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Bell Canada cuts capex to punish regulatorBell Canada cuts capex to punish regulator

Bell Canada is cutting its planned fibre spend over the next couple of years by C$1 billion in protest over a regulatory decision on wholesale network access.

Mary Lennighan

November 7, 2023

3 Min Read
Bell Canada cuts capex to punish regulator

Bell Canada is cutting its planned fibre spend over the next couple of years by C$1 billion in protest over a regulatory decision on wholesale network access.

The telco spat the dummy after the Canadian Radio-television and Telecommunications Commission (CRTC) moved to open up fibre networks run by large operators in the major cities of Ontario and Quebec, and set the prices those big players can charge for access, in a bid to boost competition.

Bell believes this decision is hugely unfair and as such has announced that it will reduce capex by more than C$1 billion (around US$730 million) in 2024-25, including a minimum of C$500 million-C$600 million in 2024. Specifically, this is money it had planned to spend rolling out fibre to homes and business in rural, suburban and urban areas, it said.

The capex cut comes in addition to a $100 million reduction in spend this year that it implemented in anticipation of the CRTC’s ruling, it said. Or more accurately, to use its own words, “the CRTC decision to unrelentingly pursue wholesale access at the expense of critical network investment.”

Naturally, the CRTC doesn’t see it like that. In an announcement of its own the regulator talked up its action as a way to increase choice and affordability of high-speed Internet services.

Its decision to open up the Ontario and Quebec markets is actually an interim step and forms part of a broader review of competition in the Internet services space. Its investigations show that competition has declined most significantly in the two markets in question and therefore it is facilitating competition there “on a temporary and expedited basis,” it said. Work on the overall process is ongoing and the CRTC aims to kick off a public hearing on 12 February next year.

“The CRTC is acting quickly to improve Internet services competition across Canada,” said CRTC chairperson and CEO Vicky Eatrides. “Today’s initial decision will bring new options to more than five million households. As the CRTC’s review advances, Canadians can expect continued action to increase choice and affordability, while supporting investment in high-quality networks.”

That’s the type of commitment we have seen many times from Canadian regulators, but nonetheless the market continues to be plagued by a lack of competition. And while the CRTC is clearly aiming to balance the needs and wants of all parties, that’s basically an impossible task in this case.

The CRTC claims that its mandated rates for the two cities “were chosen to allow Canada’s large Internet companies to continue investing in their networks to deliver high-quality services to Canadians.” But Bell begs to differ.

“Rolling back fibre network expansion is a direct result of the CRTC’s decision,” the telco said. Its fibre network passes 7 million homes and businesses at present and it had aimed to reach 9 million by the end of 2025, but it has scaled this back to 8.3 million as a result of the new regs.

Its big beef seems to be asynchronicity of the move. The telco is objecting mainly to the fact that while it has to open up in Ontario and Quebec, the regulator is not forcing operators with fibre-to-the-premises (FTTP) infrastructure in western Canada – where there are 3 million-plus premises passed – to do the same.

“If the intent of the decision is to benefit consumers then it is arbitrary and capricious to leave western Canadian consumers behind,” Bell argues.

Presumably it is Bell’s intent to try to steer the broader process by pulling fibre investment; we have seen many telcos threaten to invest less in fibre should the regulatory environment not prove conducive, but it’s not often we see telcos actually backtrack on existing figures. And it’s something of a dangerous game, from a public opinion angle, at least. It will be interesting to see how this one plays out.

 

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