Shaw Says Regulatory Changes Essential to Driving Future Network Investment
Shaw and Canada’s major cable carriers say CRTC must reconsider decision on wholesale internet access rates if Canada is to expand connectivity to more Canadians and stay on the leading edge of the global digital economy
November 13, 2019
CALGARY, November 13, 2019 – Shaw Communications Inc. today urged the Federal Cabinet to take steps to ensure Canada has a regulatory environment that delivers affordable internet choices for Canadians and supports the conditions required for continued investment in the backbone of the country’s high-speed internet infrastructure.
Shaw and Canada’s other major cable carriers, Rogers, Videotron, Cogeco, and Eastlink, made the request in a petition today asking the Federal Cabinet to require the Canadian Radio-television and Telecommunications Commission (CRTC) to reconsider its August 15, 2019, wholesale internet access rate decision.
The CRTC requires cable carriers and telephone companies to provide wholesale access to their networks to reseller internet service providers in order to provide additional retail price competition. Unfortunately, as the cable companies’ submission says, the CRTC’s August decision establishes wholesale broadband rates that are radically lower than those that have applied since 2016 and requires the cable companies to offer access to resellers at rates below their own costs.
Shaw and the other major cable carriers say access to high-speed internet is critically important to the growth of Canada’s economy, to the ability of Canadians to live, work and socialize with each other, and to participate fully in society. The companies say the CRTC should be required to take a balanced approach to achieving the government’s key public policy objectives of affordability, competition, investment, innovation and the expansion of high-speed internet access to rural and remote communities.
“Access to high-speed internet services is critically important to Canada’s economy, as well as to the ability of Canadians to live, work and socialize with each other and to participate fully in society. In connecting Canadians from coast to coast, and driving economic development and innovation, the expansion of high-speed internet access is as important to Canada today as construction of railways was more than a century ago,” the companies’ submission says.
The CRTC decision establishes wholesale broadband rates that are “indefensibly low,” the submission says, adding “the new wholesale rates will not allow the cable carriers to recover their costs, let alone earn a reasonable rate of return on the massive investments they have made and had intended to continue making in Canada’s wireline networks.”
“Fair competition that is focused on the ongoing needs of Canadians should be encouraged,” said Brad Shaw, Chief Executive Officer, Shaw Communications. “Rather, the CRTC decision creates an environment that will severely affect our ability to invest in and expand into rural and remote communities and increase speeds to meet the growing demands of millions of families and businesses, particularly as we enter the 5G era.”
According to the companies’ submission, "By reducing available revenues and reallocating market share to resellers, the decision will reduce the Cable Carriers’ operating margins by an amount that translates to as much as 54% of their planned investments in expanding and improving their broadband networks over the next five years. As a result, the cable carriers’ business case to invest in network expansion to many rural, remote and Indigenous communities will become unviable.”
“If the CRTC’s decision is not significantly changed, there’s no question that Canadians will bear the brunt of its effects,” Mr. Shaw said. "Families will be stuck with networks that are more congested, small business owners will struggle to compete with foreign competitors who have access to superior connectivity, and fewer students, emerging businesses and public officials in rural communities will be connected, which will have a profound impact on prosperity in these areas and the delivery of education, health, public safety, and other essential services.
“Today, Shaw is proud to deliver our fastest speeds to 98% of our footprint – whether you work in Bowen Island, Red Deer, or downtown Winnipeg, families and business can get Shaw’s best service,” Mr. Shaw said. “But the construction and ongoing maintenance of high-quality broadband networks takes financial investment, technological innovation and, most of all, a balanced regulatory regime that supports both network growth and fair competition.
“Our rural communities offer enormous potential that cannot be fully realized without further investment in broadband. Let’s not deepen the already acute digital divide between broadband Internet access for rural and urban Canadians,” Mr. Shaw said. “If we fail to get this right, we risk failing to bring Canada together when it needs it the most.”
Shaw Communications Inc. is a leading Canadian connectivity company. The Wireline division consists of Consumer and Business services. Consumer serves residential customers with broadband Internet, Shaw Go WiFi, video and digital phone. Business provides business customers with Internet, data, WiFi, digital phone and video services. The Wireless division provides wireless voice and LTE data services through an expanding and improving mobile wireless network infrastructure.
Caution Regarding Forward-Looking Statements
Statements included in this news release that are not historic constitute forward-looking statements within the meaning of applicable securities laws. Such statements include, but are not limited to, the expected impacts of the August 15, 2019 CRTC wholesale internet access rate decision (“Decision”) on the investment plans of Shaw and other cable carriers, the ability of Shaw and other cable carriers to compete against reseller and facilities-based competitors and to profitably sell broadband internet if the Decision takes effect, and the expected impacts of the Decision on Shaw and other cable carriers’ planned network expansion and growth. These statements are based on Shaw's belief and assumptions based on information available at the time the assumptions were made. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: legislative or regulatory developments; changes in the competitive environment in the markets in which Shaw operates, including the pricing and service plans of reseller and facilities-based competitors; changes to general economic, market or business conditions; and other risk factors contained in Shaw's Annual Information Form and 2018 Annual Report. Undue reliance should not be placed on any forward-looking statement. Shaw disclaims any intention or obligation to update or revise these forward-looking statements, except as required by law.
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