Cogeco concerns itself with wireless technology, making its entry into this field
The Canadian Radio-television and Telecommunications Commission (CRTC) has made a landmark decision that could reshape the telecommunications industry in Canada. The ruling, which allows large providers like Cogeco to borrow infrastructure from rivals, is paving the way for Cogeco's expansion into the wireless market.
However, this decision has sparked debate and controversy among industry players. Cogeco, for instance, argues that allowing national providers like Telus access to its infrastructure is unfair given the size difference between the two companies. Telus, on the other hand, is the only company currently satisfied with the CRTC's decision, taking advantage of these conditions to expand its presence in eastern Canada at little cost.
Cogeco's quarterly financial results have taken a hit, with the cable distributor losing subscribers in both the U.S. and Canada, particularly in basic TV and telephone services. Its American subsidiary, Breezeline, lost 10,425 internet subscribers in three months, and excluding the U.S. dollar variation, Breezeline's sales decreased by 6.6% compared to last year.
The decision has also led to a revision of revenue forecasts for the 2025 fiscal year, and Cogeco's stock has suffered, losing $6.02, or 8.49%, to $64.88 on the Toronto Stock Exchange.
For small Internet Service Providers (ISPs), the CRTC's decision provides increased competition, allowing them to access aggregated wholesale fibre networks and offer higher speeds and better services. While this increased competition can enhance their ability to attract and retain customers, small ISPs have historically struggled to fully utilize disaggregated access, leading to market instability. The new rules may help stabilize this aspect by ensuring aggregated access, which can be more manageable for smaller providers.
Large providers like Bell, however, have expressed "deep disappointment" with the CRTC's decision. Bell has reduced its spending on the maintenance and expansion of its national wired infrastructure by $500 million by 2025 and more than $1.2 billion since November 2023. The company argues that the decision undermines the business case for new network investments and might discourage further investment in fibre infrastructure.
To mitigate this, the CRTC has introduced a "head start rule" that gives large incumbent providers a grace period until 2029 before they must provide wholesale access to newly deployed fibre. This rule allows them time to recoup some of their network investment, potentially supporting their long-term viability.
In conclusion, the CRTC's decision aims to increase competition, benefiting consumers by offering more options and potentially better services. However, the impact on large providers could limit the expansion of networks, as they adjust their investment strategies in response to the regulatory environment. For small providers, the increased access to fibre networks could enhance their viability by enabling them to compete more effectively. For large providers, the reduction in investment may challenge their ability to sustain long-term growth and expansion. Providers have appealed the CRTC's decision, and the federal government has until mid-August to amend it or not.
- Despite the CRTC's decision being welcomed by some, such as Telus, who see an opportunity to expand in eastern Canada at reduced costs, French telecommunications company Cogeco has faced challenges, with its quarterly financial results showing a decrease in subscribers and sales.
- As the "head start rule" allows large providers like Bell a grace period until 2029 before they must provide wholesale access to newly deployed fibre, one might perceive the CRTC's decision as an incentive for French companies like Cogeco to invest more in technology andfinance to expand their business operations, including the wireless market.
