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CRTC sets final wholesale rates for broadband services

·6 min read

GATINEAU, QC, May 27, 2021 /CNW/ - Today, the CRTC set the final rates to access the large companies' high-speed broadband networks and resolved a long-standing dispute with respect to the existing wholesale model. This will enable the industry to move towards a new wholesale model that will increase competition and investments. This new model is intended to provide Canadians with more choice, better prices and innovative services.

The existing model, which is an aggregated high-speed access service, is in the process of transitioning to a disaggregated high-speed access service. This will enable competitors to access the fibre-to-the-home networks of the large companies and offer their customers faster Internet speeds and more services for all Canadians.

Under the aggregated model, a competitor connects its network to a smaller number of points in the large company's network. Under the disaggregated model, competitors connect to numerous points in the large company's network thereby reducing their reliance on expensive transport costs while spurring investments in broadband networks.

During the review of wholesale rates for aggregated high-speed access services, the information provided on the record caused the CRTC to doubt the correctness of certain aspects of its August 2019 decision. With this decision the CRTC is adopting the interim rates, with adjustments, as the final rates.

Quotes

"Since 2016, the CRTC's objective has been to complete the transition to a disaggregated wholesale model for access to the large companies' high-speed broadband networks. This model will foster greater competition and further investments, so that the industry can better serve the needs of Canadians. Today's decision will allow us to focus on that goal, while providing certainty in the marketplace for Internet service providers."

- Ian Scott, Chairperson and Chief Executive Officer, CRTC

Quick facts

  • An advantage of the disaggregated model is that it includes access to a large company's fibre-to-the-home networks, thereby allowing competitors to provide higher speeds to their customers.

  • This will also grant them more flexibility in how they offer services to Canadians, while encouraging them to invest in their own network infrastructure.

  • The wholesale rates are paid by competitors to access large companies' high-speed access networks in order to provide various services to their own customers, such as Internet, television or telephone services. This helps smaller providers who do not own high-speed access networks to provide services to Canadians.

  • In 2015, the CRTC decided that the aggregated wholesale high-speed access service would no longer be required and be phased out when the disaggregated wholesale high-speed access service is implemented.

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Wholesale broadband services – Backgrounder

Fostering competition in the broadband market

In 2015, the CRTC concluded that sustainable competition was required for access to the large companies' high-speed broadband networks. To achieve this goal, the CRTC decided that the large companies should also be required to give competitors access to their fibre-to-the-home networks under a wholesale model known as disaggregated high-speed access (HSA) service.

Given that it would take some time to implement this disaggregated model, the CRTC required that the large companies continue to provide access to their networks to competitors using an aggregated model. Aggregated high-speed access services will be phased out once the disaggregated model is implemented.

Aggregated vs. disaggregated wholesale high-speed access

The disaggregated HSA service will help increase sustainable competition, give smaller Internet service providers a greater degree of control over the services they offer to Canadians and encourage them to invest in their own networks.

One of the main drawbacks of the aggregated wholesale HSA service is the higher cost for competitors to transport large amounts of traffic over the large companies' networks. In addition, the aggregated wholesale HSA service requires competitors to rely almost entirely on a large company's network. This means that the framework depends on the Commission to set the correct rules and wholesale rates.

Consequently, an important benefit of moving to a disaggregated wholesale HSA service is to lessen competitors' dependence on price regulation and give competitors more control over their cost structure.

With a disaggregated service, competitors typically acquire only the access service on a wholesale basis, since they must provide transport by themselves or lease transport network facilities from other service providers. By investing in their infrastructure, competitors can compete to a greater extent than under the aggregated model.

The disaggregated model will better support sustainable competition and will provide benefits to Canadians, such as better prices and innovative services.

Setting wholesale rates for aggregated high-speed access services

In 2016, the CRTC set certain interim rates for aggregated HSA services for Bell Canada, Cogeco, Bell MTS, Rogers, SaskTel, Shaw, Telus and Videotron. Eastlink's rates were also revised in 2016. At the time, the CRTC was of the view that the rates proposed by certain of the large companies were not reasonable and needed to be revised.

Following a comprehensive review, the CRTC identified issues related to costing and the cost models. As a result, the CRTC made adjustments to the proposed rates and set final rates in 2019.

The final rates were subject to a number of judicial appeals, petitions to Cabinet and applications asking the CRTC to review and stay its decision. As a result, the wholesale rates announced in August 2019 have never been implemented.

Finalizing rates for wholesale aggregated high-speed access services

During the review of wholesale rates for aggregated high-speed access services, the information provided on the record caused the CRTC to doubt the correctness of certain aspects of its August 2019 decision.

The CRTC has carefully considered the issues raised by all parties, and has adopted the interim rates on a final basis, with certain reductions. The decision comes as the result of the review of an extensive record that included cost studies and other documents submitted in the process.

Most large companies will be required to make retroactive payments as a result of the decision. In general, the retroactive payments will be lower than those that would have been paid under the rates announced in 2019.

The Commission's objective is to transition Internet service providers (ISPs) to the disaggregated HSA service. Undertaking a more fulsome review of the rates set in August 2019 would only serve to further delay this transition. In addition, the Commission considers that the interim rates are comparable to the rates that would likely be put in place should it go through with a more fulsome review.

This decision will bring regulatory certainty for ISPs as they prepare business plans and make investment decisions.

Next steps

The Commission has an ongoing proceeding on the service configurations for the disaggregated wholesale HSA service framework for all wholesale providers across the country.

The Commission published a letter in April 2021 requesting wholesale HSA providers to submit additional information on the record.

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SOURCE Canadian Radio-television and Telecommunications Commission

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Cision

View original content: http://www.newswire.ca/en/releases/archive/May2021/27/c1278.html