CRTC rules on broadband competition

Late last week, the CRTC released its ruling on broadband competition (Decision 2015-326), which lays out the early foundation for the regulator’s plans to ensure that all Canadians have access to affordable high-speed internet connectivity.

Under this ruling, the CRTC is mandating access for Fibre to the Presmise (FTTP). This is good news for Canadian consumers. Prior to this ruling, incumbent carriers were not required to provide access to fibre between the premise and central office to third party providers. Now, they must provide access, enabling third-party providers to compete to deliver fibre-based services.

However, the CRTC will no longer regulate transport – which is not such good news for consumers. Transport is the network between central offices (COs) or Points of Presence (POPs) in a provider’s network. Third party providers cannot use the mandated access to FTTP if they cannot easily and affordably access incumbents’ transport networks. They will be forced to build their own transport facilities, which duplicates already existing infrastructure and drives up costs. Clearly, this diverts critical, scarce resources away from more efficient uses and smaller providers simply do not have the funds for these kinds of duplication efforts. Through its ruling, the CRTC believes that there is enough competition for transport and regulation isn’t necessary in this area. However, we know from the SWIFT feasibility study that there are many areas in Southwestern Ontario where there is only one transport provider and there are many areas where facilities-based competition has produced market failures.

The content of this latest CRTC ruling demonstrates that the imperative for SWIFT is more important than ever. SWIFT bridges the gap that produces market failure. We will accomplish this by providing open access transport for non-incumbent service providers to reach the last mile, which means we can deliver on the CRTC’s mandate for FTTP without overbuilding or duplicating fibre optic transport infrastructure. Moreover, SWIFT will deliver end-to-end open access and carrier neutrality, so competition can flourish over the entire system.

Indeed, the CRTC ruling is an endorsement of the SWIFT model and guiding principles, as demonstrated in paragraph 126 of the July 22 CRTC Review of Canadian Broadband Internet:

 “An important consideration relates to the availability of substitutes for retail Internet access services provisioned over wireline facilities. In the Commission’s view, most consumers have retail Internet usage and speed requirements that can only be served through wireline services, thereby limiting consumers’ viable options. Fixed wireless and satellite-based services are mainly options in rural or high-cost serving areas, where wireline Internet access is limited or not available. These services typically have limited bandwidth capacity and higher prices compared to retail wireline services and, as such, are generally not effective substitutes. Although mobile wireless services support retail Internet access, the higher prices for data usage over mobile wireless networks limit their substitutability – the speeds, prices, quality, reliability, and capacity of broadband over wireline facilities are far superior to those available over wireless facilities at the present time, and this will likely continue into the foreseeable future.

For further reading about the CRTC ruling, you may wish to visit the following news items: