Independents that close or are bought out, prices that are too high, large companies that control 84% of the market and prevent access to their networks: competition in the Internet access market “has diminished” in Canada over the in recent years, forcing the Canadian Radio-television and Telecommunications Commission (CRTC) to make its mea culpa.
This is what Vicky Eatrides, president of the CRTC, said in substance on Monday, as a week of public hearings on competition in internet services opened. At the heart of this debate: a CRTC decision dating from 2015 which changed the situation for independent providers, forcing them to invest to gain access to subscribers’ homes. In addition, in 2021, the CRTC made the controversial decision to cancel a large part of the reductions in wholesale rates, those that independent providers pay to access the networks of large companies like Bell and Rogers.
Result: the number of independent suppliers has declined in Canada in recent years. The biggest ones like EBOX, Distributel, VMedia and Oxio have been bought by bigger companies. The Canadian Competitive Network Operators (CNO) association, which brought together 33 independent providers in 2021, only has 17 today.
PHOTO TAKEN FROM A SCREENSHOT
The Canadian Radio-television and Telecommunications Commission (CRTC) hearings, which will continue all week, began Monday with testimony from six experts from the Competition Bureau.
“Decline” of independents
As for the effect on prices, the CRTC notes in its presentation documents that “there are some worrying signs regarding the prices of retail internet services”. “While there are generally a variety of packages and prices for internet services available in Canada, prices for mid- and high-end packages remain high compared to international peers,” it says, repeating the conclusions of a report published by Innovation, Science and Economic Development Canada (ISED) in 2022.
Since taking office in January 2023, Vicky Eatrides has bluntly acknowledged that the CRTC policy “has not had the effect [recherché] on prices. The hearings opened with the presentation of the Competition Bureau, where Mr.me Eatrides also worked from 2005 to 2019.
For Krista McWhinnie, deputy commissioner at the Competition Bureau, the difficulties in accessing independent providers to subscribers’ homes, what is called “unbundled wholesale access” in the jargon, “contributed to the decline” of these small actors.
The brief submitted by the organization is even more precise as to the causes of this decline. Essentially, an analysis last October noted that independent market shares had declined “nationally, in every region, and in almost every census metropolitan area analyzed.”
At the same time, it was noted that these independent providers had seen an increase in their subscribers in areas where they had access to cable, rather than optical fiber.
“The Bureau believes that this decline is primarily due to the lack of effective wholesale access to networks [de fibre optique jusqu’au domicile des abonnés] FTTP”, we conclude.
Price reductions requested
The CRTC further confirms in its presentation documents that independent providers have largely turned, since 2015, to cable companies like Videotron, “which now hold 75% of the total wholesale services market.”
Matt Hatfield, director of the consumer defense organization OpenMedia, spoke in his testimony of “a market decimated in the last 18 months”. He read several letters from Canadian consumers illustrating, according to him, “their fed up with these competition problems.” “Talking to a service provider is often the worst experience for a consumer. People don’t have the expertise, but they know when a supplier has too much power. »
John Lawford, director of the Center for Public Interest Advocacy, agreed. “We have an underdeveloped internet market. Canadians see that the market shares of the incumbents are enormous, and that there is little left for independents […] All they want is for price reductions. We have observed a lot of frustration among consumers, and it will increase. »
CRTC hearings will continue all week. The companies that own the networks, Telus, Bell, Videotron and Rogers, are expected on Wednesday and Thursday.