Scotiabank Questions Canadian Telecom Infrastructure Investment Amid Regulatory Pressures
Canada’s telecom industry faces a pivotal question: why should carriers continue to heavily invest in infrastructure under the current regulatory environment? This debate, sparked by Scotiabank analyst Maher Yaghi during an analysis of BCE’s 2025 financial results, highlights significant challenges for the nation’s largest telecom operators such as BCE, Rogers, and TELUS. According to Yaghi, Canada’s regulatory framework, which mandates carriers to lease their networks to competitors at rates set by the regulator, rather than market-driven prices, creates a dilemma for future investment.
Regulatory Challenges Threaten Long-Term Investments
The current policy environment forces operators to provide equal access to their infrastructure investments, meaning that competitors benefit from new upgrades without sharing the financial burden. Critics argue this discourages innovation and risks stagnation in network development. Compounding this issue is the high debt levels carried by incumbents like Rogers and BCE, which further strain their willingness to commit to future capital expenditures (capex).
Yaghi questioned whether these financial headwinds warrant a shift toward capex reductions, more aligned with smaller players like Quebecor. This approach, however, risks compromising Canada’s global competitiveness in digital infrastructure—a point highlighted both by policy makers and industry leaders over the years.
Canada’s Investment Disconnect
The Scotiabank analysis underscores a disconnect between government aspirations and industry realities. Prime Minister Carney’s recent economic strategy touted measures to “unlock private sector investment” and provide “investor certainty” for nation-building projects. However, the ongoing regulatory uncertainty surrounding telecom policies appears to undermine these goals.
For context, in 2020, the Canadian government rejected a wholesale CRTC rate proposal amid fears it could “undermine investment in high-quality networks.” Fast-forward to today, and industry observers warn that the same concerns persist. Scotiabank’s remarks signal a growing tension between government policy and the critical infrastructure investments necessary to support a thriving digital economy.
What’s at Stake for Canada’s Digital Economy?
Carriers like BCE and Rogers have resisted cutting back on capex, a decision that reinforces their commitment to connectivity leadership. However, with competitors able to piggyback off infrastructure investments at regulated wholesale prices, the incentive to sustain aggressive infrastructure upgrades diminishes. For consumers, this could translate into slower rollout cycles for next-generation technologies, undermining Canada’s ambitions in the global digital economy.
The timing of these challenges couldn’t be more critical. As nations worldwide race to bolster broadband expansion, future-proof 5G deployments, and digitize their economies, Canada risks losing ground. Policymakers must carefully weigh regulatory reform to strike a balance between fostering competition and incentivizing essential investments.
As the debate continues, the question remains: can Canada evolve its telecom regulations fast enough to protect its infrastructure edge while ensuring a fair, competitive market? Without decisive action, carriers may be forced to prioritize short-term financial stability over long-term nation-building goals.
Source: Mark Goldberg Blog
