CRTC cuts wholesale prices by 10 per cent

The CRTC has announced an immediate cut to wholesale internet rates in a move that could boost competition to big telecoms and potentially lower prices for consumers.

The Canadian Radio-television and Telecommunications Commission said Wednesday it is launching a review of its wholesale regime and will immediately cut some of the rates small players pay to access the networks of big cable and telephone companies by 10 per cent.

When the CRTC previously cut wholesale rates in 2019, several independent internet service providers (ISPs) passed discounts along to consumers. Whether or when small providers cut consumers’ bills would be a business decision for each ISP to make.

The wholesale system, under which small ISPs pay for network access at regulated rates and then sell service to their own retail customers, has been under fire for the past several years. The small players say the rates are too high after the CRTC put that 2019 decision on hold and ultimately largely reversed it in a surprise 2021 ruling.

Numerous independent ISPs have sold to big telecoms over the past year, including Distributel and EBox to Bell, VMedia to Quebecor, Start.ca and Altima to Telus, and Oxio to Cogeco.

Vicky Eatrides, who took over as chair of the CRTC earlier this year, told the Toronto Star that the broader review of the system will take some time and the regulator “wanted to do something quickly” in the interim.

“This is all about promoting competition. We know that the current approach is not working, it’s not producing the results that we had hoped for,” she said Wednesday. “And so, what we’re doing today is reviewing our approach in order to promote competition.

“Competition is good for Canadians and what we’re doing today is good for competition,” Eatrides said when asked whether the interim rate cut is in response to the recent spate of small ISPs being acquired by big telecoms.

She added that the CRTC is also expediting its current review of whether to grant small players access to fibre-to-the-home service, which offers fast speeds and is in demand by customers.

Eatrides said she expects the formal, in-person hearing to review the wholesale regime will take place in early 2024. In the meantime she said the CRTC could tweak the interim rates further if warranted.

She said the review could lead to even more aggressive regulation, including the CRTC directly setting the internet rates Canadian consumers pay. “If this fails and doesn’t produce the results that we want, retail regulation is not off the table.”

The moves by the CRTC under the new chair appear to represent a significant shift in direction after the regulator previously said it got its own 2019 decision wrong when it lowered many wholesale rates.

Last month, the federal government finalized a new policy direction to the CRTC, instructing the commission to focus on competition and lowering internet and wireless prices.

Paul Andersen, chair of the Competitive Network Operators of Canada (CNOC), which lobbies on behalf of small ISPs, said the industry has long warned that the current system is not promoting competition for consumers.

“CNOC members continue to stress the need for rapid resolution to many outstanding issues. (Innovation) Minister (François-Philippe) Champagne’s new policy direction made clear the need for immediate action and this is a first step by the CRTC to resolving these,” he said.