Order Referring Telecom Decision CRTC 2023-358 Back to the CRTC: SI/2024-55

Canada Gazette, Part II, Volume 158, Number 24

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SI/2024-55 November 20, 2024

TELECOMMUNICATIONS ACT

Order Referring Telecom Decision CRTC 2023-358 Back to the CRTC

P.C. 2024-1172 November 5, 2024

Whereas on February 9, 2023, the Governor in Council issued a direction to the Canadian Radio-television and Telecommunications Commission (“Commission”) in an Order in Council entitled Order Issuing a Direction to the CRTC on a Renewed Approach to Telecommunications Policy footnote a (“Order”) with a view to promoting competition, affordability, consumer rights and universal access;

Whereas sections 2 and 8 of the Order set out the key objectives that should guide the Commission in the making of decisions of an economic nature;

Whereas the Order requires the Commission to mandate the provision of an aggregated wholesale high-speed access service (“aggregated HSA service”) until it determines that broad, sustainable and meaningful competition will persist;

Whereas, on March 8, 2023, the Commission issued Telecom Notice of Consultation CRTC 2023-56, entitled Notice of hearing – Review of the wholesale high-speed access service framework, to allow parties and interested persons to make submissions with respect to the wholesale high-speed access service framework;

Whereas, on November 6, 2023, the Commission rendered Telecom Decision CRTC 2023-358, entitled Review of the wholesale high-speed access service framework – Temporary access to fibre-to-the-premises facilities over aggregated wholesale high-speed access services (“Decision CRTC 2023-358”);

Whereas in Decision CRTC 2023-358, the Commission directed large incumbent local exchange carriers to provide access to fibre-to-the-premises (“FTTP”) facilities over aggregated HSA services (“access to aggregated FTTP services”) within their Ontario and Quebec serving territories within six months of the date of Decision CRTC 2023-358 on a temporary basis and at interim rates, and to continue to do so until the Commission decides whether such access is to be provided in the longer term;

Whereas subsection 12(1) of the Telecommunications Act (“Act”) provides that, within one year after a decision by the Commission, the Governor in Council may, on petition in writing presented to the Governor in Council within 90 days after the decision, or on the Governor in Council’s own motion, by order, vary or rescind the decision or refer it back to the Commission for reconsideration of all or a portion of it;

Whereas, on February 2, 2024, Bell Canada presented to the Governor in Council a petition in writing requesting that the Governor in Council rescind Decision CRTC 2023-358 or, in the alternative, vary or refer it back to the Commission for reconsideration with a direction that

Whereas, under subsection 12(4) of the Act, a notice of receipt of Bell Canada’s petition was published in the Canada Gazette, Part I, by the Minister of Industry on April 27, 2024, indicating where the petition and any petition or submission made in response to it may be inspected and copies of them obtained;

Whereas, under section 13 of the Act, the Minister of Industry has provided the provinces with an opportunity to consult with the Minister;

Whereas the Governor in Council has considered Bell Canada’s petition together with all of the information and advice received with respect to it;

Whereas, on August 13, 2024, the Commission issued Telecom Regulatory Policy CRTC 2024-180, entitled Competition in Canada’s Internet service markets, which requires Bell Canada, Bell Aliant, Bell MTS, Saskatchewan Telecommunications and TELUS Communications Inc. to provide access to aggregated FTTP services, subject to certain conditions, no later than February 13, 2025;

Whereas the Governor in Council considers that, in accordance with section 47 of the Act, the Commission exercised its powers and performed its duties with a view to implementing the Canadian telecommunications policy objectives and in accordance with any orders made by the Governor in Council under section 8 of the Act;

Whereas mandated wholesale access is a proven regulatory tool and the Governor in Council considers access to aggregated FTTP services critical to supporting healthy competition in the retail Internet services market;

Whereas the Governor in Council considers that FTTP technology is an increasingly important element of the retail Internet services market and that a lack of access to aggregated FTTP services has been a barrier to competition;

Whereas the Governor in Council is of the opinion that the Commission moved expeditiously in launching a comprehensive review of the wholesale high-speed access service framework with a view to improving consumer choice and increasing competition;

Whereas the three largest telecommunications service providers in Canada — Bell Canada, Rogers Communications Canada Inc. and TELUS Communications Inc. — are of a disproportionate size relative to other Internet service providers;

Whereas those three providers are also national mobile wireless service providers and have been found to collectively exercise market power in the provision of retail mobile wireless services in all provinces except Saskatchewan and the territories;

Whereas mobile wireless services are frequently bundled with Internet services;

Whereas the return on investment and the costs of maintaining broadband infrastructure in less densely populated communities fluctuate according to the penetration rate for the retail Internet services market;

Whereas the Governor in Council has concerns about future and ongoing investments in broadband infrastructure and services in Ontario and Quebec, including in rural, remote and Indigenous communities, and concerns that those investments could, if they are unprofitable, lead to a decline in quality and consumer choice in the retail Internet services market;

Whereas the Governor in Council has concerns about the viability of small and regional Internet service providers;

Whereas the Governor in Council considers it appropriate to take a prudent approach in these matters;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Industry, under subsection 12(1) of the Telecommunications Act, refers Telecom Decision CRTC 2023-358 back to the Canadian Radio-television and Telecommunications Commission to reconsider, no later than 90 days after the day on which this Order is made, whether Bell Canada, Rogers Communications Canada Inc. and TELUS Communications Inc. and their affiliates should be prohibited from using aggregated FTTP services in Ontario and Quebec further to tariffs approved by the Commission.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

That the Governor in Council (GIC), on the recommendation of the Minister of Industry, under section 12 of the Telecommunications Act (“Act”), refer Telecom Decision CRTC 2023-358 back to the Canadian Radio-television and Telecommunications Commission (CRTC) to reconsider, no later than 90 days from the date of this Order, whether Bell Canada, Rogers Communications Canada Inc. and TELUS Communications Inc., and their affiliates, should be restricted from using access to fibre-to-the-premises facilities over aggregated wholesale high-speed access services (“aggregated FTTP access”) at tariffed rates, terms, and conditions in Ontario and Quebec.

Objective

To note the CRTC’s expeditious work in launching the broad wholesale proceeding and in mandating temporary wholesale access to fibre networks in Ontario and Quebec. And, further, to direct the CRTC to reconsider one element of the decision within 90 days, as described above. This direction for reconsideration responds to concerns about the business case for future and ongoing investments in infrastructure in less densely populated areas, including in rural, remote, and Indigenous communities; the state of competition and the viability of small and regional service providers; and the anticipated risk of a possible corresponding decline in quality and choice for consumers.

Background

On March 8, 2023, the CRTC launched a proceeding to review its existing framework for wholesale high-speed access (HSA) services in light of changing market conditions, significant challenges in implementing the framework, and the importance to Canadians of having access to greater choice and more affordable services. As part of this proceeding, the CRTC launched an expedited process to determine whether large incumbent telephone and cable companies should provide third-party companies (wholesale-based competitors) with access to their FTTP networks.

On November 6, 2023, the CRTC released a decision that directed large incumbent telephone companies to provide workable wholesale access to their FTTP networks in Ontario and Quebec by May 7, 2024 (“the Decision”). The CRTC stated that the Decision will enable wholesale-based competitors to offer FTTP-enabled services to more than five million Canadian households. In parallel, the CRTC would continue to advance the broad wholesale proceeding to ensure that all Canadians benefit from a wide range of affordable high-speed Internet services, as quickly as possible.

On February 2, 2024, Bell petitioned the GIC, asking that the Decision be rescinded. Bell’s primary argument was that the Decision undermined investment and would have significant negative effects on competition, resilience, and the evolution of its networks, especially in rural, remote, and Indigenous communities. Should the GIC not rescind the Decision, Bell proposed alternative relief, asking the GIC vary or refer back the Decision to the CRTC with a direction that

On August 13, 2024, the CRTC released Telecom Regulatory Policy CRTC 2024-180 (the “August Decision”), which extended the wholesale aggregated FTTP mandate across Canada, and required the largest telephone companies — Bell Canada, Saskatchewan Telecommunications (SaskTel), and TELUS Communications Inc. (TELUS) — to provide competitors with workable wholesale access to their fibre networks no later than February 13, 2025, subject to certain limitations, including (1) no fibre deployed after August 13, 2024, will be available for wholesale access until August 13, 2029; and (2) Canada’s largest Internet service providers are limited to using their own networks to compete within their incumbent territories (that is territories they have traditionally served). The CRTC undertook to set interim rates for wholesale aggregated FTTP access by the end of 2024, with final rates to follow. Despite the issuance of the August Decision, the Decision remains in effect and the GIC is still obliged to respond to Bell’s petition by the statutory deadline of November 6, 2024.

Implications

The petition’s request can be divided into two categories: the primary request to overturn the wholesale access framework as set out in the Decision; alternatively, a request to enact new access rules applicable to the temporary access framework.

In relation to the primary requested relief, it is recommended that the GIC decline the request to overturn the Decision, as mandating wholesale aggregated FTTP access will benefit Canadians by improving market outcomes through additional choices in service plans and providers.

However, it is recommended that the GIC take a precautionary approach, given the concerns listed above and in light of certain considerations, including the disproportionate size of the three largest telecommunications service providers in Canada (Bell Canada, Rogers Communications Inc., and TELUS Communications Inc.) and the finding that these three providers collectively exercise market power in providing wireless service.

Therefore, by referring back the Decision to the CRTC, the GIC should expect the CRTC to take into consideration the concerns listed above regarding competition and investment. This Order would require the CRTC to reconsider the matter expeditiously and publish its results within 90 days.

The CRTC engaged stakeholders during their broad review of the wholesale framework and conveyed that access established through the temporary mandate could be subject to change, and thus any company using the temporary mandate should assess the risks of doing so. In this way, any changes to the framework stemming from the CRTC’s reconsideration are risks that could reasonably have been foreseen by stakeholders using the wholesale framework.

Consultation

As required by the Act, a notice regarding the petition was published in Part I of the Canada Gazette on April 27, 2024, and the Government launched public consultations on the petition for 45 days. Of the 18 comments received, 4 were from incumbent providers, 8 from network suppliers, 3 from wholesale-based providers or associations, one from a small facilities-based provider, and 2 from individuals. SaskTel and several network suppliers supported the petition, underscoring the Decision’s potential negative impact on investment.

Comments received that did not support the petition emphasized the need for an aggregated framework in light of the CRTC’s determination that the current disaggregated regime failed to meaningfully foster competition. TELUS, TekSavvy, the Competitive Network Operators of Canada (CNOC), the Independent Telecommunications Providers Association (ITPA), and Beanfield proposed various alternative relief measures. TekSavvy, CNOC, and the ITPA agreed with Bell’s alternative relief to limit incumbent wholesale access.

The public submissions received are available on the Innovation, Science and Economic Development Canada website at:

Comments received on the Petition to the Governor in Council concerning Telecom Decision CRTC 2023-358.

Furthermore, responsible provincial and territorial ministers were provided with an opportunity to comment on the petition, in confidence, pursuant to section 13 of the Act, and their responses were taken into consideration.

Contact

Andre Arbour
Director General
Telecommunications and Internet Policy Branch
Innovation, Science and Economic Development
235 Queen Street, 10th Floor
Ottawa, Ontario
K1A 0H5
Email: telecomsubmission-soumissiontelecom@ised-isde.gc.ca