Telus calls wholesale cabinet order ‘protectionist play,’ ‘not fair to consumers’

Telus Corp. is challenging the federal government’s order that the CRTC review whether the regulator should block three of Canada’s largest telecommunications companies from accessing each other’s wholesale fibre networks. The telco is asking the Federal Court to quash the cabinet order, issued last month, and accuses the government of trying to overturn an independent CRTC decision, unfairly meeting “behind closed doors” with other parties, and failing to adequately consult with provincial governments. The application for judicial review was filed Dec. 4. “In an era where we've got everyone worried about affordability and everyone worried about access to infrastructure, why are we limiting competition?,” said Zainul Mawji, Telus’ president of consumer solutions, in an interview with The Wire Report. “That limiting of competition in this cabinet order only impacts Telus,” she argued. “How is this symmetrical?” Last year, during its review of the wholesale framework, the CRTC issued an interim decision requiring telecom incumbents BCE Inc. and Telus to give competitors wholesale access to their fibre-to-the-premises (FTTP) networks in Ontario and Quebec. That decision was replaced by a final decision, issued in August, expanding the wholesale mandate across the country and roping in Saskatchewan Telecommunications Holding Corp. (SaskTel). Notably, that decision saw Bell, Telus, and SaskTel restricted from accessing each other’s networks within their own traditional service territories. Before that final August decision was issued, Bell petitioned cabinet asking it to use its powers to rescind the earlier decision on access in Ontario and Quebec, or at least prohibit all incumbent carriers from accessing the wholesale regime entirely. The company argued that the wholesale mandate would discourage network investment and adversely affect consumers because it would cut into the financial returns on the investments it has made into fibre. READ MORE: – Bell responds to CRTC decision by cutting fibre investment – Trudeau says Bell decision to cut jobs is “garbage”; CNOC not surprised In response, the governor-in-council last month directed the CRTC to revisit whether it should block Bell, Telus, and Rogers Communications Inc. – Canada’s three largest internet service providers (ISPs) – from accessing fibre networks on a wholesale basis in Ontario and Quebec. The order did not address the more recent decision expanding wholesale access throughout Canada Telus’ opinion is that it should be able to continue using the mandated wholesale regime to access other companies’ networks outside of its own traditional territories of Alberta, British Columbia, and northern Quebec. Cabinet order procedurally unfair and unreasonable, Telus alleges Telus alleges in its court filing that “there were dozens of closed-door meetings between various parties adverse to Telus” and government officials. The company would not specify to The Wire Report who those parties would be, but alleged to the court that the meetings took place between the release of the interim decision and the issuance of the cabinet order “on telecommunications topics, including FTTP-related issues.” Although Telus and others filed responses to Bell’s petition to cabinet, Telus argues that it did not have the opportunity to “review, or respond to, any submissions conveyed” during these alleged meetings. The company argues that this makes the cabinet order procedurally unfair. “These meetings run afoul of the transparency intended by the statutory framework that governs the governor-in-council’s review of CRTC decisions,” alleges Telus, pointing to rules in Section 12 of the Telecommunications Act that require submissions before the governor-in-council to be made public. Telus declined to provide more details regarding the alleged meetings, explaining that it did not want to prejudice the upcoming court proceedings. The company also alleges that Minister of Innovation, Science and Industry François-Philippe Champagne (Saint-Maurice–Champlain, Que.), who recommended the cabinet order, did not inform the provinces of his intention to make a recommendation to the governor-in-council. “Section 13 of the Telecommunications Act was specifically designed to require provincial consultation as part of the governor-in-council’s review. This is to ensure regional representation in the decision-making process, which is especially important given the regionalized nature of the telecommunications market,” Telus writes. Telus also argues that the cabinet order is unreasonable because it is aimed at an interim decision that was replaced in August. “The CRTC explicitly acknowledged that the final decision had replaced the interim decision. It would thus be inappropriate for the interim decision to now be varied,” the company states. Cabinet addressed the interim decision because it was responding to Bell’s petition. While CRTC decisions are able to be appealed to the Federal Court of Appeal, parties are also able to file a petition to cabinet within 90 days of the commission’s decision. Cabinet then has one year until after the CRTC’s decision to act. Telecom consultant Mark Goldberg noted in a previous interview with The Wire Report that the order was issued exactly one year after the Nov. 6, 2023 decision. Innovation, Science and Economic Development Canada (ISED) declined to comment on Telus’ court filing. “The Government of Canada is making every effort to promote access to telecommunications services that are reliable, innovative, competitive and – most crucially – affordable,” a department spokesperson wrote in an email to The Wire Report. Telecoms file ‘precautionary’ petition to cabinet After the cabinet order was released – targeting the interim decision, several telecom companies filed requests with the CRTC asking it to revise its final decision, with many renewing calls to block the country’s largest telcos from using the wholesale regime. Bragg Communications Inc.’s Eastlink, Cogeco Inc., SaskTel, and the Competitive Network Operators of Canada (CNOC) made such arguments in a joint application to the CRTC on Nov. 7. The coalition urged the commission to block Rogers, Telus, and Bell – the Big Three – from accessing each other’s networks anywhere in the country, regardless of what kind of technology they use. The following day, that same coalition filed a “precautionary” petition to cabinet, also aimed at the CRTC’s final August decision. The competitors acknowledged the CRTC’s ongoing consultation on the cabinet order, but took issue with its focus being limited to the interim decision. “Thus, this petition asks the governor-in-council to vary the final decision, if necessary,” the coalition writes, explaining that the CRTC could vary the final decision as part of the proceeding. If it does, and prohibits the Big Three from wholesale high-speed access (HSA), “then this petition will be unnecessary, and we will withdraw it.” “However, if the final decision continues to permit the Big Three to access wholesale aggregated HSA, even if only over certain technologies or in certain parts of the country, then not only will the government's policy objectives be completely undermined, but the Big Three will be able to leverage their substantial market power to drive independent regional and local internet service providers (ISPs), including the petitioners, out of the market. This will ultimately hamper innovation, hurt affordability, remove investment in network expansion, and reduce choice for Canadians,” the group alleges. According to a notice published Dec. 7 in the Canada Gazette – the government resource where legislative and regulatory decisions are posted – parties have until Jan. 13 to file responses to the petition. Telus is not a national incumbent, company argues Central to Telus’ arguments in favour of maintaining its access to incumbent carriers’ networks is how regionalized the internet market is. The company has maintained that while it is an incumbent carrier in Alberta and British Columbia, it is not an incumbent on a national scale, and should be considered a new entrant in certain regions. “The governor-in-council’s presumption that there is a national market runs contrary to the CRTC’s long-standing use of regional geographic markets when making decisions about wholesale mandates,” Telus argues. Mawji shared this sentiment, echoing previous arguments Telus made during the CRTC’s February hearings on the wholesale framework review and in its June comments on Bell’s petition to cabinet. “ not an incumbent in internet in Ontario and Quebec. We are a new entrant ,” said Mawji. When it comes to certain regions outside of Telus’ core western market, such as those two provinces or Atlantic Canada, “we actually have the smallest market share in internet,” she said. “This cloud of the Big Three is being used to confuse the issue and create a wall of protectionism against new competition," she alleged. In its final decision, the CRTC highlighted the potential benefits that large telcos can bring when they enter new markets. Telus has pointed to this as justification for why it should be allowed to use the wholesale regime in outside markets. “The commission considers that where an incumbent operates out-of-territory, it is acting as a new competitor with the potential to disrupt the status quo, to the benefit of consumers. Such access enables the incumbents to provide new competitive offers and puts pressure on all competitors to deliver additional benefits for consumers,” the CRTC’s decision states. Telus is eager to compete and, by entering the market through the wholesale regime, has been able to offer consumers lower prices, said Mawji. If Telus is no longer able to do that, she argued that the consumer ultimately loses. Block is anti-competitive, Telus alleges While Bell is pushing for the Big Three to be blocked from using the wholesale access regime to access each other’s fibre networks, Rogers – like the Eastlink, Cogeco, SaskTel, and CNOC coalition – is urging the CRTC to ban the Big Three, including itself, from using the wholesale access regime to access any of their high-speed networks, regardless of what kind of technology they have. “It's very much a protectionist play,” alleged Mawji about the other telcos’ efforts. “Everyone wants to keep Telus out. They don't want to compete with us.” “We are subject to the same mandate and we didn't appeal the decision,” she noted. “Did we get everything we wanted out of the decision? No, but no one else did either. The CRTC made a very balanced decision.” She argued that by restricting incumbents from accessing the wholesale regime in-territory, the CRTC’s decision incentivizes regional incumbents to continue investing in infrastructure while still promoting competition. Mawji challenged the Governor in Council’s “concerns about the viability of small and regional internet service providers,” expressed in the cabinet order, arguing that “even the Competition Bureau said competition isn't to protect certain competitors, it's to protect the consumer.” “If the government is here to protect certain companies, that's a new memo,” she stated. “The government released a policy to the CRTC that said, we want you to prioritize competition, affordability and consumer interests, including innovation… Those are exactly the things that we are bringing to the market,” argued Mawji. “We're just dumbfounded about how that policy all of a sudden turned into protectionism. We don't understand it, and it's not fair to consumers.” None of the allegations has been tested in court. phalentm@thewirereport.ca

Telus calls wholesale cabinet order ‘protectionist play,’ ‘not fair to consumers’

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By Phalen Tynes-MacDonald
| December 10, 2024

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Telus calls wholesale cabinet order ‘protectionist play,’ ‘not fair to consumers’

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