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COLUMN: CRTC roll back on bulk internet rates a loss for consumers

Is the dream of affordable, high-speed internet for all receding further? Changing?

Algoma-Manitoulin-Kapuskasing MP, Carol Hughes writes a regular column about provincial initiatives and issues impacting our community.

Internet coverage in rural and northern Canada has been a problem for years. 

While the telecommunications industry in Canada is dominated by larger players, there are plenty of re-sellers, especially in cities. Once the city fades into the rear-view mirror, so do the options which create a scenario where competition isn’t available as a limiting factor for costs or performance. 

The result can be big bills for sub-standard service.

With repeated promises of government help to expand internet services for rural and remote locations in Canada, it was surprising when the federal regulator, the CRTC, backtracked on its plan to lower bulk internet rates. 

In a late-May decision, the CRTC reversed its decision to lower wholesale rates that had been announced in August of 2019. At that time, small internet providers passed the anticipated savings on to their customers. 

Now, those cuts will have to be reversed or losses will be absorbed by the smaller players. More importantly in Northern Ontario, the move makes the growth of competition less likely in areas that require better service and even in those areas that are currently not serviced. 

Naturally, Canada’s big three telecommunications companies, Bell, Telus, and Rogers, see things differently. They claim the move will help expand services in rural settings, but that remains to be seen. 

With a return to 2016 rates, there are a few more likely outcomes such as increased internet prices and small providers struggling to survive in a climate that is increasingly less competitive and arranged to the benefit of large players. 

Another outcome of the reversal is a growing number of calls for the Chair of the CRTC, Ian Scott, to be replaced. Scott, a former Liberal MPP and Cabinet Minister is also a former TELUS executive who was appointed by the current government. 

As head of the CRTC he is on record stating a personal preference for facilities-based competition rather than wholesale-based competition and specifically linked this view in part to some of his experience in the private sector.

The challenge here is that the private sector will never fill our rural and remote needs without either being pushed or rewarded. With a continuation of status quo for bulk rates, it is hard to see how change will be driven by Canada’s telecom giants.

And maybe it won’t. Change may come from outside the country well before any Canadian players make progress in stubbornly underserviced and unserved areas. The reason for that is Starlink, which is set to become a global player offering satellite-based internet service that, once completed, will reach all points on the globe. 

Starlink is a subsidiary of Elon Musk’s company SpaceX which builds and launches satellites. Musk is also famous for his electric car company, Tesla and has been pursuing all manner of forward-thinking projects including hyperloop transportation.

Right now, Starlink is available in some parts of Canada for individuals who want to become beta testers of the technology. The catch? It isn’t cheap and the service can be spotty. 

Once complete, the option will be tempting for many who can afford it but may suppress the growth of affordable options for those who can’t. That said, the potential of unlimited, quick internet may be enough for some to dig a little deeper in their pockets.

If it takes off, Starlink could let the big Canadian telecom companies off the hook when it comes to expanding internet services. While consumers who can afford it may not have a problem with that, those who require more affordable connectivity may.

The reversal of bulk rates makes it easy for the big three to remain comfortable with their circumstance but their rationale for the change was to expand to rural and remote regions. If Starlink makes that unappealing, the CRTC should reconsider the advantage they have handed to the big three internet providers.