Independent internet service providers say customers should not expect to see their bills go down despite a recent move by Canada’s telecom regulator to reduce network rates.
In early March, the Canadian Radio-television and Telecommunications Commission launched a review of the rates that independent ISPs must pay to the big telecom companies for access to the networks they own. The review is part of a wider effort to increase competition in the sector and slow the spate of incumbents’ acquisitions of independent ISPs over the last two years.
As part of the consultation, the CRTC imposed a 10-per-cent reduction on certain current rates, effective immediately.
However, that reduction was only applied to the portion of costs that relate to renting capacity on incumbent networks, known as traffic-sensitive components. Capacity costs usually represent a much smaller portion of an ISP’s total monthly costs, relative to the additional access fees they pay per customer.
While the exact proportion varies between ISPs and incumbents, in a March 17 letter to the CRTC, Telus said that on average, traffic-sensitive costs represent less than 20 per cent of a total bill.
Colin Legendre, chief executive officer of Coextro, an independent ISP based in Mississauga, said that traffic-sensitive costs represented just 16 per cent of his own costs, resulting in a 1.6-per-cent discount – an amount he called “a rounding error.”
“It seems a little odd to make a big flashy announcement that ends up meaning nothing,” said Mr. Legendre. “We’re getting flooded with phone calls with customers asking if they’re going to get 10 per cent off their bill. We would almost rather not have had this, because it’s such a small amount but has created a storm.”
After the announcement, TekSavvy Solutions Inc., the largest remaining independent ISP in Canada, said on its website that while welcome, the rate cut is “not material and therefore won’t lead to lower customer bills.”
In a statement, the CRTC acknowledged that the overall discount for ISPs could be lower than 10 per cent, but added that it could further reduce rates as the consultation progresses.
“This reduction is a first step in the right direction and in our analysis, and will provide competitors with some relief where data usage is variable and growing,” said CRTC spokesperson Patricia Valladao.
Paul Andersen, president of Competitive Network Operators of Canada, the industry group representing independent providers, suggested that some ISPs could be waiting to see how the consultation goes before adjusting their prices.
Many ISPs decreased their prices in 2019, after the CRTC lowered the rates by around 45 per cent. Many were then forced to raise them again in 2021 after the CRTC reversed its decision, saying it had found errors in previous calculations.
As part of the consultation, the CRTC has asked the incumbents to submit cost studies and proposed rates for an updated wholesale framework.
In a letter dated March 21, Robert Malcolmson, Bell Canada’s chief legal and regulatory officer, requested extensions on two deadlines.
The time which the CRTC has given the companies to provide the tariffs and cost studies “is plainly inadequate,” and unrealistic, Mr. Malcolmson said.
He also said that the CRTC acted “contrary” to its legal duty of procedural fairness when it imposed an immediate interim rate reduction without giving Bell “notice that this was being contemplated, nor an opportunity to make submissions.”
The regulator is also considering requiring that the incumbents offer access to their fibre networks at a mandated price and has asked for rate proposals. The incumbents have said that offering this access would disincentivize investment in network building.
In a March 22 letter in support of Bell’s request for extensions, Telus Communications Inc. said it intends to file “significant evidence and argument” in response to questions of mandated fibre access.
Written by Irene Galea for the Globe and Mail