Supreme Court Refuses To Hear Appeal From Canada’s Big Telcos In Relation To Being Ordered By The CRTC To Lower Wholesale Rates [UPDATED]

In good news for small wholesale-based ISP’s, the Supreme Court has today said that it won’t hear an appeal by Canada’s biggest telecoms of the wholesale rates the CRTC lowered back in August 2019. Those are the rates that are charged to independent ISP’s that use the infrastructure of big telcos. This decision not to hear the case basically puts an end to this case.

I asked for a comment from independent ISP Distributel in relation to this development and got this back:

“This is a positive development,” says Matt Stein, CEO of Distributel. “We support our court system and we trust in the system, and we’re very glad to see an end to this case. Canadians deserve affordable internet access, especially now when so much of our lives has moved online by necessity. Connectivity is so important right now– our average customer has increased their internet usage by 24 per cent since the pandemic hit – yet for many Canadians it’s just not affordable, especially given the global crisis we’re in.”

One thing that Distributel pointed out to me is that when the CRTC released its original rate decision in August of 2019, Distributel immediately passed the benefits on to Canadians. The company also moved to increase internet speeds for the majority of its customers at no extra cost, and launched competitive new retail pricing for bundled and stand-alone products and services.

Now I fully expect the big telcos to come up with some new way to avoid having to do what they should have done in 2019. Which is to lower wholesale rates as per the CRTC decision. I see scenarios where they use stalling tactics or threats to get their way because the big three have proven that they are unwilling to do what is right by Canadians.

UPDATE: I just received a statement from independent ISP Teksavvy. Unsurprisingly they are happy with the decision. Here is their statement in full:

TekSavvy Solutions Inc. (TekSavvy) welcomed today’s decision from the Supreme Court of Canada declining to hear appeals by Canada’s largest telecom and cable companies (such as Bell Canada and Rogers), who seek to overturn a key 2019 CRTC decision lowering the wholesale Internet rates the large carriers charge smaller competitors.

The Supreme Court’s ruling ordered the large carriers to pay TekSavvy’s legal costs, following an earlier, unanimous decision from the Federal Court of Appeal rejecting the large carriers’ appeals with costs, noting the large carriers’ arguments were of “dubious merit”. The Supreme Court’s decision was issued amid growing frustration and demands by Canadian consumers for federal action on affordable internet. 

The CRTC’s August 2019 Final Rates Order is the result of an extensive four-year regulatory proceeding that confirmed the large carriers systematically deviated from the CRTC’s rate-setting rules to grossly inflate their costs of providing wholesale access to their networks. The CRTC condemned the large carriers’ rate-fixing as “very disturbing” because it would drive smaller competitors out of business. The large carriers appealed the 2019 Final Rates Order to the courts, the Federal Cabinet and the CRTC itself.

Even after the Federal Court of Appeal’s complete rejection of the incumbents appeals, the CRTC issued a new decision declining to implement its own order. The CRTC instead allowed the large carriers to continue charging grossly inflated rates until the CRTC decides on Bell and Rogers’ further requests to raise prices and keep the overcharged amounts. TekSavvy is challenging the CRTC’s stay decision, calling it “flawed and unreasonable”.

Denied rate relief and refunds for overcharged amounts, TekSavvy was forced to raise its prices. In addition to the prospect of further price hikes, TekSavvy warned that the CRTC’s failure to act is hostile to independent investment, warning “the single greatest threat to TekSavvy’s quarter billion dollar investment plan is the CRTC’s delay in implementing its 2019 final wholesale rate order”. The company said it is currently reviewing its business plans in light of the continuing climate of extreme regulatory uncertainty.

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