CRTC upholds decision allowing large telecoms to resell internet services on each other's networks

Globe and Mail

4 hours ago

Canada's telecom regulator has upheld its decision allowing large telecoms to resell internet services by piggybacking on competitors' networks, siding with arguments made by Telus Corp. versus most of its competitors in the latest development of a multi-year, industry-wide policy debate.
Under the fibre wholesale framework, designed to improve internet affordability and competition, the government previously required three carriers - BCE Inc.'s Bell Canada, Telus and SaskTel - to give competitors access to their fibre networks at regulator-set rates.
Given the steep cost of building infrastructure, the framework was designed to give new market entrants an opportunity to enter the market and offer competitive internet services and prices.
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The latest question under review was whether, in addition to smaller regional companies, the country's three largest carriers would be allowed to take advantage of the mandated rates as well.
In its decision, issued Friday morning, the Canadian Radio-television and Telecommunications Commission held firm on its previous decision that Telus, Bell and Rogers are allowed to expand into each others' fibre networks where they don't already have their own infrastructure.
In order to overturn the CRTC's decision, those not in favour of incumbent access had to prove there was 'substantial doubt' as to whether the CRTC had made errors in its original policy allowing the sharing. But the regulator said that they had not done so.
'While the Commission appreciates the significance of the applicants' claims, the balance of the evidence does not establish a substantial doubt as to the correctness of the Commission's decision. Therefore, the Commission declines to vary the Final Decision,' the CRTC said in its decision.
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This means that Telus, whose network is primarily in the west, can expand over Bell's networks in the east, and vice versa. Rogers has infrastructure spanning the country, so it is excluded from accessing the mandated rates near-nationally. The company has some fibre, but it is not yet being required to grant competitors access to it.
The CRTC said that several thousand Canadian households have already purchased new internet plans offered by dozens of providers using the access enabled by the framework.
'Changing course now would reverse the benefits of this increased competition and would prevent more Canadians from having new choices of ISPs in the future,' the CRTC said.
The decision may not yet be final. Cabinet has the power to make changes to the regulator's decision itself, or require that the CRTC review its policies again, until August 13. Their involvement is considered a last hope by those in favour of blocking incumbent access.
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The country's biggest telecoms have been facing increasing pressure in recent years, given an overall market slowdown, reduced immigration meaning fewer new customers, and high debt loads. The country's biggest telecoms have been facing pressure due to high debt loads and the mature market's overall slowdown.
The policy debate created a rare industry split that saw nearly every one of the country's largest telecoms in agreement and only one major carrier, Telus, split from the rest.
Telus argued it should be allowed to resell on SaskTel and Bell's network, saying that where an incumbent operates out-of-territory, it is acting as a new competitor with the potential to disrupt the status quo, to the benefit of consumers.
Bell, Rogers, Cogeco Inc., Quebecor Inc., Bragg Communications Inc.'s Eastlink, Teksavvy and the Competitive Network Operators of Canada - representing independent companies - all argued that the regulator should bar the three incumbents from mandated access, disagreeing that Telus would be a 'new entrant.'
Bell and Rogers said allowing the incumbents to resell internet would put a chill on network investment, and Rogers added that none of the large incumbent players need to be enabled by mandated wholesale access to compete.
Others argued that because of their scale and ability to bundle internet with other services, incumbents like Telus operating in their networks could swallow up smaller competition and lead to more market consolidation in the long term. Telus called this view an attempt to stifle competition.
The Competition Bureau, for its part, supported incumbent sharing out-of-network, noting the risks of increased market coordination and possible negative impacts on small competitors but saying the benefits outweighed the risks.
But the CRTC found that industry projections suggested allowing the incumbents to share networks would only have a 'modest near-term impact' on regional competitors, despite applicants' claims that the sharing would severely harm those providers.
It also found that internet providers would be encouraged to continue investing in their networks, given continued pressure to compete, the cost savings of operating fibre compared to copper networks, and other protections included in the decision.
It said it will monitor the use of the framework and will make adjustments if necessary.
The federal government has yet to finalize the access rates.