Wholesale model upside down: Jetté

According to the CEO of one of Canada's largest regional internet service providers, the recent state of acquisitions in the telecom market has effectively inverted the wholesale model from what it was meant to be. “Through their acquisition of smaller players are using part of our capacity. And we're not the smallest, there are smaller players where the big incumbents are using more of their capacity. And that's wrong,” Cogeco Inc. CEO Philippe Jetté said Wednesday in conversation with TD Securities analyst Vince Valentini at the bank’s annual telecom and media investors conference. The past year has seen the acquisition of several different competitor ISPs by larger incumbent players – BCE Inc. bought EBox and purchased Distributel, Quebecor Inc. took over VMedia, Telus Corp. acquired independent ISPs Start.ca and at the same time revealed that it had acquired Altima Telecom in June 2022. “The regime was never designed or intended for massive players to use the middle capacity, a small network provider, very local, is building. The model is totally upside down when we see large incumbents using the capital and the capacity of small players,” he said. Valentini asked the CEO to share his thoughts on the TPIA framework which the CRTC is looking to rejig. In March the commission reopened a consultation into the rates competitor ISPs pay to incumbents for mandated access to their networks. Jetté said there needs to be more “symmetry” between the wireline and wireless frameworks. “In wireless you need to invest to be part of the framework and in wireline there's absolutely no minimum investment required. You can adopt the TPIA framework, get in, and never invest. I think we first need to fix that symmetry,” he said. He also said the CRTC needs to take into account the fact that larger players not only have built infrastructure but also built market positions in terms of their brands whereas smaller players have no technology or brand recognition. “You can be a national player with a very well known brand. You can be a regional player with a brand known in your region but not outside or you can be a very local player with no brand on the regional or national level – and all of this has to play in the rates,” he said. Valentini also asked Telus chief financial officer Doug French where the company stands on regulatory issues, with the CRTC reviewing several key files and with the department of Innovation, Science and Economic Development continuously making noise about lower pricing, French said Canada needs a more stable regulatory environment and the CRTC should be less involved in the future of telecoms now that Quebecor Inc.’s Videotron has increased competition and prices are lowering. “When you think about the fact that the regulator asks to hit a certain price and you won't have MVNOs yet we're still having MVNOs and this Shaw-Rogers transaction will increase competition because Videotron increased competition – they should be less involved in the future,” Doug French said. French said over-regulating the sector will result in a lack of investment in rural coverage. “The reason we have rural coverage, rural fibre, and we have connectivity to almost all Canadians is because we have an investment return thesis in Canada. To the extent that that gets changed… we would change our investment thesis. There are certain areas where we would not go to for enhanced services,” he said. French said even if the fibre or 5G “pipe” is built in those areas there is still a lot of investment required to enhance the networks to make it valuable to the users. “That investment thesis would change if we don't have that continued focus on return on investment,” he said. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Wholesale model upside down: Jetté

News | May 24, 2023

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Wholesale model upside down: Jetté

News | May 24, 2023

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