Montréal (Île des Sœurs) by JasonParis (CC BY 2.0)

Montréal (Île des Sœurs) by JasonParis (CC BY 2.0)


Ignore the Scare Tactics: The Real Future of Bell Investment in Fibre Networks

Bell’s defeat this week at the Federal Court of Appeal over its MobileTV service marked the second high profile regulatory loss in recent months for Canada’s largest communications company. Last month, the government rejected Bell’s cabinet appeal of a CRTC decision on broadband infrastructure. The CRTC ruling means that companies such as Bell will be required to share their fibre networks with other carriers on a wholesale basis.

Bell’s appeal (and accompanying lobbying effort) was premised on the notion that CRTC regulation would force the company to reconsider its fibre investment. Indeed, its cabinet appeal stated:

There should be no doubt that going forward, as a result of the CRTC’s decision, each fibre-to-the-home investment opportunity will be reviewed and the pace and scale of our investment will unequivocally be affected. Where a project’s projected return on investment is uncertain, capital will not be allocated to it. The CRTC’s decision means that investment will be stopped or delayed for years in areas where the return on investment can no longer be justified. This is simply the commercial consequence of the CRTC’s decision to mandate network unbundling in order to foster resale competition.

This version of the Bell fibre story was repeated to many municipalities, who wrote letters on behalf of the company. It included claims that the investment could decline by hundreds of millions of dollars if the CRTC decision was upheld.

Yet that is only one version of the Bell story on fibre investment. As attendees last week at the TD Securities Telecom and Media Forum learned, there is another version. With a far different audience – investors rather than regulators – the company’s message delivered by Glen LeBlanc, BCE’s Executive Vice-President and Chief Financial Officer, was much different (transcribed from webcast):

No bigger part of our strategic imperatives than that of fibre and enhancing our fibre footprint.  We have about 2.5 million premises covered with fibre today and we see ourselves at 3 million by the end of calendar 2016.  The focus right now is Toronto. We made an announcement that will build fibre to 1.1 million homes here in Toronto. That will be virtually complete the end of 2017, early 2018.

That’s about a third of premises that we would ultimately like to cover with fibre. Out of the 10 to 11 million homes we serve, we think we can bring fibre to about 9 million of that.  Frankly, that’s going to take 8 – 10 years to get there and do that.  But we’re a third of the way there...This is going to continue. It’s paramount to us to have a network of tomorrow. That’s what we’re building now.  A future-proof network, whether than be offering gig service to ultimately 2 gig, 10 gig, 40 gig service. That’s a network that for us is critical to long-term success.

Why are the fibre networks so critical? According to Leblanc, the cost savings that come from reduced service expenses is a huge factor:

We have experience now and I can speak to my experience in Atlantic Canada when we built out fibre optic in Atlantic Canada when I was CFO of Bell Aliant.  Now the benefits that we’re seeing 6 or 7 years down the road. Lower customer churn, higher ARPU per household, we’re seeing significant cost reductions in the network, lower truck rolls, lower calls to the contact centre. Ultimately, when you fast forward through the next decade, we’re going to end up with a very different cost structured telco in the future. There’s no electronics in the field. That’s one thing that I can’t overstate of how important that is. Whether that be a copper network that quite frankly over time in Canada does not age well in humidity and rain in Canadian weather. Or even fibre to the node or networks that have electronics in the field – DSLAMS or nodes. Those nodes ultimately lead to trouble, which leads to service troubles with customers and truck rolls and calls to the call centre.

Fibre is all about elimination of all of that. It’s a glass strand from our office to your home. There are no active electronics in the field.  It’s a passive network. The cost savings for that in the long term are very substantial. Payback is 7 to 10 years we would say on average. This is about reinventing who were are.  A 135 year old company that has lived off of copper networks for most of that having another 135 years on the network of tomorrow.

In fact, Leblanc went further, noting that the end goal is the elimination of the existing copper network:

The numbers we’re seeing from Verizon are absolutely achievable [30% cost expenditure reduction once a city has fibre] and we’re seeing that. But I want to separate the cost savings you see today with the cost savings you ultimately see in the long run.  The first cost savings I’ve already alluded to: that’s the lower truck rolls and better customer experience. The network performance savings, lower calls to the call centre. We’re absolutely enjoying that right out of the gate. We see about 40-50% lower truck rolls on a fibre network than our historic fibre to the node network. The great savings – the ultimate euphoria – is when you can shut down your copper network. That’s where I think you see the telco of tomorrow. 

In other words, Bell’s plan is to extend fibre to the vast majority of its existing network given the enormous cost savings, the potential for increased revenues, and prospect of shutting down its existing copper network. Bell may rely on scare tactics in regulatory proceedings to claim that fibre investment will be jeopardized by regulation, but it saves the real story for the investment community.


  1. Devil's Advocate says:

    This illustrates the conflict of interest that results from providers also having control of the infrastructure. Much of Canada’s phone infrastructure, which Bell built its initial wealth on, was built with public money.

    That infrastructure should have been maintained, expanded and improved by a neutral party. That at least would have guaranteed healthy competition between all providers, and possibly set up a scenario that enhanced net neutrality.

    • Maintaining 2 infrastructures (Copper and fiber) competitively under Bell’s roof (Central Offices) is virtually impossible. The existing ducts that go from the C.O. to homes and businesses are being reused for the fiber network and cannot accommodate both. The density of fiber traffic compared to copper makes it a mute point.

  2. Brent Beach says:


    I worked in telecom many years ago and based on what I learned then could not understand the push for fibre to each home – the copper network could provide all the bandwidth needed for 99.99% of subscribers. What was the issue?
    This column makes it all clear – it is not bandwidth it is maintenance costs. It is not demand pushing higher bandwidths. It is cost cutting CEOs making their mark.
    Down the road expect:
    1 tech boom as copper replacement procurement expands;
    2 job crash as all that maintenance is no longer required all those jobs will disappear;
    3 high service charges for the improved service.
    Of course, as costs go down and revenue goes up the CEO bonuses will go up so the universe is unfolding as it should.


  3. Thomas Rose says:

    Verizon experiences a 30% profit uptick after switching to fibre. No reason Bell can’t expect same, or better. At same time Bell (don’t know about Verizon) continues to hike consumer prices, arguing it is needed to fund future development.
    Oink, oink. The greedy, voracious corporate mammon sticks it to consumer and government alike.