In a post last month, I referred to a recent policy statement released by Ofcom, “Promoting competition and investment in fibre networks: Telecoms Access Review 2026-31”.
I thought the 39-page Statement by the UK regulator deserved a more serious look, especially in view of a sharp contrast with Canada’s regulatory posture, as set out in its 2024 Telecom Regulatory Policy: “Competition in Canada’s Internet service markets.”
Like the UK and many countries, Canada has set a political objective to extend high-speed broadband service to rural and remote regions. Of course, what the UK considers rural and remote is very different from the challenges faced by Canadian carriers. Officially, Canada defines rural as “areas [that] have populations of less than 1,000, or fewer than 400 people per square kilometre.” Roughly 20% of Canadians live in rural Canada. The UK government defines areas as rural if they fall outside of settlements with more than 10,000 resident population. In Canada’s Far North, we have a population density of just 0.02 per square kilometre. Although the definitions differ, roughly 20% of the population of the UK and Canada live in rural areas.
By the end of 2024, the CRTC shows 90.6% of Canadian households had access to gigabit broadband; Ofcom shows 87% of UK premises by mid-year 2025.
In their policy documents, there are similar opening statements by Canada’s CRTC and the UK regulator, Ofcom:
- CRTC: “the Commission is working to increase competition while ensuring continued investments in high-quality networks.”
- Ofcom: “Our regulation is designed to promote competition and investment in high quality gigabit-capable networks – bringing faster, better broadband to people across the UK.”
The UK’s approach, as laid out in Ofcom’s statement, is an endorsement of facilities‑based competition, with regulations mandating access to passive infrastructure (eg. ducts and poles). Canada used to operate under the premise that facilities-based competition is the most sustainable form; in recent years the CRTC decided to experiment with a hybrid approach, seeking to ensure its wholesale framework “provides equitable regulatory treatment” (as it describes in TRP 2024-180). The divergence is more than just philosophical; it is producing different market structures, and different investment incentives. Canada’s ‘top-down’ regulated wholesale-access policy is applied on wireline and wireless, in sharp contrast to the market-led approach in many other jurisdictions.
In its Policy determination, the CRTC said “Consumers have fewer choices when buying Internet services: in recent years, competition has been declining. By the end of 2022, independent ISPs served significantly fewer customers than they did at the start of 2020. At the same time, several of the largest independent ISPs have been purchased by incumbents.”
This formed part of the rationale for the CRTC’s shift. But there are some strange disconnects in the Commission’s logic. “These facts suggest that the Commission’s prior regulatory approach, which prioritized facilities-based competition, has not brought about sustainable competition that delivers more choice and more affordable services to Canadians, nor has it resulted in universal access to higher-speed Internet services.”
There were two different concepts there. On the first, I would actually argue that there had been greater competitive intensity today among the facilities-based service providers, as evidenced by levels of investment, lower prices, and marketplace rivalry. The fact that independent ISPs – those depending on wholesale access – hold a diminishing share of the market should have been expected as a confirmation that facilities-based service providers were always seen as the most sustainable.
What did the Commission think was meant by sustainable competition? The level of competition should never have been measured by the number of competitors.
As to the second concept (universal access to higher-speed Internet services), coverage cannot be extended by way of wholesale access. Extending coverage requires construction of new facilities, which would seem to imply the need to focus on promoting investment.
The CRTC noted that it had received evidence that “demonstrated how [a decision to mandate wholesale access] could decrease network upgrades and prevent future network deployment. The Commission recognizes that regulatory measures that reduce the incumbents’ revenues can challenge the business case for the incumbents to deploy networks.”
So, the CRTC set up a 5-year “head start” provision as an incentive for telephone companies to extend the reach of their fibre networks. “While the Commission notes that its rate-setting process is designed to be compensatory, it considers that a five-year head start would provide additional incentive for the incumbents to invest in areas where they have not yet built FTTP by giving them an opportunity to more rapidly recoup their initial investments.” At the same time, the CRTC excused cable companies from the obligation to wholesale its fibre, since it only has about 5% of homes with fibre to the premises (as contrasted with 60% of telephone companies).
As it turns out, that 5-year head start isn’t proving to be enough of an incentive. Over the past couple of months, I have written frequently [such as here and here] that capital expenditures are down, measurably down, with carriers pointing blame at the CRTC framework. The Commission’s own monitoring report shows annual drops in capital spending in 2023 and 2024 since levels peaked in 2022. Public company reports are pointing to nearly 10% lower capex in 2025, and projections to fall another 15% lower in 2026.
That should be no surprise to the Commission. The CRTC was warned, as it acknowledged in the Policy determination at ¶34: “The incumbents submitted that a Commission decision to mandate aggregated HSA is likely to reduce investment in high-speed networks.”
Investment impacts quality and coverage – factors that are important for consumers. Contrast sharply falling investment in Canada with Ookla’s latest report on the US market, “Aggressive U.S. Broadband Expansion in 2H2025 Narrows Digital Divide”. “The U.S. broadband landscape underwent a big shift in the latter half of 2025. Thanks to record-breaking new fiber builds, the aggressive expansion of SpaceX’s Starlink, and the growth in fixed wireless access (FWA), broadband availability achieved some new milestones.”
The Commission’s decision to exempt cable companies from mandated fibre wholesale due to low share might also serve as a disincentive for cable companies to invest in fibre. In the Policy, the CRTC said that it was excusing cable from mandated fibre wholesale because the cable companies had such a low percentage of premises with fibre: “by the end of 2022, the cable carriers’ FTTP reached just 5% of the homes they pass nationally, compared to over 60% for the ILECs… Mandating the cable carriers to provide aggregated FTTP services would be costly to implement relative to the benefits it may bring to Canadians. It may also result in a loss of cable carriers investment.”
The Commission warned, “A significant increase in the percentage of homes passed by the cable carriers’ FTTP may prompt a Commission review of whether the cable carriers should begin providing aggregated FTTP services.” This was very strange wording in my view – effectively threatening increased regulation if the cable companies invest too much in fibre.
In his speech at the Scotiabank TMT Investor Conference, CRTC Vice Chair Adam Scott described the Commission’s decision-making process as “we take the evidence on the record and use it to form a regulatory hypothesis — that by taking a certain course, we will see a certain type of outcome.”
In the case of capital investment levels arising from its fibre wholesale policy, the CRTC is clearly not seeing its anticipated outcome. How should the Commission respond?
I noticed an interesting phrasing in the Ofcom document with respect to capital expenditures: “We also recognised that the long-term nature of network investments requires regulatory stability and therefore set expectations about future regulation to 2031 and beyond.”
No one wants to see a return to Canada’s Calvinball approach to regulation. “The only permanent rule in Calvinball is that you can’t play it the same way twice.”
If we want to create appropriate incentives for private sector investment in telecom, we can’t keep changing the rules. But first, we need rules that actually encourage investment.