"This measure will ensure that Canadians have more choice for high-speed Internet services and are able to fully leverage the benefits of the broadband home or business," the Canadian Radio-television and Telecommunications Commission (CRTC) stated.
Financial analysts had not expected the CRTC to force big operators to share their latest upgrades since that could discourage the hefty investments needed to upgrade the final leg of a network connecting retail customers to the nearest node.
"With this ruling they've said that competition is important, that we can't afford to duplicate everything in Canada, and they are making sure that Canadians get access to competitive rates and are not locked in," said Robin Winsor, CEO of Cybera, which oversees development of cyber-infrastructure in Alberta.
The decision will affect big phone companies such as BCE Inc (>> BCE Inc.) more than cable companies including Rogers Communications Inc (>> Rogers Communications Inc.) and Shaw Communications Inc (>> Shaw Communications Inc).
The phone companies have invested heavily to replace copper connections to individual premises with fiber-optic cables, which handle much more data at much higher speeds.
The cable companies have started investing in fiber-optic connections to homes and businesses in new developments, but their coaxial cables already provide Internet service at a significantly faster rate than phone companies' copper lines.
Both phone and cable companies will have to share what fiber connections they do have to homes and businesses, most likely starting in Ontario and Quebec in late 2016. That spares Telus Corp (>> TELUS Corporation), which is building out fiber optics in Western Canada, from the initial sting.
Telecom and cable companies already had to lease their fixed-line networks to a slew of smaller rivals at prescribed rates. These rivals, such as Chatham, Ontario-based TekSavvy, are then able to sell competing services to retail customers.
The ruling also said wholesale landline services must be "disaggregated", separating access from interconnection.
"The CRTC heard what we are asking for, and we are thrilled," TekSavvy's chief lawyer Bram Abramson said, adding the company now plans to build more 'middle mile' networks.
Wednesday's ruling is the last of three major policy reviews undertaken by the CRTC. The regulator has also capped wholesale wireless rates and ruled television viewers shouldn't pay for vast numbers of unwatched channels.
(Additional reporting by Alastair Sharp, editing by G Crosse and Andrew Hay)
By Randall Palmer