Canada’s telecommunications regulator has upheld for now its decision allowing the country’s largest providers to offer wholesale access to rivals’ networks outside their core serving regions.
But the CRTC said its announcement on Monday comes as it continues to assess long-term concerns about investment and competition, with a final decision still to be made.
The federal government had asked the commission to reconsider a portion of recently established rules surrounding wholesale fibre services, as Ottawa said it was concerned about the viability of smaller internet service providers to act as alternatives to the big players.
The CRTC opened a consultation into the matter in November.
A series of previous CRTC decisions paved the way for smaller internet providers to sell their services through fibre networks owned by companies such as Telus Corp. and BCE Inc.
In May of last year, the regulator began requiring Bell and Telus to give competitors — including both big and small companies — access to their fibre-to-the-home networks, in exchange for a fee. While those rules initially applied only in Ontario and Quebec, the CRTC then announced in August they would be extended to networks owned by telephone companies countrywide.
On Monday, the CRTC said consumers benefited from increased choice and “more intense competition” between providers when the initial rules took effect in Ontario and Quebec.
“The record did not demonstrate that there has been a negative impact on investment that can be attributed to the large incumbents’ use of the temporary service,” the ruling said.
“The temporary service was in effect for only a short period of time, during which incumbents lost a limited number of customers across a variety of competitors.”
However, the commission said it is important for it to “consider possible longer-term impacts of large incumbent use” of wholesale internet services on investment and competition. It said it would defer a final decision on the matter until this summer.
Telus has argued the big players should also be allowed to sell their services to customers using rivals’ networks, as long as their ability to do so is limited to regions outside of their traditional internet-serving territories.
The company said its entrance into other regional markets where it doesn’t have its own network infrastructure promotes competition and affordability.
Telus said the regulator’s latest decision “marks a significant step toward fostering greater competition, affordability, and innovation for millions of Canadians.”
“This decision will help us expand our reach, accelerate innovation, and support national goals of affordability and universal access to high-speed internet,” said spokesman Richard Gilhooley in a statement.
“We commend the CRTC for this ruling and look forward to continuing our work with the government and other stakeholders to build a competitive, inclusive, and connected future for all Canadians.”
Bell has taken an opposing position, telling the commission that Telus’ proposal discourages the big players from investing in expansion of their own networks. Rather, the big companies would be incentivized to simply resell services over each other’s networks, Bell argued.
Meanwhile, some of the smaller providers said allowing the Big Three to access wholesale fibre internet would decrease competition.
The Competitive Network Operators of Canada, an industry association representing independent internet service providers, warned that the large carriers could exploit wholesale access rules, in part by luring customers through cellphone and internet bundles — an advantage the big carriers have over some standalone independent companies.
Paul Andersen, chair and president of the association, said the latest ruling hurts competition.
“This fibre framework was always meant to help smaller providers, so to defer it further, when that industry is looking for all the help it can to rejuvenate, is just unfortunate,” Andersen said in an interview
“We just urge them to quickly move to come to a final decision so that Canadians can have the long-term choice that they need for affordable internet.”
Andersen said independent providers are concerned that without restrictions on the Big Three selling wholesale internet services, “they will make use of their dominant power” on wireless services.
“That’s going to allow for all kinds of distortion in the market, which will effectively see smaller players completely wiped out,” he said.
But David Clement, North American affairs manager for the Consumer Choice Center, said the CRTC should avoid “trying to pick winners and losers based on the size of the competitor.”
He said the CRTC should accept Telus’ proposal.
“The CRTC had made the right call originally in not attempting to further pick winners and losers,” he said.
“From a consumer welfare standpoint, the move to allow these big companies to have cross-regional competition is a net-benefit for consumers.”
This report by The Canadian Press was first published Feb. 3, 2025.
Companies in this story: (TSX:T, TSX:BCE)
