Telus asks court to quash cabinet order for review of wholesale fibre internet rules

Telus Corp. is challenging a federal order for a CRTC review on whether Canada’s Big 3 telecom providers should be able to access each other’s wholesale fibre internet networks.

Telus is asking a Federal Court to quash the cabinet order, accusing the federal government of trying to overturn an independent CRTC decision, improperly entertaining submissions from select internet service providers, and failing to adequately consult with the provinces.

“The CRTC recently issued a decision after 17 months of expert review that was designed to increase competition and lower prices for home internet services,” Telus Consumer Solutions president Zainul Mawji said in a statement.

“Now, when Canadians are already struggling with affordability and cost of living, the federal government is seeking to overturn the CRTC’s decision and instead reduce choice and increase prices for consumers. Telus is asking the court to … allow the CRTC’s decision to stand.”

A series of recent CRTC decisions allow smaller internet providers to sell their services through fibre networks owned by companies such as Telus and BCE Inc.

Late last year, the regulator announced it would temporarily require Bell and Telus to allow competitors to access their fibre-to-the-home networks, only in Ontario and Quebec, in exchange for a fee.

That decision, which took effect this past May, was meant to stimulate competition for internet services in the provinces where the regulator said independent companies were struggling the most.

Following a broader review, the CRTC announced in August those rules would apply to networks owned by telephone companies countrywide.

Bell had appealed the initial decision that applied to Ontario and Quebec, asking the federal cabinet to overturn it. The company had argued the rules reduce its incentive to continue building out its fibre network.

Last month, Industry Minister François-Philippe Champagne said cabinet had denied Bell’s appeal. However, Ottawa requested the CRTC “reconsider a discrete aspect” of the new rules — whether major carriers such as Bell, Telus and Rogers Communications Inc. should be prohibited from using each other’s fibre networks to sell internet service to customers.

Champagne said the government had concerns about the viability of smaller internet service providers to act as alternatives to the big players. He also said the government wants to ensure companies can maintain their investments in internet infrastructure, particularly in underserved areas.

“The Government of Canada is making every effort to promote access to telecommunications services that are reliable, innovative, competitive and — most crucially — affordable,” said Audrey Champoux, a spokesperson for Champagne’s office, in a statement.

“The government is aware of the filing by Telus and cannot comment further as this matter is before the courts.”

The CRTC opened a consultation into the matter last month in response to cabinet’s direction.

But Telus said incumbent telecoms should also be allowed to sell their services to customers using rivals’ networks, as long as their ability to do so is limited to regions outside of their traditional internet-serving territories.

The company argued in its court filing that outside B.C., Alberta, and eastern Quebec — regions where it has built its own fibre infrastructure — its ability to act as a wholesale provider would give local consumers more internet options.

“Historically, Telus’ entry into other regional markets has promoted competition, affordability, consumer interests, and innovation,” the filing stated.

“The size of an internet service provider is not an indicator of its market share in any particular region in Canada. While Telus may be disproportionate in size in certain regions, it is not in others, and in some regions has significantly fewer subscribers than regional internet service providers.”

But some of the smaller providers say allowing the Big 3 to access wholesale fibre internet would decrease competition. The Competitive Network Operators of Canada, an industry association representing independent internet service providers, accused Telus of “deploying another delay tactic.”

“By closing a loophole that allows the Big 3 to get even bigger, the CRTC can ensure real competition at fair prices for Canadians across the country,” Paul Andersen, chair and president of the association, said in a statement.

“That is what people want to see: real competition, not more of the same from the Big 3.”

A joint letter written to the CRTC last month by the association, along with Halifax-based carrier Eastlink and Cogeco Communications Inc., said the large carriers could exploit wholesale access rules. The letter said the Big 3 could undermine competition by leveraging their national wireless brand recognition and “massive” marketing and sales budgets.

They also warned the Big 3 could use their “ability to lure customers” by offering cellphone and internet bundles — an advantage the big carriers have over some standalone independent internet providers.

“There is a significant risk to the viability of regional facilities-based and service-based competitors and, as a result, to competition itself,” they said.

This report by The Canadian Press was first published Dec. 6, 2024.

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

Sammy Hudes, The Canadian Press