Independent, high-speed Internet providers must be charged standardized rates from the big telephone and cable companies for using their networks under a new regulatory ruling.
The Canadian Radio-television and Telecommunications Commission said Thursday the more straightforward, single billing model will mean the same rates will apply for wholesale business and residential services.
“Large and small independent service providers now have the certainty they need to continue offering Canadians a choice of innovative and competitive service,” commission chairman Jean-Pierre Blais said in a statement.
Although the CRTC does not regulate Internet prices for consumers, it said it expects the new standardized wholesale rates will have a “favourable impact” on prices charged in the competitive retail market.
Independent Internet providers make up a small part of the market but they often distinguish themselves by offering customers an all-you-eat or unlimited service.
The CRTC said some independent Internet providers will see significant reductions in the wholesale rates they pay to rent space on the large providers’ networks as a result of its review.
Some large companies had charged independent Internet providers different rates under different billing models for wholesale and residential business services, the commission said.
Tom Copeland, president and founder of independent Internet provider eagle.ca, said the CRTC’s ruling provides stability in network rental costs. He added his network costs should come down marginally.
“I think what it means for us primarily is that we finally have some certainty in our pricing, in our costs,” Copeland said from Cobourg, Ont.
Copeland said he can now better compete with big companies such as Bell (TSX:BCE), Rogers, (TSX:RCI.B) and Telus.(TSX:T) but added that the CRTC decision won’t immediately affect his 3,000 customers.
“I don’t see it as impacting consumer prices today, to a large extent. The margins have been so slim on this because we really haven’t known what to expect going forward,” he said.
“It may, as we move forward, be different, but that may depend on consumers’ demand for bandwidth intensive applications.”
But any time the CRTC has come up with pricing that has been in favour of competition, “they’re looking out for consumers in that regard,” Copeland said.
The CRTC said wholesale rates are based on the large telephone and cable companies’ costs, plus a reasonable mark up.
In the ruling, the CRTC increased the wholesale residential rates that Rogers (TSX:RCI.B), Shaw Communications (TSX:SJR.B) and Videotron (TSX:QBR.B) can charge, while Cogeco’s rates decreased due to the correction of “certain cost assumptions.”
Costing errors also lowered wholesale rates that Bell can charge in Ontario and Quebec and Telus in British Columbia and Alberta.
The CRTC said no adjustments were made to the residential wholesale service rates of Bell Aliant (TSX:BA), MTS (TSX:MBT) or SaskTel.