The CRTC’s recent wholesale internet pricing decision has reignited a debate about the state of Canadian broadband competition. Here I address some of the claims being made by internet resellers.
First, some quick history. As a way to foster increased competition in communication services, federal government policy has, for more than a decade, required network builders such as Bell to offer wholesale network access at regulated rates to companies that then resell this internet service to consumers.
Bell offers wholesale access to more than 100 Canadian internet resellers, and our telco and cable network competitors serve others across the country.
In 2016, the CRTC cut the rates that these resellers pay for network capacity dramatically, by 86 per cent in Bell’s case. This has resulted in a significant increase in reseller market share even in regions featuring multiple major telco or cable internet competitors, as of 2018, the latest publicly available data, resellers served up to one in five internet customers.
Following intense lobbying by the fast-growing reseller community, the CRTC in 2019 reduced the network resale rates even further. In its zeal, the regulator cut the rates to below the network builders’ actual cost of providing the service.
These slashed rates were never implemented as network providers like Bell appealed the 2019 decision. The arguments were based on facts, numbers and the CRTC’s own guiding regulatory principles that the resellers have long supported.
After a lengthy analysis over 17 months, with the full participation of consumers, interest groups and all industry players, the CRTC determined that it had made errors in its 2019 decision.
In its updated decision issued last month, the CRTC set resale rates similar to, and in many cases even lower than, the 2016 pricing numbers — in Bell’s case, an average of seven per cent lower. In fact, while rates in this new decision did go up for some cable companies, all rates that Bell charges to resellers were lowered by the regulator.
The wholesale rates in place since 2016 have enabled internet resellers to build their businesses and take a significant share of the consumer market. And with many of these resellers now paying even less than the 2016 rates — including all those that buy their wholesale network services from Bell — they now have the opportunity to pass the savings on to their customers.
In fact, if you happen to know that your internet reseller buys their network service from Bell, why not ask them when you’ll be getting your price cut?
Resellers and their lobby groups will often proclaim that Canada has the highest internet prices in the world to further their arguments. However, the government’s own studies conclude that prices for internet and other communications services have fallen in recent years, while a recent study by The Economist found that Canada is number one in internet affordability internationally.
A real-world benefit of the CRTC’s decision is its support for investment in next-generation networks by infrastructure builders. In response to the regulatory certainty reflected in the decision and ongoing federal support for capital investment, Bell last week announced a further $ 500 million in fibre and 5G network investment as part of our accelerated capital plan.
This is in addition to the $ 1.2 billion in added capital expenditures in network expansion and enhancement that Bell announced earlier this year to help accelerate Canada’s ongoing recovery from COVID-19 and enable our long-term leadership in broadband communications. With these increases, Bell’s total capital investment for network expansion from 2020-2022 will be as high as $ 14 billion.
There’s a lot of rhetoric in this debate, so I encourage Canadians to simply look at the facts. The internet marketplace offers choice among multiple carriers large and small with a wide range of affordable and high-quality service options, all enabled by significant ongoing investment in our national broadband infrastructure.
Bell is focused on building the networks that connect Canadians and offering high-quality internet services in an intensely competitive marketplace. We would ask resellers to embrace that spirit with competitive pricing and service for consumers, and by stepping up to invest in new technology and infrastructure as Canada readies for the next generation of digital communications.