Is retail regulation delaying delivery of consumer benefits?

Retail price regulation means government approval is required for changes in rates, whether prices are going up or down. The same approval process is required if the terms or service characteristics, such as speeds and data allowances, are changing. These are known as tariffs. In most of Canada, for most consumer telecommunications services, tariffs, and the associated regulatory approval process, are no longer required. Such isn’t the case in many rural and remote serving areas.

Still, one would think that no regulator would stand in the way of prices going down, right? You would be wrong.

Let’s take a look at the far north, where most rates charged by Northwestel are subject to tariffs regulated by the CRTC, unlike just about everywhere else in Canada. That means that any change in price (or terms) needs the approval of the Commission, even when prices are going down, or service characteristics are improving to the benefit of consumers.

Given the geography, it isn’t surprising that Northwestel’s prices for broadband services are among the highest in the country; average available broadband speeds are among the lowest. The latest Communications Monitoring Report (CMR) shows that only 60% of residents in the Yukon and Northwest Territories have access to 50/10 service. Unlimited service was not yet available at the end of 2019 when data for the 2020 CMR was collected; an unlimited option was added in December 2020.

One might think that proposed improvements in service quality and prices would be fast-tracked by the regulator. Again, you would be wrong.

Over the past year and a half, when most of the country has been so dependent on broadband to work from home and stay connected, we have seen some lengthy regulatory delays blocking implementation of proposed rate reductions, internet speeds improvements, and launches of unlimited service. Some might consider these delays to be excessive.

For example, let’s take a look at Northwestel Tariff Notice 1099 [zip, 288KB], filed 11 months ago on October 21, 2020, with a proposed service date of November 2, 2020. From the cover letter:

On 12 August 2020 , Northwestel was pleased to be awarded $62M in broadband funding to expand broadband in our serving territory. As part of each of these winning bids for broadband funding, we committed to introduce unlimited Internet service packages not only where we received funding, but also within our cable and FTTP-served footprints as soon as possible. Consistent with this commitment, we are pleased to file today new proposed packages including unlimited Internet service packages for residential and business customers.

The CRTC itself had awarded the funding in a series of decisions on August 12, 2020, which included a condition requiring Northwestel to offer an unlimited service option. Still, the Commission didn’t approve the tariff application in the standard 15 day period, delaying interim approval until December 1, 2020. The process has continued to drag on over the past 8 months with costing submissions and responses to various interrogatories lasting until last month. Final approval is still outstanding.

In April, Northwestel filed a related application (TN 1121 [zip, 237KB]) to extend its “Try-it-and-Save” promotion for another year, and to also include the unlimited option to the promotion. On April 27, the CRTC told Northwestel that the promotion would not receive the customary 15 day interim approval, “[h]owever, the Commission intends to dispose of this application, along with any associated subsequent revisions, within 45 business days of receipt of the filing.”

The Commission has not asked Northwestel for any further information. A couple weeks ago, the CRTC approved a modified version of the promotion, only granting 6 months, while denying the request to add unlimited Internet packages to the promotion. Why? “[T]he Commission considers that including Northwestel’s unlimited Internet services at this time would potentially add complexity to the administration of the promotion and confusion to customers, given that this service has been approved on an interim basis only.”

Hold on. The only reason the unlimited service just has interim approval is because the CRTC itself hasn’t gotten around to providing final approval.

One might have thought that the CRTC would have seized the opportunity to finalize the 2020 tariff approval in time to allow people in the North to try out unlimited broadband as the school year is getting underway. But once again, you would be wrong.

There are more examples. Tariff Notice 1122 [zip, 252KB] filed April 21, 2021 seeks to reduce the price of unlimited packages by $10 for residential customers. Tariff Notice 1137 [zip, 793KB] was filed August 19 seeking to increase speeds and usage for certain cable and fibre-to-the-premises residential and business packages; two weeks ago, the CRTC told Northwestel that it will not get 15 day interim approval and “the Commission intends to make its decision regarding the application and any subsequent revisions within 45 business days of receipt of the filing.”

In a media release two weeks ago, Curtis Shaw, Northwestel President, said “We know Northern customers want to see continuous improvements in the value of their Internet service, and that’s why Northwestel has laid out its plans to improve speeds and lower rates on our most popular Internet plans”.

Nearly half a year after Northwestel asked to lower rates, the CRTC hasn’t moved on the file. What can possibly be holding up interim approval for lower broadband rates, especially at this time?

When there is so much chatter about access to affordable service, and when there is universal agreement on the need to improve access to affordable high speed services in the north, wouldn’t we want to see interim approvals and speedier processes when consumers benefit from proposed tariff filings?

Unfortunately, that isn’t happening.

Those of us who have been around for a few years understand that the machinations of government regulatory bodies have trouble keeping up with the needs of the consumer marketplace. It is an important lesson for those calling for retail rate regulation for communications services in other areas of the country.

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