Competition among providers could make ultra-high-speed fibre internet packages more affordable and give consumers more choice. But there likely won’t be much of it anytime soon if Bell successfully appeals a ruling from Canada’s telecom regulator.
The Canadian Radio-television and Telecommunications Commission ruled in July that large telecom companies such as Bell must sell wholesale access to their fibre networks to independent internet providers. Those independent ISPs could then offer customers competing internet packages, theoretically forcing everyone to offer better prices and packages in order to win customers.
Bell is appealing the ruling to both the CRTC and directly to cabinet via a petition to the Governor in Council. That alarms small internet providers and Open Media, a Vancouver-based group that advocates for Canadian internet users.
“The future of the internet is fibre and if small players don’t have fair access, they’re going to die,” said Josh Tabish, Open Media’s campaigns manager. He said the loss of small ISPs would raise Canada’s already high internet prices and reduce choices available to customers. Open Media has filed a submission to the CRTC opposing Bell’s appeal.
Fibre to the home, which is being installed in cities around the world, could boost internet speeds to over 1,000 megabits per second, compared to top speeds of around 50 or 100 megabits per second for current DSL and cable technology respectively. Fibre would better enable people to make use of a variety of emerging technologies from ultra-high-definition video to virtual reality to a huge range of connected appliances and devices at the same time.
Less than two million homes in Canada had access to a fibre connection at the time of an April 2015 presentation from the Fiber to the Home Council Americas. Since then, Bell, Rogers and Telus have all announced plans to bring fibre to more Canadian homes.
Bell threatens to reduce fibre installation
But Bell said it will scale back on installation if the CRTC ruling stands, suggesting many Canadians would have to wait much longer to get access to fibre at all.
In order to support the business case for building fibre, Bell said, the company needs customers to subscribe not just to internet, but also TV and home phone services.
Independent ISPs that buy access to Bell’s fibre networks will pay only a single wholesale fee per customer. The CRTC has not yet set the rates that Bell must charge for wholesale access. But Bell expects them to be lower than the prices it currently charges its retail customers. Bell charges $142.85 per month for its gigabit fibe service, which promises speeds of up to 940 megabits per second.
Selling wholesale access “can never compensate for the three retail revenue streams that are lost as a result of mandated access, and on which our business case for investing in fibre-to-the-home is based,” Bell said in its petition.
“It is impossible for the CRTC to set a wholesale rate that adequately compensates those who invest in fibre-to-the-home networks for their investments.”
Bell argues that small ISPs should build their own fibre networks.
That’s something some of them have done on a small scale. But they couldn’t do it on the national level that Bell, Telus and Rogers, can, says Bill Sandiford, president and CEO of the Canadian Network Operators’ Consortium, which represents 33 small, independent internet providers.
Higher costs for small ISPs
It would cost independent ISPs far more to build the same infrastructure than it would cost companies like Bell, he added.
“This is because for more than a century, these companies enjoyed taxpayer subsidies and protection from competition, as well as other exclusive benefits such as exclusive rights-of-way and building access,” Sandiford wrote in an opinion piece in the Globe and Mail.
That allowed them to build a huge network of underground conduits and above-ground poles useful for building fibre networks that smaller internet providers don’t have access to.
“The cost per kilometre if you’re just pulling through conduits could be $10,000 per kilometre. Whereas if you’re digging up a city street, it could be a quarter-million dollars a kilometre,” Sandiford said in an interview with CBC News. “The difference is vast.”
He doesn’t believe that Bell will scale back installation of fibre networks. That’s because the company has told investors that the CRTC decision “could” have a negative impact, but it wouldn’t know the effect of the ruling, “if any,” until the CRTC decides what wholesale rates Bell can charge.
“We think it’s just regulatory gaming,” Sandiford said.
Tabish of Open Media agreed.
He noted that Bell, Rogers and Telus all announced that they would be expanding their fibre networks after the CRTC decision was made.
“We’ve seen no evidence it’s going to have a detrimental effect on investment,” he said.
He doesn’t agree that independent ISPs should be forced to build all their own fibre connections, which he calls “unnecessary duplication.”
“Where ISPs should be competing is at the level of services,” he said. “Who’s got the best customer service? Who’s got the best deal on the best speeds?”
He thinks when small ISPs offer competing packages, prices for fibre internet will go down. Although independent ISPs have only 10 per cent of the home internet market, he said, 25 per cent of businesses rely on them.
“If those indie providers get cut off from fibre services,” he added, “Canadian business are going to have a real shortage of choice for affordable access and that could become a significant dead weight as Canada tries to transition to the so-called knowledge economy of the 21st century.”