A lobby group for smaller internet providers is calling on the CRTC to fix regulations it says are restricting the options Canadian consumers have for high-speed broadband service.
The Canadian Radio-television and Telecommunications Commission ruled in 2015 that large telephone companies such as BCE Inc. must open up access to their latest-generation, fibre-optic-based services to independent players.
That ruling was hailed by consumer advocates as a victory for competition in the broadband market and both the CRTC and the federal cabinet rejected appeals launched by BCE, which argued the decision would reduce its incentive to invest billions of dollars building faster networks. Innovation Minister Navdeep Bains said at the time that “wholesale broadband is a proven regulatory tool for enabling retail competition in the internet service market.”
But now, the Canadian Network Operators Consortium (CNOC), which represents dozens of small and medium-sized internet service providers (ISPs), including players such as TekSavvy and Distributel, says the CRTC rules set in the 2015 decision and related follow-up rulings have inadvertently increased both the cost and complexity of their business.
Independent providers are still not selling fibre-based service to their customers and say it will soon be too expensive to sell even higher-speed services they buy from cable players such as Rogers Communications Inc.
CNOC is filing an application with the CRTC on Wednesday, asking the commission to “review and vary” its earlier rulings on the wholesale internet market.
In the application, a copy of which was reviewed by The Globe and Mail, the lobby group says one of the central problems is a shift from a model in which small ISPs buy access to the large players’ networks for an entire region, such as a province, to one in which they must connect to customers from facilities based in individual neighbourhoods.
The move to what the CRTC calls a “disaggregated” model of access was meant to encourage the independent ISPs to invest their own capital in the cost of transporting their customers’ traffic from those neighbourhood access points to the broader internet.
But CNOC argues that the number of access points the large players have in their networks makes the cost of such connections prohibitively expensive and that such a deployment would take independent ISPs years to complete.
The CRTC is finalizing the framework and wholesale rates under the new disaggregated regime, which could come within the next six months or so. Once in place, the new rules will prevent independent ISPs from offering new customers access to download speeds of greater than 100 megabits per second (Mbps) without following the disaggregated model and connecting at each of those neighbourhood access points.
CNOC is asking the CRTC to remove that 100-Mbps threshold on an expedited basis, saying that if it does not, “competition in the retail market for internet services at speeds greater than 100 Mbps will simply be eliminated.” In recent years, major telephone and cable providers have heavily marketed the faster speeds they offer and consumers have subscribed to higher-speed services. By 2016, 15 per cent of internet subscriptions were for speeds of 100 Mbps and higher.
“We’re in a spot now where enough is known of the new disaggregated regime that the problems are obvious and glaring,” said Matt Stein, who is president of CNOC and also chief executive of Distributel.
If the CRTC does not make adjustments, he said independent ISPs will have to be more selective about where to deploy their services. “Only the most urban, dense and highly populated neighbourhoods will get competition,” Mr. Stein said. “This will create a new list of haves and have-nots.”
The Competition Bureau launched a study of the Canadian internet market in May, noting that there are more than 550 independent ISPs (the smaller providers also offer television and home phone services in some cases).
The bureau said those competitors offer prices as much as 30 per cent lower than the large incumbents, but said that as of 2016, 87 per cent of retail internet subscriptions in Canada were purchased from a traditional phone or cable company. The bureau will report the results of the broadband study next year.
Once CNOC’s application is posted on the CRTC website, other parties will have 30 days to file responses. The CRTC typically rules on such applications within four to six months of receiving final submissions, but it could extend the process if it wants more information from the parties involved.