Telus strikes back at Cogeco and defends Joly’s decision to uphold CRTC's wholesale internet rules

OTTAWA — Days after Cogeco’s CEO blasted Industry Minister Melanie Joly for authorizing Canada’s three major telecommunications companies to resell fibre optics to internet service providers on their respective networks, the only member of the big three telecoms in favour of the measure came to the minister’s rescue.

“We have a government that’s actually very committed to truly bringing competition and better choice for Canadians, I think, and not interested into political interference with their own administrative process,” said Telus chief technology officer Nazim Benhadid.

Last week, Joly sided with the Canadian Radio-television and Telecommunications Commission (CRTC) after it decided to allow for greater competition on existing networks for high-speed Internet services across the country.

“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,” Joly said in a statement.

The decision means, for example, that Telus can use other providers’ networks to attract thousands of customers in Ontario and Quebec instead of building its own infrastructure.

It has angered major players in the sector, such as Bell, Rogers, Eastlink, and Cogeco, who said it would harm them, and the investments needed to improve their networks.

They also questioned the potential for cost reduction.

In an interview with the National Post, Benhadid cited Statistics Canada to claim that costs in some regions of the country had fallen by 13.5 per cent since the CRTC released the new framework a year ago.

He also challenged his competitors to invest in Western Canada, where Telus has a strong presence.

“It’s symmetrical. (All these companies) can come and compete in Calgary, Edmonton, Vancouver. Everywhere we serve, our fibre is available. So it’s hard to understand this argument that it’s not good. They don’t want to come and compete in the west. It doesn’t work for their strategy,” he said.

Most of the sector’s key players are based in Ontario and Quebec, with Montreal housing three headquarters. Telus is based in Vancouver, British Columbia.

But Benhadid was quick to point out that when he joined Telus in 2000, fresh out of school, the company was a small amalgamation of regional players from Western Canada. This Montreal engineer, a graduate of the École Polytechnique at the Université de Montréal, recalls that the company he joined had only four employees in Quebec’s largest city. Today, Telus has more than 6,000 employees in Montreal.

“So it’s always been in our DNA to compete and be present across the country,” said Benhadid. During the interview, he often highlighted Cogeco’s business model, which includes investments abroad, notably its failed attempt to conquer the Portuguese market two decades ago .

“Cogeco’s strategy is to compete in the U.S., outside of Canada,” said Benhadid.

The Telus executive’s comments came a few days after the CEO for Cogeco told National Post he wanted to “ring the alarm bell” because he never thought that “such a damaging, dangerous decision” as the one Joly made on Aug. 6 “would or could be made.”

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

Many key industry players expected Minister Joly to announce her rejection of the CRTC’s decision.

But for Telus’s CTO, these comments came as a surprise.

“I am surprised, because objectively they don’t stand in front of the economic theories test,” Benhadid said.

At a time when Prime Minister Mark Carney wants to see Canadian companies invest in Canada, several players in the telecommunications industry say that Joly’s decision will not encourage them to do so.

Financial analyses they’re citing, including from Bank of America and National Bank, predict that such decision would lead to “a decline in future investments in telecommunications infrastructure.”

This file has also become a political melodrama in some corners of Parliament Hill. Since Joly announced her decision on a hot and dry summer evening last week, she has remained silent and did not offer any other comments than the statement she released.

On Thursday afternoon, the Bloc Québécois asked the minister to review the decision.

“Maintaining this status quo makes no sense, especially since even two of the three major telecommunications players opposed it. By doing so, Minister Joly will prevent smaller telecommunications players from becoming competitive and growing, and it is the citizens who will pay the price,” said the Bloc’s Industry critic Gabriel Ste-Marie.

But for Telus, the regulatory issue is settled, and its leadership team is ready to move forward.

The company recently announced it will expand broadband services in Ontario and Quebec with $2-billion investment in areas that don’t already have fibre .

“So the areas that companies are saying they’re not going to invest in we will. And after five years, they will have access to this fibre,” he said. “So, their strategy is to not compete in Canada. Their strategy is to do something else. And now they’re trying to justify their strategic choices.”

National Post atrepanier@postmedia.com

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