'Dangerous decision': Telecom CEO blasts Joly’s decision to uphold CRTC's wholesale internet rules

OTTAWA — A week after allowing Canada’s three major telecommunications companies to resell fibre optics to Internet service providers on their respective networks and those of smaller players, Canada’s industry minister is facing harsh criticism from the industry.

The uproar is coming first and foremost from her hometown of Montreal, where three major telecommunication companies are headquartered and where the frustration is still intense.

“I am in shock. In shock. I am profoundly disappointed,” said Cogeco’s CEO Frédéric Perron in an interview with National Post.

The Montreal-based company is not thrilled with the new minister’s first consequential move. So much so that he wanted to “ring the alarm bell” because he never thought that “such a damaging, dangerous decision” as the one she made last week “would or could be made.”

“We had high hopes that this new government would make better decisions for business and the Canadian economy,” Perron said. “And what we saw last week, by the minister’s decision, is more reminiscent of old Trudeau era, superficial policies.”

Within the industry, Mélanie Joly was expected to announce her rebuttal of a controversial decision by the Canadian Radio-television and Telecommunications Commission (CRTC) that allows, for example, a company like Telus, which is strong in Western Canada, to use other providers’ networks to attract thousands of customers in Ontario and Quebec instead of building its own infrastructure.

The regulator said the measure was intended to reduce costs for consumers. Cogeco and other stakeholders say there is no concrete evidence to support its assertion

“It discourages investment, weakens competition, and ultimately harms Canadian consumers,” said Robert Ghiz, the president and CEO of the Canadian Telecommunications Association.

This was such a hot issue that last year that Joly’s predecessor,François-Philippe Champagne, heard the industry’s call to overturn the CRTC decision by asking the regulator to “reconsider” its decision to “respond to concerns about the business case for future and ongoing investments in infrastructure in less densely populated areas.”

At the time, Joly was minister of foreign affairs and a member of cabinet when the order was given .

Companies like Cogeco or Eastlink were especially challenging the fact that the big three telecom players in Canada can resell their networks and that they’re forced to open it to them.

But last week, Joly posted a message on her X account confirming she would uphold the regulator’s decision.

“By immediately increasing competition and consumer choice, the CRTC’s decision aims to reduce the cost of high-speed Internet for Canadians and will contribute toward our broader mandate to bring down costs across the board,” she wrote.

Joly’s office did not provide any comments on time for this story.

The decision was made the day before Bell Canada’s quarterly results were announced. Bell’s stock was down that morning, and observers noted a correlation with the minister’s decision.

In an analyst call that morning, Bell’s CEO Mirko Bibic said he was “disappointed” and urged the government and the CRTC “to ensure that network builders are fully compensated for significant build costs and investment risks they take in building.”

It also came a few weeks after Cogeco announced a new mobile service with an introductory one-year free offer.

“With this decision, the minister is essentially saying it’s okay if the Big Three get even bigger. It’s okay if the regional, local players suffer, and it’s okay if there’s a re-monopolization of telecoms in Canada,” Perron said.

“We don’t think it’s okay. Consumers won’t think it’s okay, and we’ll fight to make sure it doesn’t happen.”

Cogeco and Eastlink, which announced last week it was “suspending further planned upgrades to many smaller communities across Canada,” filed an appeal in July asking the Federal Court of Appeal to quash the decision.

But in Ottawa, overriding a decision from the CRTC was seen as a “bold move” and that could “rattle the cage” not even six months after an election and a new prime minister in charge. Sources said the minister had a duty to ensure the sustainability of institutions and protect the national interest.

Champagne, who has since become minister of finance, did not comment for this story. His office confirmed that he attended the cabinet meeting in which the decision was confirmed and that “Canada’s new government has a strong mandate to bring costs down and to build one, strong, Canadian economy.”

“We would have liked to see a lot more courage, and I’m happy to be quoted on that. It seems to me like deferring to the CRTC and maintaining the status quo was the easy way, but not the right way. Sometimes the best decision is the hard decision in life, and we are saddened that the hard decision was not made,” said Perron.

Sources in the industry support Perron’s comments about the decision.

In a statement last week, Rogers Communications said “the Carney government has declared its priority is to build a strong Canada and this decision does the exact opposite.”

A recent PwC study shows that the telecommunication sector directly contributed $87.3 billion in GDP to Canada’s economy and supported over 661,000 jobs in 2024.

By 2035, the Canadian telecom industry could contribute another $112 billion to Canada’s overall GDP, according to the study.

But for Cogeco and other players, this decision could threaten these expectations.

“The decision from last week is not sending the right signal, and it’s concerning to me,” said Perron.

National Post atrepanier@postmedia.com

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