Canada's small ISPs get higher speed

OTTAWA, CANADA: Canada's established telecom carriers must allow smaller Internet providers access to their high-speed fiber networks at the same speed they offer to their own customers, the telecom and broadcast regulator ruled on Monday, but it said they can charge a 10 percent mark-up for doing so.

The mark-up will not apply to access to existing Internet services, which the carriers, such as BCE Inc's Bell Canada and Telus Corp, must continue to provide to the smaller Internet service providers (ISPs), the Canadian Radio-television and Telecommunications Commission (CRTC) said.

"Requiring these companies to provide access to their networks will lead to more opportunities for competition in retail Internet services and better serve consumers," CRTC Chairman Konrad von Finckenstein said in the decision.

Canada has seen a convergence in its telecom, Internet and broadcasting sectors in recent years, as once-dominant regional telephone carriers compete nationally against cable companies such as Rogers Communications and the smaller ISPs.

"If you are going to invest a billion (dollars) plus ... you have to make sure that investment generates sufficient returns to make it worthwhile," said Mirko Bibic, Bell's senior vice president for regulatory and government affairs.

"I suspect the 10 percent will not make it much more worthwhile," he added.

Until this decision, the established telecom companies could "throttle" third-party services, by slowing them down or limiting downloads.

The established carriers appealed a similar CRTC decision in 2009, saying they spend significant portions of their profits on expanding their networks and should not have to share expensive fiber cable with competitors at wholesale costs.

"The forced unbundling of next-generation networks that aren't even built yet would place a chill on investment in those networks at a time when the federal government is trying to encourage investment in broadband networks," Telus said ahead of the decision.

Another of the incumbents, however, welcomed the ruling.

"The CRTC is recognizing the importance competition plays in driving greater investment, innovation, and choice in telecommunications markets," MTS Allstream's Chris Peirce said.

About 400,000 Canadians buy Internet access from smaller ISPs, and most of them get it via the networks of the incumbent telecom operators.

"In recognition of these investments, the CRTC will allow them to charge competitors an additional 10 percent mark-up over their costs for the use of their wholesale Internet services' higher-speed options," the regulator said in its decision.

The CRTC also said that the country's big cable companies must make it easier for the ISPs to offer services on their networks. It is technically easier for the ISPs to use the telecom companies' networks than those of the cable networks. Cable companies have more than 50 percent of the market for high-speed internet provision, CRTC data showed.

The newer ISPs, while broadly supportive of the decision, said by not allowing access to the incumbents' regional nodes, known as central offices, the CRTC had not gone far enough.

"It is unfortunate that the Commission has failed to allow competitors the ability to innovate and compete with the telephone companies on a deeper level," said Bill Sandford, president of Telnet Communications, an independent ISP.