- Canada is requiring broadband providers to wholesale their networks to competitors, whether they want to, or not
- The government says the requirement will increase competition for the benefit of consumers
- Some of the country's largest broadband providers are not at all happy with the decision
Canada’s telecom regulator is requiring the country’s broadband companies to wholesale their networks to competitors in open-access-type arrangements, angering some of the largest service providers such as Rogers Communications and Bell Canada (BCE).
A year ago, the Canadian Radio-Television and Telecommunications Commission (CRTC) made a decision to require broadband operators to lease their broadband networks to rival companies to allow for more competition on existing networks for high-speed internet services across the country.
This week, Canadian Minister of Industry Mélanie Joly said that the government has chosen not to overturn CRTC’s earlier ruling.
Joly said, “Canada’s new government has a strong mandate to bring costs down and to build one, strong Canadian economy. This mandate serves as the foundation on which all our decisions are made.” She said the mandatory wholesale requirement “will immediately allow for more competition on existing networks”….”increasing competition and consumer choice.”
BCE, Rogers, Cogeco and others had lobbied hard for Joly to reverse the CRTC’s ruling, claiming they’ll have to cut back on billions of dollars in investment in broadband networks if other companies are allowed to simply ride on the back of their networks with competing services, according to Bloomberg.
But Joly said, the decision to uphold the wholesale access framework was based on extensive consultations over the past year with experts, the Competition Bureau and over 300 public submissions.
Predictably, Rogers blasted the decision, saying it does not incentivize Canadian service providers to invest in Canada. And Cogeco issued a statement saying it “will continue to challenge the CRTC's broken wholesale regime, including through the Federal Court of Appeal.”
Conversely, Telus, one of the three largest telecom companies in Canada, may stand to benefit from the wholesale requirement because it will give the company access to densely-populated areas outside of its own footprint.
Recon Analytics principal Roger Entner said the Canadian scheme sounds similar to Unbundled Network Element Platform (UNE-P), a regulatory and telecom concept from the U.S., especially prominent in the late 1990s and early 2000s after the Telecommunications Act of 1996. UNE-P was a regulatory mandate applied to incumbent telephone networks, with set wholesale prices determined by regulators. It was highly unpopular with incumbents and phased out in the mid-2000s.
Open-access business model gains momentum
Open access has gained momentum in the U.S., albeit through companies’ own volition and not through any government mandates.
Utopia Fiber has been building open access networks in Utah for a couple of decades. It’s run up against opposition from incumbent providers, which don’t like that Utopia works with municipal governments. But Utopia has persevered and become a role model for other providers who wish to do open access.
In late 2022, AT&T created a joint venture with BlackRock called Gigapower, and the JV’s purpose is to build open-access fiber networks in the U.S.
But recently, there appears to be some trouble with Gigapower. The company canceled its contract with the construction company Tilson, causing Tilson to declare Chapter 11 bankruptcy. And neither Gigapower nor AT&T have delved deeper into how the venture is progressing and where they expect to pick up more open-access opportunities.
“We suspect that Gigapower has fallen short of expectations so far,” said New Street Research analyst Jonathan Chaplin in a note to investors. “As far as we have seen, the company still isn’t disclosing Gigapower locations, which means they are still too small to matter after over two years of being in business.”