A construction worker works on a Bell building in Ottawa on Wednesday, June 26, 2013.Sean Kilpatrick/The Canadian Press
BCE Inc. is facing off with small Internet providers over its claim that it would scale back investment in high-speed fibre-optic services if Canada's telecom regulator forces it to open access to competitors.
Executives from BCE appeared before a panel of the Canadian Radio-television and Telecommunications Commission on Wednesday to argue that the regulator should not force it to sell wholesale access to its newest generation of fibre Internet service, which goes directly to customers' homes and is known as fibre-to-the-home. (BCE owns 15 per cent of The Globe and Mail.)
The company argues that these fibre networks – which replace traditional copper telephone wires and are capable of delivering download speeds of up to 175 megabits a second – represent brand new technology and forcing access would threaten its business model and push payback on its investment too far into the future.
Commissioner Peter Menzies pushed BCE on whether its claim that mandated access would make the investment in fibre too risky, noting that its cable competitors are also investing in adding fibre to their networks to achieve faster speeds.
"There's always risk to investment, but isn't the real risk being a stagnant company that's not moving forward and building new technology while, perhaps, the cablecos are?" Mr. Menzies asked a panel of executives from BCE.
"We are not suggesting that mandated access will immediately grind investment to a halt in every location in Canada, but it is a question of balance and it will have an impact," replied Mirko Bibic, chief legal and regulatory officer for BCE, adding it would affect how the company allocates its capital investments and could lead it to shift spending to other areas instead.
"What we're saying is a mandated access rule will affect the pace of deployment and the breadth of deployment."
Only 14 per cent of homes in Canada had access to fibre-to-the-home technology in 2013, according to the CRTC's most recent report.
Mr. Bibic said the company has already upgraded its copper networks by bringing fibre into neighbourhoods (known as fibre-to-the-node) in 80 per cent of its operating territory in Ontario and Quebec, which covers seven million homes. That allows it to deliver faster Internet than its legacy DSL service, as well as its IPTV product Fibe TV, but not what it calls the "blazing fast" speeds associated with fibre-to-the-home.
If the commission forces the incumbent telephone operators to open access to fibre-to-the-home, BCE might not prioritize building that final leg in some communities, Mr. Bibic said.
"The point it, with 80 per cent of our territory covered … we can hold and do really well with fibre-to-the-node for longer than we otherwise might."
But a panel from the Canadian Network Operators Consortium – an industry group representing independent ISPs such as TekSavvy Solutions Inc. and Distributel Communications Ltd. – challenged that assertion during an appearance at the hearing Tuesday.
"First of all, [telephone companies] have a natural incentive to build wherever there is a cable carrier, because otherwise the cable carrier will eat their lunch," said Chris Tacit, counsel to CNOC.
"There's a reason that they're sinking all that money into [fibre-to-the-home], it's because they have to keep up. Now, I don't believe for a minute that they are going to stop investing if they have to grant access," he said, adding that in some underserved areas, there could be a delay in investment but not a total halt on spending and that regulatory measures could be applied to address that.
"Our core message is don't sacrifice the economy as a whole and consumer welfare as a whole to try and address those marginal cases if they exist," Mr. Tacit said.
The commission first opened up the market for Internet services to competition in the 1990s and has mandated the large incumbent telephone and cable companies sell wholesale access to their networks to independent ISPs. It has revised the framework over the years and is now conducting another major review of the wholesale system.
One of the most controversial issues of the proceeding is whether the commission should include the newest generation of high-speed Internet services in the mandated wholesale regime.