Large providers of internet backbone across the country are scaling back their investments in rural and small towns in retaliation to the Canadian Radio-television Telecommunications Commission’s (CRTC) imposition of lower wholesale rates for internet.
Bell Canada says it will cut 200,000 households from its rural expansion program because the CRTC decision cost it $100 million.
Why it matters: The federal government’s efforts to address the slow expansions of rural internet services could slow things down further.
“The CRTC’s decision transfers capital from providers like Bell who are building Canada’s modern broadband networks to wholesale resellers that invest little to nothing – and there’s no assurance or requirement from the CRTC that any of it will be dedicated to network buildouts or otherwise passed on to Canadian consumers,” said Mirko Bibic, Bell’s chief operating officer. “Putting this kind of unexpected and retroactive tax on capital investment is not the way to ensure the continued development of Canada’s internet infrastructure.”
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Despite Bell’s plan to use non-fibre options to reach more rural Canadians, other organizations, especially smaller telecommunications co-operatives and companies, are the ones that have been building infrastructure in small towns, especially in southern Ontario.
Quadro Communications, in Kirkton, for example has been slowly purchasing telephone exchanges from Bell and supplying customers in those exchanges with wired, high-speed internet.
The CRTC’s forced cut in wholesale pricing would make it easier for those local companies to make investments in internet services. It is also expected that rates for internet service could fall if there’s more competition driven by lower wholesale rates.
The CRTC final wholesale rates are as much as 77 per cent lower than the 2016 interim rates.
Eastlink, a major internet provider in the Atlantic provinces announced it was cutting $50 million from its investment plans because of the CRTC rate cut.
The rates are retroactive and require the major internet backbone providers to pay other providers.
High speed internet in rural areas has been identified as a priority by the federal and provincial governments, both of which are investing hundreds of millions of dollars to have service expanded.
