Bell says CRTC wholesale rates decision will have $100 million impact on its business

Montreal-based national carrier Bell estimates the CRTC’s new wholesale rates for access to high-speed broadband networks will have an estimated $100 million impact to its business.

A press release from the carrier said that the order will “reduce the scope of Bell’s broadband internet buildout for smaller towns and rural communities by 20 percent, or about 200,000 households.”

The Canadian Radio-television and Telecommunications Commission (CRTC) announced the new final rates last week and said that they are lower than the interim wholesale rates implemented in 2016, which were also set to foster competition at the time.

“The monthly capacity rates are 15 percent to 43 percent lower than the interim rates,” the CRTC said in the new decision. “As for the access rates, they are three percent to 77 percent lower than the interim rates.”

In 2016, the CRTC cut proposed rates for network access by up to 39 percent and reduced the rate for the transport of internet data by up to 89 percent.

It is important to note that the final rates will be applied retroactively, but that a decision on rates for fibre-to-the-home will be “forthcoming.”

Bell’s chief operating officer Mirko Bibic, who is expected to take over as CEO next year, said in the press release that an order like this doesn’t help continued development of this type of infrastructure in Canada.

“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,” Bibic said. “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.”

The company said the estimated cost will exceed $100 million and “most of it in the form of retroactive payments to resellers, requiring the company to reduce the scope of its [Wireless Home Internet service] buildout plan by 200,000 households, to approximately one million locations.”

In 2018, Bell announced the rollout of its Wireless Home Internet service, which would bring high-speed internet access to 800,000 small-town households in Manitoba, Ontario, Quebec and Atlantic Canada.

That number was increased to 1.2 million locations after the federal government introduced its Accelerated Investment Incentive in November 2018. Bell said that the service has now been rolled out to more than 130 small communities in Ontario and Quebec.

“Bell has made great strides in connecting smaller communities with our innovative WHI technology, and we expanded the program due to the federal Accelerated Investment Incentive that has advanced capital investment across a range of Canadian industries,” Bibic said in the release. “It is unfortunate that the CRTC’s decision will hinder the positive momentum we’ve built in bringing full broadband Internet access to rural and other underserved communities.”

Innovation Minister comments

Innovation, Science and Economic Minister Navdeep Bains is “disappointed” with Bell’s decision to scale back the rollout of wireless services to rural homes following the CRTC’s decision.

“Our government has made it a priority to connect Canadians living in rural and remote regions so they can fully participate in the digital world,” Bains said in a statement.

He noted that the government’s Connect to Innovate program, which received a top-up in Budget 2019, has helped get over 380,000 Canadian households in more than 900 rural and remote communities access to internet services.

“With our targeted programs and the introduction of new incentives for capital investments, more incentives exist now than ever before to invest in connecting rural and remote regions. Our government has also been relentless in promoting competition to lower prices, improve the quality, and increase the coverage of telecom services in Canada, which is already showing results,” Bains said.

“This will not distract from our government’s commitment to connect every Canadian to affordable high-speed internet by 2030, and I am confident new competitors will step up to make these investments.”

Source: Bell

Update 20/08/19: The article has been updated with additional reporting.