Fearing that, after the Cabinet decision on wholesale rates, the federal government’s approval of the Rogers-Shaw merger would result in further “rate-fixing and price hikes by Canada’s telecom oligopoly”, independent internet service provider (ISP) TekSavvy, of Chatham, Ontario, today called on Canada’s Minister of Industry, Science and Technology, François-Philippe Champagne, to block the proposed $26 billion merger by refusing the transfer of Shaw’s wireless spectrum licenses, as well as forbidding the acquisition of Freedom Mobile by Vidéotron.
“After successfully lobbying the Minister to impose ruinous regulated rates on smaller competitors, these massive companies now want to carve up the market and fix rates among themselves,” said TekSavvy spokesman Peter Nowak. “Minister Champagne must block this anticompetitive deal – or they will soon squeeze out remaining ISPs and hike consumer prices even higher.”
TekSavvy, which bills itself as Canada’s largest independent telecommunications company, says federal approval of the merger must be contingent upon first enacting the CRTC’s 2019 decision to lower its regulated wholesale rates.
However, in May of 2022, Minister Champagne declined to implement the CRTC decision and instead endorsed much higher wholesale rates, as requested by Rogers and Bell. Teksavvy further declares that the federal government’s own data confirms Canadian internet prices are skyrocketing during an unprecedented cost of living crisis.
The proposed merger between Rogers and Shaw was approved by the Competition Tribunal on Dec. 29, but the Competition Bureau appealed the Tribunal’s decision to the Federal Court of Appeal. The appeal is set to be heard on Jan. 24. In addition, the proposed transaction is subject to final approval by Minister Champagne.
During the Competition Tribunal hearings, the companies revealed that the whole transaction hinges on a side deal under which Rogers would lease its broadband network to Vidéotron at special wholesale rates not available to independent internet service providers.
The CRTC sets wholesale rates paid by independent ISPs who lease access from larger carriers. These regulated rates indirectly determine what Canadian consumers pay for internet services. When the Competition Bureau argued that the CRTC’s rates were so high that Vidéotron could not use them and compete, Rogers confirmed that it would give Vidéotron preferential rates below the regulated rates set by the CRTC.