TekSavvy is a blow to internet competition, says lawyer

Concerns are growing that Canada’s Internet market could continue to lose smaller independent players following reports that independent service provider TekSavvy is looking for a new owner.

John Lawford, executive director and general counsel of the Public Interest Advocacy Centre, said he is not surprised by unconfirmed reports that TekSavvy Solutions is seeking new owners after a 2021 decision on internet wholesale rates was reversed by Canada’s Radio-Television and Telecommunications. Commission.

Companies like TekSavvy buy wholesale access to internet networks from telecom giants and resell them to consumers, often at lower rates. The CRTC sets the rates for wholesale access.

The news comes as TekSavvy awaits a restructuring of those rates from the CRTC. In 2021, the government department reversed an earlier decision to set them lower and therefore higher, making it more difficult for service providers to offer customers cheaper rates.

Lawford said he has a “hierarchy of blame” for the situation, and that it will eventually lead to a duopoly of internet access in Canadian communities.

“We can start with the CRTC, the most present evil,” Lawford said. “But it’s bigger than that. It also encompasses government policy and incumbents as well.”

On Thursday, The Globe and Mail reported, citing unnamed sources, that TekSavvy is looking for a new owner.

Among previous sales of Internet service providers (ISPs), Telus acquired Start.ca, an ISP operating in Ontario, earlier this year. And Quebec-based telecom giant Quebecor bought VMedia late last year, serving the GTA.

While the CRTC is working on a new pricing regime after determining its 2021 decision, Lawford said it’s too late to bail out independent providers.

“These guys are all dead. It’s over,” Lawford said. “You have one cable internet provider and one phone provider in your city and that’s it. You will get duopoly prices for the next 10 years.”

Neither TekSavvy nor the CRTC responded to a request for comment.

Once lower rates are enacted, Lawford said, larger telecom companies will own enough of the formerly independent ISPs to undermine new entrants and prevent competition.

Others in the industry are more optimistic. Geoff White, executive director and general counsel of the Competitive Network Operators of Canada, said there are still enough small ISP operators to make the industry viable.

White said the CRTC’s plan to restructure rates and review the landscape to improve competition and pricing gives ISPs hope.

“The worst thing the CRTC can do at this point is to go back on the current review of the home internet framework,” he said in an email. “Because despite all the acquisitions and mergers and very serious challenges, there are still many competitors that will give consumers a more affordable choice as long as the CRTC and the government stick to their plans and promises.”

Despite the hopes, White said, the industry is in the situation of the CRTC not aggressively “protecting a once-workable wholesale regime that lowered prices for Canadians from relentless lobbying and lawyers.”

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