CRTC allows internet providers to offer services through telecoms‘ networks – BNN Bloomberg

Vince Valentini, managing director of equity research at TD Cowen, recently shared his outlook for Canadian telcos on BNN Bloomberg. This comes at a time when Canada’s telecommunications regulator, the CRTC, has made a significant decision that will impact the industry.

The CRTC announced that starting next February, large telephone companies like Bell Canada, Telus Corp., and SaskTel must give competitors access to their fibre networks for a fee. This decision applies nationwide and builds upon a previous ruling that temporarily required access only in Ontario and Quebec.

The initial ruling was aimed at stimulating competition in provinces where independent companies were struggling. It was part of a broader review that could potentially make the direction permanent and apply to other provinces. However, Bell responded by reducing its network spend and cutting jobs, citing the ruling as a factor.

The CRTC’s latest decision applies to existing fibre networks, recognizing the high cost of building out fibre infrastructure. New fibre networks built by large telecoms won’t be accessible to competitors for five years, giving the companies a head start to recoup their investments.

The decision does not apply to cable companies like Rogers Communications, as their networks represent a small proportion of the overall fibre footprint in Canada. The CRTC’s decision follows a weeklong hearing where various industry stakeholders provided input.

Fibre internet customers in Ontario and Quebec have already seen increased choice and competition following the initial ruling. CRTC chairperson Vicky Eatrides stated that the decision aims to provide Canadians with more choice, lower prices, and better services.

While larger companies opposed the decision, smaller competitors like TekSavvy welcomed it, hoping for a more level playing field in the internet market. The Competitive Network Operators of Canada also expressed excitement about the potential for increased competition.

Bell had proposed conditions to mitigate potential disadvantages, emphasizing the importance of companies investing in their networks. The CRTC’s ruling requires both telephone and cable companies to build networks within their traditional serving territory to prevent them from acting solely as wholesalers.

Quebecor Inc. CEO Pierre Karl Péladeau called the decision positive for competition and expansion. RBC telecommunications analyst Drew McReynolds viewed the decision as balanced and likely better than feared, with a focus on balancing investment with increased competition and innovation.

Overall, the CRTC’s decision marks a significant shift in the Canadian telecom industry, aiming to increase competition, lower prices, and improve services for consumers. The final access rates, to be set by the end of the year, will be critical in determining the impact of this ruling on the market.