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Canada’s telecom regulator took steps to open more of the country’s broadband infrastructure to wholesale-based competitors. Now network operators are pushing back.

The Canadian Radio-television and Telecommunications Commission requires telecom companies that own broadband networks to sell wholesale access to third-party operators such as TekSavvy and Distributel at rates set by the regulator. The system, which is set to be expanded thanks to new rules announced by the regulator in November, is intended to encourage greater competition and consumer choice in the internet market.

Bell Canada parent company BCE Inc. BCE-T has mounted a legal challenge to the regulator, and on Friday won leave to appeal the CRTC rules. The company last week announced 4,800 job cuts, laying blame in large part on the regulatory system.

Cogeco Communications Inc. CCA-T is also unhappy with the current regulatory regime, saying it’s effectively giving big telecom companies undue access to Cogeco’s network since many of the small competitors have been acquired by the country’s major players. The regulator should only allow small, regional internet providers to take advantage of a wholesale regime intended to promote competition in the broadband market, Cogeco is set to argue at CRTC hearings this week to review the current system.

In recent years, large telecom companies gobbled up many third-party operators. Distributel, for instance, was bought by Bell, while Rogers Communications Inc. RCI-B-T snapped up Comwave, and Telus Corp. T-T acquired Start.ca and Altima.

As a result, roughly half of the third-party users on Cogeco’s network are now owned by large telecoms, says Frédéric Perron, president of Cogeco’s Canadian cable operations, Cogeco Connexion.

“This was intended for the small players to have a chance to start and create competition in Canada, and now it’s the big guys using it,” Mr. Perron said in a recent interview.

Cogeco is urging the CRTC to prevent the three major telecoms – BCE, Rogers and Telus – from taking advantage of the wholesale regime to maintain and extend their market dominance, to the detriment of regional telecoms such as Cogeco. (Cogeco also acquired a wholesale-based competitor, Montreal-based Oxio, in 2023.)

“If the Big Three can keep using our network as an all-you-can-eat buffet, like they are right now, the implications are not good for Cogeco, and they’re not good for regional players in general. And they’re certainly not good for Canadians,” Mr. Perron said.

Cogeco is slated to appear in front of the CRTC this week, along with more than a dozen other organizations, including telecoms and consumer advocacy groups, to discuss their perspectives on Canada’s wholesale high-speed internet access regime as part of a regulatory review.

In November, the CRTC ordered BCE and Telus to provide competitors in Ontario and Quebec with access to their fibre-to-the-home networks at regulated rates on a temporary and expedited basis while the regulator conducts its review. The CRTC said at the time that it was “acting quickly” amid a significant decline in competition in the internet market in those two provinces.

BCE has urged the federal cabinet to overturn the Nov. 6 CRTC decision, and has also asked the Federal Court for leave to appeal the decision. The Federal Court on Friday agreed to hear BCE’s appeal but denied the telecom’s application for a stay pending the appeal, which means that the interim rules will take effect in May.

BCE argues that it is disproportionately affected by the interim CRTC decision, which could result in the Montreal-based telecom’s competitors – including incumbent telcos such as Rogers and Telus – riding on BCE’s infrastructure instead of building out their own networks. (Although Telus is also affected by the ruling, it has limited fibre-to-the-home infrastructure outside of Western Canada.)

“Creating a world in which the incumbents are no longer investing in networks and instead are riding on each other’s networks is bad for the country,” BCE’s chief legal and regulatory officer said in an interview on Thursday, shortly after BCE announced that it was cutting 4,800 jobs. Robert Malcolmson said the CRTC ruling was the “primary driver” for the job cuts.

The CRTC hearings are slated to kick off on Monday with an appearance by representatives of the Competition Bureau, while Telus and BCE are scheduled to speak on Wednesday. Rogers, Cogeco and Quebecor Media Inc. are to appear on Thursday.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 12/04/24 4:00pm EDT.

SymbolName% changeLast
BCE-T
BCE Inc
-1.36%44.23
CCA-T
Cogeco Communications Inc
+0.58%55.83
RCI-B-T
Rogers Communications Inc Cl B NV
-2.15%52.42
T-T
Telus Corp
-1.17%21.87

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