TekSavvy sale a blow to internet competition,

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Concern is growing that Canada’s internet market could continue to lose smaller independent players following reports that independent service provider TekSavvy is looking for a new owner.

John Lawford, executive director and general counsel of the Public Interest Advocacy Centre, said he isn’t surprised by unconfirmed reports that TekSavvy Solutions is looking for new owners after a 2021 decision on wholesale internet rates was reversed by the Canadian Radio-television and Telecommunications Commission.

Companies like TekSavvy buy wholesale access to internet networks from telecom giants and sell it on to consumers, often for lower rates. The CRTC sets the rates for the wholesale access.

The news comes as TekSavvy awaits a restructuring of those rates from the CRTC. In 2021, the government agency reversed an earlier decision setting them lower and thus raising them, making it harder for service providers to offer customers cheaper rates.

Lawford said he has a “hierarchy of blame” for the situation, charging it will ultimately lead to a duopoly of internet access in Canadian communities.

“We can start with the CRTC, which is the most present evil,” Lawford said. “But it’s bigger than that, it also includes government policy and also the incumbents.”

Thursday, citing unnamed sources, the Globe and Mail reported TekSavvy is searching for a new owner.

Among previous internet service provider (ISP) sales, earlier this year Telus purchased Start.ca, an ISP operating in Ontario. And Quebec-based telecom giant Quebecor bought VMedia, serving the GTA, late last year.

Even though the CRTC is working on a new rate regime after determining its 2021 decision stifled competition Lawford said it’s too late to save independent providers.

“These guys are all dead. It’s over,” Lawford said. “You’ll have one cable-based internet provider and one telephone-based provider in your city and that’s it. You’re going to get duopoly pricing for the next 10 years.”

Neither TekSavvy nor the CRTC responded to a request for comment.

Once lower rates are set, Lawford said, larger telecoms will own enough of the previously independent ISPs to be able to undercut any newcomers and prevent competition.

Others in the industry are more optimistic. Geoff White, executive director and general counsel of the Competitive Network Operators of Canada, said there are still enough small ISP operators to make the industry viable.

White said the CRTC’s plan to restructure rates and review the landscape to improve competition and prices gives hope to ISPs.

“The worst thing the CRTC could do at this juncture is to back off from its current review of the home internet framework,” he said in an email. “Because despite all the acquisitions and mergers and very serious challenges, there are still many competitors out there who will give consumers more affordable choice as long as the CRTC and the government follow through on their plans and promises.”

Despite the hope, White said, the industry is in the situation due to the CRTC not aggressively “protecting a once workable wholesale regime that had been lowering prices for Canadians from relentless lobbying and lawyering.”