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TekSavvy asks CRTC to block proposed sale of Freedom Mobile to Videotron, says it violates Telecommunications Act

TekSavvy is not backing down. The Ontario-based independent internet service provider (ISP) is asking the CRTC (Canadian Radio-television and Telecommunications Commission) to review the pre-conditional sale of Freedom Mobile to Vidéotron as part of the Rogers-Shaw C$26 billion takeover.

TekSavvy says that the merger hinges completely on a side deal that violates Section 27(2) of the Telecommunications Act.

During the Competition Tribunal hearings, Rogers argued that wholesale rates set by the CRTC for ISPs who lease access to large carrier networks are too high to allow Vidéotron to compete outside of Quebec, which, according to TekSavvy, is confirmation that Rogers will grant Vidéotron access to its broadband network at preferential rates that are below the CRTC’s regulated rates. These preferential rates are unfair as they are not accessible to other ISPs, such as TekSavvy.

“The largest consolidation in the history of the Canadian telecom sector is predicated on unlawful wholesale agreements,” said Andy Kaplan-Myrth, TekSavvy’s vice-president of regulatory and carrier affairs. “The CRTC has exclusive jurisdiction over this matter, and it must render its decision before the Minister makes his final decision on the merger.”

The negotiations of the deal do not depend on natural market forces, but rather on Rogers’ efforts to remove regulatory hurdles for its acquisition to go through, TekSavvy complained.

“It is ironic that Canada’s telecom oligopoly—the most vicious opponents of CRTC wholesale regulation— just successfully argued to the Competition Tribunal that wholesale-based competition is the only viable solution to address competitive concerns with this merger,” said TekSavvy vice-president of insight and engagement Peter Nowak.

This could only take place because Minister Champagne rejected CRTC’s 2019 decision to lower its regulated wholesale rates in May 2022, the independent ISP argued. TekSavvy says that Bell and Rogers successfully convinced Minister Champagne to impose higher, ruinous wholesale rates on independent ISPs, which the telcos subsequently acquired and then fixed their own rates, hence eliminating wholesale-based competition.

A week ago, TekSavvy called on Minister Champagne to block the Rogers/Shaw/Vidéotron deal, citing similar competition concerns.

Minister Champagne is set to issue his final verdict after the Competition Bureau’s appeal is heard on Jan. 24, although his decision may be delayed until a parliamentary committee considers the issues during hearings on Jan. 25.

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