Canada regulators are pushing for increased competition in the internet space with a new regulation designed to give consumers more choice and competitive pricing, while offering a leg up to smaller telecoms providers seeking to grow their share of the market for internet service.
On Aug. 13, the Canadian Radio-television and Telecommunications Commission issued a new telecom regulatory policy that requires Canada’s three largest telecoms providers—Rogers, Telus and Bell—to give competitors access to their predominant fiber networks for a fee since May to Ontario and Quebec, the nation’s two largest provinces.
“This access will allow competitors to bring innovative new internet service plans to market,” the CRTC ruling stated. “More than four million households in Canada currently buy internet at gigabit speeds, and this regulatory policy will unlock new options for them when they choose a provider. Increased competition creates more choice and lower prices.”
CRTC’s new policy will offer Canada’s smaller telecommunication companies access to new markets without the expensive and time-consuming process of building out their own networks. The telecommunications industry has a large focus on capital expenditures; due to the current high cost of capital and elevated interest rates, smaller providers cannot operate at the scale of their larger rivals. The regulation allows them to focus on expanding their markets in the areas they traditionally operate in, while leveraging the networks of larger telecommunication companies to access new markets and grow their customer base.
Infrastructure build-out
That’s because the regulation puts the onus of infrastructure build-out on the industry’s dominant players, with an incentive to promote the improvement of existing networks: Any new fiber deployed by The Big Three from August 13 through the next five years will be exempt from the new wholesale access requirement, preventing use of those build-outs by the smaller competitors until 2029 and allowing the major players to recoup their investment.
The nation’s largest internet service providers will also be limited to the use of their own networks to compete in parts of the country that they have traditionally served, requiring them to rely on their own investment. This means that the large telecom companies cannot take advantage of other major rivals’ networks in those areas. Beyond the territories in which they currently operate, these major ISPs can gain wholesale access to other telecommunications companies’ networks, a provision expected to expedite the connection of more Canadians to fiber-optic services.
While the new CRTC provision offers expansion opportunities for middle market telecommunication companies, those businesses should also be aware of new regulatory, tax and operational considerations as they enter new markets, especially if planning to move into one or more new provinces.
–RSM Director Yasir Riaz in Toronto contributed to this article.