profitably," said Vipin Kumar, customer service manager of IVC. "This makes it difficult for companies like ours to compete, ultimately stifling market competition." “For third-party ISPs, the situation is dire,” an IVC news release stated. “Many operate with razor-thin margins or at a loss, making it hard to grow or improve services. Over time, fewer will survive, further reducing competition.” The rates range from about $65 to approximately $80 on a per month, per premises basis depending on provider, location, and connection speed, or $35 to $75 on a capacity-based billing basis. Geoff White is executive director of the Public Interest Advocacy Centre and formerly held the same role at the Competitive Network Operators of Canada. He has questions about the new regime. “One has to look at a couple of things: Who is left in the market, to use these wholesale services, and then of course whether the rate is something that smaller competitors can use to actually compete at the retail level. Time has always been of the essence in reviving the competitive framework, especially given the hoovering up of so many small players by the big players,” he wrote The Wire Report in an email. Bell bought Distributel in 2022, while Quebecor Inc. took over VMedia that same year. Cogeco Inc. purchased Oxio in 2023. “Don’t forget, however, that (i) these rates are interim and could be adjusted; (ii) that this is only for the incumbent telephone (not cable) companies; and (ii) only for existing fibre not new builds,” White added. “As for the actual rates, at first glance they look high compared to actual retail prices, so I’ll be looking to see how much uptake there is from competitors.” Quebecor CEO Pierre Karl Péladeau called the rates decision “very disappointing.” “We had hoped for a decision that would reflect market realities and allow us to offer Freedom Mobile customers prices that would help lower their telecom bills, as we've been doing with wireless services for nearly 18 months,” Péladeau said in a social media post on Sunday. “Unfortunately, the CRTC’s decision leaves us no room for maneuver and will prevent us from launching our services on these networks.” A veteran telecom expert was much more bullish on the commission decision. Ted Woodhead is an alumnus of Rogers Communications Inc., Telus, and the CRTC who is now in private practice. He told The Wire Report that the ruling merely extends what had been a regional regime. He disagrees with those who call for lower rates. It would put incumbent local exchange carriers (ILECs) in a difficult position. “I think if you go any lower than that then the ILECs will be selling at below their own cost of providing it, which could lead to all manner of problems,” he said in a phone interview. If that were to happen, Woodhead imagines the courts would be overrun with cases from incumbents and competitors battling over what the true rates should be. The ILECs would probably argue that selling below their cost is a form of expropriation that is banned by Canadian law, he said. SaskTel said they had no comment on the CRTC decision. Bell nor Telus responded to requests for comment. SaskTel is challenging the CRTC’s August decision mandating competitor access to its fibre netorks. In September, the Crown corporation requested from the Federal Court of Appeal both a judicial review, alleging that the new policy is unreasonable; and leave to appeal, alleging it is based on an unlawful policy direction. ppark@thewirereport.ca

Competitors unhappy, incumbents closed-lipped about CRTC’s interim wholesale rates

Regulatory |
By Paul Park
| October 28, 2024

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Competitors unhappy, incumbents closed-lipped about CRTC’s interim wholesale rates

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