Roaming rules may fall short: analysts

MONTREAL • The CRTC’s decision to regulate wholesale roaming rates is good news for small Canadian cellphone carriers such as Quebecor Media’s Videotron, but analysts say it doesn’t mean the Montreal-based company will rush to expand outside the province.

“I think among all the decisions the CRTC could have taken, this was not the best outcome that would have increased the odds of them going to Western Canada,” said Maher Yaghi, a telecom analyst at Desjardins Securities.

Though the CRTC will cap the amount Bell, Rogers and Telus can charge other carriers for allowing their customers to piggyback on major networks while roaming, it decided against other regulations the smaller rivals were pushing for.

The regulatory body chose not to mandate pricing for leasing broadcast towers, as requested by Quebecor and Wind Mobile.

“What new entrants were hoping to get from the CRTC was some kind of a normalization or standardization of what they should pay the incumbents to place their antennas on these towers,” Yaghi said.

“I think this is going to lead to many sorts of delays getting set up if someone decides to build a wider area of wireless network outside of their current home base.”

The new entrants — including Quebecor — had also asked that incumbents be forced to provide seamless roaming when travellers switch from one network to another.

The CRTC decided the big carriers did not have to do this.

“Reduction in roaming fees outside Quebec does help reduce the cost of operating a network, however, it is a very small part of the overall cost structure,” said Yaghi.

Quebecor has said publicly that it’s holding off on rolling out national cellular service until it knows the final wholesale roaming rates in areas where it won’t be building its own networks.

Although the CRTC has decided to regulate rates, the actual price won’t be announced until November.

“The rates will be one of many factors considered. The others will include prospective partners, spectrum and financing,” said Rob Goff, telecom and new media analyst at Euro Pacific Canada.

In 2008, Quebecor was among the successful bidders in the AWS-1 spectrum auction.

Then in March 2014, the company picked up seven licences in the 700 MHz spectrum in Quebec, Alberta, British Columbia and Ontario for $233 million.

However, Yaghi says that for Quebecor to run a successful wireless business elsewhere in Canada, spectrum is only a small part of the equation.

“You need to build the network, you need to open points of sales, you need to subsidize handsets, and you need to brand. You need to do a lot of things to be successful, which they

Any reduction of roaming fees, even inside Quebec, is a positive for them

did in Quebec,” he said.

Still, Yaghi says the CRTC’s decision will have an impact on the company, even in Quebec.

In 2013, Quebecor spent about $14 million on roaming fees within the province.

“Any reduction by the government of roaming fees, even inside Quebec, is a positive for them,” he said.

Quebecor is not yet saying how the CRTC’s decision will affect their business strategy, though they do consider the move to regulate roaming rates “a step in the right direction.”

“The final rates set by the CRTC will be decisively important for the viability of genuine competition,” said Quebecor Media vice-president of public affairs, Martin Tremblay, in a news release.

When contacted, Quebecor did not provide further comment on the decision.

In Desjardins Capital Markets’ report it says that while the company does have a multi-product service offering in Quebec, it does not have the same advantages outside its borders.

For that reason, Yaghi says Quebecor may be better off strengthening its presence in Quebec, perhaps even buying up the 24.6 percent of the company owned by a subsidiary of the Caisse de dépôt et placement du Québec pension fund.

“Given how well they are doing in Quebec, they should stick to what they have been doing so well, and double up on that,” he said.