In Quebec we do have a pretty reliable cable connection (Videotron) which is a decent competitor to Bell. They have a few problems over their plans and such, but their internet connection is flawless. I don't know if other provinces has this alternative tho.
So by doing option 1, they can allow more users to connect at better speed allowing them to have a chance at compteting against whatever other providers available in the area. So by doing this, it will cost a lot but you have a chance of having a lot of new customers, depending how convincing your efforts are.
By doing option 2, they ensure that if I ever was with Bell I'd put my money elsewhere and that if I was with some other provider, I wouldn't consider moving to Bell. Less cost, shittier service, more pissed off customers plus the possibility that customers might go to other providers.
So, shareholders, I offer you costly upgrades and possibly more customers or almost no cost and a possible loss of customers... They would still go for option 2. But it's always nice to have the full picture.
% APL is a natural extension of assembler language programming; ...and is best for educational purposes. -- A. Perlis