The Impossibility of Fair Competition for Third-Party ISPs in Canada: The Impact of Unfair Wholesale Rates
MONTREAL, Oct. 28, 2024 (GLOBE NEWSWIRE) — Canada’s telecommunications market is dominated by a few major players, leaving little room for smaller ISPs to compete. Unfair wholesale rates set by larger telecom companies make it difficult for third-party providers to offer competitive pricing. This issue has become central to the debate on the future of internet services in Canada and the accessibility of affordable, high-quality internet for all.
“As an independent ISP founded in 2016, IVC Telecom has gained consumer trust by offering excellent services at affordable rates. However, high wholesale rates set by dominant telecom providers leave little margin for smaller ISPs to operate profitably,” says Vipin Kumar, Customer Service Manager of IVC. “This makes it difficult for companies like ours to compete, ultimately stifling market competition.”
The regulatory framework in Canada has been slow to address the disparity in wholesale pricing. The Canadian Radio-television and Telecommunications Commission (CRTC) has faced criticism for not ensuring rates that foster healthy competition. Despite numerous appeals from IVC, other ISPs, and consumer groups, changes have been slow, allowing major telecom companies to maintain their dominance. Regardless of CRTC decisions, IVC continues to advocate for affordable internet and more competition in the market.
The CRTC announced in August 2024 that a decision has been made to allow smaller providers to access the fibre networks of large telephone companies nationwide. The decision follows a public proceeding initiated in 2023, which already highlighted the declining competition in the Internet services market. The new access rules, effective from February 2025, will apply to existing fibre infrastructure, with new fibre being accessible to competitors five years after construction. The CRTC will set cost-based wholesale rates by the end of 2024. However, according to Vipin: “We can only surmise that these rates won’t be competitive enough for independent ISPs and won’t create more affordable choices for the consumer.”
The lack of competition in Canada’s ISP market has serious implications for consumers. With fewer choices, Canadians are often forced to pay higher prices for internet services that may not meet their needs. This is particularly concerning in an era where reliable internet access is essential for work, education, and daily life. The current situation also hinders innovation, as smaller ISPs are unable to gain a foothold in the market to introduce new technologies and service models that could benefit consumers. We have touched upon this subject in our blog about the status of internet competition in Canada.
For third-party ISPs, the situation is dire. Many operate with razor-thin margins or at a loss, making it hard to grow or improve services. Over time, fewer will survive, further reducing competition. “Many have been acquired by big telcos because they couldn’t compete,” said Vipin Kumar. “The CRTC set wholesale rates higher than the retail prices Bell and Telus charge, making it harder for competitors to price competitively.”
In conclusion, unfair wholesale rates from major telecoms create a huge barrier for third-party ISPs, limiting their ability to compete. Without regulatory action to ensure fair pricing, consumers will face fewer choices, higher prices, and slower innovation. The CRTC must act to foster a more competitive and accessible internet market. In the meantime, IVC will continue to fight for affordable internet for Canadians.
About IVC Telecom
IVC Telecom is an independent internet service provider, founded in 2016 and based in Quebec, Canada with the promise to provide affordable, reliable and the fastest internet and home phone services. IVC came into existence with the simple act of giving back to the community. IVC Telecom’s mission is to provide the best quality services at a reasonable price while treating our customers with the utmost respect.
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