Independent ISP TekSavvy blames large carriers, cabinet for a planned price hike

Independent ISP TekSavvy blames large carriers, cabinet for a planned price hike
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TORONTO — One of Canada’s largest independent internet companies says it will be reluctantly raising prices for a second time this year due to an ongoing battle it’s fighting against the wholesale prices charged by the large network owners.

Ontario-based TekSavvy notified its customers by email this week that its residential internet prices will go up by as much as $10 per month after Oct. 1.

That’s on top of a $5-per-month increase that TekSavvy made last spring, amid extremely high demand for internet service that all carriers experienced due to stay-at-home orders issued across Canada to combat the COVID-19 pandemic.

TekSavvy says it has little choice but to raise prices because it has had to pay what it considers inflated wholesale prices for several years and the large networks have succeeded in delaying or blocking substantial price reductions.

The company says in its latest notice to customers that a government statement Saturday signals that the federal cabinet had “caved to pressure” from the large carriers by failing to show clear support for a CRTC’s decision to lower prices.

Canada’s large phone and cable companies, on the other hand, say they have been charging wholesale rates approved by the CRTC in 2016 and the new regulated rates it ordered in August 2019 were too low to cover their own costs.

The so-called “final” wholesale rates announced by the CRTC a year ago have never gone into effect and the 2016 rates remain in effect, under a court order issued last year at the big carriers’ request.

“After five years of cost uncertainty, inflated interim rates, and anti-competitive behaviour by the large carriers, TekSavvy is left with no choice but to interpret this (Aug. 15) announcement as an expectation from the government that retail prices should be raised, specifically to protect Incumbent investments,” it told customers Wednesday.

“This is obviously not the news we wish to be delivering to you at a time of increased uncertainty and concern.”

Company and government sources weren’t immediately available for comment on Thursday.

However, several have said in recent days that they supported a statement issued Saturday by Navdeep Bains, minister for innovation, science and industry.

Company executives have also appealed the CRTC’s new wholesale to the regulator itself and to the Federal Court of Appeal, arguing that they are set so low that they don’t cover the network operators own costs — putting future investments at risk.

This report by The Canadian Press was first published Aug. 20, 2020

Companies in this story: (TSX:BCE, TSX:RCI.B, TSX:T, TSX:SJR.B, TSX:QBR:B, TSX:CCA)

David Paddon, The Canadian Press

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