Quebecor headquarters is seen in Montreal on Thursday, May 11, 2023.  THE CANADIAN PRESS/Christinne Muschi

Rogers Communications Inc. says the telecom regulator should phase out its current approach to wholesale network access, which requires smaller internet companies to pay a set rate to larger ones to use their networks and then sell to Canadians.

Appearing before the CRTC on Thursday during its weeklong hearing about internet competition, Rogers chief technology and information officer Ron McKenzie urged the regulator to prioritize the costs incurred by companies like Rogers when they build the network infrastructure.

"The decisions you make in this proceeding will impact both the scale and pace of these capital expenditures and could jeopardize the business case for the most challenging investments, including those in rural parts of the country," McKenzie said.

"If these investments were not large and risky, our wholesale-based competitors would be making them rather than relying on our infrastructure."

He said that at minimum, wholesalers should be required to compensate companies like Rogers through rates that properly ensure cost recovery "and the sharing of the enormous risks that we are taking."

The federal telecommunications regulator is in the midst of a hearing that could affect whether it expands a November decision that required telephone companies Bell Canada and Telus Corp. to temporarily allow wholesale access to their fibre internet networks in Ontario and Quebec.

The interim decision was intended to stimulate internet competition and provide consumers more choice.

It did not apply to Rogers as a cable operator. However, rules have long been in place that require cable companies to offer internet access to third-party resellers at a set rate.

Dean Shaikh, Rogers' senior vice-president of regulatory affairs, argued that has placed a "disproportionate burden" on cable operators. Rogers is in favour of phasing out wholesale mandates, with Shaikh noting large companies could still negotiate agreements with smaller providers on rates to access their networks.

"Wholesale mandates that are overbroad or that favour one type of network technology or competitor over others undermine the primary source of competition in the market," he said.

"If the commission disagrees, an equitable, minimally intrusive wholesale regime is the best way to advance the policy objectives."

Rogers' proposal would see cable carriers exempt from requirements to implement wholesale access for the portion of their networks that rely entirely on fibre technology, known as fibre-to-the-premises (FTTP).

Rogers says FTTP represents an "insignificant" proportion of its own network and the company is instead focused on ongoing investments to upgrade its hybrid fibre-coaxial cable network.

Shaikh said access to only one next-generation network per provider should be mandated, given the "limited reach of cable FTTP networks."

"Cable carriers should not be burdened with the costs of maintaining and operating access to both," he said.

"It would significantly harm our investment and it would be difficult to provision."

Earlier in the day, Quebecor Inc. CEO Pierre Karl Péladeau also highlighted the "regulatory asymmetry" that he said places cable companies at a disadvantage compared with telephone companies.

"After benefiting from such an exceptional regulatory holiday, we believe that it is high time for Bell and Telus to play according to the same rules as the cable distributors across Canada," said Péladeau, speaking in French.

He told commissioners that with Quebecor-subsidiary Videotron's wireline footprint still limited outside Quebec, allowing the company to sell to customers using its rivals' networks would help it expand its internet offerings in other provinces.

Péladeau called the commission's decision last November a "first step in the right direction." He also slammed Bell's recent warnings to the CRTC that it could further scale back investments in its fibre network, saying that the company is "exasperating Canadians."

Bell responded to the CRTC's decision last fall by announcing it would slash $1.1 billion in planned spending by 2025 to build out its fibre network. Bell also partially blamed the CRTC's direction for its decision last week to cut nine per cent of its workforce.

The company is appealing the partial decision before both the Federal Court of Appeal and the federal cabinet — "clear proof of Bell's habitual obstruction," said Péladeau.

"Bell is seeking by all means to protect its near-monopoly on (fibre) services and to torpedo the commission's efforts."

In a statement, Bell spokeswoman Jacqueline Michelis said "consumers in Quebec and in the rest of Canada are paying lower internet prices because of intensified competition from facilities-based providers."

"With the right regulatory framework, companies that are investing billions to build world-class fibre networks will continue to provide consumers with more competition and greater value than those who simply want to resell on others’ networks," she said.

This report by The Canadian Press was first published Feb. 15, 2024.

Companies in this story: (TSX:RCI.B, TSX:BCE, TSX:T, TSX:QBR.B)

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