Saturday, June 25, 2022
HomeTechnologyInternetCabinet to rule CRTC internet rates this week

Cabinet to rule CRTC internet rates this week

A letter sent to the federal cabinet late last summer was blunt about the fate of small internet providers: “This chapter… rings the death knell of competition.”

Billing itself as the largest independent internet service provider (ISP) in Quebec with nearly 100,000 customers, EBOX argued that Canada’s telecom regulator had gone seriously wrong in a decision on broadband rates last year.

Too wrong, the company said it’s nearly impossible for EBOX to continue to offer high-speed internet service at good prices.

“(The decision) actually nailed the coffin after years of struggling to get fair and reasonable rates.”

By the end of this week, the government should decide on a trio of petitions asking the Canadian Radio-Television and Telecommunications Commission (CRTC) to overturn the controversial decision.

This is the latest step in a process that has taken at least seven years as the CRTC reviewed the wholesale prices small ISPs pay to access the networks of major telecom companies such as Bell and Rogers.

Whatever the federal cabinet decides, it’s too late for EBOX. After 25 years in business, the company sold itself to Bell in February, just five months after his letter to the government.

Still others in the industry say that the combination of regulatory delays and the dramatic CRTC reversal that returned to higher wholesale rates last year has steadily reduced or killed independent ISPs.

“If rates are not corrected, this industry cannot survive like this. EBOX is a case study in this regard,” said Andy Kaplan-Myrth, vice president of regulatory affairs at TekSavvy, one of the largest independent ISPs with more than 300,000 customers.

TekSavvy, wholesale internet lobby group Competitive Network Operators of Canada (CNOC), and National Capital FreeNet (NCF), an Ottawa-based nonprofit ISP, filed petitions appealing the CRTC decision.

“Everyone has waited as long as we can wait for rates to resolve,” Kaplan-Myrth said, noting that TekSavvy has lost 20 percent of its customer base since August 2020, when it was forced to raise prices. the process took a long time.

“It’s not really sustainable and the government has to make a choice”

(Former EBOX CEO and co-founder Jean-Philippe Béïque said it would be inappropriate for him to comment on whether CRTC rates were a factor in the company’s sale.)

“Many (wholesale ISPs) will die if the decision is not suitable for competition,” said Marc-André Campagna, CEO of Oxio, an independent ISP with 30,000 subscribers that he founded in 2019 after developing cloud-based operations. and billing software.

“If that happens, the big guys will win, there will be no more competition, and they will be able to keep raising their prices.”

People living in most urban and suburban areas have two main options for internet service, a telephone or cable company. The wholesale broadband system aims to eliminate the expense and disruption of building additional telecom networks, while allowing consumers to choose from more service providers.

Independent ISPs pay large telecom companies set rates for network access and often offer lower retail prices than major players to stand out.

This often means low profit margins, but there are hundreds of small ISPs across Canada and the wholesale industry has been growing in recent years.

Still, CRTC data shows the trend reversed between 2019 and 2020, where wholesale ISPs lost a full percentage of market share and fell to 8.5 percent, or 1.2 million residential internet customers.

Their total revenues fell to $726 million, and wholesale ISPs earned less per customer in 2020 than the previous year — their average revenue per user fell to $47.94 per month, from more than $61 for large phone and cable companies.

Independent ISPs predict these numbers will get worse in 2021 and blame the CRTC.

The CRTC’s review process began years ago, and by 2016 it set tentative wholesale rates because the prices small ISPs complained about were too high.

As of 2019, the CRTC has issued much lower final rates and has ordered large telecommunications companies to make retroactive refunds to wholesale ISPs.

Small ISPs celebrated by announcing some of the sudden price cuts. Campagna said, for example, that Oxio sets its prices based on new wholesale prices.

But several major telecom companies (to the Federal Court of Appeals, the cabinet, and the regulator itself) filed a series of appeals, and an interim court order suspended the CRTC decision.

These lower wholesale rates never went into effect.

“We’ve sold a lot of unprofitable plans during this period,” Campagna said.

Oxio has raised $50 million in venture capital investments on the strength of its proprietary software and other innovations, he said, but without it it would struggle to survive.

Officials lost most of their appeals, but it was the CRTC itself that stunned the industry with its decision a year ago.

The Commission said it made a number of mistakes in its 2019 decision and will largely restore the provisional 2016 rates instead of going into another lengthy process.

“When the 2021 decision came out, it was much worse than we could have imagined,” said NCF Executive Director Shelley Robinson.

The nonprofit ISP has approximately 3,000 subscribers, 300 of whom live in Ottawa Housing Estates, and also provides other digital literacy services.

“This is certainly an ongoing existential threat – prices are too high for us to make a long-term trip without really trying to hurt it,” Robinson said. “This is hindering our ability to fulfill our mission.”

But major telecommunications companies say the CRTC got it right last year.

In a filing opposing the cabinet appeal, a group of cable companies, including Rogers and Shaw, said using “radically lower” 2019 rates would require cable companies to “subsidize vendors’ business.” They also said that large companies will cut the money they have to invest in their networks by up to $3.7 billion over five years.

Separately, Bell said the 2021 decision set the wholesale rates it could claim to be slightly below 2016 levels, meaning it still has some back payments. The company also said it has invested more — an additional $500 million in two years — because of the decision.

CRTC Chairman Ian Scott told a parliamentary committee in February that he acknowledged the decision “created difficulties for some opponents” but was confident the regulator did the “responsible thing”.

“It is true that some competitors lowered their retail prices based on this decision, but given the appeals filed at the time, it was a business decision and a risk they were taking,” Scott said.

CNOC and TekSavvy argued in cabinet appeals that Scott was biased in favor of major telecommunications. In part, they point to the fact that, The star first reportedThe CRTC chairman had a beer with the soon-to-be-CEO of Bell in 2019 after the company appealed the original rate decision.

Geoff White, executive director and general counsel of the CNOC, said the “long, long saga” had hurt many of the band’s members.

“The current model is broken,” he said. “The simple fix is ​​for the cabinet to step in and say, ‘We are not satisfied with what the CRTC has done’.”

JOIN THE CHAT

Conversations are the opinions of our readers and are subject to: Code of Conduct. Star does not support these views.

Do NOT follow this link or you will be banned from the site!