Independent ISP says Yale report would give big networks too much influence

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TORONTO — One of the country’s independent internet service providers says Canadian consumers will lose out if the Trudeau government enshrines “market forces” as the main way to stimulate competition.

VMedia founder George Burger says the Liberals have given Canada’s telecom regulator more flexibility to strike a balance between the conflicting interests of the big telecom players and their smaller rivals compared with the previous Conservative government.

Burger argues recommendations made last week in a report from an expert panel headed by Janet Yale would again limit the Canadian Radio-television and Telecommunications Commission’s ability to set wholesale rates that strike the right competitive balance.

The final version of the Liberals’ policy direction, in effect as of June 2019, said the CRTC should encourage “all forms of competition and investment.”

That was a change from a 2006 policy direction given to the CRTC under Maxime Bernier, the minister responsible for telecommunications at the time, which stated instructed the regulator to “rely on market forces to the maximum extent feasible” and interfere “to the minimum extent necessary” to meet overall objectives.

Burger, who founded VMedia in 2013 as a company that delivers Internet-based TV service that competes with network giants Bell and Rogers at the retail level but buys capacity from them at the wholesale level, said in an interview that the 2019 Liberal policy direction gave the CRTC much more flexibility to balance various forms of competition.

VMedia — which serves about 45,000 households in local markets across the country —  is one of hundreds of small internet services providers that are locked in a years-long battle over how much they must pay for wholesale service from major telecom companies, including Bell and Rogers.

The independent ISPs argue that their wholesale rates had been set artificially high from 2016 until last August, when the industry regulator reduced them. The big ISPs argue the regulator’s new rates are too low to cover the billions it costs to build their infrastructure.

Burger said panel recommendation No. 28, among others, shows disregard for the 2019 Liberal policy by advocating the Telecommunications Act “foster a competitive market for the provision of electronic communications services primarily through reliance on market forces and, where required, through efficient and effective regulation ”

He accused the expert panel of having a “double-standard” when comes to different industries.

“When it comes to the interest of incumbents, then yes (to) market forces. When it comes to the interests of the cultural community and the media sector, market forces don’t apply.”

The Broadcasting and Telecommunications Legislative Review didn’t immediately respond to a request for comment.

VMedia — which serves about 45,000 households in local markets in all 10 provinces —  is one of hundreds of small internet services providers that are locked in a years-long battle over how much they must pay for wholesale service from major telecom companies, including Bell and Rogers.

The independent ISPs argue that their wholesale rates had been set artificially high from 2016 until last August, when the industry regulator reduced them. The big ISPs argue the regulator’s new rates are too low to cover their costs.

Bains and his counterpart at Heritage Canada have said they’ll carefully review all the Yale report before making decisions.

In response to Burger’s comments, a spokesperson for Bains issued a statement saying affordability is a priority for the Liberals but focused more on wireless service — where the big telecom players are working to defend their investment from incursions by mobile virtual network operators which, like the independent ISPs, want to use the big networks.

“Our government has made affordability a priority. Cell phone and wireless bills are putting too much pressure on Canadian household budgets,” the statement says.

“Minister Bains has given clear direction to the CRTC to promote competition, affordability, consumer interests, and all forms of investment in all their telecommunications decisions.”

Companies in this story: (TSX:BCE, TSX:RCI.B)

David Paddon, The Canadian Press