The impact of facilities and service-based competition on internet services provision in the Canadian broadband market

Abstract

A variety of studies have focused on the effect of competition in broadband markets on increasing broadband penetration rates. Few studies however have focused on the extent to which competition also results in innovation in the marketplace, as demonstrated by increased broadband speeds, and other improvements that provide value to broadband users. This paper considers the effectiveness of market competition as a means of encouraging broadband providers to offer innovative services that meet citizens' increasing needs for affordable high quality and high speed broadband connectivity. The study focuses on the provision of broadband services in Canada, a country where consumers were early adopters of broadband and where the policy environment has encouraged competition in the broadband market from its inception.Drawing on data from the OECD and the Canadian Radio-television and Telecommunications Commission (CRTC), the paper demonstrates that Canada's regulatory regime does not appear to be sufficient to enable a competitive marketplace that results in the provision of innovative broadband services.

Rural Broadband Development in Canada’s Provinces: An Overview of Policy Approaches

“…Incumbent telephone companies compete with incumbent cable companies to provide broadband services, and wholesale regulations require these companies to make their fixed line infrastructure (described as 'last mile' connections) service using the Bell or Telus copper DSL network, or the Rogers or Shaw cable network, rather than building its own networks). While Canada was one of the first countries to devise a wholesale access regime, previous studies suggest that relatively high regulated wholesale prices, and hesitation by the CRTC in application of the rules restricted the ability of non-incumbent Internet service providers to become effective competitors (Berkman Center, 2010;van Gorp & Middleton, 2010). Recent changes to the wholesale regulatory environment are making it somewhat easier for non-incumbents to develop competitive offerings but the regional duopolies of copper telephone and cable broadband operators still dominate the Canadian residential and business markets for Internet access services, with a 92% and 68% share of respective market revenues (CRTC, 2013).…”

Broadband transformation through improved support systems

“…The Berkman Center report describes Canada's unbundling policies as 'weakly implemented.' van Gorp and Middleton (2010) conclude that Canada's facilities-based competitive environment has not resulted in effective competition (defined by the ACCC as allowing competitors to hold 'a reasonably sustainable market position', Australian Competition & Consumer Commission 2009).…”

The strategic use of download limits by a monopoly platform

“…Unlike us, they don't model price or quality setting by the content providers and, so, do not consider the effect download caps have on those choices. Beyond the Dai and Jordan articles, the academic literature on download caps appears limited and focused on legal and regulatory issues (see, e.g., Van Gorp and Middleton, 2010). 9 In this regard, we note that, until recently, the Canadian ISP Rogers, which offers many plans, only offered plans with download caps.…”