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.

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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communications@crtc.gc.ca

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