Bell canada stock price, Court rejects ordered the network owners

Bell and Rogers' appeals of the CRTC's ruling on wholesale internet prices were rejected by the court.

On the other side of the case, big telecom firms were forced to cover court expenses for smaller ISPs.

On Thursday, the Federal Court of Appeal rejected appeals by Canada's biggest telecommunications and cable firms, granting independent internet providers an interim victory.

The network operators, including Bell, Rogers, Telus, and others, were also ordered to cover the costs of the appeal to TekSavvy Solutions Inc., Canada's largest independent ISP, and an industry group.

"This is a big victory for Canadians," said Matt Stein, chair of the Canadian Network Operators Consortium and CEO of Distributel, one of the consortium's approximately 30 members.

The court's ruling, he said, marks the end of a "crucial chapter" in a fight that questioned "Canada's longstanding tradition of adequate oversight to ensure equal pricing and competition."

The court's 3-0 decision concluded that the appellants' failure to persuade the three judges on any of the concerns they raised was reflected in the award of costs to TekSavvy and CNOC.

Small and mid-sized ISPs in Canada represent approximately one million households with facilities that they either own or rent.
Small and mid-sized ISPs in Canada represent approximately one million households with facilities that they either own or rent.

The court heard numerous appeals, including one brought on behalf of BCE by Bell Canada and another for most of Canada's largest cable companies, including Rogers, Shaw, Quebecor's Videotron, and Cogeco.

However, the Federal Court of Appeal is only one tool used by the major network owners to keep the CRTC from lowering the wholesale prices they charge to smaller internet providers that compete for some of the same customers.

As part of the regulatory process, the CRTC is reviewing its own decision, and the federal government has suggested that it may intervene if the arms-length regulator fails to strike the right balance.

BCE's chief financial officer, coincidentally, said Thursday at an industry conference that opinion has changed in favor of telecommunications network builders since the pandemic.

BCE chief financial officer Glen LeBlanc said the value of providing solid, stable wireless and internet networks was recognized during the COVID-19 pandemic in response to questions from a Bank of America analyst in an interview-style session.

On the one-year anniversary of the CRTC's wholesale prices decision, the federal government released a statement on Aug. 15 that indicated some errors in the agency's process could jeopardize investments in Canada's communications networks, especially in rural and remote areas.

"Based on its analysis, the (cabinet) believes that the (August 2019) rates do not, in all cases, adequately match the policy objectives of the wholesale services system and is concerned that these rates will undermine investment in high-quality networks, especially in rural and remote areas," said Industry Minister Navdeep Bains.

Bains stated that referring the decision back to the CRTC for reconsideration is unnecessary "at this time," but that the government will continue to track the CRTC proceedings to ensure that the "correct incentives" are established for both investment and competitive choice.

Small and mid-sized ISPs in Canada represent approximately one million households with facilities that they either own or rent. Despite having just about a tenth of the market, they contend that they are a viable alternative to the larger carriers.

Independent ISPs, on the other hand, rely on "facilities-based" carriers to link their equipment to their networks.

The facilities-based carriers' key message is that the CRTC's proposed wholesale prices were so poor that they didn't cover the expense of delivering the services provided by their wholesale customers. The proposed wholesale rates haven't gone into practice because of the court appeal.

Independent ISPs argued that the interim market prices they've been paying since 2016 have always been too high, and that if the CRTC's decision is implemented, they'll be able to lower retail costs.

The CRTC directed facilities-based carriers to reduce their wholesale capacity rates by up to 43% and their access rates by up to 77%.

The appeal court's decision appears to indicate the cabinet's comment last month was "without basis," according to VMedia Inc., a Toronto-based CNOC member.

The possibility of decreased network infrastructure investments is also a "staple in all rate-setting proceedings," according to the study, but it hasn't been proven in previous decisions that have gone against network owners-operators.