In a ruling that will please small Internet Service Providers (ISPs) and frustrate large incumbent providers, the CRTC has decided that not only do large firms need to give small players access to their Internet networks; but they must also provide small competitors with access to the same blazing fast speeds offered to their own customers.

The decision was made to help foster competition; much like the decision Industry Canada made back in 2008 to open up the wireless market to new competitors by setting aside spectrum exclusively for them. In this instance, smaller ISPs, like TekSavvy Solutions and Primus Canada, will be able to better compete with larger "incumbent" firms like Bell and Rogers by being able to offer the same network speeds to their customers. Additionally, large cable companies must design their networks such that smaller ISPs can connect to them through "as few points as possible." Like the telephone companies, the cable firms must also provide access to alternate ISPs at matching speeds to what they offer their own customers.

Typically, while smaller ISPs could gain customer appeal in niche markets by offering more affordable pricing, the downfall was always the speed: the networks would be slow and congested, thus potentially driving customers back to the larger, more reliable firms.

"We give $20 to Bell out of every $30 we charge," Rocky Gaudrault, CEO of TekSavvy told Marketnews contributor Frank Lenk in an interview on the topic earlier this year. "The last few years, we've been fighting for equal speeds."

At a hearing earlier this summer, the incumbents argued that aiding the smaller firms would delay or reduce investments in new fibre cabling initiatives, and even went so far as to indicate that what smaller ISPs want is "impossible" on a technical level.

Still, the CRTC seems to have sided, in large part, with the alternative ISPs.

"Access to broadband Internet services is a key foundation for the digital economy," says Konrad von Finckenstein, Q.C., Chairman of the Canadian Radio-television Telecommunications Commission (CRTC). "The large telephone and cable companies are bringing their fibre networks closer to Canadian homes and businesses, which allows for faster Internet connections. Requiring these companies to provide access to their networks will lead to more opportunities for competition in retail Internet services, and better serve consumers."

While smaller firms will undoubtedly benefit from this decision, however, larger ISPs, like Bell, have called the situation, on both the ISP and 3G wireless fronts, unfair. The incumbents have, and continue to, invest significant resources in building up their networks. Then, they are essentially forced to open them up to what are clearly competitors.

However, the CRTC has an answer to this: the larger ISPs will be able to charge competitors an additional $0.10 per one-cent markup on their costs for the use of the higher speed options of the wholesale Internet services, thus profiting in this manner from the partnership.

The CRTC did deny the smaller ISPs' requests for larger firms to reconfigure their networks to allow them to offer additional services. According to the Commission, this would "constitute a disincentive to network investments without necessarily enhancing innovation or competition."

Chances are good that this issue will be looked at again as alternative methods of communication beyond telephone and cable are emerging, including 3G HSPA wireless networks (using a Hub in the home affords access to speeds rivaling wireline broadband for multiple persons,) and satellite Internet.

"The CRTC will consider the need to phase-out mandated Internet access services when alternatives, such as wireless or satellite Internet services, become more accepted as substitutes," declares the Commission.

For now, however, the issue will be of major concern to ISPs, especially as video viewing and streaming becomes more popular online with services like the Rogers On Demand Online portal, as well as companies like Netflix coming to Canada. How can ISPs manage growing traffic and still offer customers high network speeds?

What is your opinion on the matter? Did the CRTC make the right decision? Leave your thoughts in the comments section below.

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