OTTAWA - Canada's big telephone and cable companies must provide the highest broadband speeds available when they sell access to smaller Internet service resellers, the federal telecom regulator ruled Monday.
The Canadian Radio-television and Telecommunications Commission (CRTC) said companies that own the nation's Internet infrastructure, such as Bell (TSX:BCE) or Rogers (TSX:RCI.A), can no longer hoard those high speeds for themselves.
The commission said the decision helped safeguard the principles of public access and greater competition. Currently, smaller Internet service providers, or ISPs, only account for 7.3 per cent of the market.
"Access to broadband Internet services is a key foundation for the digital economy," CRTC chairman Konrad von Finckenstein said in a release.
"The large telephone and cable companies are bringing their fibre networks closer to Canadian homes and businesses, which allows for faster Internet connections. Requiring these companies to provide access to their networks will lead to more opportunities for competition in retail Internet services and better serve consumers."
Large telephone companies such as Bell will be permitted to charge an additional 10 per cent markup on the costs of providing access to their highest speeds.
But the CRTC says cable companies, such as Rogers or Videotron, are already charging a sufficient markup for their service. The cable firms must also make technical changes to their networks so that secondary sellers have easier access.
A similar decision had been reached in late 2008, but Bell Aliant (TSX:BA.UN), Bell Canada and Telus Communications Corp., (TSX:T) successfully petitioned the federal cabinet last year to have the issue sent back to the CRTC for a second look.
Mirko Bibic, Bell's vice-president of regulatory and government affairs, said he hopes cabinet will scrutinize the latest decision within the 90 days it has to order a change.
"There's no policy clarity in Canada has far as I'm concerned," Bibic said following the decision.
"On one hand you have (Industry) Minister (Tony) Clement very preoccupied with the national digital economy strategy and access to broadband .... On the other hand, we have a regulator that imposes rules that don't allow us to maximize the returns on our investments, and that has a definite impact on our (technology) roll-out plans."
The commission, however, ruled against allowing the smaller ISPs to gain access to the broadband networks at the source — a move which would have given them greater control of the actual broadband traffic.
They remain subject to the traffic management techniques used by the big telephone and cable companies when they sell to retail customers. The CRTC said it feared that giving smaller players such access would hurt innovation within the larger firms.
CRTC commissioner Timothy Denton dissented with that particular part of the decision. He underlined that smaller outfits were often the innovators in a marketplace, and denying them access to the tools to come up with new products and services was not in line with the concept of increasing competition.
The smaller ISPs were once the pioneers of the retail Internet industry in Canada, but were quickly overtaken by the larger firms.
Rocky Gaudrault, co-owner of ISP Teksavvy, said the decision tied their hands in terms of future innovation. But he said it was a positive result for smaller companies like his.
"From a consumer perspective, it means that possibility to get higher speeds now, so from that perspective it's a great gain," Gaudrault told reporters.
"We've been at a very slow speed and stuck there for a number of years now."