BCE CEO says regulatory intervention threatens to stall fiber-network investment

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Canada’s telecom industry is “moving rapidly” toward regulatory intervention that threatens to stall investment in high-speed internet networks in rural communities, BCE Inc.’s chief executive says.

In order to foster competition in the internet market, the Canadian Radio-television and Telecommunications Commission requires large telecoms to sell access to their networks to smaller internet service providers at regulated rates.

In March, the CRTC launched a review of its framework for wholesale internet access, citing a desire to increase competition and reduce prices. The consultation includes looking at whether the large telecoms should be mandated to provide access to their fiber-to-the-home networks, which offer faster speeds.

Currently, internet service providers are able to negotiate access to those networks, but they say the prices are too high for them to be able to compete.

Mirko Bibic, the chief executive officer of BCE BCE-T, cautioned on Monday that if the rates are set too low, companies such as his will be forced to curtail their investments, particularly in smaller, rural communities, where the return on investment is lower.

“If it affects the ROI, we will cut investment, or we will pace it out more slowly, and rural and smaller communities are going to get left behind – or they’ll have to wait another five to 10 years, which I think is fundamentally unjust,” Mr. Bibic said in an interview after a speech to the Canadian Club Toronto.

In its notice of consultation, the CRTC states the risk of discouraging future investments in fiber-optic networks is “minimal” because those networks are mostly built.

However, Mr. Bibic said there are still four to five million locations without access to the technology.

He also cautioned that regulations that place the interests of resellers over those of builders could have negative unintended consequences on the country’s critical infrastructure.

“If you keep pulling on that thread and take it to its darkest conclusion, we’re all going to rely on one network. Is that what we want? That’s not competition,” he said.

He urged regulators to “take a breather” and allow the market to settle in the wake of Rogers Communications Inc.’s RCI-BT recently completed $20-billion takeover of Shaw Communications Inc SJR-BT.

As part of that deal, Quebecor Inc.’s QBR-BT Videotron Ltd. expanded beyond its home province of Quebec through the acquisition of Shaw’s Freedom Mobile, Canada’s fourth-largest wireless carrier.

“A merger was approved which makes one large competitor larger and makes another large competitor larger and extends its territory beyond the province of Quebec, and Bell and Telus are still making investments there. To me, that’s ultimate success,” Mr. Bibic said.

“So why don’t we just kind of take a breather, let the market operate? … There’s a risk of piling on from an intervention point of view, before we even let this new dynamic take place.”

Analysts have noted that competition between the telecoms has intensified in recent weeks, with Rogers and BCE’s Bell Canada entering into a price war on wireless and home internet bundles.

However, some analysts predict that the trend could be short-lived, with Rogers simply looking to appease regulators after its hotly contested takeover of Shaw.

Analysts have also noted that without mandated access to fiber-to-the-home networks, Quebecor will struggle to compete in the market for bundled services outside of its Quebec cable footprint.