Cogeco would like to no longer be forced to sell access to its wired network to large telecommunications companies. Intended to stimulate competition, the Canadian regulatory framework rather helps the biggest players in the industry, argues the Montreal cable distributor.
The regulatory framework adopted at the end of the 1990s to stimulate competition no longer adequately plays its role, asserts the president of Cogeco Connexion, Frédéric Perron, in an interview.
“It was turned upside down,” he denounces. The opposite is happening, where it is mainly the big players, therefore the “Big Three”, Bell, Rogers and Telus, who use this regime to increase their dominance over our network. »
The three big telecommunications companies represent almost half of the wholesale sales on Cogeco’s network, says Mr. Perron. “This diet was supposed to help little ones. »
The phenomenon has grown in the last 12 to 18 months, observes the businessman. “It was a lot smaller, that’s what I can say. »
The industry has also lost several independent players in the last two years. Bell acquired Ebox and Distributel. Telus got its hands on Altima. Cogeco itself consolidated the industry with the purchase of Oxio.
Cogeco will present its arguments to the Canadian Radio-television and Telecommunications Commission (CRTC) on Thursday during public hearings on the framework for wholesale high-speed access services.
The cable company is not calling for an end to wholesale rates, which have encouraged competition, but it would like the three largest telecoms companies to no longer be able to benefit from the regulatory framework. Quebecor, which operates the Videotron and Fizz brands, is not covered by this request.
Mr. Perron finds it unfair that the three large companies use the network of a regional player, like Cogeco, to compete with it. Cogeco has no choice but to carry out wholesale sales at a rate regulated by the CRTC. “It is an existential threat for regional players like Cogeco. »
The manager does not want to reveal what volume represents wholesale compared to direct sales to subscribers for competitive reasons, but he answers that it is a “fairly important” activity. “Sometimes, we have to make new investments, just to help our competitors, because we have to increase the capacity of our network because their presence is quite significant on our network. »
Even though Cogeco is well known in Quebec, Mr. Perron emphasizes that the company is much more modest than the Canadian telecommunications giants. He gives the example of Bell, which announced the layoff of 4,800 people, or 9% of its workforce, last week. “The layoffs are almost the total number of Cogeco employees,” he says.
Bell supports Cogeco’s proposal. She goes even further by asking to exclude Videotron in the regions where it is present. “Specifically, national wireless providers, Bell, Rogers and Telus, should not be able to benefit from resale anywhere, while other incumbents, such as Videotron, should not be able to benefit from resale on their wireline territory,” said company representatives in their opening remarks on Wednesday during the CRTC hearings.
Asked to react on Monday, Rogers and Telus did not respond to our requests.
Optical fiber
Cogeco will also ask the CRTC not to be forced to offer access to its fiber optic network to the home and that this obligation only applies to major players.
The CRTC took a first step last November with a temporary decision before the February hearings to force “large telecommunications companies” to share their fiber optic network to the home in Quebec and Ontario.
Cogeco does not want this obligation to be extended to its activities on a permanent basis. If the CRTC still chooses this option, Cogeco requests an exemption period, time to make its investments profitable.
“As for the new fiber networks that we have built in remote rural areas, that we have just built, that we have not yet had our return on investment, such developments should be excluded of the regime for a few years. »
Asked whether Cogeco could reduce its investments in infrastructure if it is not satisfied with the regulatory framework that the CRTC will adopt, Mr. Perron is cautious. “I wouldn’t want to speculate because it depends: it’s not black or white. It depends on what they’re going to rule on, but possibly yes. »
A dilemma for the CRTC
Pierre Larouche, professor of competition law at the University of Montreal, judges that the proposal to exclude Bell, Rogers and Telus from access to the Cogeco network is “reasonable”, but the CRTC will also want to avoid that the Montreal company finds itself in a monopolistic situation in certain remote regions. “It’s never a good idea to be stuck with just one supplier. »
The CRTC risks experiencing a certain dilemma when listening to Cogeco’s arguments, believes Mr. Larouche.
“These are arguments that are very difficult to decide.
” We [le CRTC] does not want to say to Cogeco: “We accept that you are transformed into a player who only does wholesale resale”. We must maintain a certain level of encouragement for Cogeco to continue to invest; that requires incentives.
“On the other hand, we cannot say either: “Do what you want in the regions where you invest,” adds the professor. So, you would be king and master until one of your competitors brings the connection to your customers’ homes. »
A middle ground proposal could be to exclude large telecommunications companies, but to offer wholesale sales to smaller independent players, says Mr. Larouche. “Let’s say that the damage for Cogeco would be less great. »