Bell Canada says it will cut about 200,000 rural households from a broadband internet build-out to offset the impact of a regulatory change that lowers the wholesale broadband rate that it can charge smaller providers. Bell Canada head office is seen on Nun’s Island, Wednesday, August 5, 2015, in Montreal. THE CANADIAN PRESS/Ryan Remiorz

Bell will cut 200K households from rural broadband program after CRTC rate cut

Company says the cut will cost it $100 million

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 that 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.

READ MORE: CRTC lowers wholesale broadband rates to boost competition

Rogers Communication said it was very disappointed by the CRTC’s ruling and that 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 that the company will still make profits by selling infrastructure access to smaller providers, and could still very much 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.

ALSO READ: CRTC to bring in ‘code of conduct’ for internet providers

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 priced 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 that 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 make sure there are still incentives for the major providers to invest in infrastructure, while also giving opportunities for smaller players.

ALSO READ: B.C. minister says rural internet is ‘railroad of the 21st century’

Ian Bickis, The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

Rural municipalities bracing for possible RCMP cost hike

If proposal from province goes through, it could cost Ponoka County big time

Lacombe author Fran Kimmel to attend Words West of the 5th in Rimbey to celebrate Culture Days

Rimbey to celebrate Culture Days with renowned writers, photographers, musicians

Rimbey Christian School welcomes new teacher

New faces at Rimbey Christian School

Red Deer Rebels fall to Edmonton in home opener 4-2

Red Deer will play the second of a home and home on Sunday

Handgun crackdown, health spending and transit plans latest campaign promises

Friday was the end of a busy week on the campaign trail

Iconic 90s TV show ‘Friends’ celebrates 25th anniversary

The iconic, decade-long television show aired its first episode 25 years ago today

Expert says acquittal of Alberta parents in boy’s death unlikely to set precedent

The Stephans testified they thought their son had croup and used herbal remedies to treat him

Air Canada forced girl, 12, to remove hijab: civil rights group

The San Francisco Bay Area office of the Council on American-Islamic Relations calling for change

Man from Winnipeg who was hiking alone found dead in Banff National Park

RCMP say the man was hiking alone on Mount Temple Thursday

Singh campaigns in Toronto, May in Winnipeg, as Liberal and Tory leaders pause

All parties expected to be back on the campaign trail Sunday

Possible Canadian cases of vaping illnesses being investigated: health officer

‘I think that will be really important to address the overall trend of youth vaping’

Most Read