Bell won’t participate in subsidized broadband projects if wholesale access for Big Three continues, signs agreement with CNOC

BCE Inc. says it will not participate in future government-subsidized broadband projects – such as those meant to support Canada’s connectivity goals through the Universal Broadband Fund – unless the CRTC restricts the country’s largest telecom companies from reselling internet services over each other’s high-speed networks. The company made its case in an intervention filed last week with the CRTC, as the regulator considers whether it should block the Big Three incumbent carriers – Bell, Rogers Communications Inc., and Telus Corp. – from its mandated wholesale fibre access framework. In November 2023, the CRTC made a decision to temporarily require Bell and Telus to open up their fibre-to-the-premises (FTTP) networks to competitors in Ontario and Quebec, who could then sell internet services over the two telecoms' fibre facilities. This interim decision to mandate aggregated wholesale access involves no restrictions on the Big Three from reselling each other’s networks. Bell disagreed with the interim decision and petitioned the government to overturn it. However, before that petition was addressed, the CRTC issued a final decision in August 2024 broadening the requirement for wholesale FTTP access across Canada, with Bell, Telus, and Saskatchewan Telecommunications Holding Corp. (SaskTel) mandated to allow access to their networks. That final decision also restricted Bell, Telus, and SaskTel from using wholesale services within their traditional serving territories, but they are still allowed to use them outside of those territories. While there are some limitations on incumbent access in the final decision compared to the interim decision, early last month, Canada’s cabinet responded to Bell’s petition. Instead of overturning the interim decision, cabinet directed the CRTC to reconsider whether the Big Three should be blocked from using the FTTP wholesale regime in Ontario and Quebec. That two-province reconsideration is the focus of this CRTC proceeding that Bell has responded to. However, with a broader Canada-wide framework on the table at the same time as this proceeding, intervenors including Bell have taken the opportunity to have their say on incumbent access to the wholesale framework countrywide. Rogers and Bell maintain their stance against incumbents’ access to the regime, calling for the Big Three to be blocked from wholesale high-speed access (HSA) across the country, regardless of what kind of technology their networks use – whether it be fibre or cable. Meanwhile, Telus stands staunchly opposed – the western telco is challenging the cabinet order in court. READ MORE: - Rogers, Cogeco, Eastlink ask CRTC to block Big Three from wholesale access - Telus calls wholesale cabinet order ‘protectionist play,’ ‘not fair to consumers’ - SaskTel seeks judicial review, appeal of CRTC wholesale fibre decision In its intervention, Bell reiterates the arguments it made in its petition to cabinet, asserting that if its main competitors – Rogers and Telus – can simply resell its fibre network instead of building their own, the business case for further fibre deployment becomes “effectively impossible to justify.” Bell illustrates this by pointing to cuts in its own network investment plans, including the $1 billion reduction in fibre investments it announced following the CRTC’s November 2023 interim decision. The company noted further reductions in capital expenditures and a decrease in the number of homes and businesses slated to receive fibre connections from Bell between 2025 and 2027 “as a result of the final decision,” but these numbers were filed confidentially with the CRTC. “While our planning process remains ongoing, we can confirm that additional communities will indeed be impacted and that the impacts in the identified communities will be greater if the commission does not revise its approach to whether Bell, Rogers, and Telus are eligible to take advantage of wholesale HSA,” said Bell. The cuts could have been greater if Bell had not already been committed to a number of investments related to broadband subsidy programs, the company said, adding that it will not be participating in future subsidy programs if the CRTC does not change its tune on wholesale access for the Big Three. “If , we plan not to participate further in government subsidy programs and to review the time required to complete build outs associated with existing subsidy program commitments in light of the unanticipated and significant negative impact of the final decision and resale by the large national incumbents on the economic viability of those builds,” warned Bell. The Wire Report has reached out to Bell for clarity on which government subsidy programs it is referring to and whether that includes programs financed by provincial governments or by contributions from telecom companies, such as the CRTC’s Broadband Fund. Bell’s move not surprising, says Woodhead Regulatory consultant and former CRTC staffer Ted Woodhead told The Wire Report that Bell’s plans come as no surprise, echoing concerns he and other industry experts shared at the Canadian Telecom Summit earlier this year. “It’s just plain logic,” he stated. “Wholesale was not intended for incumbent telephone companies. It never was,” said Woodhead, noting that he was working at the commission when the wholesale access regime was first implemented. “It was meant to allow other companies who otherwise couldn't build out ubiquitous networks across the country to enter and provide competitive choice to across the country … and the incumbents were expected to build facilities.” “If people want diversity of supply, if they want companies like TekSavvy Solutions Inc. and other to be part of the ecology of the telecom universe in Canada, then you allow them to have access to these tariffs, but you don't allow incumbents to do it,” stated Woodhead. “If we're changing that, then that will end network expansion. It will be incumbents reselling incumbents.” Woodhead said the government has a choice to make: “does it want further investment or doesn't it? Because that's what this comes down to.” Competitors risk being squeezed out by incumbents, says Bell Bell says that although it would “prefer to invest in expanding and upgrading its own network,” that “is not a prudent business strategy” if other incumbents can access it, because Bell will not be able to “differentiate itself” from them. “Instead, Bell will seek to maximize returns on its existing network infrastructure without expanding or enhancing it and, outside of its existing network footprint, will resell the networks of its competitors to its existing national wireless customer base (in order to reduce churn).” The company insists that the other large incumbents will do the same, rather than invest in their own infrastructure. The end-result of this will “likely” be each of the Big Three acquiring approximately one third of the wireline and wireless market share outside of Quebec, “with small reseller ISPs and regional cable companies effectively pushed out of the retail market entirely,” said Bell. “The final decision actually creates the worst of all worlds,” Bell asserted, emphasizing that up to 5 million households in its wireline footprint could lose access to both fibre investments and resale competition. “Consumers will have reduced choice, reduced resilience, no access to new networks, and none of the more significant and sustainable pricing and technical benefits that result from facilities-based competition.” Bell signs off-tariff agreement with CNOC As part of its intervention, Bell said it has signed an off-tariff agreement with the Competitive Network Operators of Canada (CNOC) to “address concern” the CRTC has about the viability of smaller, regional, and independent ISPs. According to Bell, the deal will provide CNOC members with access to Bell's FTTP network at access and capacity-based billing (CBB) rates below the interim tariff rates set by the CRTC in October (for speeds 1,500 Mbps and below) – but it hinges on the CRTC barring incumbents from the regime. “Bell and CNOC have entered into this agreement to provide a path toward a more appropriate regime that better supports both competition and investment, rather than disproportionately promoting the financial objectives of a single large national incumbent,” said Bell. The incumbent noted that some CNOC members have already entered into individual agreements with Bell and it anticipates more will sign on, “even though the implementation of those agreements is not yet certain” – because they are contingent on the Big Three being restricted from wholesale. In an interview with The Wire Report, CNOC’s president Paul Andersen would not say much about the specifics of the deal, citing confidentiality. He explained that the agreement is between CNOC and Bell, and that each CNOC member individually enters into a separate agreement with Bell. “We see this as a way that allows all Canadians to get competition in Bell’s region,” said Andersen. Andersen said the group is pleased to see broad support for restricting the Big Three from using the wholesale access framework and hopes the government will “continue to be supportive of small service-based competitors.” CNOC’s intervention – arguing that incumbents should be blocked – was signed by more than 30 groups, including SaskTel, Beanfield Technologies Inc., Bragg Communications Inc.’s Eastlink, the Canadian Association of Wireless Internet Service Providers (CanWISP), Cogeco Communications Inc., and the Independent Telecommunications Providers Associations. In addition to Bell and the competitor ISPs, TekSavvy, Rogers, Quebecor Inc., and the Public Interest Advocacy Centre (PIAC) also filed in support of restricting the incumbent telcos. “ just traditionally never come out of their areas, so it's just never really been an issue. We're glad that it's now getting the attention that it probably requires, because it was something that came up very late in the record,” Andersen said. He added that CNOC hopes for a “swift” decision from the CRTC in favour of prohibiting the big players from the framework. Stakeholders have until Thursday, Dec. 19 to file replies to the interventions in this proceeding. phalentm@thewirereport.ca With files from Hannah Daley

Bell won’t participate in subsidized broadband projects if wholesale access for Big Three continues, signs agreement with CNOC

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By Phalen Tynes-MacDonald
| December 18, 2024

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Bell won’t participate in subsidized broadband projects if wholesale access for Big Three continues, signs agreement with CNOC

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