Canadian Radio-television & Telecommunications Commission helps sustain competition in broadband market
The CRTC’s services framework sets out the terms & conditions and rates whereby telecommunications providers are required to partition a percentage of their networks over to their competitors.
“As Canadians participate more actively in the digital economy, they will need access to higher Internet speeds to power their broadband homes and businesses. By continuing to mandate certain wholesale services, and including access to fibre facilities, we are continuing our work to drive competition so Canadians have access to more choice, innovative services and reasonable prices. At the same time, we fully expect that companies will continue to invest in their networks, including in fibre technology, to meet the growing needs of consumers.” – Jean-Pierre Blais, CRTC Chairman
On July 22nd, the CRTC announced measures to facilitate competition between companies that offer broadband Internet. These measures are intended to provide Canadians with more choices, foster innovation, and provide services at reasonable prices.
After conducting an extensive review, the CRTC found that large broadband companies continue to possess leveraged market dominance and anti-competition provisions of high-speed access services and the CRTC is requiring that they make wholesale access to these services available to competitors.
* The CRTC will continue to take action to ensure that Canadians have more choices for high-speed Internet services.
* The CRTC will continue to mandate access to wholesale services, including high-speed access services, to encourage competition in the broadband Internet market.
* Additionally, the CRTC is requiring that competitors have access to wholesale high-speed services of the large established companies that use optical fibre facilities.
* The CRTC is encouraging further investment in high-quality networks.
The big telecommunications companies of Canada will be required to open up their highest-speed fibre lines to smaller competitors who want to offer broadband services to consumers.
The smaller competitor companies currently own only about 10% of the Canadian home internet market, with the other 90% controlled by the big phone and cable companies. Telecom and cable providers are already required to share their copper and coaxial cables with smaller competitors such as TekSavvy, Distributel, and Primus, and will also now have to do the same with their fibre optic cables.
Canadians will only demand higher speed services increasingly in the coming years to support their growing Internet needs and usage. To provide services, the larger telecom companies enter into a wide variety of wholesale arrangements, in particular, wholesale high-speed access services are used by competitors to provide Internet services in retail markets, also for television and telephone services.
The CRTC decision is a loss for big companies like Bell, which argue that it would not have any incentive to invest in laying new fibre optic cables if they knew it was going to be forced to allow rival companies to profit from them However the regulation does contain some solace for the big providers. The CRTC said it will allow the big telecoms to charge surcharges for having to share their cables in order to make a reasonable profit on their investments. The pricing model will be worked out with each company on the basis of actual cost, plus a markup limited to 30%.
There are also some other changes in the new plan, which have been designed to push the smaller competitors to invest in their own infrastructure; rather than just piggy-backing on the infrastructure of the larger companies.
The smaller competitors are using what is called the “aggregated” model of service. They tap into a single point of access, of which there is one per province. All traffic from that node to the homes and businesses of the consumer travels is carried on the cables that belong to the large telecoms. Because there is only one interface per province, the distances can be long, and the smaller competitors are required to pay for the transport of the data at rates that generally increase with distance traveled.
Under the new rules, any smaller company that wants access to the high-speed fibre optic cables must agree to a “disaggregated” model of service, where they are required to plug in much closer to the final consumer at a regional point of access. The smaller companies would then have to arrange transport of the signal from that regional interface to their own offices, either by installing their own fibre optic cable, or by leasing it from another company. The CRTC designed this to prevent smaller competitors from acting as mere resellers of existing bandwidth, rather only contribute to expand the availability of total amount of bandwidth available. The CRTC believes the change will help produce internet providers who want to serve only a particular region, rather than an entire province.
The new rules will be phased in first in Ontario and Quebec, where most of Canada’s smaller internet providers operate. For the time being, smaller companies are unlikely to offer rival high-speed internet packages in other parts of Canada. Consumers in other parts of Canada, who wish to have fiber optics connections will have to rely on the big providers for the time being.