Fostering competition in the Internet services market

We set wholesale rates to facilitate greater competition between Internet service providers and to promote innovative broadband services and affordable prices. Canadians can choose to buy Internet services from independent service providers or from large cable or telephone companies available in their community. In most areas of Canada, there are enough companies to ensure competition, innovation and options for retail Internet services. As a result, the CRTC does not regulate retail Internet service prices, except in Northwestel’s operating territory.

When we determined that there was limited competition for certain residential and business Internet services in Canada’s North, we decided to regulate, on an exceptional basis, Northwestel’s rates for these services.

Regulating wholesale broadband services

To foster greater competition, the CRTC requires that large companies sell access to their networks under specific rates, terms and conditions. Service providers use this access, with their own networks, to offer Internet and other services to their own retail customers. In other words, independent service providers are wholesale customers of large cable and telephone companies.

We set the rates that telephone and cable companies may charge their wholesale clients. The rates are based on the costs that the large cable and telephone companies incur to provide the wholesale service, and include a reasonable markup.

We have set the final rates for one type of wholesale service available to independent service providers known as the aggregated wholesale high-speed access service.

We are now working to implement a new regime known as the disaggregated wholesale high-speed access service that will enable competitors to access the large companies’ fibre-to-the-home facilities and offer their customers faster Internet speeds. In turn, this new wholesale model will better support sustainable competition and will provide benefits to Canadians, such as better prices and innovative broadband services.

Types of wholesale broadband services

There are two types of wholesale broadband services available to competitors, which they can use to access the large companies’ high-speed networks: the aggregated service and the disaggregated service.

Aggregated service

  • Available across Canada.
  • Provides access to fibre-to-the-node (FTTN) but not fibre-to-the-home (FTTH)*.
  • Competitors connect their network to a smaller number of points in the large companies’ networks.
  • Competitors have to rely almost entirely on the large companies’ network.
  • Generally higher costs to transport large amounts of traffic over the large companies’ networks.
  • Service is no longer mandated by the CRTC.

Disaggregated service

  • Currently available only in Ontario and Quebec.
  • Provides access to both FTTN and FTTH (which allows competitors to provide higher speeds to their customers).
  • Competitors connect to many points in the large companies’ networks.
  • Competitors have more flexibility in how they access the large companies’ networks, and therefore more control over the services they offer.
  • Competitors can choose how they want to transport traffic (lease facilities from large companies, purchase their own facilities, etc.).
  • Service is mandated by the CRTC.

*For FTTN, a telephone company connects to an end-customer through fibre and copper facilities, and a cable company connects through both fibre and a coaxial facilities. For FTTH, fibre is extended all the way to the end-customer.

Why is the distinction between aggregated and disaggregated services important?

The industry is transitioning from the existing aggregated model to the disaggregated model. This disaggregated model will encourage more competition by giving competitors more control over the services they offer Canadians and encourage them to invest in their networks.

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