BCE Inc. will spend an additional $500-million to speed up its rollout of high-speed internet and 5G wireless services after a long-awaited but controversial regulatory decision provided the company with the conditions it needs to invest, its CEO says.
The Montreal-based telecom said earlier this year that it would invest an additional $1-billion to $1.2-billion into its networks over the next two years, on top of its usual $4-billion a year in spending. Now, the company is boosting that amount to $1.5-billion to $1.7-billion in additional investment, crediting last week’s reversal of a 2019 decision that would have slashed the rates that large phone and cable companies can charge smaller internet service providers for access to their broadband networks.
“Bad regulatory decisions really negatively affect investments, and the right decisions really do support investments,” Mirko Bibic, CEO of BCE and Bell Canada, said in an interview Monday. “If we have a framework that encourages investment, Bell will step up and encourage investment, extend networks, improve access – and value will increase for consumers,” he added.
The Canadian Radio-television and Telecommunications Commission (CRTC) requires large telecoms to sell network access to independent ISPs, who then sell internet service to their own customers. In August, 2019, the commission slashed the rates large telecoms can charge smaller providers for access to their networks and ordered the telecoms to make large retroactive payments – at the time totalling an estimated $325-million, according to court documents – to third-party operators to compensate for the higher rates they had been paying since 2016.
The decision sparked legal and regulatory challenges from the large telecoms and prompted Bell to pull back on some of its planned investments in rural broadband, a move that drew the ire of then-innovation minister Navdeep Bains, who said he was “deeply disappointed.”
Last Thursday, after a lengthy review, the CRTC reversed its 2019 ruling, saying it found significant errors that cast doubt on the correctness of the decision. The commission decided to maintain the interim rates that have been in place since 2016 with some minor adjustments, including removing a 10-per-cent markup that the telephone companies – Bell Canada, Telus and SaskTel – were previously able to charge.
“The reason [phone and cable companies] appealed the decision using all the avenues available to us was because every single aspect of the 2019 decision was wrong,” Mr. Bibic said. “We put forth extensive evidence showing the errors.”
Backlash to last week’s decision has grown, with independent ISPs saying it will result in higher prices for consumers. Chatham, Ont.-based independent telecom TekSavvy Solutions Inc. has pulled out of a coming auction for wireless airwaves and is petitioning the federal cabinet to reinstate the 2019 decision and to remove CRTC chairman Ian Scott – or at least force him to recuse himself from future decisions on similar matters. (Mr. Scott previously worked for, and was later a lobbyist for, Telus.)
Toronto-based independent telecom VMedia has also called for Mr. Scott to step down and for Ottawa investigate whether political and corporate interests influenced the CRTC’s review.
The CRTC declined to comment on the reactions to its ruling, but Mr. Scott has previously said that parties are well within their rights to challenge commission decisions that they disagree with.
“There’s no place in responsible public policy discourse for that kind of reaction,” Mr. Bibic said Monday, regarding calls for Mr. Scott’s removal from the CRTC. Claims that the decision will result in higher prices for customers are hyperbolic, he added.
“I don’t see why resellers would increase their rates. What they’re going to be paying, going forward, is either exactly what they’ve been paying or slightly less than they’ve been paying,” Mr. Bibic said, referring to the 10-per-cent fee that telephone companies will no longer be able to charge.
While the adjustments to the 2016 rates will result in some retroactive payments to smaller ISPs, Mr. Bibic did not provide an estimate of how much Bell will have to pay, saying that the company is still working through the details.
However, BMO analyst Tim Casey estimated that the large phone and cable companies will pay roughly 10 per cent of what they would have owed if the 2019 rates had been implemented – in Bell’s case, that would have been around $170-million, Mr. Casey said in a note to clients. (Rogers would have owed around $225-million in retroactive payments, while Quebecor Inc. would have paid back about $60-million and Cogeco Communications Inc. would have been on the hook for around $30-million, according to Mr. Casey’s estimates.)
Last week’s ruling is the second regulatory victory for Canada’s major telecoms in recent weeks. In April, after months of deliberation as well as public hearings, the CRTC announced it would force the Big Three national mobile carriers – Bell, Telus and Rogers – and SaskTel to sell access to their wireless networks to certain regional competitors. However, the regulator stopped short of mandating access for competitors with no wireless airwaves or infrastructure, as consumer advocates and some smaller telecoms were requesting.
The wireless decision “further reaffirmed the importance of investment in networks,” Mr. Bibic said. “Both of those decisions do, and so we’re comfortable investing even more,” he added.
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