Applicants claim regulatory asymmetry between wireless and wireline policies
By Ahmad Hathout
A consortium of competitors is asking the CRTC to consider banning Rogers, Bell and Telus from accessing the wholesale internet regime regardless of technology and geography.
The regulator announced last week it is launching a public consultation, at the behest of the federal cabinet, to review whether the Big 3 should be banned from accessing at least the last-mile fibre regime – which includes the middle- and last-mile facilities of Bell and Telus in Quebec and Ontario. The concern is that smaller players would not be able to sufficiently compete with the deeper-pocketed national incumbents if they are allowed to roam in competitor territory.
The original petition to cabinet, filed by Bell in February, targeted the CRTC’s interim decision in November 2023, which confined mandated access to the bundled fibre of Bell and Telus in the two largest provinces. The CRTC’s August decision on the full review of the wholesale internet regime usurped that interim order and includes the national expansion of access to the bundled last-mile fibre of the two telcos and maintained wholesale access to older internet technologies.
While the August decision banned the large incumbents from using the wholesale internet regime in areas where they have their own operating networks, it allowed them to use it in areas where they don’t.
A joint review-and-vary application by indie rep the Competitive Network Operators of Canada (CNOC), Cogeco and Eastlink, made public Wednesday, asks the CRTC to expand the cabinet-recommended inquiry to include the August decision, and specifically consider banning the Big 3 from access to the wholesale internet regime regardless of technology, geography and whether they’re within or without their operating territory.
The application specifically notes that, while cabinet was responding to a challenge to the November 2023 decision, the “competitive and investment issues” in the cabinet recommendation “are not confined to fibre networks but to the mandated service writ large.”
“By allowing the Big 3 to use wholesale HSA outside their respective territories, the Commission failed to consider the Big 3’s distinct advantages, including their ability to (i) leverage their existing balance sheets to offer low-priced, but temporary plans with the outcome of forcing the regional competitors out of the market; and to (ii) cross-subsidize their Internet plans by offering a wireless-wireline bundle,” the application said.
“These dominant carriers gain mandated access to markets where they presently have wireless facilities, allowing them to further grow their market share at a fraction of the cost compared to having to build facilities to serve the same markets,” the application added. “This access further entrenches their dominance in the Canadian telecommunications market to the detriment of regional facilities-based and service-based competitors.”
The large players, to be sure, have talked a lot about the importance of the bundle for customer loyalty and reduced churn, including Telus, which announced Tuesday that it has launched gigabit internet plans in Ontario and Quebec using the wholesale internet regime.
“While this [bundling] may create short-term benefits for consumers, it will, over the longer term, pose an existential risk to the regional facilities-based and service-based competitors and ultimately result in even more consolidation in the internet market,” the application says. “With the ability to leverage wholesale HSA rates, the Big 3 can undercut regional carriers and other independent ISPs using their economies of scale to provide wireless-wireline bundles and lock in an entire household to a term contract with the carrier.
“Many regional carriers and smaller ISPs do not provide wireless service (such as Cogeco and most CNOC members) while others lack a national network and can only compete within a narrower footprint,” it added.
In addition, the applicants say the wireline policy doesn’t make sense because it is not uniform with the CRTC’s policy on wireless, which bans the Big 3 from accessing the mobile virtual network operator (MVNO) framework because the incumbents don’t need regulatory assistance.
“The policy rationale for preventing a dominant class of carriers from accessing certain wholesale services at regulated rates, terms and conditions is straightforward. Dominant carriers have the means to expand their networks on their own or, if preferred, to negotiate commercial agreements with other carriers. They do not require the Commission’s assistance to secure this access,” the joint application says.
The MVNO regime also relies on commercial negotiation to set rates, with a regulator as arbiter of last resort, while the wholesale regime relies on commission-set rates. “New wireless entrants must negotiate MVNO and domestic roaming rates with the Big 3, who can leverage potentially below-cost mandated wholesale HSA rates,” the applicants say. “This puts regional carriers like Cogeco and Eastlink at a disadvantage, hindering their ability to offer competitive bundles.”
The application claims the CRTC’s neglect of this issue will not reduce barriers to entry into the market, which is required in cabinet’s policy direction to the CRTC, and “reduces competition, innovation and choice” in the sector.
The competitors are asking for the commission to bring their application together with the consultation it will launch at the behest of cabinet.
If allowed, the competitors will effectively be able to relitigate warnings they sent to the CRTC. The CRTC had previously denied – on the basis that it was still reviewing the wholesale access framework – an application from Bell, Cogeco, Eastlink, TekSavvy and CNOC requesting the Big 3 be banned from accessing the networks of the incumbent telcos because it would harm third-party competitors to the detriment of the market, competition and prices.
Regional competitors have long maintained that the wholesale internet regime was made for competitors and not for the national incumbents.
