CNOC calls move “disappointing” but not surprising
By Ahmad Hathout
Bell CEO Mirko Bibic announced Thursday the telco is again cutting its fibre buildout target after the CRTC earlier this week refused to ban the largest internet service providers from using its last-mile fibre network in Ontario and Quebec.
Bibic said the company is now targeting less than 8.3 million homes for direct fibre by the end of this year.
“This decrease in our fibre buildout is a direct result of the CRTC’s refusal to ban Telus and other large carriers from reselling the FTTP network we’ve built,” Bibic said in a fourth-quarter earnings call Thursday. “We will revisit our buildout plan if the CRTC reverses this decision.”
The CRTC said Monday its decision not to include an exemption in its November 2023 order – which mandates that Bell and Telus provide access to their middle- and last-mile fibre networks to competitors at CRTC-approved rates in Ontario and Quebec – was the right one in part because it subsequently allowed Telus to use Bell’s networks to offer gigabit internet services in Ontario and Quebec – a net positive for competition and consumers, it said.
“To put it bluntly, we’re not in the business of building fibre for Telus’s benefit, and that’s what the CRTC policy that’s in place right now forces us to do,” Bibic said Thursday.
While Telus has fibre facilities in parts of Quebec, the CRTC’s interim decision overwhelmingly impacts Bell – the historically dominant telco in those provinces with a sprawling fibre network. Telus has been the only one of the “Big 3” (Rogers, Bell, and Telus) to support the CRTC opening the wholesale internet regime to the largest three providers in the face of resistance from smaller competitors, who have argued that the regulatory policy was always meant to benefit upstarts and competitors like themselves, not the incumbents.
“The CRTC’s decision is, in our view, misguided as it goes against its longstanding facilities-based competition policies, which have clearly encouraged private investment,” Bibic said Thursday. “These policies have enabled our significant network investments that brought fibre to millions of homes and businesses for the benefit of Canadians.”
Paul Andersen, president and chair of the Competitive Network Operators of Canada (CNOC), which represents independent wholesalers, said Bell’s announcement is a “disappointing development, but not a surprising one.
“CNOC has called on the CRTC to limit the ability of the Big Three telecom giants to access each other’s networks to offer high speed internet services,” Andersen added. “By removing the incentives for the largest incumbents in Canada to build networks, CNOC is concerned that the Big Three will focus their efforts on expansion through wholesale, rather than by connecting Canadians through new fibre builds.”
CNOC has multiple times asked the CRTC to ban the largest three telecoms from access to the wholesale internet regime because it could negatively impact smaller competitors.
This is the second time Bell has reduced its spending and its target for households to receive direct fibre connections. Within hours of the CRTC ruling that Bell had to open its bundled fibre network to competitors in the interim November 2023 decision, it slashed the buildout target from nine million to 8.3 million by the end of 2025.
But the CRTC’s decision on Monday, which came in response to a cabinet recommendation following a Bell petition against the November 2023 interim order, will not be the last time it looks at the issue. The commission ordered in August the expansion of the interim decision to all provinces on a final basis, providing to Bell and Telus a five-year access moratorium on new fibre builds. But the CRTC again did not restrict access by the Big 3 to any of the internet technologies under the wholesale internet regime broadly.
The cabinet recommendation gave Rogers, Eastlink, Cogeco and indie ISP rep, the Competitive Network Operators of Canada, a justification to file review-and-vary applications asking the regulator to reconsider this (TekSavvy also filed its own challenge on separate matters). The CRTC said Monday it will rule on these consolidated applications by this summer.
If the issue was a can, the CRTC kicked it down the road on Monday, Bell executives conveyed Thursday.
“It’s the status quo at this point,” Bell Chief Financial Officer Curtis Millen said. “Unfortunately, the CRTC kind of pushed the decision down the line. We don’t think it’s conducive to driving innovation and investment in Canada, especially in our networks, but we’ll have to wait for a final decision.”
Bibic noted that, while the telco has already allocated some $3.4 billion for spending this year – roughly $500 million less than last year – it has the malleability to shift the spending toward or away from fibre investment. But that will depend on what the regulator has to say come the summer.
In the meantime, Bell executives conveyed bewilderment at the perceived lack of regulatory action at a time when the Canadian economy is struggling.
“To us it makes no sense that the CRTC is forcing incumbent resale at a time … when Canadian productivity is already lagging and we’re having conversations about how to boost the Canadian economy and boost productivity,” he said Thursday.
“I don’t understand why a regulator would put in place policies that creates disincentives to investment, puts jobs at risk, and puts at risk the building of critical infrastructure,” he added. “It seems like the wrong policy at exactly the wrong time and we all know that our world leading – I say Canada here – communications infrastructure was built on long-standing facilities-based competition policy that served this country very well for years and years.”
The fourth quarter is the most competitive time of the year, and this was no different for Bell’s wireless division. Bibic said price competition in the quarter was “unprecedented,” reflected in average revenue per user, which was down 2.7 per cent to $57.15, in postpaid churn, which was up .03 points to 1.66 per cent, and in net new postpaid subscribers.
The company added 56 per cent less new postpaid customers, at 56,550, compared to the 128,715 it added the year prior. Bell ended the quarter with a postpaid subscriber base that was up 1.1 per cent over the year to 9.53 million.
The telco stopped selling prepaid plans on its Virgin flanker brand as of September 30 and on its Bell brand as of December 31. As such it has removed tens of thousands of subscribers from its balance sheet. As such, the company lost 5,480 net new subscribers in the quarter, an improvement of 85 per cent compared to a loss of 36,630 the year prior. Churn was flat at 6.15 per cent. The telco ended the year with a prepaid base down 12.3 per cent to 758,138.
On internet, the company added 34,187 customers in the quarter, 38.5 per cent less than the 55,591 it added in the equivalent period. The total base by the end of the quarter was flat at roughly 4.5 million.
On IPTV, the company said it lost a “not meaningful” 444 subscribers in the quarter, compared to a gain of 23,537 last year. The total base increase was flat at roughly 4.5 million.
On connected devices, Bell added 100,343 net new connections, up 27.4 per cent over the year, for a total base that was up 11.4 per cent to about 3 million.
Bell Media revenues were up $10 million to $832 million compared to the equivalent period last year.
Bell’s overall company revenues were flat year-over-year at $6.4 billion for the three months that ended December 31, with net earnings up 16.1 per cent to $505 million.
Screenshot of Bell CEO Mirko Bibic
