TekSavvy says it is currently not for sale
By Ahmad Hathout
Bell announced Monday evening that it is cutting its fibre investments by over $1 billion in 2024-25 after the CRTC said it must negotiate access with competitors on that network.
The telco said that plan will also include a minimum cut of $500 to $600 million in 2024.
“Bell’s fibre network is now available to over seven million homes and businesses,” Bell said in a press release. “Prior to the CRTC’s decision, Bell’s near-term plan was to build high-speed fibre to nine million locations by the end of 2025. Bell will now re-consider pending builds in all communities where it had planned to expand, and will reduce its 2025 build target from nine million to 8.3 million locations.”
The CRTC announced merely hours earlier that it was forcing the incumbent telephone — not cable — companies in Ontario and Quebec to get into negotiations within six months for competitor access to their last mile fibre networks, which were previously only mandated by the regulator if competitors got their own traffic transport network.
Bell’s CEO Mirko Bibic said during the company’s third-quarter conference call last week that the telco effectively slowed down its fibre buildout because of the uncertainty surrounding the CRTC’s impending decision on the last mile and wholesale access files – the latter is yet to be determined.
Bell had argued that the CRTC had taken a preliminary view that last mile fibre should be mandated based on an erroneous claim that fibre-to-the-home buildouts are largely complete; in fact, Bell argues, it still has at least five million homes to connect.
Monday’s decision and response shows Bell wasn’t feigning. In the press release, Bell is miffed that the CRTC did not include western Canada, where there are over three million fibre locations passed and where the other telco giant, Telus, is predominantly located.
“If the intent of the decision is to benefit consumers then it is arbitrary and capricious to leave western Canadian consumers behind,” Bell said in the release. “When Bell enters a community with high-speed fibre Internet, it increases competition, and customers benefit from better service, better value and lower prices.”
Bibic added in the release: “When others scaled back investment at the onset of the COVID-19 pandemic, Bell leaned in and accelerated our annual capital expenditures to historic levels to provide Canadians with the reliable connectivity that they needed. Since 2020, we have invested over $18 billion in our networks and expanded high-speed fibre Internet to over three million homes and businesses across Québec, Ontario, Atlantic Canada and Manitoba. When public policy conditions in telecommunications support major investments and job creation, Canadians in small and large communities benefit directly from the best network technology available.”
Cutting back investment in response to a CRTC decision isn’t a new invention. In fact, it was the last time the commission announced proposed cuts to the wholesale internet rate in 2019 when the incumbents, including Bell, announced cuts to spending. The regulator never ended up implementing those rates and is now reviewing the framework.
A Telus spokesperson said in a statement that the telco is “reviewing the interim decision and look forward to participating in the remainder of the CRTC proceeding.”
Andy Kaplan-Myrth, vice president of regulatory and carrier affairs at large independent wholesaler TekSavvy, said in a statement that while the CRTC’s decision is welcomed, there are some concerns about the rates.
The commission set the rates higher than many of the retail prices Bell and Telus charge their own customers, Kaplan-Myrth said, which will “preclude effective competition and deny consumers price relief for critical telecom services.”
The second issue, according to TekSavvy, is the geographic limitations of the temporary regime. “There is no compelling reason to deny consumers in other regions of the country the benefits of competition for essential services, including in Telus’ territory across the Western provinces and Bell’s territories in Manitoba and Atlantic Canada,” Kaplan-Myrth said.
The CRTC said in its decision that a big part of its narrowing of the regime was to allow it to be nimble if it had to make quick changes to the regime and because it would have taken much longer to set rates for the entire country.
“Consumers in other regions are no less deserving of price relief and competitive choices than consumers in Ontario and Quebec,” added Peter Nowak, TekSavvy’s vice president of Insight and Engagement. “We hope that the CRTC will act quickly to rectify the rates and expand this interim ruling to all regions.”
TekSavvy also confirmed Tuesday that it is not up for sale, after reports emerged earlier this year that it was looking for a suitor.
While the Competitive Network Operators of Canada (CNOC), which represents independent telecoms, applauded the decision, holds the same concerns expressed by TekSavvy.
“A national permanent framework applicable to all dominant carriers with just and reasonable rates is required to allow for true competition which is yet to be established,” CNOC President and Chair Paul Anderson said in a press release. “This is essential, as the right structure is the cornerstone for innovation and investment in the services that our members provide. We’ve seen how restrictive rates can impede our ability to innovate; therefore, we are optimistic that the CRTC will continue on the path they have started and quickly establish a national framework with final rates that supports vigorous national competition.
“We are thankful the Commission has set interim rates; however, these wholesale rates which are just one of the cost inputs to our services, are well above retail rates seen in the market today. Until final rates that are just and reasonable are set, significant competition is unlikely to be stimulated.”
John Lawford, executive director of the Public Interest Advocacy Centre, said, “The decision is good for remaining wholesale based competitors but there are too few of them left to effect much change in the market and this decision (and the 6 months to implement it) are unlikely to resurrect these competitors,” he said, referring to the frenzy of acquisitions of wholesalers by larger entities.
“Videotron may benefit but Quebecor is under financial stress as evidenced by their recent restructuring,” Lawford added. “The restriction to Ont/Que and telco (not cable) access only is a more serious tactical and political mistake that will haunt the Commission. Bell’s reaction with a capital strike raises larger questions about whether government policy in this area can only be achieved with radical solutions such as structural separation or nationalization of elements of the private companies presently most benefitting from our Telecommunications law.”
Photo of Bell CEO Mirko Bibic.
