Bell urges conditions if CRTC mandates wholesale access, Telus awaits its next move

BCE Inc. is urging the CRTC to implement conditions such as caps on eligible speeds and initial access restrictions if the regulator allows smaller internet providers to use rivals’ fibre networks to offer their services to customers.  

Representatives of Bell Canada’s parent company appeared before the CRTC on Wednesday as part of the commission’s consultation on internet competition.

The appearance comes less than a week after Bell pinned a hefty amount of blame on the CRTC when it announced it would slash nine per cent of its workforce and potentially further scale back investment in its fibre network.

Bell chief legal and regulatory officer Robert Malcolmson told commissioners their previous calculation that granting temporary wholesale internet access wouldn’t lead to spending cuts was “dead wrong.”

“The question … is whether the commission will double down or pause and consider how investment incentives can be restored while maintaining the vigorous price competition that is so clearly occurring in the marketplace,” said Malcolmson.

The CRTC’s interim decision last November temporarily required Bell and Telus Corp. to provide competitors with access to their fibre-to-the-home networks in Ontario and Quebec within six months.

Bell responded by reducing its network spend by $1.1 billion by 2025 including a minimum reduction of $500 million this year. Bell has said the rules, which it is appealing, diminish the business case for it to invest.

The CRTC’s decision was meant to stimulate competition for internet services, as it said at the time its review could potentially make that direction permanent and apply it to other provinces.

Some smaller companies have urged the CRTC to expand wholesale rules to help them fill gaps in service. New Brunswick-based Xplore Inc. said at a hearing earlier this week that this would allow it to compete in remote regions and offer those residents more affordable internet options.

Malcolmson maintained Wednesday that prioritizing resale over investment “will undermine network expansion and competition.” But the company offered multiple conditions to help mitigate potential disadvantages to companies like Bell should the CRTC expand the wholesale internet regime.

Those include only allowing resale of internet speeds up to 1.5 gigabytes per second, mirroring the top speeds available on cable networks, to help preserve the “competitive advantage from building a faster network.”

The company also proposed that wholesalers only be able to sell internet in a particular location using another company’s network five years after it is built, so as to “provide a minimal window to recover some of our investment before handing our network over to our competitors.”

Malcolmson said it’s important that network-building companies remain motivated to invest in their own networks or else they, too, will shift their focus to resale. He said Bell has already started to change its approach in anticipation of the CRTC’s direction.

“We have actually begun reselling internet over cable networks under the Bell brand within our legacy network footprint,” he said.

“Although right now we are only at the early stages, we stand ready to reduce further (fibre) deployment and reluctantly shift to reselling cable and Telus fibre if regulatory conditions so dictate.”

The CRTC is in the midst of a five-day hearing this week as part of its review, with over 20 groups scheduled to present.

Appearing before the commission earlier in the day, Telus said it won’t decide whether it needs to adjust its network spending plans until the regulator makes a final ruling.

Unlike Bell, the company said the CRTC’s interim decision last November did not prompt it to cut back on investment.

“Where we end up with the final wholesale rates will ultimately determine how we invest the next dollar,” said Matthew Murray, Telus senior vice-president and corporate controller.

Telus Consumer Solutions presidentZainul Mawji told commissioners that a wholesale internet access framework without restrictions on who can access it “would be a very stark outcome” that dissuades big companies from expanding into new regions.

“You would see incumbents, maybe not right away, but over time for sure, reduce, diversify their investments elsewhere, and start to ride on each other’s networks,” she said.

“Remote areas would be the most impacted. We do have in Canada some of the best coverage for both fibre and wireless access to a broad base of the country. There are remaining places to complete access to. They’re expensive.”

Malcolmson said although Bell’s fibre network now reaches 7.4 million locations, around five million homes in its service area still do not have access.

Telus has nearly completed its fibre network build in Quebec but remains far from finished in terms of household coverage in Alberta and B.C., it said.

“Our current forecast is not zero when it comes to incremental investment,” said Telus’ Murray.

“We would like to continue to do that and finish those communities, but it does require ensuring that we have a framework, and if necessary rates, that would allow us to recover those costs, get a payback on those investments.”

This report by The Canadian Press was first published Feb. 14, 2024.

Companies in this story: (TSX:T, TSX:BCE)

Sammy Hudes, The Canadian Press