CRTC launches review of wholesale network rates, slashes some rates by 10 per cent immediately

Today, the Canadian Radio-television and Telecommunications Commission (CRTC) announced that it will be reviewing its existing framework for wholesale high-speed access (HSA) services, and is imposing a 10 per cent reduction on some wholesale rates immediately.

“The CRTC recognizes its current approach is not meeting its objective of encouraging more competition in the internet services market,” the commission said in its release.

The current approach stems from a 2015 policy that allowed competitors to connect their networks to an incumbent carrier (large telephone or cable company) and obtain the same high-speed paths to deliver internet services to customers, throughout the incumbent carrier’s entire operating territory. Large cable carriers also had to make fibre-to-the-premises (FTTP) available at wholesale rates to competitors, following the policy.

The 2015 policy also sought to encourage a transition from an aggregated to a disaggregated wholesale HSA, under which competitors typically acquire only the access service on a wholesale basis since they provide transport themselves or lease transport networks from other service providers. By investing in their own infrastructure, competitors could compete better, rely less on price regulation and have more control over their own cost structure, the CRTC determined.

But the transition to a disaggregated model posed many challenges, particularly around the competitors’ ability to feasibly access FTTP facilities. Other competitors like ILECs (incumbent local exchange carriers) end up leasing most of the fibre access facilities deployed by incumbent carriers. ILECs currently serve over nine million households in major urban centres.

In contrast, ISP competitors are losing subscribers. In 2019, they accounted for almost 10 per cent of all fixed internet service subscribers, while in 2021 this number had dropped to just over 8 per cent. 

Meanwhile, incumbent carriers have radically increased their internet market dominance, launching subsidiaries that offer competitive prices and acquiring smaller competitors.

Hence, the proceeding will focus on whether incumbent carriers should provide competitors with access to their fibre-to-the-home networks and whether a return to an aggregated wholesale HSA service should be mandated. The aggregated wholesale HSA service requires competitors to rely almost entirely on a large company’s network, which means the Commission will be setting the terms and rates.

The proceeding is also meant to determine whether an aggregated wholesale HSA service should be mandated temporarily until the commission decides as to whether such access is to be provided indefinitely.

According to the CRTC, this review is necessary, as the existing wholesale high-speed access service framework does not align with the principles of competition and affordability prescribed in the 2023 policy direction.

The CRTC is welcoming comments until April 24, 2023 on the question of mandating access to fibre-to-the-home networks.

For all other issues within the scope of the review, comments are accepted until June 22, 2023.

Canadians can participate by:

  • filling out the online form;
  • writing to the Secretary General, CRTC, Ottawa, Ontario K1A ON2; or
  • sending a fax to (819) 994-0218.

The Commission will also hold a public hearing on the matter, on a date to be announced.

Independent internet service provider TekSavvy expressed support for CRTC’s consultation saying; “The CRTC appears to understand that previous decisions have decimated the competitive market for internet services and led to higher prices for consumers. While additional interim rate reductions are required to have a meaningful impact, we are pleased to see a proper focus and fast-track toward more competition and better prices.”

Updated 3/8/2023, 2:12 PM EST with TekSavvy’s statement

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Ashee Pamma
Ashee Pamma
Ashee is a writer for ITWC. She completed her degree in Communication and Media Studies at Carleton University in Ottawa. She hopes to become a columnist after further studies in Journalism. You can email her at [email protected]

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