In an attempt to boost broadband competition, Canada's telecom regulator is forcing large phone companies to open their fiber networks to competitors. Smaller companies will be allowed to buy network capacity and use it to offer competing broadband plans to consumers.
Evidence received during a comment period "shows that competition in the Internet services market is declining," the Canadian Radio-television and Telecommunications Commission (CRTC) said in its announcement Monday. The CRTC said the "decrease is most significant in Ontario and Quebec, where independent competitors now serve 47 percent fewer customers than they did just 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."
The CRTC hasn't made a final decision on fiber resale. But in the meantime, until a more permanent ruling is made, large telcos in Ontario and Quebec will be "required to provide competitors with access to their fibre-to-the-home networks within six months," the CRTC said. The six-month period is intended to give companies time to prepare their networks and develop information technology and billing systems, the agency said.
"On a temporary and expedited basis, the CRTC is providing competitors with a workable way to sell Internet services using the fibre-to-the-home networks of large telephone companies in Ontario and Quebec, where competition has declined most significantly," the agency said. "The CRTC is also setting the interim rates that competitors will pay when selling services over these fibre-to-the-home networks. These rates were chosen to allow Canada's large Internet companies to continue investing in their networks to deliver high-quality services to Canadians."
Advocates for wholesale fiber access welcomed the interim ruling but said that Canada's regulator should have acted more quickly and forcefully to preserve competition.
Bell protests, says it will cut fiber spending
Fiber-provider Bell protested the ruling by announcing "its intention to reduce capital expenditures by over $1 billion in 2024-25, including a minimum of $500 to $600 million in 2024, money the company had planned to invest in bringing high-speed fibre Internet to hundreds of thousands of additional homes and businesses in rural, suburban and urban communities."
"Rolling back fibre network expansion is a direct result of the CRTC's decision," Bell claimed. The telco said the CRTC's decision "is arbitrary and capricious" because it doesn't apply outside Ontario and Quebec.
Telus, another major fiber provider, "said the company is reviewing the interim decision and looking forward to participating in the remainder of the CRTC proceeding," according to The Globe and Mail.
For over 20 years, the CRTC has "required large incumbent telephone and cable companies to sell access to their networks under specific rates, terms, and conditions," the agency said. But fiber access wasn't previously included.
"In 2015, the CRTC set out separate rules for accessing fibre, which have been so unworkable that 8 years later we still don't have wholesale access to fibre," according to an April 2023 post by OpenMedia, a nonprofit that advocates for open and affordable networks.
Many small ISPs “have already sunk”
OpenMedia called yesterday's CRTC decision "a small step forward for affordable Internet."
"The decision will require Bell and Telus to sell access to their fibre network in those provinces to small providers within the next 6 months," the group said. But despite declining competition, "the CRTC's decision will not apply to other provinces, and will only hold until the CRTC reaches a more permanent decision about their failing wholesale Internet rates regime," the group said.
OpenMedia Executive Director Matt Hatfield said the "decision should be a lifeline for small ISPs—but it comes so late, most have already sunk. Fibre Internet is the high-speed Internet gold standard Canadians now demand, and the CRTC's indifference to that reality has led to most small ISP players being edged out or absorbed by telecom giants over the last few years."
In March 2023, the CRTC denied a request from a trade group representing small ISPs seeking wholesale fiber access. But the agency opened a proceeding that resulted in yesterday's interim action.
Call for “national permanent framework”
Competitive Network Operators of Canada (CNOC), the trade group that lobbied the CRTC for wholesale access, offered tepid praise of yesterday's decision. "While this decision marks an important and essential step towards a fairer competitive landscape, CNOC has concerns about the application of the decision to only one class of wholesale service provider, [and the] lack of continued relief for [the] rest of Canada along with rates above those in market today," the group said.
CNOC President Paul Andersen called for "a national permanent framework applicable to all dominant carriers with just and reasonable rates."
Small ISPs in the US used to have similar access to large phone networks, but that changed in 2005 when the Federal Communications Commission reclassified DSL and eliminated a requirement to share networks with competitors. The current FCC is working on a plan to reinstate net neutrality rules and common-carrier regulation of broadband but is not proposing any "unbundling" rules that would force Internet providers to let competitors offer service over their networks.
In both the US and Canada, fiber Internet service is provided mostly by telephone companies. "By the end of 2022, 60 percent of Canadian homes and businesses reached by the large telephone companies, not including the territories, had access to fibre-to-the-home networks. By contrast, less than 5 percent of homes and businesses passed by cable companies have access to fibre-to-the-home networks," the CRTC said.
