Canada’s telecom regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), recently made a significant decision to broaden a directive that will require large telephone companies to provide rivals with access to their fibre networks. This move is aimed at improving competition in the internet market across the country. The directive, which will come into effect in February, expands upon an earlier temporary directive that was limited to the Ontario and Quebec markets, where the CRTC noted a significant decline in internet competition.
Vicky Eatrides, the chairperson and CEO of the CRTC, emphasized the importance of this decision in providing Canadians with more choice of high-quality internet and cellphone services at lower prices. The regulator has been working towards encouraging competition in the telecommunications sector while also incentivizing companies to invest in network infrastructure. The positive impact of increased competition in the cellphone market has already been observed in terms of lower rates for consumers, and similar benefits are expected for internet services.
The nationwide policy comes at a time when telecom companies are facing challenges such as heightened competition in the wireless sector, reduced levels of immigration, and the ongoing decline of traditional cable television. Following the CRTC’s announcement, stock prices of companies like BCE Inc. and Telus Corp. experienced a decline on the Toronto Stock Exchange. However, the broader stock market closed higher, indicating a mixed reaction to the news.
The CRTC had initially introduced a temporary directive last November and had indicated its intention to review the policy’s applicability to other provinces and make it permanent. After receiving input from over 300 parties, including major internet service providers and smaller competitors, the regulator decided to extend the directive nationally. However, newly built fibre infrastructure will be exempt for five years to allow telephone companies like BCE, Telus, and SaskTel to recover their investments.
Setting the rates for access to fibre networks is a crucial aspect of the directive, and the CRTC is expected to have interim rates in place by the end of 2024, with final rates to follow. Analysts like Maher Yaghi from the Bank of Nova Scotia have highlighted the importance of these rates in determining the impact on the sector. Setting rates too low could have negative consequences for the telephone companies, while setting them too high may hinder competition.
It is important to note that the directive does not apply to the limited fibre infrastructure owned by cable companies, which connect only 5% of households. Cable companies are already required to allow competitors access to their networks at rates set by the CRTC. Andy Kaplan-Myrth from TekSavvy Solutions Inc. sees the decision as a positive step but emphasizes the need for fair rates to be set for the new fibre access.
Pierre Karl Péladeau, the president and CEO of Quebecor Inc., has praised the CRTC’s decision but has urged the regulator to set rates that are just and reasonable, reflecting market realities. The rates set for access to fibre networks will play a crucial role in determining the success of this directive in promoting competition and benefiting consumers in the Canadian internet market.