In a mandate letter to new CRTC chair Vicky Eatrides released on Monday, Heritage Minister Pablo Rodriguez and Industry Minister Francois-Philippe Champagne stress the importance of wholesale regulation in ensuring competition for internet services to Canadians.
Though the sentiment sounds nice, emergency action is required. Last Friday we learned that two more independent wholesale-based internet service providers have been swallowed by Canada’s telecom giants. London, Ont.-based ISP Start.ca has been acquired by Telus, who also admitted it had quietly purchased Montreal-based Altima Telecom in June last year.
These two acquisitions are just the latest carnage resulting from the CRTC’s disastrous 2021 decision to reverse an earlier ruling lowering wholesale access rates – the fees that independent ISPs pay to the giants to use parts of their networks. Despite repeated warnings by these ISPs, Champagne in May, 2022 rejected appeals to overturn the CRTC and endorsed its higher rates, saying, “The decision provides stability.”
The death spiral was nearly immediate: Bell acquired Montreal-based Ebox and then Toronto-based Distributel, along with several of its brands including Primus and Acanac, while Videotron bought Toronto-based VMedia. Ebox, Distributel and VMedia were three of the largest indie ISPs in Canada; now, Telus has swallowed up Start and Altima. There may yet be more unreported acquisitions that we don’t know about.
Some of these acquired brands will continue operating as “flankers” of their parents, maintaining the illusion of choice for consumers while serving as tools through which the big companies can use predatory pricing to crush remaining independents such as TekSavvy. Remaining independent ISPs also continue to be locked out of offering high-speed fibre services, thanks to the CRTC's dithering on setting usable wholesale access rates.
If Champagne does not act now, this pattern of acquisitions will continue until no independent ISPs remain. As the chart above shows, consumers currently have dozens of “brands” to choose from when it comes to wireless and internet services – but nearly all of them are owned and operated by a few giant firms.
This market collapse comes as no surprise. As Internet Society of Canada co-chair Matthew Gamble puts it on his blog, “with the 2021 rates and no real access to fibre to the home networks, these independent ISPs really only had one choice – get acquired or die trying.”
The telecom market is already one of the most consolidated industries in Canada and it is just getting worse. The Rogers-Shaw merger and a related side deal with Videotron that revolves around illegal wholesale rates, which we are challenging at the CRTC, will kill off remaining competitors. Champagne must hold true to his word and not approve the merger until there is legal clarity on it, which includes our challenge.
If action is not taken now, consumer prices will continue to rise even higher and there will be few voices left to oppose the big companies on policy matters, either at the CRTC or government level.
TekSavvy is one of the only major wholesale-based ISPs left. The government and CRTC must immediately enable competitive access to fibre services and lower wholesale access rates, and prevent big telcos from eliminating competition by using their subordinate brands to engage in predatory pricing.