CRTC will look at wholesale Internet access for new, fibre-to-the-home networks

TORONTO—The CRTC will hold a proceeding to look at whether incumbent Internet service providers should be required to give smaller competitors wholesale access to their fibre-to-the-home networks, CRTC Chair Jean-Pierre Blais said. In a speech Tuesday at the Canadian Telecom Summit conference in Toronto, Blais said the commission will consider “different approaches” to its regulation of mandated wholesale access services, which permit small telecom service providers to lease wholesale access to the incumbents’ network infrastructure so they can offer their own retail Internet services. “We will hold a proceeding to determine whether competitors should have mandated access to these high-speed fibre networks, and if so, when, where and at what cost,” Blais said, according to his speaking notes. “I know this is one proceeding everyone in this room will be watching very closely. Our objective will be to facilitate the development of a competitive Canadian broadband market, while balancing the incentives to invest in innovative networks.” CRTC regulations currently require incumbents to offer small Internet service providers (ISPs) wholesale access to their copper, cable, and fibre-to-the-node networks, though not more expensive fibre-to-the-home networks that offer faster speeds and more data capacity. Incumbent telcos BCE Inc. and Telus Corp., as well as regional incumbents Bell Aliant Inc. (majority owned by BCE), Manitoba Telecom Services Inc., and SaskTel, are spending hundreds of millions of dollars to build out fibre-to-the-home networks, mostly in new, greenfield neighbourhood constructions. BCE is also building out fibre-to-the-home in some areas of Quebec and Telus in parts of British Columbia as well as in Rimouski, Que. Telus has said it also has plans to invest in fibre-to-the-home in further parts of Alberta and B.C. this year. BCE said last year that its fibre-to-the-home build in Quebec will cost the company $240 million. Bell Aliant has estimated that it spent $500 million on its fibre-to-the-home network by the end of 2012. Ted Woodhead, Telus’ senior vice-president of government and regulatory affairs, said in an interview at the conference that applying the CRTC's existing wholesale access regime to new, fibre-to-the-home networks, won’t work. “There’s no legacy rate of return, costing, on a copper network. This is all new. It’s all trench, all new fibre access, and the old tools aren’t going to work,” Woodhead said. According to a three-year plan the CRTC released last month, the CRTC lists a commission review of “new wholesale high-speed access services,” including for fibre-to-the-home (or fibre-to-the-premise), in 2014-2015. “Are there different approaches that we could be using? Our goal is to make sure the wholesale service regime supports the development of a competitive telecommunications market in Canada. But, make no mistake, we will have to be persuaded that the course chosen is in the best interests of Canadians,” Blais said in his speech. Mirko Bibic, BCE’s senior vice-president of regulatory affairs, said Tuesday on a panel at the Canadian Telecom Summit conference in Toronto that the CRTC’s wholesale Internet regime is a form of “regulatory arbitrage” as the commission regulates the wholesale access pricing. “The price for access to Bell’s network, from 2010 to this year ... were reduced by the commission by 27 per cent,” Bibic said, adding that those savings should be passed onto consumers, while small ISPs have not reduced their prices. “That’s not getting passed on. It’s pure regulatory arbitrage. The fact is that if Canadians are well served today, it’s by the investments that the incumbent telcos and the cablecos are making: $45 billion in investments in the last six years in the wireline world.” Bibic told The Wire Report in November that mandated wholesale access to the multi-million-dollar fibre-to-the-home networks could act as a “disincentive” to further investment. “It doesn’t mean that at some point down the road we won’t find the right element in place to do deal with wholesale ISPs , but it certainly should not be mandated,” he said. Blais said in his speech the commission fully appreciates the incumbents’ need for a return on investment. “At the same time, we recognize that the better the network, the more you can do and the better you can serve Canadians,” he said. According to the commission's plan, it will also conduct a review of the “essential services” it requires providers to offer on a wholesale basis in the 2013-2014 regulatory year. Any changes to its essential services framework, the CRTC said, would be implemented the following year. The commission will also review its basic service objective, which requires telecom providers to offer services such as home phone and dialup Internet, in high-cost service areas, typically at a fixed price. “It’s time to prepare to take another look at our basic service objective, something we will do in 2014-2015. Should broadband be considered a basic service for Canadians across the country?” Blais said. “That’s one of the key questions we will be asking when we start our review.” Blais said the CRTC also has “serious concerns” about the telecom services available in Canada’s North, which will also be on the regulator’s radar as early as this month for a hearing about the services of Northwestel, a BCE subsidiary. “We’ve heard from Northerners who are unhappy about the quality, prices and variety of the communication services available. We’ve also heard complaints about frequent services outages. In response, we ordered Northwestel to develop a plan to update its aging network,” Blais said. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and reporting and editing by Simon Doyle at sdoyle@thewirereport.ca

CRTC will look at wholesale Internet access for new, fibre-to-the-home networks

News | June 4, 2013

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CRTC will look at wholesale Internet access for new, fibre-to-the-home networks

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