TekSavvy’s application to the CRTC to address issues of undue preference arising from off-tariff agreements (OTAs) stirred up a hornet’s nest, with interventions pouring in from sympathizers and critics alike.
OTAs were permitted by the CRTC in 2012, allowing carriers to enter into negotiated wholesale agreements with competitors that deviated from the Commission’s normal rate regime.
But with the embattled Rogers-Shaw merger at stake, a new policy direction pushing for competition and innovation, and the meteoric rise in cell phone service bills over the past decade, the OTAs dispute could not be more relevant.
TekSavvy’s Part 1 application, filed on Jan. 20, refers to two alleged instances of undue preference. First is the OTAs that Rogers has entered into with Vidéotron as a remedy to enable the closing of its C$26 billion acquisition of Shaw. The wholesale arrangements will confer on Vidéotron favourable rates and terms for access to backhaul, domestic roaming, and Third-Party Internet Access (TPIA), not available to other competitors.
The second instance concerns Bell which, according to the independent ISP, is providing its newly-acquired EBOX Inc. with access to wholesale FTTP (fibre-to-the premises) services that are not available to other competitors and for which there are no wholesale tariffs.
Pending the outcome of this investigation, TekSavvy is asking the CRTC to void the wholesale agreement between Rogers and Vidéotron or order Rogers to extend the same rates and terms to all competitors. Bell should also be ordered to offer competitors aggregated wholesale access to FTTP service speeds it has provided EBOX, Teksavvy said.
The application gained support from advocacy groups like OpenMedia, Public Interest Advocacy Centre (PIAC), Competitive Network Operators of Canada and competitor carriers Globalive, TELUS, and Community Fibre Company.
Globalive, one of the most vocal critics of the Rogers-Shaw merger, argued that these wholesale arrangements will have a negative impact on its re-entry into the wireless market. Globalive also said it is preparing its own Part 1 Application to the CRTC regarding similar wireless-specific arrangements and related specific remedies.
PIAC contended that the CRTC allowing OTAs was “the beginning of a slow death for wholesale competition”, adding, “it is no surprise that a system ripe for abuse and secrecy, in the absence of rigorous Commission oversight, was indeed abused and rendered largely inscrutable to both competitors and the public.”
Furthermore, OpenMedia claimed that its support for TekSavvy’s application represents a community of “nearly 300,000 people in Canada”. But it should be noted that the association attached a petition with only 31,886 signatures, senior consultant in the telecommunications industry Mark Goldberg pointed out in a tweet, adding that scanning through the signatures revealed many duplicates.
OpenMedia has clarified to IT World Canada that the number of signatures in the petition cited refers to the number of unique petition signers as originally delivered to the Cabinet in September 2021 and that the duplicates have no impact on the figure cited in the submission.
TELUS also showed support for TekSavvy’s request to investigate whether agreements between Rogers and Vidéotron violate subsection 27(2) of the Telecommunications Act but “takes no position” on whether a similar investigation in Bell’s case is warranted.
Shaw and Québecor, unsurprisingly, bared their teeth, lambasting TekSavvy’s plea to sabotage the side divestiture on which the Rogers-Shaw merger deal lives or dies.
Since the 2012 decision, Shaw argued, at least 21 OTAs were entered into by carriers, and since 2015, dozens more. “In spite of the exponential increase in OTAs being entered into in the past decade, TekSavvy’s is the first Part 1 application alleging undue preference through an OTA, negating TekSavvy’s suggestion that OTAs are inherently problematic.”
Shaw added that the new policy direction does not justify a reconsideration of the entire OTA regime. “In fact, the prevalence of OTAs demonstrates that a robust market for wholesale internet services has emerged and is healthy. The current regime is achieving the Act’s objectives, while also helping to encourage all forms of competition and in doing so foster affordability in the market, all of which are consistent with section 2 of the new Policy Direction.”
Québecor, on the other hand, took the high road, saying that it is actually open to entering into an OTA with TekSavvy or any other carrier. The Quebec-based carrier said it can even offer the same wholesale arrangements as the one it currently has with Rogers. That, Québecor says, should be enough for the CRTC to see there is no undue preference whatsoever arising from its OTA with Rogers.
However, Québecor vouched for TekSavvy’s request to investigate Bell’s alleged instance of undue preference.
In response to TekSavvy’s accusations, Bell affirmed; “EBOX is now a division of Bell. Bell doesn’t provide EBOX with any wholesale services, telecom or other. There can be no agreement, off-tariff or not, preferential or not, between Bell & EBOX since they’re the same corporate entity.”
Updated 3/1/2023 with OpenMedia’s statement