Appeals on the horizon
By Ahmad Hathout
The CRTC ruled Friday that it will continue allowing the three largest internet service providers to use the wholesale access regime, pointing to the “several thousand” Canadian households now on service plans offered by the “dozens of providers” using the final framework from August 2024.
The decision flies in the face of concern from a broad swath of ISPs big and small, who have argued this would be a disastrous decision for investment in networks and for the viability of regional players as the deeper-pocketed, bigger brands will now be able to ride on their network and take even more market share from their already precarious businesses. Some providers projected that the market share capture by the incumbents – Rogers, Bell and Telus – could be as much as 50 per cent of the retail segment outside of their operating footprint as a result.
But the regulator said Friday that it believes that the incumbents will grow only moderately in these areas. “To date, the Largest Incumbents have captured no more than 2% of the market outside of their traditional operating territories,” the CRTC said Friday. “Additionally, at their peak, wholesale-based competitors held a 10% share of the overall retail market across Canada.”
The regulator adopted the view from its previous decision on this same matter when it was asked by the federal cabinet to revisit the issue of access by Big 3 to the bundled last-mile fibre networks of the telcos in Ontario and Quebec: that Telus, the only large player in favour of the CRTC’s policy, was utilizing the regime to provide Canadians choice.
“Thousands of Canadian households have since subscribed to new Internet plans offered by these competitors, and competition is expected to continue to increase as wholesale providers expand into new markets,” the commission said Friday.
“The facts show that the Final Decision is increasing competition and enabling new choices for Canadians,” it added. “Changing course now would reverse the benefits Canadians are receiving and prevent more Canadians from having more choice of ISPs in the future. The Commission will continue to monitor the use of its wholesale HSA framework and is prepared to make any adjustments necessary.”
The commission effectively adopted the logic of Telus, which, to the amusement of Rogers and Cogeco at the time, said in February last year that it was operating as a new entrant – and therefore increasing competition – outside of its operating territory in western Canada. (Telus’s CEO Darren Entwistle correctly predicted this decision.)
“The Commission notes that the Largest Incumbents do not own or operate networks to provide retail wireline services outside of their traditional wireline serving territories,” the regulator said Friday. “Therefore, when these companies use wholesale HSA services to sell out-of-territory, they become a new competitive option for consumers in that area.”
Telus has said on several occasions that its strategy to capture market share in the east includes the bundling of services, which, beside outright buying wholesalers, would require access to others’ networks.
The CRTC said it acknowledges the “increased challenge” for some competitors in the face of these incumbent bundles, but “Canadians stand to benefit from more choice in providers” of those services.
The CRTC, which set interim access rates in October, said it will now focus its attention on final rates for that wholesale access.
Friday’s decision addresses the consolidated challenges to the final decision in August. The Competitive Network Operators of Canada (CNOC), Eastlink, Cogeco and Rogers – which also sought access protection for its multi-gig cable networks – piggybacked off of cabinet’s recommendation and filed challenges, urging the CRTC to reverse course on the incumbent access question.
“By enabling the Big 3 to act as both competitors and wholesale providers, the CRTC has undermined the very purpose of the regime: to foster sustainable competition from independent competitors,” CNOC, which organized a public campaign against that access, said in a statement, adding the CRTC must release its decision on final rates.
“This decision puts the future of affordable, competitive internet for Canadians at risk,” Paul Andersen, CNOC’s chair and president, added. “Without clear action from Cabinet, smaller providers will exit the market, and Canadians will face higher prices and fewer choices.”
Rogers called the decision “misguided” and counter to the “federal government’s own agenda to drive real competition, encourage network investment, and expand connectivity to rural and remote regions of Canada.
“At a time when Canada needs investment to grow the economy, the commission is doubling down on a failed policy that won’t create competition and will reduce capital investment. The result is the lost opportunity to create jobs and get our economy back on the right path.
“We urge the federal government to reverse this decision to preserve billions of dollars in planned Rogers network investments that are now at risk. World-class networks are the backbone of Canada’s economy, and we need policies right now that encourage investments to drive economic resiliency and competitiveness.”
TekSavvy filed its own review-and-vary application urging the CRTC to not allow the commission’s five-year access protection for Bell and Telus for new builds inside their operating territories, and also asking for a specific timeline on when the cable companies’ last-mile fibre builds will be subject to the aggregated access regime.
The commission, however, declined to set a specific end date for the cable exemption. The cable companies have shouldered the burden of wholesale subscribers for a long time, and the CRTC said it wants to ensure not just that both telcos and cablecos are now treated equitably, but that cablecos have the breathing room to build out nascent fibre-to-the-home networks.
That said, the CRTC said it will “monitor FTTP deployment by cable companies to inform any future requirements.” Similarly, the commission said modifying the headstart rule for new telco fibre builds would be “administratively burdensome and could reduce, rather than promote, investment incentives.”
“TekSavvy is very disappointed in today’s CRTC decision,” Andy Kaplan-Myrth, TekSavvy’s vice president of regulatory and carrier affairs, said in a statement. “The wholesale framework has always been intended to carve out a sustainable market for small competitors like TekSavvy. This decision undermines that by allowing giants like Bell and TELUS to misuse the competitive regime to instead dominate those markets and squeeze out independent competitors. The CRTC also leaves in place anti-consumer rules that artificially deny competitive choices for Canadians.
“Given how this decision puts dominant telecom giants head-to-head against independent competitors, it is now even more critical that wholesale rates are significantly reduced.”
Some of these players are signaling that they will formally ask cabinet, which was once petitioned by Bell on this matter, to intervene again.
“If this decision stands, it will lead to reduced investments in network infrastructure, including in rural and remote communities, and ultimately less choice for Canadians,” the Canadian Telecommunications Association, a trade group representing large players Rogers and Bell, said in a statement Friday. “The Association is calling on the Government of Canada to overturn the CRTC’s decision and prohibit the three largest providers from reselling service over their competitors’ networks.”
“Today’s decision sends the wrong signal to the companies that build networks,” added Robert Ghiz, the trade group’s president and CEO, in the release. “It will reduce investment, undercut smaller regional providers who took on the risk of building their own networks, and ultimately harm the very consumers the policy claims to protect.”
Bell, which is asking cabinet to reverse the decision, said the CRTC had an opportunity to determine how the telco would allocate spending on fibre in a conference call earlier this year. “This decision has already significantly undermined the business case for future network expansion,” Bell said Friday. “As a direct result, Bell has reduced its capital expenditures by $500 million in 2025 alone and by over $1.2 billion since the CRTC’s initial decision in November 2023. The CRTC policy will continue to have major negative impacts well into the future.
“Today’s decision calls into question the regulator’s ability to objectively evaluate its original decision on this issue,” the telco, which earlier organized its own public campaign, said. “The CRTC has again chosen to ignore the relevant evidence that was before it. The CRTC’s claim that there was no ‘evidence demonstrating a causal link’ between the decision and Bell’s previously announced reduction in fibre investment, affecting more than 1 million homes and businesses in more than 150 communities, is simply false.”
Bell is referring to the CRTC’s finding that the telco’s reduced network investment outlook justified a change in the commission’s decision. But the regulator said it is already giving the telco a head-start on new builds and it still has to set the final rates, which will take into consider the cost of builds.
Lee Bragg, Eastlink’s executive vice chair, similarly said the telecom is “deeply disappointed” in the decision. “This decision is not only short sighted but more importantly, does not reflect the country’s critical policy objectives of building a strong, connected Canadian economy enabled by facilities-based investment while encouraging real competition that depends on sustainable networks. If this decision stands, we will need to refocus our investment and expansions plans away from facilities-based capital investments and towards a new business model.”
Cogeco’s statement is less restrained: “Today, the CRTC made a terrible decision in allowing the Big Three telecoms to use regulation to get even bigger. The decision threatens competition, affordability, choice and investment. It will hurt consumers and the Canadian economy. We will continue to fight this decision until it’s fixed.”
The CRTC acknowledged that the decision would bother some parties. But it said it would be closely monitoring the “relevant markets and make any adjustments necessary.” That monitoring includes incumbent and independent ISP market share and new incumbent investment in fibre builds.
