The Canadian Radio-television and Telecommunications Commission (CRTC) has rejected an application by Bell Canada and other telecommunications companies to increase retail rates for basic cable service by 12 percent, in addition to denying a request to annually increase rates indexed for inflation.
The CRTC said the applicants “did not submit or provide any evidence to suggest that the current maximum rate of $25 is no longer economically viable for them as retailers.”
The CRTC estimates there are 1.5 million Canadians who subscribe to $25 monthly cable packages, representing approximately 15 percent of all people subscribing to cable services in Canada in 2021.
Government policy has required telecommunications companies to provide consumers with a “small entry-level basic service,” which first came into effect in March 2016. The amount was capped at $25 per month for basic services, which did not include rental equipment like set-top boxes, to provide Canadians “with the choice between a reasonably priced entry-level offering and the television service provider’s first-tier offering.”
The CRTC said that basic service was designed to benefit consumers by providing choice and economic options where broadcasting companies “have multiple options to recoup their costs,” noting that telecom companies have pricing flexibility for most of their other services offered.
It said the telecom companies had not provided compelling enough evidence to justify the proposed price increase to basic service. The CRTC said no cost analysis was provided that showed telecommunications companies have seen their costs increase “to the extent that a permanent increase of 12% to the maximum allowable retail rate and the implementation of an annual inflationary index are warranted.”
Bell Canada and the other telecom companies first filed their application to raise prices in January 2022, and asked that the price cap be raised to $28 effective April 1, 2022. The companies also asked that every year on April 1 the price cap be adjusted on a yearly basis and linked to the annual consumer price index (CPI) for inflation.
The CRTC opened a public consultation process for comments while asking for annual profit returns from other telecommunications companies including Quebecor Media Inc., Rogers Communications Inc., Shaw Communications Inc., and TELUS Communications Inc.
A number of companies, mostly telecommunication companies, which supported the application, included Rogers, Corus Access Communications, the Canadian Communication Systems Alliance, and Pelmorex Weather Networks.
The CRTC said almost all of the individual Canadians who responded to requests for comment opposed the application, as did many public interest organizations. The latter included, in part, the Consumer Association of Saskatchewan, the National Pensioners Federation, as well as the Independent Broadcast Group/Le groupe de diffuseurs indépendants, and Anthem Sports and Entertainment—who “strongly opposed the application for reasons relating to access, affordability, and lack of evidence submitted to justify the approval of the requests.”