{"id":37434,"date":"2025-08-01T12:29:08","date_gmt":"2025-08-01T12:29:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/37434\/"},"modified":"2025-08-01T12:29:08","modified_gmt":"2025-08-01T12:29:08","slug":"if-bell-doesnt-like-competing-with-telus-on-its-own-broadband-network-it-really-wont-like-the-alternatives","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/37434\/","title":{"rendered":"If Bell doesn\u2019t like competing with Telus on its own broadband network, it really won\u2019t like the alternatives"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

The headquarters of BCE Inc., Bell’s parent company, in Montreal in May.Christopher Katsarov\/The Canadian Press<\/p>\n

Since the spring it has been hard to avoid Bell Canada\u2019s relentless multimedia advocacy campaign on behalf of \u2026 Bell Canada. Ostensibly the campaign<\/a> is about the need to \u201cbuild, connect and grow\u201d Canada, in particular by means of fibre-optic internet networks, which Bell Canada just happens to be in the business of installing, the better to sell you its high-speed internet service.<\/p>\n

\u201cThe right public policy choices,\u201d Bell promises\/warns\/threatens<\/a>, \u201ccan unlock billions in fibre investment.\u201d Which is a roundabout way of saying the wrong public-policy choices will leave all those billions locked up and uninvested. By \u201cwrong public-policy choices,\u201d Bell means policy choices that don\u2019t go Bell\u2019s way. And there is one public-policy choice that Bell is most anxious should go its way: whether to let other internet providers offer their services over its network, and vice versa.<\/p>\n

In November of 2023, the industry\u2019s regulator, the Canadian Radio-television and Telecommunications Commission, issued a decision mandating that Bell and Telus, the two biggest telephone companies offering \u201cfibre-to-the-premises\u201d internet service, open their networks to competitors, including each other. At first this was limited to Ontario and Quebec: a bit of a fiction, as Telus doesn\u2019t have any networks in Ontario and Quebec. But the decision was expanded the following August to cover the whole country. <\/p>\n

Bell and Telus would each be allowed access to each other\u2019s network, in those provinces where they did not already dominate. Thus Telus could expand into Bell\u2019s turf in Ontario and Quebec, and Bell could expand into Telus\u2019s, in Alberta and British Columbia. Similar obligations, and similar opportunities, were extended to providers in other provinces, all with a view to stimulating greater competition in high-speed internet service.<\/p>\n

There\u2019s nothing particularly novel about this idea. Similar arrangements cover wireless telephone service and cable-based internet, where large incumbents (Bell, Telus and Rogers in wireless; Rogers, Videotron and Cogeco in cable) have for years been required to sell access to their networks to smaller independent service providers, who resell it to consumers.<\/p>\n

Even so, Bell wasn\u2019t having it. The company would prefer not to provide access to its fibre network to anyone, even the small fry. But it was particularly incensed \u2013 or saw a public-relations opportunity in pretending it was \u2013 at the idea of opening its network to its major competitors. \u201cWe\u2019re not in the business of building fibre for Telus\u2019s benefit,\u201d groused Mirko Bibic, CEO of BCE Inc., Bell\u2019s parent company.<\/p>\n

So Bell appealed to the federal cabinet, which duly ordered<\/a> the CRTC to reconsider this aspect of its ruling. When the CRTC reaffirmed its initial decision last February, the company staged a public tantrum<\/a>, announcing that it would slash $500-million from planned investment this year and slowing the rollout of its fibre service to about 1.5 million households.<\/p>\n

Bell alleges Telus salespeople sold illegal pirated TV service to poach its customers<\/a><\/p>\n

To hear Bell tell it, there is a direct causal link between the two: Having to compete with Telus on its own network \u2013 even at the price the CRTC requires Telus to pay \u2013 makes it impossible to invest in expanding capacity, depriving it of the \u201creasonable return\u201d that can justify the investment. In reality the connection is mostly a negotiating ploy. In effect Bell has put a gun to its own head: Keep out the competition, or we stop building out a network we\u2019ve already spent billions developing.<\/p>\n

Even so far as there is a trade-off, it\u2019s not obvious that more investment is always better, if it comes at the cost of higher prices to consumers. We could make everyone give Bell $1,000, and require Bell to invest every dollar of it. It wouldn\u2019t necessarily be to consumers\u2019 benefit.<\/p>\n

It depends: Consumers might be willing to pay for the resulting improvements in service. Or they might not. Ordinarily we leave these decisions to consumers and providers to work out between them, with competition as the referee: The company that offers the optimal trade-off between service and price, as consumers perceive it, will attract more business than its rivals.<\/p>\n

But in a situation like this, with old, established near-monopolies in each market, their positions fortified by the heavy upfront costs of building a network, it\u2019s hard to see how competition can even get started. So, arguably, you need a regulator to pry open the market. According to the CRTC<\/a>, the evidence from its initial decision showed that \u201cconsumer benefits brought about by [letting Bell and Telus into each other\u2019s markets] outweighed any impact that access had on investment.\u201d<\/p>\n

Nevertheless, Bell continues to fight, appealing once again to the federal cabinet to overturn the CRTC\u2019s decision. And it has some powerful allies: not only most of the other regional telephone monopolies, like SaskTel, as you would expect \u2013 they don\u2019t want to have to compete with Telus, either \u2013 but also small, independent resellers like TekSavvy: They want access to Bell\u2019s network, but they don\u2019t want larger competitors joining them, particularly competitors who can bundle their internet service with other services like wireless telephony.<\/p>\n

Why is Telus the odd man out in support of the CRTC decision? Again, self-interest: Whatever it loses from opening access to its markets in Western Canada, it more than gains from expanding into Quebec and Ontario. Even as Bell is threatening to cut back on investment, Telus has announced plans<\/a> to spend $2-billion building its own fibre network in Central Canada, in addition to the service it provides via Bell\u2019s. So the competition vs. investment trade-off is even more complicated than it appeared. <\/p>\n

The issue is fascinating one, as it pits two rival camps of free marketers against each other. On the one hand are those who emphasize the sanctity of property rights and the importance of rewarding risk-taking. The market the CRTC is attempting to set up, they argue, isn\u2019t a real one, nor is the sort of competition that requires constant regulatory intervention. Rather than forcing telephone companies to rent their networks to each other at prices set by the regulator, competitors should have to build their own.<\/p>\n

Against them are those who emphasize market structure and consumer choice. Telecommunications networks, they argue, are a natural monopoly: It\u2019s unrealistic to expect every competitor to build its own network. Innovation and efficiency gains, at least those likely to benefit consumers, come from competition, not from the grand designs of vertically integrated monopolists. Mandating access may be an imperfect form of competition, but it\u2019s better than no competition at all.<\/p>\n

But are these the only choices? What\u2019s common to both sides in this debate are two key assumptions: that the universe of potential competitors is limited to Canada, and that the same people who build and control the networks should also be in the business of providing the services that use them. Neither necessarily holds.<\/p>\n

If you think that internet service \u2013 or any service \u2013 should only be provided to Canadians by Canadian companies, then yes, your options for competition are going to be few, whether or not you mandate access. Very few Canadian companies could afford the cost of building their own networks. And scarcely more are likely to really threaten the competitive position of the incumbents: witness the relative equanimity with which Bell views the prospect of competing with the independents versus its sheer apoplexy over having to face Telus.<\/p>\n

But foreign providers have the kind of investment backing and marketing muscle to really make a dent in the market, even as new entrants. That is, they could, if they were allowed to. Under the Telecommunications Act, a company must be \u201cCanadian-owned and controlled\u201d to operate as a \u201ctelecommunications common carrier\u201d in Canada, meaning it must be incorporated in Canada and have at least 80 per cent of its voting shares controlled by Canadians. <\/p>\n

An exception was added in 2012, allowing 100-per-cent foreign ownership, but only for smaller carriers: those with less than 10 per cent of total market revenues. If we\u2019re seriously interested in competition, this seems perverse.<\/p>\n

But there\u2019s another way to gin up more competition \u2013 one that would not require either opening our markets to foreign competition (desirable as that is) or the sort of artificial, hothouse-competition that is current CRTC policy. That is to separate ownership of the networks from the right to provide service on them. <\/p>\n

As things stand, Bell, Telus and the other incumbents are essentially required to compete with their customers, acting as wholesalers to the very companies that are seeking to take market share from them at the retail end. That\u2019s obviously rife with conflicts of interest, which is why it has to be so closely supervised by the CRTC.<\/p>\n

But force the big carriers to divest \u2013 either the network, or the service provider \u2013 and that conflict disappears. The network is, and would remain, a quasi-monopoly (leaving aside cable, satellite and wireless internet) and as such would still require regulation. <\/p>\n

But the services that use it are not. Once these roles were separated, service providers would be free to compete with each other on an equal footing, secure in the knowledge that the network operator did not have skin in the game. Again, that\u2019s a fairly heavy regulatory intervention up front, but one that promises a much more robust and durable form of competition than the kind we have now.<\/p>\n

Of course, if there\u2019s one thing that could cause Bell and Telus to resolve their differences, it\u2019s the prospect of being forced either to compete with foreign carriers or to divest their service providers. But if competition, and consumers, were really what this were about, that\u2019s what we\u2019d do.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: The headquarters of BCE Inc., Bell’s parent company, in Montreal in May.Christopher Katsarov\/The…\n","protected":false},"author":2,"featured_media":37435,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[33737,64,63,33736,33738,237,1721,105],"class_list":{"0":"post-37434","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-internet","8":"tag-andrew-coyne","9":"tag-au","10":"tag-australia","11":"tag-column","12":"tag-coyne","13":"tag-internet","14":"tag-opinion","15":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/37434","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=37434"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/37434\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/37435"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=37434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=37434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=37434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}