The Canadian Radio-television and Telecommunications Commission (CRTC) handed a major victory to BCE (TSX:BCE) (Bell), Rogers Communications (TSX:RCI.B) and other large telecommunications companies by reversing a decision that would have reduced the prices they can charge internet resellers.
The big carriers will now be able to charge rates similar to the prices that were originally set in 2016 for wholesale access to their broadband networks.
The CRTC’s latest decision overturns a controversial 2019 ruling that would have forced large telecom companies to lower their wholesale rates sharply and make retroactive payments to small companies that lease space on their networks.
Canadian Imperial Bank of Commerce (TSX:CM) estimated last year that those payments could amount to $469 million, with BCE and Rogers paying more than 70% of that amount. The telecommunications companies would have also seen an ongoing impact to their profitability, as lower wholesale prices would allow resellers to offer less expensive home internet plans to consumers.
Under the new pricing regime, the major telecom providers will still have to make retroactive payments, but they will be much smaller. The CRTC said the decision was necessary to ensure that the industry still invests in high-speed internet service.
BCE and other large internet providers fought hard, appealing the 2019 pricing structure through the courts, and the federal government backed their position. Many analysts had expected the regulator to shift its stance.
This is the second major ruling from the CRTC in the past two months. In April, the regulator said it will force large carriers to sell access to their networks to smaller wireless players, making it easier for regional providers such as Quebecor (TSX:QBR.B) and Cogeco Communications (TSX:CCO) to compete.
