(CBC) Bell scales back rural internet plans after CRTC decision on rates

(CBC) Bell scales back rural internet plans after CRTC decision on rates

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Bell Canada says it will cut roughly  200,000 households from a rural internet expansion program after a  federal regulator lowered wholesale broadband prices that major telecom  companies can charge smaller internet providers.

The  Montreal-based company said Monday the final rates set last week by the  CRTC will cost it more than $100 million, with the bulk of the sum going  to cover the retroactively lower rates.

"Putting  this kind of unexpected and retroactive tax on capital investment is  not the way to ensure the continued development of Canada's internet  infrastructure," said Bell chief operating officer Mirko Bibic in a  statement.

The company said that in response, it will cut back  by 20 per cent on a rural internet program designed to provide wireless  internet access to homes that are hard to reach by fibre or traditional  cable access.

Rogers reaction

Rogers Communication  said it was disappointed by the CRTC's ruling and it was reviewing all  future investment in rural and remote communities in light of the  $140-million charge expected by the decision.

The regulator  requires that large telecom companies like Bell and Rogers sell access  to their infrastructure to smaller internet providers as a way to  improve competition and lower prices.

After years of review, the  CRTC set final wholesale rates last week that were up to 77 per cent  lower than the interim rates set in 2016.

Bell's decision to cut  back spending is a political move designed to play on fears, said John  Lawford, executive director and general counsel of the Public Interest  Advocacy Centre.

"It  bugs the hell out of me that they can hold rural people hostage, or  pretend that they are, by saying, 'Oh, now we're not going to invest.'"

He  said the company will still make profits by selling infrastructure  access to smaller providers, and could still afford to continue the  high-speed expansion to less profitable rural areas.

"If they  dug a little deeper in their pockets they could keep those marginal  people on if they really believed in rural areas, but they don't.  They're using them as a pawn, so that's why it's sickening to me."

He  said rural internet expansion, which is already subsidized by the  government, isn't really related to the CRTC decision last week to set  lower broadband wholesale rates.

The  major telecom companies have long threatened that infrastructure  investments could be impacted by lower broadband access rates.

Bell  says the latest decision means the rural expansion program will be cut  back to a million households from 1.2 million across Manitoba, Ontario,  Quebec, and Atlantic Canada. The company had expanded the program from  an initial target of 800,000 households following a federal government  incentive program.

The cut to rural service expansion seems to  be based on a false premise, said Matt Stein, chair of the Canadian  Network Operators Consortium and CEO of Distributel.

"It seems like they're trying to put the blame on not being able to charge the excessively high prices that they had been."

He  said the CRTC didn't give a discount to independent service providers,  it just corrected a price that had been too high based on the  regulator's criteria.

"If Bell was counting on charging too high  a price for these services to wholesale ISPs as a way to fund rural  broadband, that doesn't make a lot of sense."

A Competition  Bureau study released in early August found CRTC rules that allow  smaller providers to buy access to networks have created more choice for  consumers and increased competition, though rural and remote customers  have fewer options.

The  study found 90 per cent of all customers were generally satisfied with  their internet provider, while customers of independent providers were  more likely to be very satisfied.

The Competition Bureau said it  was important to set wholesale rates at the right level to ensure there  are still incentives for the major providers to invest in  infrastructure, while also giving opportunities for smaller players.

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