A man walks and texts on his smart phone in downtown Toronto.
Nathan Denette/The Canadian Press
The federal cabinet says the new, lower rates that Canada’s large phone and cable companies are allowed to charge smaller internet providers for access to their networks could stifle investment in telecom infrastructure.
However, the Governor in Council declined to overturn the August 2019 ruling that reduced wholesale broadband rates or send it back to Canada’s telecom regulator for reconsideration, saying it would be premature to do so because the Canadian Radio-television and Telecommunications Commission (CRTC) is already in the midst of reviewing its decision.
“We will continue to monitor the CRTC proceedings closely,” Navdeep Bains, Minister of Innovation, Science and Industry, said in a statement Saturday.
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Consumer advocates and smaller internet service providers (ISPs) criticized the decision, saying it would result in higher costs for internet users.
“The government has effectively told the CRTC that they expect the rates to go up because they’re worried about investment. But these increases will most certainly be passed along to customers,” Laura Tribe, executive director of OpenMedia, an organization advocating for widespread inexpensive internet access, said in a statement.
Matt Stein, CEO of Distributel and chairman of the Competitive Network Operators of Canada (CNOC), an industry group for independent ISPs, called it a bad day for internet consumers.
“This is the kind of thing that causes rates to go up,” Mr. Stein said. “This creates new delay and new uncertainty, which unfortunately are the tried-and-true weapons of the big phone and big cable companies.”
Large telecoms are required to sell wholesale access to third-party operators such as TekSavvy Solutions Inc. and Distributel Communications Ltd., who then sell internet services to their own customers. The system is meant to increase competition in the internet market.
Last summer, the CRTC lowered the rates that the larger players are permitted to charge third-party operators and ordered them to make retroactive payments to compensate for the higher prices that have been charged since the commission set interim rates in 2016. The phone and cable companies said at the time that the retroactive payments would total $325-million, according to court documents.
The decision was stayed on appeals to the federal court by BCE Inc. and a group of five cable operators: Rogers Communications Inc., Shaw Communications Inc., Quebecor Inc.‘s Videotron Ltd., Cogeco Communications Inc. and Eastlink Inc.‘s owner Bragg Communications Inc. That case was heard in June and a decision is pending.
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BCE and the cable companies, along with Telus Corp., also appealed to the CRTC, asking it to review its decision, and petitioned the federal cabinet. BCE wanted Ottawa to overturn the decision and reinstate the previous rates, while Telus and the cable companies requested that the decision be sent back to the CRTC for reconsideration.
Mr. Bains said the Governor in Council is concerned that the new rates could undermine network investments, especially in rural and remote areas, where it is needed most.
“Incentives for ongoing investment, particularly to foster enhanced connectivity for those who are unserved or underserved, are a critical objective of the overall policies governing telecommunications, including these wholesale rates,” Mr. Bains said.
“Given that the CRTC is already reviewing its decision, it is unnecessary to refer the decision back to the CRTC for reconsideration at this time,” he added.
However, Ms. Tribe said that if the government is really concerned about network investment, it should get going on its plan to dole out funding for projects aimed at bringing high-speed internet to rural and remote areas.
Maryam Monsef, Canada’s Minister of Rural Economic Development, said in June that the Universal Broadband Fund, which is expected to pay out up to $1-billion over 10 years, would start taking applications “in the coming days.”
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The phone and cable companies, meanwhile, welcomed the decision, saying they were pleased that the government has acknowledged their role in keeping Canadians connected during the COVID-19 pandemic.
Rogers spokesperson Andrew Garas said the rates set by the CRTC last summer do not reflect the cost of building and expanding broadband networks and would have an impact investments, particularly in rural and remote areas, where the costs of building telecom infrastructure are higher.
BCE called it a “welcome recognition” that the rates set by the CRTC in August were too low.
“We trust the CRTC’s review will reflect the government’s objective to drive network investment, especially in rural and remote regions, with wholesale rates that are fair and reasonable,” BCE spokesperson Marc Choma said in an email.
Chethan Lakshman, vice-president of external affairs at Shaw Communications, said the company looks forward to working with the CRTC to create a new wholesale framework that “more appropriately balances” objectives such as network investment and affordability.
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TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
