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3 September 2024

CRTC Issues Final Decision: Telcos Must Provide "Fibre-To-The-Premises" Internet Network Access To Competitors

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Cassels

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Cassels Brock & Blackwell LLP is a leading Canadian law firm focused on serving the advocacy, transaction and advisory needs of the country’s most dynamic business sectors. Learn more at casselsbrock.com.
On August 13, 2024, the Canadian Radio-television and Telecommunications Commission (CRTC) concluded its long-running consultation on "fibre-to-the-premises"...
Canada Media, Telecoms, IT, Entertainment

On August 13, 2024, the Canadian Radio-television and Telecommunications Commission (CRTC) concluded its long-running consultation on "fibre-to-the-premises" (FTTP) internet network access by ordering that certain large telecommunications companies (telcos) must provide their competitors with access to their FTTP networks starting in February 2025. The order expands upon an interim order that the CRTC issued in November 2023 and adds additional provisions intended to balance the need for greater consumer choice in their selection of internet services with the need to incentivize large telcos to invest in and develop fibre internet network infrastructure.

Background

In March 2023, the CRTC began a public consultation process intended to update the regulatory framework for Canada's internet services market. As the CRTC noted, the existing regulatory framework has proven unsuccessful in encouraging choices and pricing affordability for Canadian internet customers and has failed to address competitive concerns in the current Canadian retail market for internet services.

One of the main issues the CRTC examined was whether large incumbent telcos should be required to provide their smaller competitors with access to the incumbent telco's FTTP networks. As the name suggests, FTTP refers to the supply of fibre optic connectivity from an internet provider's transmission point directly to the end user's premises (i.e. the consumer's home). It is often also referred to as "last mile access," as it provides internet access through the "last mile" between some midpoint (like a telephone pole) and the end user's premises/consumer's home.

Traditionally, large incumbent telcos were only required to provide their competitors with "disaggregated" access to their networks, which required the competitor to connect to the incumbent's network at several different points. Incumbents were not previously required to provide competitors with "aggregated" FTTP access, which allows a competitor to more easily and efficiently connect to the incumbent's network at one central connection point and then directly to a consumer's premises.

Midway through the CRTC's full consultation process, the CRTC released an interim order in November 2023, directing certain large incumbent telcos to provide their competitors with aggregated access to their FTTP networks in Ontario and Quebec. As we discussed in more detail in our previous Cassels Comment, the interim order was intended to immediately address what the CRTC found to be urgent concerns regarding the rapid decline in the number of Canadian internet service providers and the resulting decline in competition for the provision of those services.

After the interim order was issued, the CRTC continued its consultation process regarding a potential permanent order. In total, the CRTC reviewed over 300 submissions from interested stakeholders and held a public hearing in February 2024 at which 22 stakeholders made oral presentations.

The Final Order

The CRTC's public consultation culminated with the release of Telecom Regulatory Policy CRTC 2024-180 on August 13, 2024. In that decision, the CRTC ordered three of Canada's largest telcos—Bell Canada, TELUS Communications, and Saskatchewan Telecommunications—to provide competitors with workable wholesale FTTP access to their fibre networks by February 13, 2025. In reaching its decision, the CRTC cited the objectives of supporting vigorous competition in the retail internet services market to foster greater affordability and choice for consumers; promoting investment in and development of high-quality networks; and ensuring that the wholesale high-speed internet access framework operates equitably and transparently.

The CRTC's final order converts its November 2023 interim order into a permanent order, with several notable differences and clarifications:

  • The permanent order applies across Canada. The interim order had only applied to Ontario and Quebec, which the CRTC had identified as having experienced a particularly significant competitive decline in their retail internet services markets.
  • The permanent order provides a 5-year transition period for any new fibre developed by the telcos who are subject to the final order. In other words, while the subject telcos have until February, 2025 to ensure that their current fibre is made available to smaller competitors on a wholesale FTTP basis, they have until August, 2029 to do so for any fibre that they build after the date of the order. The purpose of this 5-year transition period is to continue providing the subject telcos with a "head start" incentive to build out new fibre and connect it to Canadian households, as the subject telcos can now take advantage of a 5-year new fibre exclusivity window within which to recoup their investments.
  • Canada's largest incumbent internet service providers (including cable companies) will be required to use their own networks to compete in parts of Canada that they have traditionally served. Therefore, those large incumbents can only use the subject telcos' FTTP networks to provide competitive internet service offerings in new areas of Canada in which they have not previously competed.

The final order also maintains the portion of the interim order that clarified that cable companies (i.e. telcos that offer internet services primarily through cable instead of fibre) are not subject to the order and are therefore not required to provide competitors with access to the fibre that they do have in place. The CRTC reached this decision based on findings that cable companies have built little fibre to date, with their fibre access only reaching approximately 5% of Canadian households (compared to 60% of households reached by the fibre-based telcos). However, pre-existing requirements on cable companies to give competitors access to their cable networks continue to apply.

Key Takeaways

The final order reflects the CRTC's commitment that it has emphasized throughout the public consultation process to update Canada's retail internet services framework in a way that balances the interests of consumers by offering them choices in the provision of retail internet services and anticipated competitive pricing, with the need to continue to incentivize telcos to invest in building out new fibre networks. Specifically, the provisions of the final order requiring the subject telcos to provide access to their pre-existing FTTP fibre within the next 6 months but only provide access to newly built FTTP fibre within 5 years is a clear attempt by the CRTC to acknowledge the infrastructure cost concerns of large incumbent telcos in building out new fibre while still fostering the longer term goal of increased competition in the Canadian retail internet services market.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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