Rogers, BCE Get Victory as Canada Regulator Sets New Internet Rates
(Bloomberg) -- Canadian regulators handed a major victory to BCE Inc., Rogers Communications Inc. and other large telecommunications firms by reversing a decision that would have slashed the prices they can charge internet resellers.
The big carriers will be able to charge rates similar to the prices originally set in 2016 for wholesale access to their broadband networks, the Canadian Radio-television and Telecommunications Commission said Thursday.
The decision overturns a controversial 2019 ruling that would have forced large telecom companies to cut their wholesale ates sharply and make retroactive payments to small companies that lease space on their networks.
Canadian Imperial Bank of Commerce analyst Robert Bek estimated last year those payments could amount to C$469 million ($389 million), with BCE and Rogers paying more than 70% of that amount. The telcos would have also seen an ongoing impact to their profitability, as lower wholesale prices would allow resellers to offer less expensive home internet plans to consumers.
Under the new pricing regime, the major providers will still have to make retroactive payments but they will be much smaller. The CRTC said the decision was necessary to ensure the industry still invests in high-speed internet service.
“This model will foster greater competition and further investments, so that the industry can better serve the needs of Canadians,” Ian Scott, chairman of the CRTC, said in a statement. “Today’s decision will allow us to focus on that goal, while providing certainty in the marketplace for Internet service providers.”
“We’re pleased the CRTC has recognized the critical role that network builders play in connecting Canadians everywhere,” BCE spokesperson Jacqueline Michelis said in an emailed statement. “It’s a positive decision that enables the major infrastructure investments Canada needs, including Bell’s accelerated capital plan.”
BCE and other large providers fought hard, appealing the 2019 pricing structure through the courts, and the federal government backed their position last year. Navdeep Bains, then Canada’s innovation minister, said in August the ruling did not “appropriately balance the policy objectives of the wholesale services framework” and might undermine capital investment in networks.
Many analysts had expected the regulator to shift its stance. The Covid-19 pandemic underlined the economic importance of high-speed internet networks, strengthening the telecoms’ case, National Bank Financial’s Adam Shine said in a note to investors last year.
This is the second critical ruling for the CRTC in the past two months. In April, it said it will force large carriers to sell access to their networks to smaller wireless players, making it easier for regional providers like Quebecor Inc. and Cogeco Communications Inc. to compete. But that privilege extends only to companies that already own some wireless spectrum of their own.
©2021 Bloomberg L.P.