CRTC OPENS UP WIRELESS, A LITTLE

TELECOM REGULATOR ‘There isn’t an instant reward,’ chairman says

Canada’s telecom regulator’s decision to make it easier for small wireless carriers to expand to different regions of the country won’t result in an immediate shift for Canadian consumers, but will bring about “incremental” improvements to wireless competition, according to CRTC chairman Ian Scott.

“It’s a longer-term game. And there isn’t an instant reward,” Scott said in an interview Thursday following the release of the CRTC’S long-awaited decision on mandating access to large national wireless providers’ networks.

The Canadian Radio-television and Telecommunications Commission said Bell, Rogers, Telus and Sasktel must sell wholesale access to regional wireless carriers for seven years. The CRTC said the idea is to allow regional players “to serve new areas while they build out their networks.”

The decision opens up Canada’s wireless market to more competition, but doesn’t go as far as the CRTC was considering, which was to force incumbent wireless carriers to provide network access to mobile virtual network operators (MVNOS), or competitors without any infrastructure of their own.

Providers will negotiate wholesale rates under terms and conditions set by the CRTC. Currently, there is nothing forbidding such agreements, but no MVNO with any competitive impact has emerged because the companies haven’t been able to negotiate mutually agreeable terms. Scott said the difference in the new regime will be that the companies will be forced to come to an agreement, with the CRTC as a “backstop.”

Regional players will then be able to resell that service to MVNOS. The CRTC said that will “enable further competition in the marketplace.”

In Canada, the wireless market is dominated by the “big three” national wireless providers — Bell, Rogers and Telus — with regional fourth competitors across the country. Regional wireless players include Quebecor’s Videotron in Quebec, Eastlink in Eastern Canada and Shaw’s Freedom Mobile in Ontario, Alberta and B.C.

The large wireless providers have argued mandated MVNOS would harm their ability to invest in their infrastructure, as the industry is in the process of building out 5G networks. Potential competitors and advocates have said MVNOS are necessary to increase competition in the wireless market and bring prices down.

MVNO supporters said Thursday they were disappointed with the decision, with advocacy group Openmedia saying the decision is “nowhere near good enough” and that the CRTC should mandate full MVNO access.

Telecom researcher Ben Klass said in an email it “will not succeed in bringing about effective or sustainable competition.”

Scott said he understands “people think there’s a magic bullet. There isn’t one.”

He said the “facts are that the regional competitors, where they are gaining market share, and have been effective competitors, are where rates are lowest.”

“What we’re doing is trying to make sure that those players, both continue to invest, raise their game, so to speak, so that they will be the preeminent competitors to the big three. Simply having examined the issue in detail, we haven’t concluded, by definition, that a bunch of smaller players who enter and exit the market and don’t necessarily invest will have a better or more meaningful impact.”

It would be the regional players who would have been harmed with a full MVNO model, Scott said.

At the moment, wireless providers with their own infrastructure are required to sell wholesale access to each other for roaming purposes, so that their customers continue to have service when they travel outside of their providers’ operating territory. But wireless providers can only sign up customers who live in areas where they have their own physical networks, meaning regional wireless players are limited to their operating territories.

Scott said competition has been driving down prices in Canada, but “it’s not pushing rates down fast enough … and the intensity of competition is therefore not sufficient.”

He said the CRTC believes “this is the best way to ensure that the big three, for lack of a better term, will be subject to ongoing vigorous competition, and that’ll produce the rates we want.”

In the 2019 federal election, the Liberals campaigned on lowering wireless prices, while the previous Conservative government focused its wireless policy on promoting a fourth wireless competitor. The Liberals have previously said if their 25-per-cent price reduction target isn’t achieved, they would change MVNO rules to make it happen.

Innovation Minister François-philippe Champagne said in a statement Thursday he is “reviewing the decision and its implications to ensure they align with the government’s goals of promoting competition, affordability, consumer interests and innovation.”

The Liberal government had previously pushed the CRTC to move in the direction of MVNOS, ordering the CRTC to reconsider a 2017 decision in which it ruled against the establishment of a type of MVNO based mostly on Wi-fi access. The regulator chose not to, but said it would speed up its MVNO review instead. Then-innovation minister Navdeep Bains considered sending that decision back for a second time, according to access to information documents, but ultimately chose not to.

Parties who are unhappy with the CRTC’S decision also have the option of appealing it to federal cabinet, and in Federal Court.

The decision comes a month after Rogers announced it plans to buy Shaw. As the fourth wireless competitor in Ontario, Alberta and B.C., Shaw is a regional player that has been widely credited with bringing down prices in those provinces. The deal still has to be approved by the Competition Bureau, the CRTC and Innovation Canada.

That means as the CRTC launches its strategy to strengthen regional players, a large chunk of Canada could see the loss of theirs.