By Alastair Sharp

OTTAWA (Reuters) - Canada's established telecom
carriers must allow smaller Internet providers access to their
high-speed fiber networks at the same speed they offer to their
own customers, the telecom and broadcast regulator ruled
Monday, but it said they can charge a 10 percent mark-up for
doing so.

The mark-up will not apply to access to existing Internet
services, which the carriers, such as BCE Inc's Bell
Canada and Telus Corp, must continue to provide to the
smaller Internet service providers (ISPs), the Canadian
Radio-television and Telecommunications Commission (CRTC) said.

"Requiring these companies to provide access to their
networks will lead to more opportunities for competition in
retail Internet services and better serve consumers," CRTC
Chairman Konrad von Finckenstein said in the decision.

Canada has seen a convergence in its telecom, Internet and
broadcasting sectors in recent years, as once-dominant regional
telephone carriers compete nationally against cable companies such
as Rogers Communications and the smaller ISPs.

"If you are going to invest a billion (dollars) plus ...
you have to make sure that investment generates sufficient
returns to make it worthwhile," said Mirko Bibic, Bell's senior
vice president for regulatory and government affairs.

"I suspect the 10 percent will not make it much more
worthwhile," he added.

Until this decision, the established telecom companies
could "throttle" third-party services, by slowing them down or
limiting downloads.

The established carriers appealed a similar CRTC decision
in 2009, saying they spend significant portions of their
profits on expanding their networks and should not have to
share expensive fiber cable with competitors at wholesale

"The forced unbundling of next-generation networks that
aren't even built yet would place a chill on investment in
those networks at a time when the federal government is trying
to encourage investment in broadband networks," Telus said ahead
of the decision.

Another of the incumbents, however, welcomed the ruling.

"The CRTC is recognizing the importance competition plays
in driving greater investment, innovation, and choice in
telecommunications markets," MTS Allstream's Chris
Peirce said.

About 400,000 Canadians buy Internet access from smaller
ISPs, and most of them get it via the networks of the incumbent
telecom operators.

"In recognition of these investments, the CRTC will allow
them to charge competitors an additional 10 percent mark-up
over their costs for the use of their wholesale Internet
services' higher-speed options," the regulator said in its

The CRTC also said that the country's big cable companies
must make it easier for the ISPs to offer services on their
networks. It is technically easier for the ISPs to use the
telecom companies' networks than those of the cable networks.
Cable companies have more than 50 percent of the market for
high-speed internet provision, CRTC data showed.

The newer ISPs, while broadly supportive of the decision,
said by not allowing access to the incumbents' regional nodes,
known as central offices, the CRTC had not gone far enough.

"It is unfortunate that the Commission has failed to allow
competitors the ability to innovate and compete with the
telephone companies on a deeper level," said Bill Sandford,
president of Telnet Communications, an independent ISP.
(Reporting by Alastair Sharp; editing by Peter Galloway)