Big news at the CRTC, as the Commission moves to throw a lifeline to the remaining non-incumbent ISPs. New CRTC Chair Vicky Eatrides has her marching orders, which include addressing the “perception that the CRTC is taking too long to make decisions”. Also in play is the 2023 Policy Direction, which finally repeals the earlier one from 2006 (and 2019), officially recognizes that mandated wholesale is here to stay, and commits to an aggregated approach to network access. All of this is reflected in the CRTC’s newly announced review of internet competition and wholesale. Here is a quick summary of the more remarkable aspects:
A market dominated by incumbents and FTTP
Telecom Notice of Consultation CRTC 2023-56 provides some important context for where things currently stand when it comes to wireline internet access in Canada. Incumbents “hold dominant positions” and their dominance is growing, as “many competitors have begun losing subscribers” in addition to incumbents acquiring these competitors. Furthermore, incumbents have rolled out FTTP across much of their territories and are decommissioning their old copper networks, making access to FTTP crucial for the future of mandated wholesale. The Commission recognizes that rapid and significant changes are required to make wholesale access to FTTP viable for non-incumbents (IISPs).
Expedited access to FTTP on an aggregated basis
The first thing the CRTC needs to do is to stop the bleeding. Debates over wholesale rates and configurations (aggregated/disaggregated) have dragged on for many years, but given where things are headed there will be no actual “competitors” to the incumbents years from now unless something happens more quickly. So the priority for the CRTC is to get some kind of “expedited and temporary” framework in place, “at least until the conclusion of this proceeding”. The CRTC warns that “procedural requests by interveners that the Commission finds will unduly delay or impede this process will not be granted”, recognizing that it is in the incumbents’ interest to draw out the process as long as possible until they are the only ones left standing. So we’re going to see a “multi-stage” process, with expedited access sorted out in the coming months, with the first tariff filings due from incumbents at the end of next week (to address the immediate 10% reduction for some “traffic-sensitive components”). The CRTC is clearly indicating where it wants to go on this, and is departing from its previous ponderousness to get the ball in motion, while warning incumbents not to get in the way. This is commendable. All of these expedited and temporary moves are to get something in place while the CRTC follows a more conventional process for determining what a more long-term regulatory regime looks like.
The return of price regulation?
Perhaps the most surprising part of CRTC Notice 2023-56 is the indication that retail price regulation is on the table as part of its broader approach to competition policy. As the CRTC notes, this is something it has avoided since the 1990s wave of telecom liberalization. Price regulation was imposed on wholesale access so that incumbents wouldn’t strangle their competitors (economically of course), but everyone was free to set whatever prices they wanted for regular customers. Government and industry have both claimed credit for programs to provide low-income access, but this has not been enough to prevent prices that the CRTC says “remain high relative to international peers” for “mid-range and top-range plans”. At this point retail regulation is just a “potential” step and the CRTC wants to hear input about what might trigger such a move. Furthermore, the CRTC instructs those participating in its process to comment on what other forms retail regulation could be pursued (under section 24 of the Telecom Act), prior to considering regulating rates (sections 25 and 27). However, this could be read as an attempt to provide more concrete means for opening a policy door that would ordinarily be shut, and a warning of just how far the CRTC is willing to go.
All in all, the CRTC has taken immediate steps to save what remains for the players that depend on mandated access to incumbent networks, but it will take more to encourage new competitors to replace those that have been lost in recent years. For the moment, this adds to what is certain to continue to be a very busy agenda for internet policy in Canada more generally, and at the CRTC specifically.