Leasing "Dark Fibre" May Encourage Foreign Telecom Competition

Canadian regulation has traditionally been extremely restrictive towards foreign competition. This especially true in the area of telecommunications where it has been all but prohibited for decades. However, a recent decision by the CRTC regarding the wholesale of unused fibre optic lines may create an inroad for non-Canadian companies to operate Internet services in Canada with more control over unused fibre optic cables, also known as "dark fibre."

Internet providers such as Bell and Telus frequently own huge amounts of broadband infrastructure, many parts of which are rented out to smaller companies to offer their own high speed Internet services. Most of what is rented out is already carrying a signal from the original owner. On the other hand, much of this wire is unused, leaving the reseller to "light" the dark fibre by sending its own signal through the cable.

Recently the Canadian subsidiary of an American company, AboveNet Communications Inc., applied to the CRTC to become a reseller using dark fibre lines. Telus, the company they had proposed to use resources through, objected citing that foreign companies are not allowed to operate telecommunications technology in Canada, even though the Commission had never ruled on whether lighting dark fibre could be considered an act of "operation."

As a result, the proceeding gave rise a consultation on the issue. Just last week it was determined that while foreign companies cannot own the physical infrastructure, a lack of restrictions may allow them to operate them, so long as they are contracted to do so by a Canadian corporation. While it is unlikely that clarification on this small loophole will result in any dramatic change in the broadband market in Canada, it at least create new opportunities for competition with resources that would otherwise go unused.

For a more detailed summary of these developments, read here.

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