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Breaking High-Speed Fiber Network Monopoly in Canada

In Canada, the telecom/internet business is dominated by three companies, Telus Corp., BCE Inc., and Rogers Communications Inc. In markets where more than one could possibly be an option, they try not to compete, limiting customer options. Last year, the Canadian Radio-television and Telecommunications Commission (CRTC) proposed a plan to allow wholesale access to their fast fiber networks, but the implementation of the plan was set back by petitions from the companies, who said that allowing mandated access would lower the company’s return on investment from the use of their fiber infrastructure. This week, the CTRC will announce plans for the wholesale access to high speed fiber internet, hoping to increase high-speed coverage and to support retail competition. Under the new policy, smaller companies would be able to buy high-speed internet access from the bigger companies and create their own transmission facilities, giving them more control over costs. Before, the incumbents holding the monopoly were able to choke out smaller competition, since they could provide faster internet and already had the infrastructure in place to do so, while the smaller companies did not have the capital to update their dated infrastructure. Customers were left with one clear choice if they wanted high speed internet.

The competition between the large and small companies is a version of evolutionary stability strategy. To keep smaller companies from becoming competition to the larger ones, the larger companies don’t allow the smaller companies access their fiber networks, allowing them to reign as the sole providers of fiber internet. The smaller companies provide sub par internet compared to the larger ones, and have to pay outrageous prices or invest money that they don’t have if they want to provide fiber internet. Either way, the smaller companies can never win, so being a small company is not evolutionarily stable. The only way a new company could possibly win is if it has roots in a large amount of financial capital, for example, if AT&T decided to expand to Canada. Otherwise, a newly introduced company will be even more irrelevant through the years until they capitulate and bought out to become part of the monopoly. The new ruling will help relax the reign the larger companies have, hopefully allowing indie companies to buy up wholesale fiber internet access at a reasonable price to offer to their customers.

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