CRTC allows smaller internet companies to sell service over telecoms’ fibre networks

TORONTO — In a move it says is meant to revive dwindling competition for internet services in Canada’s two largest provinces, the CRTC will allow independent competitors to sell over the large telephone companies’ fibre networks in Ontario and Quebec.

The national telecommunications regulator announced the interim decision Monday at the Canadian Telecom Summit in Toronto amid an ongoing review of third-party access to fibre networks in the hope of lowering prices for customers.

It represents a partial decision, with more hearings to come, in a review launched by the CRTC in March into the rates that smaller competitors pay the major telecom companies for access to their networks. At the time, the commission also announced it would lower some wholesale internet rates by 10 per cent.

The review, which has received more than 300 interventions, included an expedited probe of whether big carriers should provide smaller competitors with access to their fibre-to-the-home networks.

The CRTC said its review found there has been a significant competitive decline in Ontario and Quebec, where independent internet providers currently serve 47 per cent fewer customers than two years ago.

“At the same time, several competitors have been bought out by larger internet providers. This has left many Canadians with fewer options for high-speed internet services,” CRTC chairwoman Vicky Eatrides said in her speech to conference attendees on Monday.

“The CRTC is acting quickly to help stabilize the market.”

The decision requires large telephone companies, namely BCE Inc. and Telus Corp., to provide competitors with access to their fibre-to-the-home networks within six months. The commission said the delay will allow companies to prepare their networks and develop information technology and billing systems.

The CRTC said it is also setting interim rates that smaller competitors will pay for access to fibre networks, which will support both competition and continued investment in high-quality networks.

Bell Canada responded to the decision by announcing it would reduce its fibre network expansion, saying the CRTC’s direction “discourages network investment.”

In a press release on Monday evening, Bell said it would reduce planned network investment by more than $1 billion in 2024-25, including a minimum of $500 million to $600 million next year. It noted this comes on top of Bell having already decreased its 2023 capital expenditure budget by $100 million in anticipation of the CRTC’s decision.

“Rolling back fibre network expansion is a direct result of the CRTC’s decision,” the company said.

“When Bell enters a community with high-speed fibre internet, it increases competition, and customers benefit from better service, better value and lower prices.”

The company said Bell’s fibre network is currently available to more than seven million homes and businesses and that prior to the CRTC’s decision, it had planned to reach nine million locations by the end of 2025.

“Bell will now re-consider pending builds in all communities where it had planned to expand, and will reduce its 2025 build target from nine million to 8.3 million locations,” it said.

Telus spokeswoman Kalene DeBaeremaeker said in a statement the company is reviewing the interim decision “and (looks) forward to participating in the remainder of the CRTC proceeding.”

The CRTC said its move is meant to stabilize the market in areas where it will make a significant impact on choice and affordability for consumers, in line with Industry Minister François-Philippe Champagne’s direction earlier this year for the CRTC to enhance consumer rights.

The decision was met with cautious praise from the Competitive Network Operators of Canada, which called the decision “an important and essential step towards a fairer competitive landscape.”

But the organization, which represents independent internet providers, said its “optimism is tempered,” noting the decision “only implements an interim regional regime for two major telephone companies and rates are still interim.”

“A national permanent framework applicable to all dominant carriers with just and reasonable rates is required to allow for true competition which is yet to be established,” said CNOC president and chair Paul Andersen.

“This is essential, as the right structure is the cornerstone for innovation and investment in the services that our members provide … Until final rates that are just and reasonable are set, significant competition is unlikely to be stimulated.”

The regulator said its broader review remains ongoing, with the next public hearing set for Feb. 12, 2024.

No decisions have been made yet as to whether there will be a similar move affecting internet services in other provinces.

Companies in this story: (TSX:BCE, TSX:T)

This report by The Canadian Press was first published Nov. 6, 2023.

Sammy Hudes, The Canadian Press