By Todd Hofley
More than half of Canadian consumers likely think about switching their internet companies, but a fast-growing number of condo and apartment residents are prevented from changing suppliers because of “bulk arrangements” between big telcos and building developers.
A 2019 Competition Bureau Canada survey showed more than half of Canadians had considered switching telecom providers. Thirty per cent did switch. Since then, complaints about big telcos have grown substantially. But, over the same time, a tsunami of bulk agreements has locked more families into an internet service agreement they didn’t ask for, know about or participate in.
With a bulk agreement or arrangement, a large telco — such as Rogers, Bell, or Telus —negotiates to pay a developer a significant up-front payment (e.g. $425-$500 per unit: for a 500-unit condo in a 12-condo master planned community with 6,000 homes, it would be about $2.5M-$3M) in return for providing internet services to all the units in a multi-dwelling unit building (MDU) for a period of five to 10 years. Residents are automatically enrolled in this incumbent’s service and the cost is included in their condo fee or rent. There is no ability to opt out, cancel or negotiate on price.
A whole new class of captive consumer can now be defined by their type of housing. In a nutshell, despite their thoughts about shifting providers, tens of thousands of building residents are no longer able to exercise choice. Additionally, these consumers have lost their power and leverage. After all, it’s the consumers’ ability to choose that creates competition and forces companies to lower costs and improve services.
Bulk agreements were in limited practice until about five years ago because “end-user choice” was supposed to have been guaranteed by the CRTC in a seminal 2003 decision. Since then, despite this, hundreds of agreements have locked more and more residents into bulk arrangements, removing the competitive market within these buildings and substituting it with a monopoly.
Because of the nature of how these agreements are structured, the public — including the Canadian Radio-television and Telecommunications Commission (CRTC) itself — has had little insight into this practice, allowing it to grow exponentially in the shadows.
While “access” to a building is guaranteed through regulation, if that building’s market has already been locked down and turned into a defacto monopoly, the value of that “access” is zero. In some instances, the very nature of this monopoly is protected even further as the bulk agreement forbids marketing or promotion of services that compete with the bulk provider.
It makes no sense for a competing ISP to install facilities when an incumbent telco already controls all the customers in a building. It would be like the government of Canada saying that all Canadians must use Air Canada to fly between cities, and then being surprised when WestJet doesn’t.
Incredulously, the large telcos have said that an ‘end user’ wanting another service can simply pay twice. Once for the incumbent’s service and a second time for their provider of choice. As ridiculous a suggestion as that is, double paying isn’t even an option most of the time because there is no other network or provider to move to – because they haven’t built in – because there is no market to compete for.
Almost every high rise built in the last 25 years has at least two incumbents along with several other ISPs including third party wholesale competitors in the building. It’s because of this fiercely competitive market that prices for internet service in high rises are less than half of what someone in a house will pay and less than half of what they were only five years ago at speeds that are 4x. This is a perfect example of competition at work.
Today, bulk arrangements have locked in close to 50 per cent of Greater Toronto Area’s new and planned MDUs. By our estimation, over the last two years, more than twice as many residents than in the previous five years were forced into bulk arrangements. Every month, five to seven new developments are signed on to these agreements in favour of lone incumbent providers. The numbers are escalating fast.
A 2023 Beanfield survey of new multi-dwelling unit developments turned up 54 projects, comprising almost 40,000 units, with bulk deals ready to be rolled out. Rogers led with 29 buildings and 13,000 suites locked into bulk agreements between 2017 and 2022 with expiry and renewal dates ranging from the present to 2028.
Similar practices have started taking place in rural and suburban communities with single-family housing subdivisions. We are already seeing the snowball effect, rolling across Canada.
During the July 2022 national outage, many Canadians living in MDUs were cut off for hours, unable to share neighbours’ internet because entire buildings were locked in with a single ISP. One point of failure is bad for resiliency, safety and security for residents. The Canadian Internet Registration Authority recently stated, “As Canadian networks grow in tandem with the housing supply, internet access resilience must be made a priority. Decision-makers at ISPs and in the government must prioritize an environment with multiple network providers, mixed technologies and resilient configurations to ensure that Canadians can access the internet 24/7, 365 days —no matter where they live.”
At upcoming CRTC hearings in February, we’ll raise bulk agreements as a critical issue for the regulator and for independent ISPs where MDUs represent over half of the market. It’s part of how we can create a vibrant, sustainable, and competitive telecommunications market.
MDUs make up over a third of existing Canadian dwellings and 77 per cent of all new housing starts across the country. These buildings typically house younger Canadians and new immigrants — groups most in need of choice and consumer power.
CRTC Commissioners will be asked for a clear and timely ruling against Rogers’ bulk agreement practices that will set a precedent to end all network providers’ anti-competitive bulk agreements with developers.Consumers — whether they live in a house or a condo/apartment — should have the same right to choose.
—————-
Todd Hofley is VP, Policy and Communications at Beanfield, an independent telecom operating in Toronto, Montreal, Vancouver and Ottawa. Visit Beanfield’s Linktree page for sources to help Canadians learn more about the issue and help change the Canadian telecom landscape: https://linktr.ee/changetelecom.
Guest Post: Consumers deserve ISP choice, no matter where they live
Posted in Commentary with tags Beanfield on February 12, 2024 by itnerdBy Todd Hofley
More than half of Canadian consumers likely think about switching their internet companies, but a fast-growing number of condo and apartment residents are prevented from changing suppliers because of “bulk arrangements” between big telcos and building developers.
A 2019 Competition Bureau Canada survey showed more than half of Canadians had considered switching telecom providers. Thirty per cent did switch. Since then, complaints about big telcos have grown substantially. But, over the same time, a tsunami of bulk agreements has locked more families into an internet service agreement they didn’t ask for, know about or participate in.
With a bulk agreement or arrangement, a large telco — such as Rogers, Bell, or Telus —negotiates to pay a developer a significant up-front payment (e.g. $425-$500 per unit: for a 500-unit condo in a 12-condo master planned community with 6,000 homes, it would be about $2.5M-$3M) in return for providing internet services to all the units in a multi-dwelling unit building (MDU) for a period of five to 10 years. Residents are automatically enrolled in this incumbent’s service and the cost is included in their condo fee or rent. There is no ability to opt out, cancel or negotiate on price.
A whole new class of captive consumer can now be defined by their type of housing. In a nutshell, despite their thoughts about shifting providers, tens of thousands of building residents are no longer able to exercise choice. Additionally, these consumers have lost their power and leverage. After all, it’s the consumers’ ability to choose that creates competition and forces companies to lower costs and improve services.
Bulk agreements were in limited practice until about five years ago because “end-user choice” was supposed to have been guaranteed by the CRTC in a seminal 2003 decision. Since then, despite this, hundreds of agreements have locked more and more residents into bulk arrangements, removing the competitive market within these buildings and substituting it with a monopoly.
Because of the nature of how these agreements are structured, the public — including the Canadian Radio-television and Telecommunications Commission (CRTC) itself — has had little insight into this practice, allowing it to grow exponentially in the shadows.
While “access” to a building is guaranteed through regulation, if that building’s market has already been locked down and turned into a defacto monopoly, the value of that “access” is zero. In some instances, the very nature of this monopoly is protected even further as the bulk agreement forbids marketing or promotion of services that compete with the bulk provider.
It makes no sense for a competing ISP to install facilities when an incumbent telco already controls all the customers in a building. It would be like the government of Canada saying that all Canadians must use Air Canada to fly between cities, and then being surprised when WestJet doesn’t.
Incredulously, the large telcos have said that an ‘end user’ wanting another service can simply pay twice. Once for the incumbent’s service and a second time for their provider of choice. As ridiculous a suggestion as that is, double paying isn’t even an option most of the time because there is no other network or provider to move to – because they haven’t built in – because there is no market to compete for.
Almost every high rise built in the last 25 years has at least two incumbents along with several other ISPs including third party wholesale competitors in the building. It’s because of this fiercely competitive market that prices for internet service in high rises are less than half of what someone in a house will pay and less than half of what they were only five years ago at speeds that are 4x. This is a perfect example of competition at work.
Today, bulk arrangements have locked in close to 50 per cent of Greater Toronto Area’s new and planned MDUs. By our estimation, over the last two years, more than twice as many residents than in the previous five years were forced into bulk arrangements. Every month, five to seven new developments are signed on to these agreements in favour of lone incumbent providers. The numbers are escalating fast.
A 2023 Beanfield survey of new multi-dwelling unit developments turned up 54 projects, comprising almost 40,000 units, with bulk deals ready to be rolled out. Rogers led with 29 buildings and 13,000 suites locked into bulk agreements between 2017 and 2022 with expiry and renewal dates ranging from the present to 2028.
Similar practices have started taking place in rural and suburban communities with single-family housing subdivisions. We are already seeing the snowball effect, rolling across Canada.
During the July 2022 national outage, many Canadians living in MDUs were cut off for hours, unable to share neighbours’ internet because entire buildings were locked in with a single ISP. One point of failure is bad for resiliency, safety and security for residents. The Canadian Internet Registration Authority recently stated, “As Canadian networks grow in tandem with the housing supply, internet access resilience must be made a priority. Decision-makers at ISPs and in the government must prioritize an environment with multiple network providers, mixed technologies and resilient configurations to ensure that Canadians can access the internet 24/7, 365 days —no matter where they live.”
At upcoming CRTC hearings in February, we’ll raise bulk agreements as a critical issue for the regulator and for independent ISPs where MDUs represent over half of the market. It’s part of how we can create a vibrant, sustainable, and competitive telecommunications market.
MDUs make up over a third of existing Canadian dwellings and 77 per cent of all new housing starts across the country. These buildings typically house younger Canadians and new immigrants — groups most in need of choice and consumer power.
CRTC Commissioners will be asked for a clear and timely ruling against Rogers’ bulk agreement practices that will set a precedent to end all network providers’ anti-competitive bulk agreements with developers.Consumers — whether they live in a house or a condo/apartment — should have the same right to choose.
—————-
Todd Hofley is VP, Policy and Communications at Beanfield, an independent telecom operating in Toronto, Montreal, Vancouver and Ottawa. Visit Beanfield’s Linktree page for sources to help Canadians learn more about the issue and help change the Canadian telecom landscape: https://linktr.ee/changetelecom.
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