The federal Cabinet Friday has refused to overturn last year’s decision by the Canadian Radio-television and Telecommunications Commission (CRTC) to classify Ethernet services as essential services, whereby incumbent local exchange carriers would be told what to provide and at what price, to competitors.
Cabinet also told the CRTC to reconsider its refusal to allow Bell Canada Enterprises (BCE) Inc. to sell fibre to the node to retail customers at higher speeds than the wholesale digital subscriber line (DSL) connectivity it sells to independent Internet service providers.
Will this help consumers by forcing newer carriers to build their own networks? Or will it hurt competition by favouring the older incumbents, which for most of their history have been monopolies?
Winnipeg-based Manitoba Telecom Services (MTS) Inc., which provides competitive services outside Manitoba through its Allstream unit, immediately issued a press release decrying the decisions as a “setback for Canadian consumers and businesses.”
In both cases, the decisions resulted from Cabinet appeals by MTS and Bell Canada.
Johanne Lemay, co-president of Lemay-Yates Associates, a Montreal telecommunications consultancy, noted that in both cases Cabinet ruled against regulating prices.
"The Canadian government continues to believe in facilities-based competition at the expense of competition that would be increased from the wholesaling of facilities, and I think they're very determined on that path," she said. "They've been on this path for quite some time, and I think again they've determined this is the only path they want to go down."
The rulings are good news for Bell and Telus Corp., she added.
The CRTC has been dealing with the Ethernet issue for nearly two years. In March, 2008, it issued decision 2008-17, which changed the regulations for wholesale services provided by incumbents to competitors.
MTS Allstream asked the federal regulator to change its definition of essential services to include Ethernet, but a year ago, the CRTC refused. That was decision 2008-118.