Cabinet Refuses to Intervene in CRTC Decision to Shut Down Affordable Internet

The CRTCs quest to make you pay more for Internet is succeeding. The Cabinet chose not to intervene.

It’s no secret that Canadians pay some of the highest rates for cell phone and Internet in the developed world. For many Canadian’s, shelling out a small fortune for quality of service that would make your average American actually appreciate what they have on the same front (an accomplishment in and of itself, really) has become all too par for the course. With monopoly like powers granted to only four plays (at most), Canadians have largely given up hope that the situation will improve any time soon.

Indeed, selling false hope on this front has proven to be marginally lucrative for political parties trying to get votes. This, after all, has been the subject of multiple party platforms both in the 2021 and 2019 federal elections. Obviously, once the election ends, so does the political parties efforts to work for you as we simply go back to the same old corruption lobbyist rule.

Not helping matters in this front is the CRTC (Canadian Radio-television and Telecommunications Commission) which has, in recent years, proven very effectively that it is the poster child of regulatory capture in Canada. The cozy relationship between the regulator and the very corporations they are allegedly regulating was ultimately summed up in a a single picture with the CRTC chair hanging out with a Bell CEO over a beer right before critical decisions were being made. While the picture wasn’t really necessary to showcase just how bad the CRTC is in doing its job, it really was the icing on the cake.

A year ago, the CRTC reversed a previous decision to keep cell phone and Internet rates lower, all but guaranteeing that rates are going to skyrocket further. Around the same time, the CRTC also decided not to allow smaller providers access to Internet infrastructure in Canada. This became known as the MVNO (Mobile Virtual Network Operator) decision. Now, why should a smaller player be granted access to this infrastructure? There are actually a plethora of reasons.

One big reason is that Internet infrastructure was built largely thanks to taxpayers money. The Canadian government offers grants for larger ISPs to lay the groundwork for Internet infrastructure such as fibre optic cabling and server backbones. Those large providers then get to keep the results of that infrastructure and profit off of subscribers wanting Internet and cell phone access. It’s a really outdated model because in places like Europe, smaller players are granted access to the same infrastructure as well, thereby increasing competition, lowering rates and increasing quality of service. European’s, of course, benefit from this, but Canadian’s don’t have the same system in place.

A small MVNO startup, wanted to gain access to this infrastructure so they could deliver more affordable high speed access to the nations Internet infrastructure. Unfortunately, the larger players weren’t willing to play ball because Canada is not a place that allows much in the way of competition. The regulators and lawmakers do a lot to ensure this. So, the MVNO filed a challenge to the CRTC claiming anti-competitive behaviour. Unfortunately for Canadians, the lawsuit would prove to ultimately be unsuccessful. So, the last ditch effort to bring in a small amount of competition into the market fell onto the federal government.

Now, we are learning that the Cabinet chose not to intervene. From Open Media:

Today Cabinet refused to revisit the Canadian Radio-Television and Telecommunications Commission’s (CRTC) April 2021 MVNO decision, which denied MVNO access in most circumstances to Canada’s telecommunications market. The decision comes in response to an appeal to the Governor in Council from dotmobile, a startup MVNO looking to operate in Canada. Cabinet’s decision is the latest in a series of anti-consumer telecom choices from the government and the CRTC that have effectively kneecapped competition in our cell phone and home Internet markets, contributing to Canada paying some of the highest wireless prices in the world.

“Today the government re-committed to a broken system they know does not work,” said OpenMedia Campaigns Director Matt Hatfield. “Infrastructure-based telecom competition has failed to lower our world-leading wireless prices for many years. And yet, Minister Champagne and Cabinet are once again backing that failing model as their only solution to the problem. Meanwhile, MVNO service is a globally-proven model for reducing wireless prices – and yet today’s decision continues to lock Canadians out of that service in almost all circumstances. We deserve a far better policy response from our government that actually addresses our telecom market’s obvious competition and affordability problems.”

Mobile Virtual Network Operators, or MVNOs, are low-cost carriers that purchase access to existing telecom infrastructure and offer customers a cheaper alternative for their cell phone plans. The CRTC’s 2021 decision technically enabled MVNO service, but only for providers who have purchased expensive spectrum and will launch physical infrastructure within a few years, locking most would-be competitors out of the market.

A series of CRTC and government actions over the past year have contributed to putting competition in Canada’s telecom sector on the wrong path. In May 2021, the CRTC sided with Big Telecom in overturning their own rates for Canada’s wired Internet wholesale access regime. As a result, home Internet prices went up for many people in Canada, and smaller independent Internet providers have struggled to continue providing service. In December, in a sign that Trudeau is distancing from his 2019 promises to reduce the cost of connectivity in Canada, the mandate letters given to Ministers Champagne and Hutchings failed to mention lowering cell phone or Internet prices in Canada. A key pending decision is whether the government will approve Rogers’ bid to buy out Shaw, removing the most successful wired and wireless competitor to Bell, Telus and Rogers from the market.

This ultimately is the latest development that shut down competition and raised Internet and cell phone rates in Canada. With the federal government jumping on board to try and ensure that Canada’s broken telecom sector continues with business as usual, Canadian’s are going to continue to pay the price – much to the delight of the telecom monopolies operating in the country.

Drew Wilson on Twitter: @icecube85 and Facebook.

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