By Ahmad Hathout
TORONTO – The CRTC approved Monday a limited and temporary regime in which competitors can force negotiations for access the last mile fibre services under the current aggregated regime.
The regime will be narrowed to the incumbent telephone companies, who will be required within six months to provide wholesale access to their fibre-to-the-premises networks in Ontario and Quebec, noting there is increasing demand there for faster speeds that are provided by a direct fibre line to homes and businesses.
The CRTC reasoned that the fibre builds of the cable companies, which have largely relied on hybrid fibre-coax builds, are still in new developments, which have limited reach. So it has excluded those companies from the regime.
The limited regime is said to impact at least five million household and will be held until the CRTC makes a decision on a reworking of the larger wholesale internet framework, in which it will attempt to find a lower rate at which wholesale competitors buy capacity from the larger players. It will then decide whether to make last-mile fibre access permanent.
The regime is limited to certain provinces because it is there that “competition has declined most significantly,” the CRTC said. Ontario and Quebec are the two provinces where the newer disaggregated regime – where competitors were allowed mandated access to last-mile fibre in exchange for getting their own transport network – is still alive and kicking.
The CRTC also reasoned that it limited the scope to allow the commission to be more nimble to respond to changes in the market, including the fact that the regime may not be needed longer-term, it may need to undergo different service configurations, and that narrowing it to two provinces would provide for a quicker resolution because it would dramatically reduce the time to set a rate.
The commission ruled that the disaggregated regime was not working as intended – in part because competitors complained about the economic problems of connecting to many more traffic transport points – and held a preliminary view that last-mile fibre access under the current aggregated regime can be implemented simultaneously with the newer regime. That was also a view held by the new policy direction from Cabinet.
The regulator said in recent years the percentage of customers served by competitors has decreased dramatically, with the decrease most significantly in the aforementioned two provinces. Those provinces saw independent competitors serving 47 per cent fewer customers than they did two years ago.
Factoring into that measure is the acquisition of smaller wholesale-based providers by the larger players, which competitors say is a symptom of inflated wholesale access rates that the CRTC has yet to resolve.
The CRTC launched the wholesale internet framework proceeding in February and is expected to hold a hearing on it next year. It was in that announcement that it said it would make an expedited decision on the current last-mile fibre access matter.
The regulator said it set a rate for that access that will balance competition while maintaining the incentives to invest.
The question now is whether this decision will be appealed.
The incumbents, including Bell and Telus, have repeatedly said that the CRTC made an error in its assessment on how deep their fibre networks reach. Both said they still have many more households to connect directly to fibre and that mandating access will undermine their investments. Telus specifically noted that it would still need time even after building out the network to be made whole on its investments.
Other opponents of this measure included Rogers and Videotron, with the group arguing that there has been insufficient evidence that such a regime is required now.
“The Commission considers that while competitor access to the cable carriers’ higher-speed wholesale services mitigates some concerns, there are still many households where competitive options are currently limited by the lack of viable FTTP access, such as in many greenfield areas,” the CRTC said in its decision, addressing opposition concerns, adding demand for gigabit or higher speeds is growing rapidly.
“Both ILECs and cable carriers have invested heavily in network upgrades and fibre deployments in an apparent effort to meet this growing demand. In these circumstances, it is the Commission’s view that competitors’ inability to practically provide services over FTTP networks has severely affected their ability to effectively compete.
“The Commission is concerned that this negative impact on wholesale-based competition will become even more severe over time. Absent regulatory intervention, meaningful wholesale-based competition will continue to decline.”
