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Telecom Order CRTC 2025-74

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Gatineau, 10 March 2025

Public record: Tariff Notice 1231

Northwestel Inc. – Introduction of Winback Discount for Residential Unlimited Internet Packages

Summary

Canadians need access to reliable, affordable, and high-quality Internet services for every part of their daily lives. Competition in the Internet service market is an important part of increasing Canadians’ access to a variety of service offerings at affordable prices. One way that companies can offer more competitive services is through promotional offerings or discounts.

Northwestel Inc. (Northwestel) submitted an application proposing to introduce winback discounts for certain Internet packages. Winback discounts are promotional offers on services that are available to former customers who have switched to another service provider.

In this order, the Commission encourages affordability in the Far North by approving Northwestel’s application. This will benefit customers in the Far North by offering discounts on internet packages.

Application

  1. On 22 August 2024, the Commission received an application from Northwestel Inc. (Northwestel) proposing to introduce Item 1733 – Winback Discount for Residential Unlimited Internet Packages to its General Tariff.
  2. Specifically, Northwestel proposed to introduce 12 new residential Internet packages with unlimited usage. The rates for these packages would be discounted from Northwestel’s current Commission-approved month-to-month rates for identical packages in Item 1735 – Terrestrial Internet Services of its General Tariff. Northwestel submitted that the packages would provide eligible customers who meet the winback criteria with discounted rates on eligible unlimited Internet packages for a six-month period. After that period, the standard month-to-month rates in Item 1735 would apply.
  3. To qualify for a discounted package, a customer (i) must not have an active Northwestel Internet package at their service location, (ii) must have previously subscribed to a Northwestel Internet service for at least one month, and (iii) must have disconnected the residential Internet package for a period of at least one month. The customer must also have subscribed to an Internet service of an alternative service provider within Northwestel’s operating territory.
  4. Northwestel submitted that the proposed rates for these packages comply with the Commission’s revised price floor rules for residential Internet services, as set out in Telecom Decision 2022-343.Footnote 1
  5. Northwestel proposed that the new discounted packages be available on an ongoing basis, but that the benefit to any individual customer be limited to six months within any 12-month period. This limitation would prevent any individual customer from benefitting from the discounted rates without a cooling-off period equal to the length of the discount.Footnote 2
  6. The company noted that since all the discounted packages pass the price floor test set out in Telecom Decision 2022-343, there is no negative impact on competition that might otherwise be a concern if the discounted rates were set below the price floor. Therefore, Northwestel submitted that it would not be necessary to have an expiration date for the proposed service offering.
  7. Since residential Internet services are categorized as capped services pursuant to Telecom Decision 2015-79, Northwestel requested that the proposed new packages be categorized as residential Internet services and that they be included in the applicable price cap sub-basket.Footnote 3 Since the company is not proposing any rate increases, the changes do not have any impact on its price cap indices.
  8. Additionally, Northwestel proposed to change the name of Section 17 of its General Tariff from “Promotions” to “Bundles and Discounted Services” to better reflect the nature of services in that section.
  9. The Commission did not receive any interventions in relation to Northwestel’s application.

Commission’s analysis

  1. The Commission’s policy for promotions has generally been in relation to offerings that are below cost. For example, in Telecom Decision 94-13, the Commission considered that below-cost pricing for market trials and promotions did not generally have a negative impact on competition; therefore, market trials and promotions were exempted from a price floor test on the condition that sufficient information is provided by the incumbent local exchange carrier (ILEC) to show that the offering is a legitimate market trial or promotion of limited duration. In the case of Northwestel’s proposal, since all the discounted packages pass the relevant price floor test, these offerings would not have the negative effect that discounted rates below the price floor might have.
  2. In Telecom Decision 2008-41, the Commission forboreFootnote 4 in large part from the regulation of promotions for retail residential and business local wireline services in non-forborne areas if they met certain criteria. Specifically, promotions forborne from regulation are those where (i) the combined enrollment and benefit period does not exceed 12 months, (ii) there is a cooling-off period equal to at least half of the combined enrollment and benefit period, and (iii) there are no existing or recently elapsed promotions that involve any of the same tariffed services or underlying services in the same geographic area. The Commission further determined that ILECs would still be required to file tariff applications for any proposed promotions for residential and business local wireline services that do not meet the criteria set out above.
  3. Telecom Decision 2008-41 applied to local wireline services rather than regulated retail Internet services. However, in a previous promotion offered by Northwestel (the Try-it-and-Save promotion),Footnote 5 the Commission was of the view that its past policies provided guidelines for acceptable practices with respect to promotions.
  4. Winback promotions have traditionally been offered by the telecommunications industry to address loss of customers due to competition in the market. In Telecom Decision 2022-343, the Commission considered the state of competition for residential Internet services in Northwestel’s serving territory. In that decision, the Commission determined that Northwestel’s customers would likely view the services of Starlink, a division of SpaceX Canada Corp.’s (Starlink) as comparable to Northwestel’s fixed Internet services, and noted that Starlink’s service rates were lower than Northwestel’s when comparing services of similar speeds.
  5. In keeping with the Commission’s considerations in Telecom Decision 2022-343, the Commission believes that Northwestel’s proposed discounted packages would make a positive contribution to competition in the residential Internet service market. Returning customers will benefit from Northwestel’s proposed discounted packages, and the introduction of such offers should encourage competition in the market resulting in more choices for customers.
  6. The proposed rates for the discounted packages are consistent with the Commission’s rate determinations in Telecom Decision 2022-343. Additionally, in line with Telecom Decision 2008-41, Northwestel’s proposed eligibility criteria ensures that the benefit would be limited to six months within any 12-month period, and no individual customer would benefit from the discounted rates without a cooling-off period equal to the length of the discount.
  7. Furthermore, Northwestel’s proposal to add the discounted packages to its residential Internet service sub-basket is appropriate. Given the current constraints for the residential Internet service basket in Telecom Decision 2022-343, there would be no impact to the price-cap indices.
  8. The Commission also considers Northwestel’s proposed housekeeping change to change the name of Section 17 of its General Tariff from “Promotions” to “Bundles and Discounted Services” in order to accurately reflect the contents of that section to be appropriate.
  9. The Commission considers that Northwestel’s proposal is reasonable and complies with regulatory policies.

Conclusion

  1. In light of all of the above, the Commission approves, by majority decision, Northwestel’s application.
  2. The dissenting opinion of Commissioners Bram Abramson and Claire Anderson are attached to this order.

Secretary General

Related documents

Dissenting opinion of Commissioners Bram Abramson and Claire Anderson

  1. The majority of the Telecommunications Committee, on behalf of the Commission,Footnote 6 approves Northwestel Inc.’s (Northwestel) new residential unlimited Internet winback promotion, which targets only customers who used to be their residential Internet subscribers but who, for at least one month now, have switched away.
  2. Based on the record before us, we would not have. The proceeding engages the interest not only of Starlink, a division of SpaceX Canada Corp. (Starlink) – the other service provider that has vaulted the high hurdles involved in being present in much of Northwestel’s serving area of Yukon, the Northwest Territories, Nunavut, and certain neighbouring communities (Far North) – but also of smaller providers, most of them headquartered locally, that compete against the pair, generally in a more limited portion of the Far North. However, those providers’ views are not on the record. Nor was Northwestel asked to serve them with its application to maximize the likelihood of finding them there.
  3. We would have asked. Northwestel’s doing so would have created a better case for considering that these providers, opposed in interest to Northwestel, had nothing to add to the file. Particularly given the Commission’s recent and express commitment to helping address the need for more choice of Internet service providers (ISPs) in the Far North,Footnote 7 shining a brighter light on a proceeding focused on that very thing would, in our view, have been a step in our stated direction.

Competitive safeguards

  1. Sector-specific regulators generally oversee markets that exhibit at least one of two characteristics:
    • They are prone to persistent market power, for instance where high barriers to entry exist, which may therefore need ongoing regulation to level the playing field.
    • The policy goals that society attaches to their outcomes are “polycentric”Footnote 8 or, at least, hard to quantify, in ways not fully captured by the total or consumer welfare standards.
  2. In markets with high entry barriers, targeted promotions made quickly to customers switching away are an effective strategy by firms with market power against nascent competitors. For this reason the Commission proceeded, as it implemented competition in Canadian telecommunications markets, to create asymmetrical protections for competitors in respect of winbacks and promotions. For winback communications, incumbents were not to contact subscribers to win them back for a fixed period – generally, either three or 12 months – after they had left for a competitor.Footnote 9 For targeted promotions, incumbents were to ensure promotions were made available to all, not just competitors’ customers,Footnote 10 in addition to the further safeguards described at paragraphs 11 and 12 of the majority’s decision.
  3. As competition took hold, market power diffused, principally through the intermodal competition unlocked by upgrades to the incumbent telephone and incumbent cable platforms. With these changes, most restrictions on both winback communications and targeted promotions fell away: first, in respect of local exchange services, at the Governor-in-Council’s behest;Footnote 11 then soon following, in respect of Internet access, at the Commission’s.Footnote 12 These changes were based on the principle that, in light of the level of competition in the relevant markets, such restrictions no longer struck the right balance between freedom to compete and protecting the competitive process.

Competition and consumer choice in the Far North

  1. Differences in how telecommunications services are regulated in the Far North, including a more comprehensive set of tariff controls as brakes on the incumbent’s incentive to abuse its market power, reflect differences in the Far North’s competitive landscape. These differences include very high costs to provide service, as well as a converged incumbent for both telecom and television distribution services.
  2. Notwithstanding these differences between the Far North’s competitive landscape and Canada’s South’s, it remains “a priority for the Commission to help address the need for more choice of ISPs in the Far North.”Footnote 13 As the Commission underlined by linking this freshly-affirmed priority to improvements to wholesale services, the presence of a U.S.-basedFootnote 14 satellite provider – operated at enormous costs that underscore the continuing high barriers to entry and to scaling in the Far North – does not fully meet this need.
  3. Restrictions on winback communications and target promotions were, in the South, relaxed in view of competition’s evolution. The juxtaposition of differences in the Far North’s competitive landscape with the Commission’s priority to address choice makes it less than clear that the same conditions obtain in the Far North. Even were Starlink deemed to be a second player with market power,Footnote 15 is the same approach to winbacks and promotions in the Far North and the South therefore appropriate or, on the contrary, should smaller competitors be protected against winbacks and promotions, as they were in the South until the advance of independent third-party competition?Footnote 16 Indeed, if it is our priority to address the need for more choice of ISPs in the Far North, what is the importance of including their voices and views on the record of a proceeding disposing of such matters, as this one is?
  4. In our view, the majority’s decision fails to attend to these differences in market dynamics, to what they imply in respect of winback communications and targeted promotions, and to the heightened need for a more complete record as a result.

Participation and the public record

  1. A challenge to building a complete record on any matter disposed of by way of tariff application, including competitor tariff applications, is – ironically – the special procedures developed to speed these along in the first place.
  2. In 2005, 2008, 2010, and 2016 the Commission gradually adopted new streamlined rules for tariffs, and broader new rules of practice and procedure.Footnote 17  They put tariffs on a sort of “rocket docket”, allowing them to be processed more quickly, but keeping them isolated in a silo built of procedural dispensations, with all of the decreased public participation that that implies. Key to this approach is the expectation that interested parties will regularly check various pages deep within the CRTC’s website in order to know that something has been filed, download it, and check what it is.
  3. That expectation has not, in our view, made it to lift-off. Administrative tribunals like the Commission, which are masters of their own procedure, always risk falling prey to the following perverse incentives. On one hand, our goal is to provoke public participation, creating a rich record based on which to advance well-informed decisions. On the other hand, that very participation slows us down: how much easier to complete and process an application with few objections gumming up the works and few eyes watching?
  4. To be clear, the watch-our-website presumption is not unique to tariffs in the new direction the Commission took when we issued newly updated procedures in 2010. Part VII of the helpful Guidelines on the CRTC Rules of Practice and Procedure(Rules) lists three ways to know a proceeding has begun: the Commission’s website; the Canada Gazette and newspapers (neither of which publicize tariff proceedings); and from service providers involved in the proceeding, such as by way of notice.Footnote 18 It is the hitch in this last item, which serves a counterweight to the watch-our-website direction, that is unique to tariff proceedings, including competitor tariff proceedings. In most circumstances, say the Rules, applicants must serve their applications on anyone that is adverse in interest to them, known as a “respondent”, as well as on anyone else the Commission directs [paragraph 22(1)(b)]. But, for competitor tariffs, there is a loophole: subsection 59(2), which shrugs that “[p]aragraph 22(1)(b) … do[es] not apply to a tariff application.”
  5. In our view, this is a flawed O-ring in tariffs’ rocket docket. Competitors come in all shapes and size. But as to the assumptions that all will trawl the CRTC’s website incessantly for an application of potential interest, or set up website-watching agents to do it for them, or even that an efficient market will birth a commercial service to alert them of it – none of these have materialized. As suggested elsewhere,Footnote 19 conflating a lack of interventions with implied consent awards the tie to the applicant, as it were, and creates a recipe for loopholes as a result. It is invariably at least as plausible that a lack of interventions points to potential deficiencies in our own procedures. Where there clearly exist parties opposed directly in interest to the applicant, we should not be satisfied with reading into their silence. All the more so when the battle of interests relates to a priority – consumer choice in the Far North – we have identified clearly in a regulatory policy issued only weeks earlier, mirroring Far North consumers’,Footnote 20 and local ISP competitors’,Footnote 21 own pleas.
  6. We therefore depart from the majority on procedural grounds. We would not have been satisfied with the shrug of Rule 59(2). We would have countered it with the room, left by Rule 7, to vary the Rules if public interest or fairness considerations “permit,” or even demand, and required Northwestel to serve other service providers serving the Far North.
  7. More broadly, however, we would also have questioned whether Rule 59(2) is the better approach, as we do now. Surely applicants filing a competitor tariff should serve it on persons who may be opposed in interest to the filer, such as competitors. Surely a commitment to administrative justice requires that the better part of audi alteram partem, and the duty to consider all relevant evidence, is to have provided such notice. Surely it is time to delete subsection 59(2) of the Rules.
  8. Facilitating public participation must, in our view, mean more than a collection of ad hoc measures – however well-intended – such as press-releasing upcoming major hearings, creating public-facing web pages that slip out of the Commission’s specialized technical language, or lowering the height of Commissioners’ dais. It also means focusing on actual participation; developing metrics to track it, like the percentage of public proceedings decided without any interventions; and publishing these metrics, with a commitment to their continuous improvement. The Commission is, in our view, relatively advanced amongst administrative tribunals in the measures it takes to encourage participation, bring transparency to its proceedings, and invite the public in. But being advanced also means being open to and enthusiastic about doing better. This is the way.
  9. Of course, this way would leave for yet another day the broader question of a high tariff burden, on one hand – and, on the other, the imbalance from which it springs. That imbalance, which weighs heavily on our rulebooks and workloads, pits a thicket of notional, increasingly-obsolete Public Switched Telephone Network (PSTN) pages, against whatever regulatory attention remains to devote to current and future challenges.
  10. To restate an idea,Footnote 22 and evoke a well-known cartoon image that crystallizes it: perhaps it is time to stop telling the fellow who wants to show us the round wheel that we’re too busy wheeling a triangular one up the hill to listen. Rather than turbo-charging the engine driving tariff proceedings’ three-pointed wheels, we have the authority to take a step back, follow where many of our peer jurisdictions have already led, and work collaboratively on an orderly copper-to-fibre and PSTN-to-broadband transition, as we implied we would do in 2016.Footnote 23 We have the authority to collaborate with Canadians in doing so. We even have the authority to appoint an Inquiry Officer to kickstart the process.Footnote 24 What is stopping us?
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