Nestled on the banks of the Grand River in Brantford, Ont., is the birthplace of Canada’s telecommunications industry. It was here in 1874 that Alexander Graham Bell was inspired to invent the telephone at his “dreaming place” behind his family’s farm.
As a scientist and a teacher of the deaf, Bell made it his life’s work to connect people. Fast forward to 2019, and one can only imagine how he would feel about the way his namesake company is treating Canadians disadvantaged by the digital divide.
BCE Inc., formerly The Bell Telephone Company of Canada, is slashing its broadband internet expansion in smaller towns and rural communities by 20 per cent, or roughly 200,000 households, to protest a recent rate ruling by the federal telecom regulator.
Not only is BCE forsaking its own rural roots, it’s leading a revolt by older, established companies against consumer choice. Other entrenched players, including Rogers Communications Inc. and Shaw Communications Inc., are also threatening to slash spending on rural connectivity. Canadians should be furious.
Broadband internet is no longer a luxury; it’s the backbone of the Canadian economy. In a bid to create more competition, the Canadian Radio-television and Telecommunications Commission announced earlier this month that it was cutting the wholesale rates that large telephone and cable companies charge independent internet service providers to access their networks. Those smaller companies, which include players such as TekSavvy and Distributel, then resell services to their own customers.
A resale model is required to promote competition because it costs too much for startups to build new networks from scratch. Although incumbents have long complained about providing network access to their rivals, this time the CRTC really called their bluff. The regulator made the rate reductions retroactive to 2016.
“As the demand for faster broadband speeds grows, we are putting measures in place to ensure Canada’s internet market remains dynamic," said CRTC chair Ian Scott in a statement on Aug. 15.
Instead of accepting the ruling, big communications companies had a collective conniption. Together BCE, Rogers, Quebecor, Shaw and Cogeco say they expect to fork out about $325-million in retroactive payments as a result of the CRTC decision. That sum total is a minor inconvenience when one considers those same companies earned aggregate profits of more than $5.8-billion last year alone.
“The CRTC’s decision transfers capital from providers like Bell who are building Canada’s modern broadband networks to wholesale resellers that invest little to nothing – and there’s no assurance or requirement from the CRTC that any of it will be dedicated to network buildouts or otherwise passed on to Canadian consumers,” said Mirko Bibic, Bell’s chief operating officer, in a statement last week.
That’s not how smaller players see it. They’ve accused incumbents of overcharging them for wholesale access and using their market power to undercut them on retail rates.
It’s important to remember that most of these incumbents built up their businesses by operating in monopoly markets. That’s why it’s unconscionable that established players are now using rural Canadians as pawns.
While independent players have captured some market share in urban centres, that’s not the case in rural and remote parts of Canada where some two million consumers are held captive by limited choice, poor-quality service and significantly higher costs.
The CRTC wants all Canadians to have minimum download speeds of at least 50 megabits per second (Mbps) and 10 Mbps for uploads by 2031. But only 37 per cent of rural and remote homes have access to that service.
While 50/10 Mbps might be enough for basic streaming and surfing, many of us city slickers already enjoy unlimited data packages at much faster speeds. That’s simply not an option for people in Yukon, Northwest Territories and Nunavut. No homes in those three territories had access to comparable unlimited data services last year, according to the CRTC.
People in rural or remote communities need the same connectivity, the same resource as everyone else if they’re to have a fighting chance to prosper in the modern world. Companies such as BCE should be the solution rather than the source of their connectivity problems.
One might argue that publicly traded telecoms’ sole duty is to maximize shareholder value, but that kind of thinking is increasingly outdated. Last week, a group of American CEOs said that corporations have a duty to all stakeholders, including the public, and not just their investors.
That goes doubly for Canada’s telecom incumbents. They enjoy dominant market share. It’s time others had a real chance to compete.