Why does Northwestel have to ask the CRTC about overages anyway?

Northwestel, the North’s dominant internet provider, is applying to Canada’s national telecoms regulator – the CRTC – for permission to waive overage fees in March and April.

Doing so will mean most NWT residents won’t need to pay any overages for those two months, with many people remaining at home during the coronavirus pandemic.

(Not all residents are included. Those in satellite-based communities would see their cap double instead.)

Northwestel’s initial application to the CRTC stated the company would only waive overage fees if the CRTC agreed to reinstate around $6 million in funding for Northwestel that would otherwise have been phased out under a ruling from 2018.

The CRTC told Northwestel that was unacceptable and asked it to reapply “without preconditions.” Northwestel says it is now preparing a second application.

But many residents have asked: why does Northwestel need the CRTC to be involved in the first place?

We asked the CRTC to explain.

“Back in 2013, the CRTC found that Northwestel held market power in the provision of retail internet services in terrestrially served communities,” said Patricia Valladao, the CRTC’s manager of media relations, by email.

If a company holds market power, in simple terms that means it has the ability to set whatever price it likes because there aren’t enough competitors.

Because Northwestel holds market power, the CRTC decided seven years ago it needed to be federally regulated “to protect the interests of users.”

Since then, said Valladao, Northwestel has been required to file with the CRTC any time it tries to change any of its plans. That allows the CRTC to have oversight over what the company charges you, since there isn’t enough competition for the market to decide a fair price.

Even though waiving overages would mean reducing the money the company makes, it still involves changing the terms of a federally regulated plan. That means Northwestel is legally obliged to file with the CRTC.

We asked the CRTC if any other internet providers in Canada have to do this.

Valladao wrote: “No. Northwestel is the only telecommunications service provider whose retail internet service is regulated, which was due, in part, to its dominant position in the provision of retail internet services in the North.”

That’s why providers like Bell, Rogers, Telus, and others can announce they are removing data caps and do so with immediate effect, but Northwestel can’t. (Even though Northwestel is owned by Bell, it’s still subject to a different set of rules.)

So what happens next?

The CRTC says, as of Friday morning, it is still waiting for a new application from Northwestel.

When that arrives, there is already a special accelerated process set up so applications like this “can be addressed in a timely manner” during the pandemic.

How long that will be in practice isn’t clear, and depends on the detail of Northwestel’s second application.