WHEREAS the owners of broadband infastructure have invested significant sums of money in developing their distribution networks; and

WHEREAS the owners of broadband distribution networks set their user fees to facilitate future investment in expanded networks; and

WHEREAS the owners of broadband distribution networks allow for third party internet service providers to utilize their networks for a fee; and

WHEREAS Telecom Order CRTC 2019-288 set final rates for wholesale high-speed access that owners of broadband distribution networks can charge third party internet service providers for aggregated wholesale high speed access services; and

WHEREAS the position taken by the CRTC related to wholesale internet pricing has the potential to significantly reduce the level of investment in internet infrastructure in small and rural communities in Canada; and

WHEREAS in September 2019 the Federal Court of Appeal issued a temporary stay of Telecom Order CRTC 2019-288; and

WHEREAS the Canadian Radio-television and Telecommunications Commission (CRTC) has issued Telecom Notice of Consultation CRTC 2020-131 which reviews the approach to rate setting for wholesale telecommunications services;

THEREFORE, BE IT RESOLVED that the Rural Municipalities of Alberta (RMA) urge the Government of Canada and the Canadian Radio-television and Telecommunications Commission (CRTC) to reconsider its position on wholesale internet pricing; and

FURTHER BE IT RESOLVED that RMA request the Government of Canada and CRTC to create a financial framework where communication and internet fee structures include funds for mandatory investment of network expansion into currently unserved areas of Canada by all telecom and internet service providers.

The wholesale pricing model introduced in August 2019 has the potential of increasing competition and lowering internet pricing for urban areas in Canada where there are multiple providers and good existing high-speed internet infrastructure. However, in rural areas where there are often only a few telecom providers or no service at all, the pricing model discourages investment in these rural areas. When a large telecom provider decides to invest in a rural area, the period to recoup the investment is very long, if ever. If the telecoms are forced to provide low cost access to these assets to their competitors, it discourages the investment. With the large number of additional towers needed to move from 4G to 5G networks, this Canadian Radio-television and Telecommunications Commission (CRTC) decision will likely result in rural areas never receiving upgrades, and areas currently unserved will remain unserved. With the advancements in artificial intelligence and our ever-increasing reliance on the internet to provide basic services to our residents, the need for a robust Canada wide network coverage including the most remote rural areas is a national problem. Having higher wholesale rates and forcing the network operators to reinvest the additional money collected into poorly covered or unserved areas would better serve Canada’s collective interests.

RMA has no active resolutions directly related to this issue.

Canadian Radio-television and Telecommunications Commission

In relation to wholesale internet pricing, on August 15 2019, the CRTC issued Telecom Order 2019-288 – Follow-up to Telecom Orders 2016-396 and 2016-448 – Final rates for aggregated wholesale high-speed access services in September 2019 (the Order), setting final rates for the wholesale high speed access (HSA) service providers’ aggregated wholesale HSA services.

As noted in the Resolution, the Federal Court of Appeal (FCA) granted a temporary stay of the implementation of the final rates for aggregated wholesale high speed access service resulting from the Order, following filed motions for leave to appeal from Bell Canada and Bell MTS, as well as from Bragg Communications Incorporated (Eastlink), Cogeco Communications inc. (Cogeco), Quebecor Media Inc. on behalf of Videotron Ltd. (Videotron), Rogers Communications Canada Inc. (RCCI), and Shaw Cablesystems G.P.(Shaw) (collectively, the cable carriers).

On November 13, 2019, the Commission received an application from TELUS Communications Inc. (TCI), as well an application from Bell Canada and a joint application from the cable carriers, both dated 13 December 2019, in which they requested that the Commission review and vary the Order. Included in these applications, Bell Canada and the cable carriers requested that the Commission further stay the implementation of the final rates set out in Telecom Order 2019-288 if and when the stay granted by the FCA is lifted.

On September 10, 2020, the FCA denied the appeals, thereby removing the stay of Telecom Order 2019-288.

On September 28, 2020, the CRTC issued Telecom Decision 2020-342, in which it approved the stay of Order 2019-288 as requested by Bell Canada and the cable carriers. Therefore, the Commission approved the requests to stay the implementation of the final rates established in the Order pending its final determinations on the review and vary requests.

The final determinations on the review and vary requests have not been issued by the CRTC.

On April 24, 2020, the CRTC further launched Telecom Notice of Consultation CRTC 2020-131 – Call for comments – Review of the approach to rate setting for wholesale telecommunications services, in which the Commission invited interested persons to identify issues associated with the approach to rate setting for wholesale telecommunications services, with the intent to establish a more transparent and efficient rate-setting process while ensuring that rates for regulated wholesale services remain just and reasonable. This proceeding is currently in progress.

It is noted that, while the proceedings remain open, we are unable to comment on the proceedings or the findings related to either the review and vary requests related to the Order, nor the analysis related to Notice of Consultation 2020-131. That said, the Commission remains dedicated to ensuring that the wholesale rates for all regulated services remain just and reasonable, and is working towards that end in both of these proceedings.

We are also aware of the concerns expressed by the RMA in their Resolution that regulated wholesale prices have the potential to significantly reduce levels of investment. At the same time, the Commission recognizes that rates may also have the impact of hindering effective and efficient competition to the detriment of consumers. This balance has been recognized by the CRTC in paragraph 14 of Notice of Consultation 2020-131, which states:

• Wholesale rate setting can have a significant impact on the telecommunications market, and the establishment of wholesale services and associated rates is an important aspect of establishing and maintaining a competitive Canadian telecommunications environment. Rates that are not just and reasonable can have the following impacts:
• Setting rates too low creates a disincentive for incumbents to invest in their network, while simultaneously deterring wholesale customers from making further network investments, as the tariffed rates are much lower than the cost to build;
• Setting rates too high creates an environment in which wholesale customers cannot effectively compete due to inflated prices, yielding an imbalance in favour of the incumbents.

We acknowledge the concerns and issues raised by the RMA. While we are unable to comment on the ongoing work related to these two open proceedings, we would like to reinforce the Commission’s commitment to ensuring that the rates for wholesale regulated services, including aggregated wholesale HSA service, are just and reasonable.

In relation to the request for the Government of Canada and the CRTC to create a financial framework where communication and internet fee structures include funds for mandatory investment of network expansion into currently unserved areas of Canada by all telecom and internet service providers, we note that, for years the CRTC has helped subsidize local telephone service in high cost serving areas by way of a subsidy to service providers. More recently, in 2016, the CRTC expanded the definition of ‘basic service’ to go beyond local phone service to include broadband services as well. At the same time, due to the ubiquity of local phone service in place, the Commission indicated that it was phasing out the local phone service subsidy, and replacing it with the CRTC’s broadband fund. This fund was established in order to help fund broadband service deployment in underserved and unserved communities, with an objective of helping ensure all Canadians have access to, among other things, Internet speeds of at least 50 Mbps download and 10 Mbps upload no matter where they live, in as timely a fashion as possible.

The Canadian Radio-television and Telecommunications Commission (CRTC) released Telecom Decision CRTC 2021-181 in May 2021. This decision reversed the previous CRTC decision regarding wholesale internet pricing and reverts wholesale rates to 2016 level. This decision satisfies the first operative clause of Resolution 9-20F.

The second operative clause asks for guaranteed investment in rural broadband infrastructure through the collection of a fee. The CRTC response describes how their broadband fund is open for eligible projects to provide access to 50/10 internet speeds. However, these funds are not the result of a fee, and do not guarantee investment in rural broadband.

RMA assigns this resolution a status of Accepted In Part, and will continue to advocate for funding for underserved areas of the province.