Bell to cut rural broadband rollout by 20% in response; Other carriers equally disappointed, angry
MONTREAL – Bell Canada spent the weekend crunching numbers (update: Rogers did the same) and announced today that last week’s CRTC decision to slash the rates paid by independent third party internet access (TPIA) providers – retroactively, too – will have a cost which will be paid by rural Canadians.
Bell said Monday morning it has estimated the impact of the CRTC’s decision to lower wholesale fees, retroactively, to be $100 million, and in order to pay for that, it will reduce its broadband Internet buildout for smaller towns and rural communities by 20%, or approximately 200,000 households.
Update: Rogers said Monday afternoon as a result of the Commission decision, it “expects to record a charge of approximately $140 million in the current quarter to account for the retroactive impact of the lower rates,” reads its statement. "The company is determining next steps, including a review of all future investments in rural and remote communities.”
"The CRTC's decision transfers capital from providers like Bell who are building Canada's modern broadband networks to wholesale resellers that invest little to nothing – and there's no assurance or requirement from the CRTC that any of it will be dedicated to network buildouts or otherwise passed on to Canadian consumers," said Mirko Bibic, Bell's chief operating officer, in its release.. "Putting this kind of unexpected and retroactive tax on capital investment is not the way to ensure the continued development of Canada's Internet infrastructure."
In 2018, Bell announced the rollout of its new Wireless Home Internet (WHI) service to bring high-speed Internet access to houses, farms and small businesses in areas that are difficult for providers to reach with fibre or traditional cable Internet access. It announced a major expansion of the project in June, too.
“Bell's original WHI rollout plan to serve 800,000 small-town households in Manitoba, Ontario, Québec and Atlantic Canada was expanded to more than 1.2 million locations following the federal government's introduction of the Accelerated Investment Incentive in November 2018. Bell has already rolled out WHI service to more than 130 small communities in Ontario and Québec,” reads the press release.
However, having to pay $100 million in retroactive disbursements to resellers, the WHI buildout plan will now only reach 1 million locations.
Cogeco Communications put out its own release today as well, saying the Commission’s decision will cost it about $25 million “in the current quarter to account for the retroactive impact of the lower rates, of which $15 million relates to fiscal years 2016, 2017 and 2018, and $10 million to fiscal year 2019,” reads the Cogeco release.
We have asked the other incumbent carriers affected by the decision (Shaw, Telus, Vidéotron, SaskTel, Eastlink) for comment and will update this story if/when they respond. In off-the record chats with two so far, they are extremely unhappy.
“While Cogeco supports fair competition in the Canadian telecommunications market, just and reasonable wholesale rates are paramount to ensure continued and sustained investments in networks, especially in unserved areas. Cogeco is currently reviewing the details of the CRTC decision and assessing its options going forward,” reads its release.
Bell, Rogers and Cogeco cited the recent report from the Competition Bureau, which said Canadians in most regions are well served and mostly satisfied with their broadband providers, adding “more than one million Canadian households rely on smaller competitive providers to obtain internet services, and that the competitive impact of this class of providers continues to grow.”
Saying the CRTC should set wholesale access rates at realistic levels, the Bureau warned of "the potential negative effects that a wholesale access regime can have on the incentive for facilities-based competitors to make the necessary investments to ensure that Canadians are served by world class networks,” reads today’s Bell release.
"Bell has made great strides in connecting smaller communities with our innovative WHI technology,” added Bibic. "It is unfortunate that the CRTC's decision will hinder the positive momentum we've built in bringing full broadband Internet access to rural and other underserved communities."
The company did not specify the communities or regions which are being cut from the WHI plan, but a spokesperson noted it will not affect any of the communities for which Bell is receiving funding from the federal government’s Connect to Innovate program.
While Videotron's leadership has not yet made up its mind what to do, it sent a statement to Cartt.ca Monday afternoon saying the company is "disappointed by the CRTC’s recent decision. It is likely to affect our company, as it will the other facilities-based providers. We are still assessing the impact on our operations. For now, all options are on the table."
Options available for the unsatisfied are: a request to the CRTC to Review and Vary its decision, an appeal to Cabinet, and a trip to the Federal Court to appeal on an issue of law or jurisdiction.
Consumer group OpenMedia is unhappy, saying Bell’s “withdrawal from these markets is an incredible opportunity for the CRTC and federal government to break up Big Telecom’s stronghold, and truly introduce choice and competition. Through the CRTC’s broadband fund, and federal government funding committed through both ISED and Rural and Economic Development, there are billions of dollars in investment for rural connectivity – and not a cent should be squandered on Bell, who has demonstrated it will simply turn its back on people in Canada any time it doesn’t get its way,” said executive director Laura Tribe, in its release.
