Roundup: CRTC Puts An 'End' To Internet Competition
Plus: Indie theatres urge Competition Bureau action on Paramount-Warner Bros. and scalping for profit is now illegal in Ontario
The weekly competition news roundup on a Friday afternoon? Wha?!? It’s happening, people! Or… it is this week, at least. I’m trying some things out and am wondering if more or less people might read this at the end of the week rather than on a weekend morning. Let’s find out, shall we? And with no more ado, let’s get to it:
In a classic let’s-distract-from-the-bad-news-with-some-good-news move, the CRTC issued two decisions on Friday that will affect internet and wireless customers.
First, the bad news: final rates on wholesale internet access that affect most Canadians are largely unchanged, a decision that smaller service providers say “will end meaningful consumer internet competition in Canada.”
Wholesale rates are an arcane subject that can cause eyes to glaze over, but they’re vital because they do much to determine what the vast majority of Canadians pay for internet service, both directly and indirectly.
In a nutshell, wholesale rates are what internet providers pay to large telcos to use parts of their networks so that they can deliver services to their own customers. This has generally applied to smaller, independent providers such as TekSavvy and National Capital FreeNet but it has also become relevant for big companies including Bell and Telus, who were recently given access to each others’ networks outside of their home territories by the CRTC.
The idea is that consumers should have multiple providers to choose from for their internet services, but the cost of building many networks to homes is prohibitive and impractical, since nobody wants their lawns dug up by a dozen companies installing cables. Wholesale-based competition – service providers sharing networks in exchange for access fees – is the solution.
Those access rates, which the CRTC arrives at after studying costs submitted by network owners and then adding a suitable markup, are the biggest operating expense for indie providers.
As such, they do much to determine the competitive landscape for internet service in Canada. If wholesale rates are low, indie providers can offer services for lower prices and force the big companies to follow suit. If the rates are high, prices for consumers stay high and the indies have trouble competing – especially since the big companies don’t have to pay themselves wholesale fees. As an extra gut punch to smaller competitors, the big companies often sell internet services to consumers at prices below what they charge at wholesale.
So what did the CRTC do about these rates on Friday? Here are the interim access rates on Bell and Telus networks for services up to 1.5 gigabits per second that the CRTC set in 2024, compared with the new ones introduced today:
Bell (Ontario and Quebec): $68.94, now $68.26
Telus (Quebec): $65.25, now $57.86
Telus (Alberta and B.C.): $80.41, now $77.21
As is clear, only Telus’ access rate in Quebec has seen a significant change while its fees in the west are decreasing slightly. Bell’s rates are effectively the same.
In its press release, the CRTC trumpeted these incremental changes as taking “action to help deliver more choice of affordable internet services.” That statement might possibly be justified by the fact that the regulator did actually lower one other type of wholesale fee – so-called capacity charges.
On top of paying a per-customer access fee to the network owner, wholesale-based service providers must also pony up for how much internet bandwidth their customers might actually use at a given time. Known as Capacity-Based Billing (CBB), it’s bought in 100-megabit-per-second increments, and the CRTC did in fact lower prices here. Here are the comparisons for Bell and Telus again:
Bell (Ontario and Quebec): $64.24, now $44.19
Telus (Quebec, Alberta and B.C.): $75.86, now $42.12
Do these changes make a difference? Not at all, according to the indies. They say CBB makes up only a small fraction of a customer’s total bill, whereas the wholesale access fee is much more important.
“Dropping the main [fibre] line rates from $68.94 to $68.26 is a slap in the face: so much time and work spent for nothing – they can't think it will have any impact for the independents,” says Shelley Robinson, executive director of National Capital FreeNet. “Part of the reason the Commission keeps dropping CBB is because it does so little and yet they can say they dropped wholesale rates.”
It’s worth noting that these “final” rates can also be appealed in various ways by all involved parties. Given the history of wholesale rates in Canada, it’s a really safe bet that someone will.
It’s also worth noting that these rates only apply to fibre networks. As TekSavvy notes, only a fraction of Canadians are on fibre networks, while the majority are on cable owned by the likes of Rogers and Videotron.
“The CRTC has kept the same high wholesale rates it already set years ago. After waiting three years for this decision, it is frustrating that nothing has changed to help increase real competition or lower retail prices for fibre internet,” says Andy Kaplan-Myrth, vice-president of regulatory and carrier affairs at the company.
“We continue to wait for the CRTC's decision for the vast majority of wholesale rates, including cable internet rates. These rates have been unchanged for years and remain outstanding even as the cable carriers upgrade and replace those networks, evicting small independent competitors from wholesale access to thousands of consumers’ homes.”
The ongoing saga of wholesale rates on those “older” networks, the CRTC’s inability or unwillingness to finally set them, the resultant demise of many indie ISPs, and the role that now apparent Ontario Liberal leader candidate Navdeep Bains played in it, is a tale that we’ll relate here shortly.
But for now… what about the good news mentioned above? Oh yes: the CRTC also announced click-to-cancel rules for telcos, meaning that internet and cellphone providers will have to make it easy for customers to modify or cancel their services online without having to call in and inevitably spend hours on the phone with an agent.
Of course, the bad news to that good news is that these rules don’t take effect until a year from now, which is plenty of time for the telcos to appeal them or otherwise try to water them down.
QUICK UPDATE: Seconds after I hit send on this newsletter, the Competitive Network Operators of Canada – an advocacy group representing small ISPs – issued the mic drop of all mic drops with a full-page statement on its website proclaiming that, “CRTC final fibre rates end independent internet competition for consumers in Canada.”
🕺 ENTERTAINMENT
Canada’s independent theatres are urging the Competition Bureau to take a good hard look at the proposed takeover of WARNER BROS. by PARAMOUNT because of its potential impact on film exhibition here. In an open letter to the enforcement agency, the Network of Independent Cinema Exhibitors (NICE) highlights that Warner Bros. holds “one of the most significant repertory catalogues in cinema history,” which many second-run theatres depend on, and that it is currently “the most exhibitor friendly major studio.” NICE, which represents more than 140 theatres across the country, points to Disney’s takeover of Fox in 2019 as a cautionary tale. Since the merger, Disney has imposed more onerous terms on independent theatres and significantly decreased the number of films they can access. “NICE urges the Competition Bureau to conduct a full and rigorous review of this transaction, with specific attention to its impact on Canadian filmmakers, theatrical distribution in Canada, and on independent exhibitors,” the group says.
On that front, opposition to PARAMOUNT’s proposed acquisition is also growing in Hollywood, despite WARNER BROS. shareholders approving the transaction. A letter initially signed by more than 1,000 actors and production workers has now grown to more than 4,000 signatories, with the likes of Robert DeNiro and Sofia Coppola getting in on the action.
And hey, it’s now illegal to resell concert and sporting event tickets in Ontario at a profit. TICKETMASTER has begun delisting tickets running afoul of Premier Doug Ford’s new law, while STUBHUB and SEATGEEK say they intend to comply. Will base ticket prices now just get more expensive to compensate?
✈️ AIRLINES
In saying the quiet part out loud, U.S.-based airline JETBLUE looks to have provoked a new lawsuit around its alleged use of surveillance pricing. The class action, filed in New York, comes right after an employee of the airline told a customer complaining about prices on X, formerly Twitter, to “try clearing your cache and cookies or booking with an incognito window.” The lawsuit says customers shouldn’t have their privacy rights violated in a “digital rat race for airline tickets,” and that costs should be the same for each similarly seated passenger. Surveillance pricing, meanwhile, is hot, hot hot, with Manitoba moving to ban the practice, new NDP leader Avi Lewis calling for the same and Doug Ford saying… nah, actually we’re good with it.
Here in Canada, WESTJET is closely following a price increase on checked baggage by AIR CANADA with a hike of its own. As CBC notes, it’s the third increase to baggage fees in the past three years, which really proves that flying is the new cellphone or Netflix subscription. Or is it vice versa?
🛒 GROCERIES
And while we’re on the topic of surveillance pricing, SOBEYS has expanded its deal with a tech company that will allow the grocery chain to install electronic shelf labels at more than 300 stores. The $51 million deal with Montreal-based JRTech Solutions, which distributes the electronic labels made by Sweden’s Pricer AB, will see deployment begin in May. As Supermarkets News notes, Walmart’s plan to equip all its U.S. stores with digital shelf labels has met with heavy resistance from workers unions, who object to the move both taking away jobs and opening the door to prices being based on individual customer data.
💾 BIG TECH
Antitrust trials are great for embarrassing emails from big companies coming out – see the recent Live Nation “robbing them blind” case – a fact that AMAZON is again learning the hard way. Emails revealed this week in an ongoing monopoly case in California against the company suggest that Amazon colluded to raise the prices of pet treats, khaki pants, eyedrops and other products. As one exchange showed, Amazon raised prices on a set of dog treats and worked with its manufacturer to convince Chewy, a competing online pet product retailer, to follow suit. “The evidence uncovered today is clear as day: Amazon is working to make your life more unaffordable,” said state attorney general Rob Bonta. Amazon, of course, disagrees.
In case you missed, Alexander Martin – the Toronto indie game developer known as Droqen – joined the Do Not Pass Go podcast this week to give us a behind-the-scenes on his historic attempt to take on GOOGLE and APPLE at the Competition Tribunal:
🥊 COMPETITION
The federal government is looking to appoint new lay members to the COMPETITION TRIBUNAL. Effectively Canada’s competition court, the tribunal is a panel currently made up of four judges and five lay members, though up to eight are allowed by law. As previously reported here, two existing members – Stephen Law, an economics professor at Mount Allison University, and Ted Horbulyk, an associate professor emeritus of economics at the University of Calgary – recently had their terms extended until 2030. Ramaz Samrout, a managing partner of Ottawa-based consulting firm REIM Strategies, is scheduled to see her term end on June 1. A spokesperson could not say how many new members the Tribunal is currently looking to add, but the part-time jobs require a post-graduate degree in economics, business, commerce or finance and offer a per-diem of $920 to $1,080.
🤝 LOBBYING
Thanks to everyone who took the time to fill out the subscriber survey last week, it gave me some great insights on what you guys like and maybe don’t like so much. Our monthly Lobby Report got the least love in those responses, and that’s understandable – it had been a work in progress that I was feeling my way into. I’ve decided to yank it from the regular rotation from now but, because I’m conscious that it does have fans, I’ll likely reintroduce it as a special feature for paid subscribers, while also working on making it more useful as opposed to simply functional.
In that vein, just a few notes on who lobbied who the most in March. Leading the charge was the UNIFOR trade union, which descended on Ottawa on Mar. 23 and 24 with a lobbying blitz that resulted in 82 total posted communications, most of which were with Members of Parliament but also Industry Minister Melanie Joly. ENBRIDGE was up next with 55 total communications for the month, with many involving the Finance and Natural Resources departments. The COUNCIL OF CANADIAN INNOVATORS, a tech advocacy group led by former BlackBerry boss Jim Ballsillie, rounded out the top three with 53 communications, with 13 of those involving Joly’s department.
🚨 COMING UP
Most musicians are afraid to speak out about the Live Nation monopoly for fear of repercussions, but not Rollie Pemberton. Better known as CADENCE WEAPON, the rapper and former Edmonton poet laureate takes aim at a more real reality that is less controlled by big corporations on his new album, Forager, and upcoming book, Ways of Listening. He joins us next week on the Do Not Pass Go podcast, which is now going to drop on Tuesdays rather than Mondays as per what you guys told us you preferred in the subscriber survey.