Canada’s telecom regulator has set more interim rates at which telephone companies must grant rivals access to their fibre networks, though some providers have said the rates are still too high and will hinder competition.
The Canadian Radio-television and Telecommunications Commission (CRTC) decision, announced Friday, largely reaffirmed previous rates set for Ontario and Quebec, and introduced new rates outside of these provinces. It sets the prices that service providers will pay to access the fibre networks owned by Bell Canada owner BCE Inc. BCE-T, Telus Corp. T-T and SaskTel.
The third-party internet access (TPIA) mandate allows smaller operators to access incumbents’ networks at CRTC-set prices for seven years, allowing them to earn income and win customers while they build their own networks.
The mandate has been heavily criticized by the incumbents, who say the mandated prices are too low to support extensive network construction and maintenance. The telecoms have seen their stock prices under pressure in recent months as competitive pressure in the wireless sector has mounted, future immigration targets have moderated and as Canadians continue to cut cables in favour of streaming services.
One of the companies poised to benefit from fibre access is Quebecor Inc. QBR-B-T, which is poised to expand its internet services alongside the rollout of its new Freedom Mobile wireless brand. Quebecor acquired Freedom Mobile in 2023 from Shaw Communications Inc. to ease regulatory concerns about competition raised by Rogers Communications Inc.’s RCI-B-T $20-billion acquisition of Shaw.
In a post on Twitter, Quebecor chief executive and president Pierre Karl Peladéau called the CRTC’s decision “very disappointing,” and said it would “prevent us from launching our services on these networks.”
“We had hoped for a decision that would reflect market realities and allow us to offer Freedom Mobile customers prices that would help lower their telecom bills,” Mr. Peladéau said.
Meanwhile, Andy Kaplan-Myrth, vice-president of regulatory and carrier affairs for independent service provider TekSavvy Solutions Inc., said in an e-mail the rates remain “considerably higher than what some of the big telcos are regularly offering customers at retail,” and would need to be lowered in their final iteration to “realistically enable competition.”
Previously: TekSavvy ‘running on hope’ as it urges CRTC to allow wholesale fibre internet access
The CRTC is expected to finalize these tariffs in early 2025, but indicated in its Friday announcement that the interim rates are likely close to the final ones as it had already completed “much of the underlying analysis necessary to set rates on a final basis.”
Analysts describes the rates as generally favourable to the incumbents, saying the rates would support competition but not do undue harm to the telecom giants.
Bank of Nova Scotia analyst Maher Yaghi said that BCE and Telus had “dodged a big bullet” and that the CRTC’s decision seemed to encourage network investments.
“We believe the set rates will allow challengers to be competitive if they can sell converged services in a combo. However, the rates are not low enough to upend the market structure and continue to provide an acceptable rate of return to network builders,” he told investors in a Sunday-night note, at the same time upgrading his rating for Telus to “sector outperform.”
Also in a Sunday note to investors, RBC Dominion Securities Inc. analyst Drew McReynolds called the updated interim rates “balanced and overall manageable for the telco incumbents.”
According to BMO analyst Tim Casey, the average revenue per internet user in Canada is about $71. This means that in some places, Bell and Telus could lose money if providing access to an wholesale service provider.
In a Sunday note to investors, Mr. Casey said the wholesale access will add to “incremental competition,” as companies will likely push bundled services with wireless, video, voice, streaming, and security on top of internet access.
BCE and Telus can also access each other’s fibre networks, but only outside their legacy footprints, meaning they may see potential to expand alongside new entrant resellers.
The CRTC first set interim fibre prices in Ontario and Quebec, where it said competition had seen the most significant decline, in November, 2023. Friday’s figures for these two provinces are largely unchanged, at rates of $64-$78 for Bell and $65-$76 for Telus.
Announced Friday, ISPs’ access to Bell’s network outside these provinces will be about the same price, while the cost to access Telus’s networks in Alberta and British Columbia will be about $76-$80.
In August, Scotiabank’s Mr. Yaghi said the “pain threshold” for the incumbents would be if the rates were set below $60.
Any new fibre deployments are protected until 2029, which the CRTC said will give BCE, Telus and SaskTel an opportunity to recoup their investments.
Bell and Telus’s fibre networks have been accessible to independent service providers since May. Access to other provinces’ networks at these mandated rates begins Feb. 13, 2025.