Small ISPs say their potential footprint is shrinking due to fibre upgrades

Small Internet service providers (ISPs) will find themselves blocked out of more markets as incumbent providers continue their fibre-to-the-home network upgrades, particularly if the CRTC does not give the smaller players wholesale access to those networks, said Bill Sandiford, president of the Canadian Network Operators Consortium (CNOC). “We have ISPs in CNOC’s ranks that are outright losing customers,” Sandiford said in a telephone interview Tuesday. “Their customers are calling them up saying, ‘Bell just knocked on my door and said that, as of next month, there won’t be any copper here anymore, and I need to find a new ISP.'” In a notice of consultation posted on the commission’s website Tuesday, the CRTC said it will hold a hearing next October to review its policy framework, which requires incumbent telecom providers to offer smaller companies wholesale access to their copper, cable and fibre-to-the-node networks, allowing them to offer their own retail services like Internet. Part of the review, the commission said, will consider incumbent providers’ increasing deployment of fibre-to-the-home, or “fibre-to-the-premises,” network technology, which do not currently fall under its wholesale access regulations. “he Commission intends to use this proceeding as an opportunity to study FTTP in Canada,” the CRTC notice said. “Issues to be examined include the current state of deployment; the economic and social impacts this technology will have on consumers, competitors and incumbent carriers; the drivers for investment by incumbent carriers; and ultimately whether regulatory intervention is needed with respect to mandated sharing of FTTP facilities,” it said. Incumbent telcos BCE Inc. and Telus Corp., as well as regional incumbents Bell Aliant Inc. (majority owned by BCE), Manitoba Telecom Services Inc., and SaskTel, are spending hundreds of millions of dollars to build out fibre-to-the-home networks, through upgrades to existing networks and in new housing developments in cities and communities across the country. BCE said last year that its fibre-to-the-home build in Quebec will cost the company $240 million, while Bell Aliant has estimated that it spent $500 million on its fibre-to-the-home network by the end of 2012. Some incumbent cablecos, such as Rogers Communications Inc., also offer fibre-to-the-home in some new developments. Sandiford said CNOC will likely ask the commission to require the incumbent carriers to offer wholesale access to their fibre-to-the-home networks as part of the consultation, though he noted that he has not yet spoken with CNOC members to establish the group’s position. Without access to those fibre-to-the-home networks, he said, many small ISPs could see their growth potential fall off dramatically in the years ahead, as consumers steadily increase their bandwidth consumption habits. “Customers tend to use more and more bandwidth every single day and the legacy networks that are in the ground today making use of copper or other facilities are going to max out,” he predicted. “When that happens, customers are only going to want the fibre-based facilities, and that’s where all the growth is going to be going forward.” Small ISPs, he said, are also finding it increasingly difficult to offer services in new subdivisions, condos and office buildings, which are often targeted for fibre-to-the-home deployments. BCE spokeswoman Jacqueline Michelis did not respond to Sandiford's comments in an emailed statement Tuesday. "We look forward to taking part in the proceeding," she said of the CRTC consultation. Mirko Bibic, BCE’s senior vice-president of regulatory affairs, told The Wire Report last November that mandated wholesale access to the multi-million-dollar fibre-to-the-home networks could act as a disincentive to further investment. “It doesn’t mean that at some point down the road we won’t find the right element in place to do deal with wholesale ISPs , but it certainly should not be mandated,” he said. “We’re taking the risk. We’re making the investment. We need to be able to generate a return on the investment so we can continue to do more." Peter Rocca, CEO of small ISP Start Communications, said in an interview that providers like his need access to the telcos’ ever-expanding fibre networks in order to compete “on a level playing field.” While fibre-to-the-home deployments still account for a small percentage of network connections for now, he said, that number is likely to climb. “As new homes are being built, copper is not being put out to many of these homes,” he said. “It’s cheaper to put fibre into homes than it is copper now, so as these areas continue to become a larger percentage of the market, absolutely it’s eroding competition,” Rocca said. In Tuesday’s notice of consultation, the CRTC said that its wholesale hearing and any resulting policy decisions “should balance incentives for innovation and investment” against “the benefits that greater competition can create for consumers.” In addition to considering fibre-to-the-home services, the hearing—schedule to start Oct. 27, 2014—will also review the commission’s wholesale regulation of other services and consider whether any of those regulations should be changed, as well as whether it should require incumbents to offer wholesale access to any additional services. “The Commission will not, however, consider the appropriateness of new wireless wholesale services (e.g. tower sharing and wholesale wireless roaming) in the context of this proceeding,” it said. The hearing will also consider the principles the commission uses to establish the incumbents’ regulated wholesale rates, which are currently calculated by applying an established mark-up to the incumbents’ costs of running their networks. The commission, which invited carriers and the public to comment on a series of questions relating to wholesale services by Dec. 6, said it hopes to release any amendments to its wholesale framework within four months of the hearing, sometime in late February or early March 2015. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Small ISPs say their potential footprint is shrinking due to fibre upgrades

News | October 15, 2013

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Small ISPs say their potential footprint is shrinking due to fibre upgrades

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