Two internet service providers are seeking leave to appeal a recent decision by Canada’s telecom regulator, arguing the commission made “significant” legal errors by allowing large telecoms to resell internet over each others’ networks.
In documents filed to the Federal Court of Appeal Friday morning, Cogeco Communications Inc. CCA-T and Bragg Communications Inc.’s Eastlink said the Canadian Radio-television and Telecommunications Commission acted arbitrarily and contrary to its legal mandate.
The companies asked the court to allow the appeal and ultimately quash the CRTC’s June 20 decision, which determined that the country’s largest telecoms could expand into one another’s footprints where they don’t already have their own infrastructure by piggybacking on certain carriers’ networks.
The effort to overturn the decision is the latest in a two-year regulatory saga in which Telus Corp. T-T was the only major company in support of wholesale fibre access.
The decision allows Telus to use fibre networks owned by BCE Inc.’s BCE-T Bell Canada to enter Eastern Canada, which is where Cogeco and Eastlink operate.
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In previous submissions to the CRTC, the two companies and others argued that the policy would enable incumbents such as Telus to use their scale and bundling abilities to swallow up competitors. But in its June 10 ruling, the CRTC found it would only have a “modest near-term impact” on regional competitors.
In a statement, the CRTC said it could not comment on Friday’s filing, as the matter is before the Federal Court of Appeal, but said it is closely monitoring internet service competition and is prepared to make any adjustment necessary to serve the public interest.
The wholesale framework was designed to improve internet affordability and competition by giving new market entrants an opportunity to use existing networks. Bell, Telus and SaskTel are required by the policy to give competitors access to their fibre networks at regulator-set rates. Meanwhile, Rogers, Videotron, Cogeco and Eastlink are required to share access to their cable networks.
But companies have long disputed what “new market entrant” should mean, and whether it should include a large telecom entering an area where it has little market share in a particular product category.
The CRTC had said that where an incumbent operates out-of-territory, it is a new entrant with the potential to disrupt the status quo, to the benefit of consumers.
But in the Friday court filings, Cogeco and Eastlink said the regulator made a legal error by considering Telus, Bell and Rogers Communications Inc. RCI-B-T new service providers, arguing it misinterpreted several key statutory definitions.
The regional telecoms also argued the CRTC made a legal error by failing to consider whether its decision would reduce barriers to entry for smaller providers, and that it made a jurisdictional error by failing to consider key arguments they had made in previous submissions, which they said rendered the decision essentially “arbitrary.”
In its June 20 decision, the CRTC said it had “properly weighed the evidence on the record of the proceeding” and established a policy that balanced the needs of investment and competition.
The Federal Court of Appeal must now determine whether Cogeco and Eastlink have put forward an “arguable” case that the decision was based on errors of law or jurisdiction.
Telus is the only major telecom to support the CRTC’s policy.
In previous CRTC proceedings, Telus has argued it should be allowed to resell on SaskTel’s and Bell’s networks, saying that it is acting as a new competitor to the potential benefit of consumers, offering new options and services.
Telus has also previously argued that the CRTC’s decision did consider previous policy directions and was based on extensive data and a wide range of submissions.
Bell and Rogers, for their part, have previously said that allowing the incumbents to resell internet will put a chill on network investment and therefore improved service. In its June 20 decision, the CRTC dismissed these concerns, saying incumbent access would not discourage network investment.
The federal government has the power to make changes to the regulator’s decision itself, or require that the CRTC revisit it, until Aug. 13.