Ruling on high-speed Internet services pleases consumer groups

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This article was published 13/08/2024 (601 days ago), so information in it may no longer be current.

A Manitoba coalition representing consumer groups, Indigenous communities and anti-poverty advocates helped achieve a ruling from Canada’s telecommunications regulator on Tuesday that could open up the market to less expensive high-speed Internet service.

The Canadian Radio-television and Telecommunications Commission (CRTC) ruled that by next February companies like Bell MTS must make their fibre networks accessible to third-party service providers at a fee to be set by the end of the year.

While the CRTC says it is a “major step forward to improve competition in Canada’s Internet market,” it is a ruling that will only impact markets where fibre to the home networks currently exist.

On Tuesday, Chris Klassen, an independent lawyer retained by the Public Interest Law Centre to represent the Manitoba coalition — the Manitoba Branch of the Consumers’ Association of Canada (CAC Manitoba), Aboriginal Council of Winnipeg and Harvest Manitoba — said, “Generally our clients are happy with the decision that came out today.”

The process to get to the decision took more than a year. In the meantime, the CRTC granted partial third-party access to fibre networks in Ontario and Quebec that started in May of this year.

The general thinking is that the changes will increase the quality and variety of services on offer and lower the price.

“The CRTC has been aware for quite some time that its past approaches to regulating the home Internet market have failed,” Klassen said. “It has consistently been observed that competition in markets across the country is not adequate to meet consumers’ needs.”

CAC Manitoba did its own research that found more than half of Manitobans reported only one or two service providers to choose from.

“The problem was clear,” Klassen said.

Cable television companies provide high-speed Internet services via their existing networks and have built minimal fibre networks so they are largely unaffected by the ruling.

Companies like Bell, Telus and SaskTel, which have invested billions of dollars in fibre networks, presented to the CRTC in opposition during the consultation process. The CRTC did provide a concession to the large telcos.

Klassen said, “The CRTC received a lot of comments from those large telecom companies cautioning that if the mandate was introduced broadly, their incentive to invest in expanding networks would be undermined and they strongly encouraged the CRTC to not do that. Our clients were fairly dismissive of those concerns of the telcos.”

Damon Johnston, president of the Indigenous Council of Winnipeg, said a ruling like this has the potential to give Indigenous-owned enterprises a chance to get into a market that had effectively been out of reach to them in the past because of decades of exclusion from the mainstream economy in Canada.

“Depending on the willingness to get into this market there could be more players like social enterprises or Indigenous-owned,” he said. “Those types of operations may not be focused as much on profits for the business owner and more on better sharing of a bigger economic pie.”

The CRTC’s previous decision, which took effect this May in Ontario and Quebec, was meant to stimulate competition for Internet services in the provinces where the regulator said independent companies were struggling the most. The CRTC issued the ruling amid a broader review that it said could potentially make that direction permanent and applied to other provinces.

Bell responded last year by reducing its network expenditure by $1.1 billion in 2024 and 2025, saying the ruling diminished the business case for it to invest. The telecom giant later slashed 4,800 jobs, partially blaming unfavourable regulatory policies, and warned it could further cut network spending in the future.

On Tuesday, the CRTC said its latest decision applies only to existing fibre networks, in recognition “that building out fibre is expensive.”

The CRTC said fibre Internet customers in Ontario and Quebec are already benefiting from increased choice and competition just a few months after the initial decision took effect.

“Today’s decision builds on our work to ensure that Canadians have access to more choice of high-quality Internet and cellphone services at lower prices,” said CRTC chairperson Vicky Eatrides in a statement.

“We have already taken action to encourage more competition in the cellphone market, while maintaining incentives for companies to invest in networks. We are seeing a positive impact on the cellphone rates Canadians pay and expect to see similar benefits for Internet services.”

While some larger companies voiced opposition to the CRTC’s direction during its hearing, smaller competitors such as TekSavvy decried what they described as an unfavourable regulatory environment for wholesalers. Many of those providers urged the CRTC to level the playing field when it comes to Internet competition.

Bell had proposed multiple conditions to help mitigate potential disadvantages should the CRTC expand wholesale access, including the five-year head start for network builders to recoup investment costs before a wholesaler can access the infrastructure.

— with files from The Canadian Press

martin.cash@freepress.mb.ca