Canada's telecom regulator is paving the way for smaller Internet providers to get earlier access to fibre-optic wires owned by the dominant telephone and cable companies, saying it hopes to promote more competition in the broadband market.
The Canadian Radio-television and Telecommunications Commission (CRTC) said Tuesday that it has set temporary rates for what third-party competitors – players such as TekSavvy and Distributel – must pay to lease access to so-called "last-mile" services in Ontario and Quebec. The temporary rates mean the small players don't have to wait until the CRTC determines final rates, a complicated process with no fixed timeline.
The decision will give small competitors the ability to lease even the fastest broadband services starting now. That means they can sell to customers living in newer buildings that only have fibre-based service, as well as selling faster service to those in homes where telecom BCE Inc. has invested to upgrade its copper network and bring fibre all the way to the home.
However, it will take some time before small players can sign leases and work out the details to take advantage of the new access to fibre services. In part, that is because this is just one step in a process that has been under way since 2015, when the CRTC announced sweeping changes to its wholesale Internet regime.
That ruling received widespread public attention for the commission's move to mandate access to ultrahigh-speed fibre services – a decision BCE appealed to the federal cabinet, which ultimately rejected the appeal.
But in the 2015 ruling the CRTC also said it would shift from a model in which small competitors buy access to an entire region, such as a province, to one where they connect to customers from facilities based in individual neighbourhoods or areas. The new regime will give small providers more control over their costs but also increases complexity as they will have to arrange for and pay to transport their customers' traffic from those neighbourhood access points to the broader Internet.
"[The new regime] is extremely complex and I would say that many providers in this space are really just starting to understand how complicated this will be," said Matt Stein, chief executive of Distributel.
"There are hundreds of sites that we're going to have to get to in order to offer fibre to the premise," he said, adding that rural areas could be hard to serve and, "even suburbs, in some cases, are sparse enough that it will be an economic challenge to make work."
TekSavvy chief legal and regulatory officer Bram Abramson said his company was already getting calls from customers on Tuesday asking for fibre-based service. "We hope soon to be able to make our service available to fibre-only customers in as much of the footprint as we can – but we still don't know exactly what that will look like."
"It's been widely recognized that multiplayer competition drives affordability and this helps bring that kind of marketplace into the condo buildings and new housing developments that up until now have not enjoyed that degree of competition. We obviously think it's good to see the CRTC recognize that this matters to consumers," he added.
The rates the CRTC set on Tuesday will be in place until the commission completes its "in-depth" process of determining final rates. The new framework will be rolled out at a later date in other provinces.
BCE is in the midst of spending billions to upgrade its network in Toronto and Montreal but Desjardins Securities Inc. telecom analyst Maher Yaghi said he does not believe the rates established on Tuesday are so low that they will "negatively impact the economics" of the company's fibre business. He noted the new rates for fibre-to-the-home service are close to what BCE charges its own retail customers.
BCE spokesman Marc Choma said the company is still reviewing the details but emphasized the rates are only temporary. "It's another step in an ongoing process we've been planning for," he said, adding, "The CRTC needs to be mindful of the impacts of the rates it sets on investment in next-generation broadband facilities."
Cable companies in Ontario and Quebec are also affected by the ruling – they already had to provide access to their high-speed cable Internet service but will now also have to sell access to fibre service in new developments where they never built a cable network. Representatives for Rogers Communications Inc. and Videotron Ltd. said they are still studying the decision while Cogeco Communications Inc. declined to comment Tuesday.