TekSavvy raises monthly prices, accuses Ottawa of siding with major internet carriers

a man sitting in front of a computer keyboard: TekSavvy is accusing big carriers of threatening to "hold back investments in rural Canada unless they were protected from competition," and said Ottawa has "caved" to those demands."

© THE CANADIAN PRESS/Jonathan Hayward
TekSavvy is accusing big carriers of threatening to “hold back investments in rural Canada unless they were protected from competition,” and said Ottawa has “caved” to those demands.”

Independent telecommunications provider TekSavvy says it is raising its monthly internet prices while accusing the federal government of siding with major phone and cable carriers in an ongoing battle over wholesale pricing.

The company sent emails to its customers Wednesday, warning it would be increasing the price of its internet data packages by $10 a month beginning Oct. 1, calling the move “a difficult decision.”

Read more: Telecom regulator may have erred with decision on wholesale rate, minister says

The email says the increase is in response to a statement released by the federal cabinet Saturday regarding last year’s controversial decision by the CRTC to cut wholesale capacity rates by nearly half.

That CRTC decision, issued Aug. 15, 2019 but put on hold by an appeal court, has been praised by Canada’s independent internet service providers but denounced by the large phone and cable companies who say the rates would be far too low.

Saturday’s statement, written by Minister of Innovation Navdeep Bains, said cutting wholesale rates may undermine investments in Canada’s communications networks, particularly in rural and remote areas, which have largely been spearheaded by major companies like Bell Canada and Rogers Communications in partnership with the government.

TekSavvy is accusing those big carriers of threatening to “hold back investments in rural Canada unless they were protected from competition,” and said Ottawa has “caved” to those demands.”

“After 5 years of cost uncertainty, inflated interim rates, and anti-competitive behaviour by the large carriers, TekSavvy is left with no choice but to interpret this announcement as an expectation from the government that retail prices should be raised,” the company’s email to customers said.

A press release issued Monday in response to the government statement used similar language, but did not specify how much prices would be increased by.

Read more: Big Canadian internet providers must now be clear on pricing, contracts: CRTC

The statement issued by Bains suggests but doesn’t say outright that the arms-length regulatory body needs to re-think how it arrived at its conclusions after years of study and analysis.

“On the basis of its review, the (cabinet) considers that the rates do not, in all instances, appropriately balance the policy objectives of the wholesale services framework and is concerned that these rates may undermine investment in high-quality networks, particularly in rural and remote areas,” Bains said.

Bell, Rogers and most of Canada’s other large phone and cable companies argue the CRTC overstepped its authority by cutting wholesale capacity rates by up to 43 per cent and chopping access rates up to 77 per cent.

But their wholesale customers — labelled “resellers” by their detractors and “independents” by their supporters — argue that the CRTC’s decision would end years of overcharging by the big carriers and allow them to lower the retail rates that they charge.

Both sides of the argument have spent the past year lobbying the government, as well as fighting each other at the Federal Court of Appeal and before the Canadian Radio-television and Telecommunications Commission. The CRTC is now reviewing its own decision.

The government statement says it won’t intervene in the CRTC’s ongoing review.

“We encourage all parties to cooperate in the CRTC’s ongoing review of the rates decision to support a timely conclusion that will provide more certainty for all involved parties,” Bains said.

Bell said in a statement Saturday that the CRTC decision would set wholesale rates below cost, “which would certainly have impacted future investment by facilities-based carriers like Bell,” particularly in rural and remote regions.

Read more: TekSavvy appeals to Canadians for support amid battle with phone, cable industry giants

A statement from Rogers Communications said, in part, that “the CRTC rates do not reflect the true cost of building and expanding Canada’s world-class broadband networks and will impact network investments, especially in rural and remote areas where costs are significantly higher.”

TekSavvy, Canada’s largest independent internet service provider (ISP), connects its service to existing telecommunications networks owned by companies like Bell, Rogers and Telus across the country.

Canada’s small and mid-sized ISPs collectively serve about one million households using infrastructure they either own or rent.

TekSavvy has repeatedly argued that the major carriers are standing in the way of lowering consumer prices in Canada in order to avoid competition.

— With files from the Canadian Press

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