Bell Canada To Cut Rural Internet Expansion To 200,000 Homes

A week after federal regulators in Ottawa announced that they are lowering wholesale broadband prices that major telecom companies can charge smaller internet providers, Bell Canada, an arm of BCE Inc. (TSX:BCE) has announced that it is cutting 200,000 households from its rural internet expansion program.

The Montreal-based telecom company said the final rates set last week by the Canadian Radio-television and Telecommunications Commission (CRTC) will cost it more than $100 million, with the bulk of the sum going to cover the retroactively lower rates.

Bell Canada said that in response, it will cut back 20% on a rural internet program designed to provide wireless internet access to homes that are hard to reach by fibre or traditional cable access.

Rogers Communication (TSX:RCI) followed the Bell Canada announcement by issuing a statement saying the company is "disappointed by the CRTC's ruling" and is reviewing all future investment in rural and remote communities in light of the $140-million charge it expects to receive due to the regulator’s decision.

The CRTC requires that large telecom companies like Bell and Rogers sell access to their infrastructure to smaller internet providers as a way to improve competition and lower prices.

After years of review, the CRTC set final wholesale rates last week that were 77% lower than the interim rates set in 2016.

Canada’s major telecom companies – Bell, Rogers and Telus (TSX:T) – have long threatened that infrastructure investments could be impacted by lower broadband access rates.