Ruling unlikely to stem ‘Net growth

TORONTO • Experts are casting doubt that some major Canadian firms will follow through on threats to stop expanding their broadband networks after the CRTC lowered proposed rates to be charged to smaller rivals accessing their services.

The broadcast regulator’s decision isn’t significant enough to lower the profitability of big telecommunication companies to a point where they change how they spend on network infrastructure building, said Maher Yaghi, an analyst at Desjardins Securities.

“We have not seen, in Canada, telcos retract from making major investments based on CRTC decisions,” he noted.

In early October, the Canadian Radio-television and Telecommunications Commission announced interim rates that Bell, Rogers, Telus, SaskTel, Shaw, Cogeco, MTS and Vidéotron must charge independent service providers (ISPs) to gain access to their faster networks.

For the most part, these rates were lower than those the companies proposed, and in some cases, by up to 89 per cent, the CRTC said.

Bell Canada hopes the CRTC will set final prices at a rate that will allow large companies with ongoing infrastructure projects to continue to fund them, said BCE Inc.’s chief executive officer George Cope.

If the CRTC’s final rates are too low, “those type of investments can be curtailed,” he told analysts during a recent conference call.

Bell invests roughly $3.7 billion in capital annually, spokeswoman Jacqueline Michelis said in an email.

Telus has voiced similar concerns. Spokesman Richard Gilhooley said the telco, which invested about $2.85 billion in new infrastructure this year, can only continue to make such enhancements in a regulatory environment that affords it the ability to make that money back over time.

For its part, the CRTC said its interim rates are “just and reasonable,” and accounted for investment and enabling of competition.

Yaghi noted that smaller rivals that gain access to bigger networks would have to pass on the savings to consumers by lowering their price offerings to become more competitive and snag more market share.

It would take a lot of growth to concern the large companies, he added, estimating that the market share of all the smaller ISPs together doesn’t break double digits.

Drew McReynolds, an analyst at RBC Dominion Securities, offered a more generous estimate of 15 per cent in a recent note.