The Canadian Radio-television and Telecommunications Commission (CRTC) issued its latest decision last Friday (October 25, 2024), concerning the resale of the fibre optic access networks of the large incumbent telephone companies.
Putting aside my views on whether this regime is necessary at all, let's take a closer look at the bottom line in Friday's decision.
The reactions from at least some of the reseller beneficiaries of the decision were not entirely complimentary. Generally speaking, some like Teksavvy, felt the rates were too high, others felt they "seemed" high, but were appreciative of the clarification, while others still reserved judgement.
Notably, Pierre-Karl Péladeau, the CEO of Quebecor, indicated he was very disappointed in the decision and that it would prevent Quebecor from launching service on these networks to support his recently acquired Freedom Mobile customers. This may foreshadow Quebecor's participation in an appeal either of this decision or the future final rates decision.
Investment analysts were generally noncommittal trending positive suggesting that the CRTC had struck a balance between competitive choice for consumers and ongoing network investment by the incumbents. I suspect in that sense it served to calm jittery investors who otherwise might have meaningfully impacted the share prices of the incumbent telephone companies.
What did the CRTC decide?
In a nutshell, the CRTC in previous decisions had among other things established interim rates for access to the fibre of Bell Canada and Telus in Ontario and Quebec and ordered fibre access nationally by February of next year.
In Friday's decision, the CRTC established interim rates effective next February for most of the rest of Canada and made some minor revisions to the previous rates they had set in Ontario and Quebec. Depending on the carrier, the CRTC access rates of $69-$80 per month reflect the differences in their respective cost profiles.
The interim rates result in a level of consistency across the country, taking into account carrier-specific cost differences, and are a step closer to providing some longer term certainty to both the network providers and resellers alike.
The CRTC also said a few other things, as asides, that I found of note. The CRTC stated that the rates established in the decision were determined after a comprehensive review and a week-long public hearing. The CRTC emphasized that the rates were established in accordance with its long-standing approach. Importantly, the CRTC noted that the rates reflect the actual costs of building fibre networks and will permit the network providers to continue investing in high-quality networks.
Those types of statements in the decision will no doubt feature large in any ensuing appeals as they demonstrate that the CRTC turned its mind to the complex costing data involved, applied its long-standing costing approach and provided ample opportunity for opposing evidence and comment. Should appeals emerge, I will write about them as they progress.
The CRTC indicated that it is nearing the end its analysis of the costing data subject to some additional filings. Based on that, it would seem unlikely that the final rates are likely to materially change from those established in this decision.
This provides everyone with a path to compete and the CRTC hopes, the incentive to invest and continue investing. While some resellers have expressed disappointment with the interim rates, it isn't their only path to competing with packages offering fibre-like download speeds.
Where I live in Ottawa, competitors offer packages that resell both the cable and telco network providers which is evident by the associated upload speeds associated with the respective packages. Both packages in question offer 1 Gbps or more download speeds and are priced differently. One is provided over infrastructure leased from the cable operator and the other is available over fibre to the home from the telephone company. The resellers have been provided the means to compete and it lies with them to do it. This decision doesn't alter that, in fact it increases their opportunity.
Whether they will be ultimately successful is up to them although I am confident the resellers will say that their success is the responsibility of the regulator.
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