The Federal court has extended the suspension of CRTC’s proposed retroactive internet wholesale pricing until it can confirm a hearing status.
According to the order, the Federal Court agreed that the respondent (CRTC) has not made compelling arguments against the issue and that the CRTC order could permanently distort the market in a way that’s difficult to heal. Thus, it will continue to suspend CRTC’s new pricings until it could reach a verdict on whether to grant the ISPs a hearing.
The Federal court’s announcement last Friday has put resellers in an awkward spot, especially the ones that have preemptively lowered subscription pricing for their customers immediately following CRTC’s order. In September, reseller Teksavvy lowered subscription rates for 85 per cent of its customers. Distributel Communications, Start.ca and Oricom also followed suit, with each announcing their own free plan upgrades.
If the Federal court blocks the CRTC pricing, then resellers would either need to retract the price drops to maintain profits or risk running into deficits.
Related Story: Bell petition to cabinet: cheaper wholesale internet ‘yield no real benefits for Canadians’
After the CRTC proposed to cut internet wholesale capacity rates by between 15 to 43 per cent, facility-based internet service providers (ISPs) including Bell, Rogers, Shaw, and Quebecor, asked the federal court to block the change. Additionally, Bell Canada sent a petition to the cabinet detailing the new pricing’s potential detriments on its network development efforts.
A Canaccord Genuity report estimated that Rogers, Bell, and Quebecor would be impacted the most by the CRTC’s new pricing. Their annual revenue would be reduced by CA$50 million, CA$45 million, and CA$25 million respectively.
In its petition, Bell Canada wrote that the retroactive pricing could demand the major ISPs to pay up to CA$345 million to resellers, equating to nearly a year’s worth of HSA revenue.