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No evidence Big Three acting as fibre wholesalers would hurt smaller providers: CRTC

The CRTC has denied a request by Bell Canada and some independent internet providers for an expedited decision that would prevent large carriers from using rivals' fibre networks to offer their services to customers.
The CRTC has denied a request by Bell Canada and some independent internet providers for an expedited decision that would prevent large carriers from using rivals' fibre networks to offer their services to customers.A person navigates to the online social media pages of the CRTC on a cellphone in Ottawa on Monday, May 17, 2021. THE CANADIAN PRESS/Sean Kilpatrick

The CRTC has denied a request by Bell Canada and some independent internet providers for an expedited decision that would prevent large carriers from using rivals' fibre networks to offer their services to customers.

The regulator said the request, filed in March, "failed to provide sufficient evidence of irreparable harm."

CRTC secretary-general Marc Morin delivered the response in a Friday letter to the coalition, which also includes TekSavvy, Eastlink, Cogeco Communications Inc. and the Competitive Network Operators of Canada.

The companies had argued that granting Canada's Big Three internet carriers, including Bell itself, access to one another's fibre networks would threaten the viability of independent internet service providers.

"However, they do not offer sufficient evidence to support these statements," Morin wrote.

Last November, the CRTC issued an interim ruling that required Bell parent company BCE Inc. and Telus Corp. to provide competitors with access to their fibre networks in Ontario and Quebec within six months. That means independent telecoms could pay to use those networks to provide fibre service to their customers.

That decision was meant to stimulate competition for internet services in Canada's two largest provinces, where the CRTC said internet competition has suffered most in recent years.

The rules took effect Tuesday, but they only apply temporarily, as the regulator is in the midst of a broader review looking into internet competition.

It has said its consultation, which included a five-day hearing in February, could potentially make those temporary rules permanent and applicable to other provinces under a national wholesale framework.

Morin said the regulator expects to deliver a final decision on wholesale fibre access by the end of this summer.

"Implementation of the temporary mandate ... will result in increased competitive choice for Canadians," said Morin.

"This benefit to the public outweighs any potential harm identified by the applicants that could result during the short timeframe until the commission makes its final decision."

Bell has been vehemently against the CRTC's interim decision, seeking to have it quashed since it was made.

It has previously accused the CRTC of "predetermined" outcomes related to its internet review, saying the commission's current direction lowers Bell's incentive to continue building out its fibre network.

It responded to the interim ruling by cutting $1.1 billion in network spending plans by 2025. It also partially blamed the regulator's initial decision when it announced it would slash nine per cent of its workforce earlier this year.

In February, the Federal Court of Appeal rejected Bell's request for a stay of the interim decision but said it would hear the company's appeal. Bell is also awaiting a decision from the federal cabinet, which it asked to review the regulator's move.

During the CRTC's hearing three months ago, Bell executives proposed multiple conditions, should the CRTC expand the wholesale internet regime, to help mitigate the potential negative effects it would face.

That included restricting the eligibility of national wireless carriers — Bell, Rogers Communications Inc. and Telus — to sell internet over fibre networks built by their rivals.

Bell representatives argued that without such restrictions, larger players would increasingly rely on each other’s existing networks rather than investing to expand their own.Although it would theoretically benefit from such an arrangement, the company joined the smaller players in arguing against it.

"Allowing incumbents to resell on each other’s networks will permanently distort Canada’s internet market in large carriers’ favour and will come at the expense of smaller internet providers," Bell spokeswoman Jacqueline Michelis said in a statement on Tuesday.

"We hope the CRTC’s final decision this summer will create incentives for Bell to continue investing in network expansion that will connect more Canadians to high-speed fibre internet wherever they live."

Noting the "diverging views on this issue," Morin declined to rule on the issue of wholesale access eligibility "in isolation." He said in his letter last week it would be "inappropriate" to do so when that point "is so closely intertwined with other issues" in the ongoing consultation.

"The commission reiterates its previous statement that the access established through the temporary mandate … may differ from the final decision," Morin stated.

"Therefore, any provider that plans to use the temporary mandate should assess the risks of doing so."

CNOC president and chair Paul Andersen said the CRTC's response goes against its stated intent for its wholesale review, which "was to ensure that independent internet service providers can compete with large carriers."

"By declining this request and allowing large carriers to resell on each other’s networks and bundle wireless services, Canadians will actually see less competition for high-speed internet services," he said in a statement.

Some independent internet companies have emphasized the importance of wholesale access to their operations.

TekSavvy vice-president of regulatory and carrier affairs Andy Kaplan-Myrth previously called the CRTC's hearing on the issue “the most critical regulatory proceeding for TekSavvy ever.”

He told commissioners earlier this year TekSavvy has lost more than 100,000 subscribers since its peak in 2019 amid an unfavourable regulatory environment for wholesalers.

"The Big Three have an unfortunate history of predatory pricing to undercut wholesale competition," Kaplan-Myrth said in a statement.

"Without rules in place to protect against this, we see no reason why they will not continue to do so when it comes to fibre."

This report by The Canadian Press was first published May 7, 2024.

Companies in this story: (TSX:BCE)

Sammy Hudes, The Canadian Press