TekSavvy asks CRTC to review legality of Rogers-Vidéotron deal
Side deal is key to Rogers' proposed $26-billion merger transaction with Shaw
TekSavvy Solutions Inc. has filed an application to the Canadian Radio-television and Telecommunications Commission disputing the legality of the wholesale arrangements Rogers Communications Inc. has made with Quebecor Inc. as part of the divestiture of Freedom Mobile, a side deal that is key to Rogers’ proposed $26-billion merger transaction with Shaw Communications Inc.
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In its Jan. 19 filing, the independent internet service provider said the regulator should investigate the agreement between Rogers and Quebecor’s subsidiary Vidéotron, alleging it violates a section of the Telecommunications Act as the discounted rates Rogers would offer Vidéotron to lease its broadband network aren’t available to independent ISPs such as TekSavvy.
“This transaction is designed so the dominant carriers can weaponize the ISPs they acquired, using below-tariff rates to eliminate us from the market,” TekSavvy vice-president of regulatory and carrier affairs, Andy Kaplan-Myrth, said in a press release.
Vidéotron, a major player in Quebec but with little presence elsewhere, is set to purchase Shaw’s Freedom Mobile unit for $2.85 billion, a divestiture Rogers said should allay concerns about reduced competition stemming from the merger.
Rogers has confirmed it will grant Vidéotron access to its broadband network at preferential rates that are below the CRTC’s regulated rates, TekSavvy said, arguing this is against the CRTC’s set wholesale rates for ISPs who lease access to large carrier networks.
The Competition Tribunal, which released a decision on Dec. 29 that allowed the Rogers-Shaw merger to proceed, has described these arrangements as “further discounted from the CRTC tariffed wholesale rates.” TekSavvy said the CRTC should rule that this violates Section 27(2) of the Telecommunications Act.
“The CRTC has exclusive jurisdiction over this matter and it must render its decision before the Minister makes his final decision on the merger,” Kaplan-Myrth said.
The application also requests an investigation into whether BCE Inc.’s Bell is providing unduly preferential wholesale arrangements to its recently acquired ISPs.
The CRTC did not immediately respond to a request for comment on the application.
The deal is currently blocked from closing until the Commissioner of Competition‘s appeal of the Tribunal’s approval of the merger is heard before the Federal Court of Appeal, which granted an emergency interim stay on the Tribunal decision. The appeals hearing is scheduled on Jan. 24.
Pending that appeal, the deal only requires approval from Innovation, Science and Economic Development Canada (ISED), led by industry minister François-Philippe Champagne.
A House of Commons committee is also set to hold meetings on Jan. 25 to review the updated deal that includes the proposed remedy to sell Freedom Mobile to Vidéotron.
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