Media Releases

Internet: The CRTC’s wholesale pricing regime penalizes innovation and rural regions

Montreal, March 3, 2022 – With the pandemic having lasted nearly two years now, the Canadian population has had to spend more time online, whether for work, education, or entertainment. Almost half of the working population started working more from home. A substantial share of students also had to pursue their studies remotely. With online presence having increased, the majority of Canadians (55%) now spend five hours or more a day online.

While the internet has held up well despite the pressure exerted by this rapid and somewhat forced digital turn, certain service companies forced to go digital saw their client volumes fall given the low quality of internet services in rural regions.

“The unavailability of high-speed internet in some of these far-flung regions is a reality for a significant portion of clients, a situation that was sometimes a problem for students who had to attend school remotely. This new reality has emphasized the importance of having access to high-quality internet in order to pursue professional, educational, or personal activities,” explains Valentin Petkantchin, Economist and Senior Fellow at the MEI.

The issue is even more important when you consider the many families that have left large urban centres to set themselves up in the suburbs or in rural regions.

Let’s stop restraining telecom innovation and investment

The telecommunications sector requires constant major investments to develop infrastructure across the country. These telecom infrastructure investments allowed Canadians’ needs to be met during a period when access to these services was crucial. The situation would probably have been more problematic without the vision, innovation, and major investments of companies in this sector.

If they really want Canadian consumers to continue to have access to high-quality, reliable internet services, the authorities will have to think twice when the time comes to make decisions.

“CRTC decisions aiming to dictate network sharing conditions and wholesale prices create additional uncertainty and only increase the risks. They lead to substantial wasted resources in terms of lobbying, compliance, and complaints on the part of providers—resources that are not available to be invested in providing better service to consumers,” adds Valentin Petkantchin.

“It’s time for the CRTC to re-examine its regulatory framework and to gradually dismantle its wholesale pricing regime and put its trust in entrepreneurs. Instead of another about face on wholesale pricing, the authorities should stop overregulating the sector, and transition to a framework based on real, dynamic, facilities-based competition,” concludes MEI Public Policy Analyst Gabriel Giguère.

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The Montreal Economic Institute is an independent public policy think tank. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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