Let Competition Be the Guide: Why the Government and CRTC Got It Right on Wholesale Fibre Broadband Access
CRTC policy was always about maximizing competition regardless of the provider. That principle should remain the guide.
Late last night, Industry Minister Mélanie Joly announced that the government was leaving in place a CRTC decision that granted wholesale access to fibre networks. By sheer coincidence, today the Globe and Mail runs my opinion piece on the issue, in which I argued that maximizing competition regardless of provider should be the guiding principle for the government. I start by noting that the Canadian struggle to foster greater competition in telecom and Internet services dates back decades. As early in the 1970s, the Canadian Radio-television and Telecommunication Commission (CRTC) mandated that dominant companies such as Bell provide access to their key network infrastructure to open the door to new marketplace entrants. In recent years, the debates have shifted to granting wholesale access to wireless and Internet networks to inject competition into those services.
The regulatory model designed to foster new competitors, more consumer choice, and lower prices has enjoyed modest success, at best. The days of telecom monopolies for basic telephone services are long gone. But the Internet and wireless competition puzzles have proven far harder to solve with Canada consistently ranking among the most expensive worldwide for these services. A slew of independent Internet providers garnered some traction as demand for better priced Internet access soared, yet their dependence on regulatory rulings and the delays in gaining access to the fastest speeds and latest technologies undermined their competitiveness.
The sector now finds itself in a new regulatory battle, this time over access to the “last mile” Internet fibre connections. The principles remain largely the same, but the players have changed. In an unlikely turn of events, it is Telus – one of the big three telecom providers alongside Bell and Rogers – that wants to use the system to gain entry into the Ontario and Quebec markets, where it is not a significant provider of broadband Internet services.
The CRTC ruled in 2023 that competitors should have access to big three fibre networks in those provinces, a decision expanded across the country in 2024. That decision has sparked vocal opposition from Bell (which faces mandated access to its fibre networks), Rogers (which faces more competition), and mid-sized regional providers such as Cogeco and Eastlink (who envisioned being the prime beneficiaries of the regulatory policy).
The ruling is currently subject to both a court challenge and petitions to the federal cabinet to exclude the big three providers from being beneficiaries of the policy. These developments raise three key questions.
First, should the policy be limited to smaller, independent providers? While those companies were the primary participants in the mandated access system, the reality is that the independent sector is now a shadow of its former self. Bell’s 2017 acquisition of MTS in Manitoba and Rogers purchase of Shaw in 2023 led to landgrab in which larger players gobbled up many independent providers, including Distributel, Oxio, VMedia, Primus, Acanac, and EBox. The larger players, after years of complaining about the CRTC’s support for the independent sector, seemed to bet that they could eliminate it by buying up the competition. In other words, if limited to independent providers, the policy is largely dead.
Second, would granting Telus mandated access help or hurt competition in a market that now features far fewer competitors? According to a Competition Bureau submission, it might help. The bureau is careful to distinguish between granting access to the big three in their own markets where they already offer wireline services as opposed to new markets. Access in existing markets would hurt competition, but for new markets, it thinks wholesale access is more likely to have benefits that outweigh the risks.
Third, what is the likely impact on network investment if the big three are granted wholesale access to competitor networks? According to Bell and Rogers, it will lead to a sharp reduction in their capital expenditures as the companies argue that granting wholesale access to competitors will reduce their potential investment returns. Yet the problem for these companies is that has the feel of crying wolf: in 2015 Bell said wholesale access would undermine future investment, in 2019 it said a change in wholesale rates would affect infrastructure development, in 2020 it said it would reduce rural broadband investment, and in 2023 it said it would cut capital expenditures. The playbook is always the same but the threat rarely materializes.
As the government considers its next move in light of a cabinet appeal, there are few good options. Having stayed on the sidelines during the wave of market consolidation, it provided the fuel that led to the elimination of many independent providers. And while network investment remains critical, it is hard to take usual threats seriously given years of overheated claims.
Few envision the CRTC policy as being about fostering access for big providers. But the reality is that it all started with an application in the 1970s for access by Canadian Pacific and Canadian National, Canada’s two dominant transport companies at the time. In other words, the policy was always about maximizing competition regardless of the provider. That principle should remain the guide as cabinet sorts out the latest battle over Internet competition in Canada.
Post originally appeared in the Globe and Mail at https://www.theglobeandmail.com/business/commentary/article-telecom-communication-competition-tech-telus-bell-rogers/
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I'm all for competition but allowing competitors to use their networks will not help.
It will reduce the incentive to improve their networks.
Why spend money on something that will help their competitors?
It doesn't make sense.
Get more competition but this is not the way to do it.