The arrival of glass fibers lowers the discounted internet providers

Old copper cabling is seen in a storage room in the garage of a high-rise home in Toronto on September 19, 2017.

Christopher Katsarov / The Globe and Mail

George Burger says his company VMedia Inc. no internet service can get into buildings and homes of customers as it once did, because copper cabling used by the Toronto-based internet provider to reach customers is replaced, and parts of its market take over.

The problem is that fiber-optic networks – which carry internet signals over glass filaments – are gradually being installed directly into homes and replacing slower but cheaper copper-based wiring.

VMedia is one of the hundreds of independent ISPs throughout Canada that rent space on the networks of major telecommunications and cable companies to cater to price-conscious consumers who would like to pay monthly fees that are about 25 percent lower are compared to the larger regular partners.

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But Burger says that ISPs like him are increasingly less able to offer consumers such low prices because they lose access to old wiring that can be rented from a major player at a mandatory wholesale price low enough to still make a profit.

Burger says it is not always clear why VMedia can not get access to a new customer in an older building.

"We know that we used to have someone in that building that we could maintain and now we can not."

Graham Fletcher, owner of independent ISP, the internet center in Edmonton, shares Burger's concern about removing old wiring such as digital subscriber lines (DSL) that telephone companies use for residential Internet services.

Sometimes, says Fletcher, old wiring is removed from pipes running through a neighborhood, while other times the copper wires remain, but they are not available for communication because their power is diverted for other purposes.

"Anyway, we lose the DSL activities when they use the cable tube," says Fletcher.

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The Canadian Radio Television and Telecommunications Commission has decided that large telephone and cable companies are obliged to allow small ISPs to use their newer fiber optics – but at intermediate prices that are too high to beat business, and much higher than the wholesale prices for legacy cabling, says Burger.

VMedia, for example, currently has to pay $ 121 per month to Bell for every fiber line – higher than the promotional retail prices that Bell recently offered to consumers for its fiber-to-the-home products.

Both Burger and Fletcher – together with the Canadian Network Operators Consortium (CNOC) – have urged the CRTC to complete the process of determining the final wholesale prices for hiring fiber optic infrastructure.

They expect the final wholesale rates set by the CRTC to be much lower than the current interim rates.

"I am pretty sure that the CRTC will realize over time that this needs to be addressed," says Burger.

"But for the time being, as it looks now, it is really unclear in which direction the regulators encourage competition at the independent ISP level, and that is the concern."

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Matt Stein, chief executive of Distributel – a national independent ISP based in Toronto – says the process of the CRTC "takes much longer than we expected and during this delay the major carriers will continue to operate without competition from companies such as Distributel."

"This means that customers do not get the full offer they deserve," says Stein, who is also the chairman of CNOC, who represents independent ISPs.

But there is a limit to the effect of lower prices on the Indians, says Warren Shiau, vice president of research at IDC Canada. He suggests that consumers are willing to pay what Bell, Rogers and Telus charge for various reasons, including the complacency of the consumer.

"The resellers offer considerable cost savings, usually in the area of ​​25 percent for comparable services, but relatively speaking their share in the market is miniscule," he says.

Only 13 percent of Canadian Internet internet subscriptions were distributed among the approximately 550 alternative providers in 2016, according to the Competition Bureau, with 87 percent among a dozen regional telephone and cable companies such as Bell Canada and its subsidiaries, Telus, Rogers, Shaw, SaskTel, Videotron , Cogeco and Eastlink.

"It's not that it's hard to find one, there are hundreds, it's not that the service is inferior, they just sell Bell's internet service, Rogers or Telus networks – so the service is equivalent. "

Burger says that VMedia, despite the small market share it owns, could flourish with the legacy wiring "because we were able to offer services at a significantly lower cost than the incumbent operators."

"And we still made money, so you can imagine how much the incumbent operators were doing."

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