A woman walks in front of the Telus head office is shown in Toronto in February, 2021.Frank Gunn/The Canadian Press
Telus Communications Inc. T-T is asking the Federal Court to quash a cabinet order concerning a controversial part of the wholesale internet regime, saying that order could render the significant investments it has made in Ontario and Quebec “meaningless.”
In its application for judicial review, submitted to Federal Court late last week, Telus accused the federal government of improperly trying to overturn an independent decision by the Canadian Radio-television and Telecommunications Commission (CRTC) that allows Telus to resell internet over the fibre networks of BCE Inc.’s Bell Canada BCE-T in Ontario and Quebec.
In November, cabinet directed the CRTC to reconsider whether Canada’s three largest internet providers should be allowed resell internet services over Bell’s and Telus’ fibre networks at regulated prices.
Telus says the cabinet order was based on closed-door meetings between the government and its competitors that “run afoul” of transparency principles, and did not give sufficient explanation for why reconsideration was necessary. Telus also alleged that Industry Minster François-Philippe Champagne did not consult with provinces before providing his recommendation for the order.
It’s the latest in a long history of telecom debates, stemming from fundamental disagreement among players about the degree to which the government should actively aim to shape competition through regulation, and when limitations on incumbents in favour of independent providers are appropriate.
“We’re incredibly confused and perplexed by this decision,” said Zainul Mawji, executive vice-president and president of consumer solutions at Telus, in an interview, calling the federal government’s position protectionist and other telecoms’ complaints anti-competitive.
Telus did not answer a question about the value of the “significant investments” it said it stands to lose should it be barred from accessing Bell’s fibre networks in Ontario and Quebec at mandated rates.
Its application for a judicial review says the cabinet order “now threatens to render these investments meaningless.”
Most of Telus’ competitors have asked the CRTC to ban the big three from reselling over each other’s networks. Bell Canada and Rogers Communications Inc. have said it would discourage infrastructure investment.
Meanwhile, independent providers – including Cogeco Inc. CGO-T, Bragg Communications Inc.’s Eastlink and TekSavvy – have said it would allow large players to undercut them by bundling internet with mobile services, given their national wireless networks and scale.
But Telus has taken a different view. In its Dec. 4 application, Telus argued that smaller internet providers in Ontario and Quebec have been given the ability to bundle services at least as effectively – or more so – than it has. This is because of the mobile virtual network operator (MVNO) policy, which requires network providers to grant competitors access to their networks.
But Frédéric Perron, Cogeco’s president and chief executive officer, challenged these claims.
While the large carriers will have access to each other’s fibre networks indefinitely at costs set by the CRTC, he said, smaller players can only access their wireless networks at commercially agreed-upon rates (with the CRTC providing final-offer arbitration) for seven years. The time limit is intended to encourage players to invest in their own infrastructure.
He said that Cogeco expects to lose market share if a new incumbent entered the market and would severely affect the company’s ability to make investment in its networks within five years.
“It doesn’t add up for a regional player like us against a player that’s 10 times the size,” he said. “The impact will be that the big three get bigger.”
This comes as Cogeco is mere quarters away from launching its own mobile services (the company recently filed for mobile-related trademarks). It will be doing so at a moment of increased competitive intensity, and as Ottawa has cut future immigration goals.
In its order to the CRTC, cabinet expressed concerns about infrastructure investment and the “viability of small and regional internet service providers” should incumbent access go ahead. In its application, however, Telus argued that while it is dominant in certain regions, it is not in others.
“We have the smallest market share relative to any of our competitors,” said Ms. Mawji, referring to Ontario and Quebec. “So we are the ones that are bringing new competition to the market.”
Mark Goldberg, a telecommunications consultant, said he couldn’t recall the last time there was a request for a judicial review of a cabinet order in telecom.
He noted that cabinet took a weak approach in its order, given that it asked the CRTC to reconsider its interim decision, despite the fact that it could have asked it to reconsider the final version of that decision, released in August.
The CRTC said that while the order from cabinet relates only to the interim decision, published last October – whereby the network sharing was limited to Quebec and Ontario, where Bell would disproportionally be required to share its fibre network – it is also considering the question of incumbent access in relation to its final order, which requires Telus to share its network in Alberta and British Columbia as well.