Fewer independent ISPs means your internet bill will keep rising

If animal species were going extinct as quickly as competition from Canadian independent internet providers, the government would have declared a national emergency long ago.

In recent years, small business internet service providers (ISPs) have either been swallowed by larger competitors or shut down altogether. Paul Andersen, head of the Competitive Network Operators of Canada (CNOC), told a regulatory hearing a year ago that independent operators have lost nearly 40 per cent of subscribers nationally—and almost half in Ontario and Quebec—since late 2020.

CNOC itself is shrinking. The organization now has only 15 members, down from 31 just three years ago. Next week, when the Canadian Radio-television and Telecommunications Commission (CRTC) releases its latest decision in this ongoing regulatory battle, more ISPs could be forced out.

At the heart of this decline is the CRTC’s long-running struggle to regulate competition. For nearly two decades, it has been caught in a battle over whether independent providers should have fair access to networks built by larger telecom companies—and at what price.

Regulatory chaos is killing internet competition in Canada. Photo by Glenn Carstens-Peters

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The commission has repeatedly tried to advance Third Party Internet Access (TPIA), but the process has been chaotic. It has set interim wholesale access rates, had them appealed, tried to correct them, been forced to retreat, reconsidered them again, been told by cabinet to take another look, and set rules for some regions that don’t apply to others—but might in the future.

Despite all this, competition keeps shrinking, and the internet market is looking more like the cable TV industry—where fewer choices mean higher prices and weaker competition.

Some argue that the solution is simple: those who invest in infrastructure—digging ditches and stringing poles to bring fibre lines to homes—shouldn’t be forced to share their networks.

That argument might make sense in a true free market. But Canada’s telecom sector isn’t a free market. It is a protected, regulated industry in which policy decisions constantly shift.

Sometimes, telecom giants complain about regulatory burdens. Other times, they benefit—such as when they are allowed to bundle internet, cell phone, cable, and landline services into exclusive packages. This is the game all involved are engaged in with the CRTC.

Under this system, blocking competitors from accessing networks doesn’t promote competition. It creates an oligopoly. At worst, it leads to a monopoly.

For years, Bell, Rogers, and Telus have insisted that fewer competitors actually benefit consumers. They argue that the number of dogs in the fight doesn’t matter—it’s the fight in the dogs that counts.

They claim that a small number of strong competitors can still keep prices low and service quality high. Even they acknowledge, however, that companies need an incentive to build infrastructure.

That is where things get complicated.

Regional providers like SaskTel, Eastlink, and Videotron operate under different models, raising the question of how competition should be defined in a market where some players are government-owned and others are vertically integrated giants.

This brings us to Telus’s latest move.

Right now, Telus—a telecom giant in the West—is trying to enter Ontario as a “new competitor.” The company wants access to fibre networks built by both large and small players, claiming it should be treated the same as independent ISPs.

This attempt to play both sides—acting as an incumbent in some markets while seeking preferential access as a competitor in others—has turned into a regulatory mess. Multiple CRTC rulings, cabinet appeals, legal battles, and a Telus-backed “populist” petition have only complicated the situation.

While all this plays out, smaller ISPs remain stuck in a regulatory swamp, struggling to stay afloat while incumbents navigate it comfortably. They need clarity. Instead, they get delay after delay.

Consumers deserve real competition, but that only happens if investors know the regulatory landscape is stable. Right now, that stability does not exist.

Next week, the CRTC will issue its latest ruling. Will it finally stand up for competition, or will it let independent ISPs fade away, leaving Canadians with fewer choices and higher prices?

Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, an award-winning journalist, and former vice-chair of the CRTC.

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