By Ahmad Hathout
OTTAWA – The Competition Bureau said in a submission to the CRTC studying the wholesale internet framework Thursday that mandating last mile fibre could have short-term price benefits but may also negatively impact investments in fibre builds.
The CRTC is seeking comments on a preliminary view it holds that third parties should have mandated access to the incumbent’s last mile fibre under the current aggregated regime, which packages the leasing of the traffic transport (middle) mile and the last mile. Under the current aggregated regime, third parties don’t have commission backing for access to the fibre going straight to the premises.
The bureau said in its submission that the FTTP regime could give wholesale internet service providers access to additional speed options to diversify their offerings and acutely reduce prices, but said the impact on investments and competition may take a hit in the process.
“[The] Bureau notes that increasing or modifying wholesale regulation (such as through mandating aggregated access to FTTP facilities) could have a negative impact on investment incentives,” the competition watchdog said in its submission, drawing on a 2019 broadband study it conducted.
“Such impacted incentives could reach beyond just the incumbent Facilities-Based Competitors and could potentially impact investments undertaken by independent fibre-optic Facilities-Based Competitors who operate in certain areas of Canada.”
The bureau, however, noted it does not yet take an official position on the CRTC’s preliminary view.
The arguments line up well with Telus’s and Bell’s complaints about the direction the CRTC is going with regulation. Bell CEO Mirko Bibic has complained that the incumbent still has five million households to reach with fibre, investment into which would be in jeopardy if it has to lease it to third parties.
Telus similarly said it still has fibre investments left to make and argued that there needs to be a safety period where the telecom can make back that spend – which could take a while after the infrastructure is deployed – before the CRTC can even implement such a regime. Telus has recommended that, must the CRTC implement such a regime, it should do so on a “rolling basis, community-by-community.”
“Even once a network is established, there is an ongoing need for investment by network owners to ensure that the network grows and changes in response to changing consumer demands,” the bureau said, citing its study.
The incumbents have warned the commission that it is a bad idea to mandate such access, stating there’s no evidence for its requirement right now. TekSavvy and Quebecor – which has said last mile fibre is essential to solidify its fourth-player status – have asked for the CRTC to launch mandated access to fiber-to-the-premises facilities within two or three months so they can compete where they were shut-out for years.
“The magnitude and impact of the effect of mandating aggregated access to FTTP on investment incentives may depend on a variety of factors, including but not limited to: the magnitude of the remaining FTTP facility deployment, the amount of any public assistance provided to incentivize such deployment, the ongoing investments required to grow and change existing facilities in response to consumer demands, and the precise wholesale rates set by the CRTC for aggregated access to FTTP,” the bureau said.
“Should the CRTC mandate access to FTTP facilities on an aggregated basis the Bureau recommends that the CRTC continue its practice of including rate components designed to maintain investment incentives,” it added.
The CRTC has said the disaggregated regime – which is operational in parts of Ontario and Quebec and provides third parties more transport options by unbundling the middle and last mile – isn’t working.
But the bureau said in its submission that the CRTC should not wholesale disregard the disaggregated regime and instead take a region-by-region view to assess which regime would best fit the given scenario.
Photo of Competition Commissioner Matthew Boswell
