Industry Minister Melanie Joly in Ottawa on July 11. Minister Joly declined to overturn a ruling by Canada’s telecom regulator that allows incumbents to resell internet over each other’s networks.Spencer Colby/The Canadian Press
The federal government is backing a ruling by Canada’s telecom regulator that allows incumbents to resell internet over each other’s networks, prompting strong reactions from companies and industry groups Thursday.
In a statement late Wednesday night, Industry Minister Mélanie Joly declined to overturn the ruling, saying the findings were based on extensive consultation with experts and hundreds of public submissions.
The Canadian Radio-television and Telecommunications Commission (CRTC) requires three carriers – BCE Inc.’s Bell Canada BCE-T, Telus Corp. T-T and SaskTel – to give competitors access to their fibre networks at regulator-set rates, outside of their own territories. The policy is intended to increase competition and affordability for internet services.
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While Telus is in favour of the policy, and has started offering internet over Bell’s network in Ontario and Quebec, all other major carriers are opposed to it, arguing it could harm investment and competition in the long term.
In her statement, Ms. Joly said the policy would contribute to the new Liberal government’s broader mandate to bring down costs for consumers.
“To that end, the government is declining to alter the CRTC’s decision to expand mandatory wholesale access,” she said.
The decision is a departure from the last time cabinet was asked to review the CRTC’s policy. In December of last year, when faced with a similar review and vary abdication, then-industry minister François-Philippe Champagne required the CRTC to reconsider its findings. In June, the regulator once again stood firm on its position. Cabinet had until Aug. 13 to weigh in another time.
Some of the country’s leading carriers issued statements after Ms. Joly’s decision.
Telus chief executive officer Darren Entwistle commended the verdict, saying it affirms the regulator is guided by due process. “It sends a strong signal to consumers, businesses and investors that the Canadian regulatory system is robust,” he said in a statement.
However, Rogers Communications Inc. RCI-B-T said in a statement the decision “does not incent Canadian companies to invest in Canada.” Rogers and Bell have both warned they will cut investment if the policy is not changed.
Cogeco Communications Inc. CCA-T said it was dismayed by Ottawa’s move, adding it “contradicts government efforts to promote sustainable competition and drive economic growth.” In July, Cogeco and Bragg Communications Inc.’s Eastlink filed with a federal court for leave to appeal the CRTC’s decision.
Eastlink said in a statement Thursday it was suspending planned upgrades after the verdict, and over the next month, would identify communities that will become unprofitable and “require shutdown.”
The Canadian Telecommunications Association, representing industry players, apart from Telus, said the policy will undercut smaller players and urged the government to reverse course.
The ultimate effect of this policy will depend on the mandatory access rates that the CRTC has yet to set.
Talking to analysts Thursday morning, Bell CEO Mirko Bibic urged the regulator to ensure “network builders are fully compensated for the significant build cost and investment risk they take.”