Sugar Mobile model threatens facilities-based competition: Telus, Quebecor

Allowing Sugar Mobile to continue roaming on Rogers Communications Inc.’s network would be a “backdoor means” to mandated mobile virtual network operator (MVNO) access, and “a recipe to destroy any appetite for facilities-based competition,” Telus Corp. said. The company waded into an ongoing dispute between Sugar Mobile — an affiliate of Ice Wireless, an Iristel Inc. subsidiary — and Rogers, in which final interventions were due Thursday. Rogers threatened to disconnect Ice Wireless unless Sugar Mobile stopped roaming, and argued that it had the right to do so because Sugar Mobile is selling service outside of Ice Wireless' operating territory. It said customers who don’t live in Ice Wireless’ licensed serving territory and don’t use wireless service on its home network don’t have a right to the Rogers network. Ice Wireless is maintaining that a disconnection would cause “irreparable harm” to the company and arguing the CRTC's wholesale wireless decision from last year, which outlines the framework for wholesale mobile wireless services, supersedes the roaming agreement. The policy stopped short of mandating MVNO access to wireless networks, a stance the CRTC recently upheld, though Ice Wireless pointed to a section of the policy that requires incumbents to provide roaming to “all subscribers served by their wholesale roaming partners, including the subscribers of any MVNOs operating on their wholesale roaming partners' networks." Telus said the CRTC's policy prohibits permanent roaming, which Sugar Mobile is engaging in, and argued that “if Sugar were to be able to get permanent roaming in this case, it would be creating a loophole to obtain what the Commission denied in — mandated wholesale MVNO access services from Rogers, Bell or .” It gave the example of the Montreal market, where Quebecor Inc.’s Videotron built its own wireless network in order to compete with the three incumbents. “These four facilities-based providers have spent and continue to invest massive amounts of capital to serve customers on their networks. In contrast, with nary a dollar in network investment, Sugar is trying to use regulated roaming rules to compete directly in Montreal,” Telus said. Without building any facilities, Sugar Mobile has permanent access at the same rates its competitors are only entitled to “for their respective customers when they happen to travel in Montreal.” Telus added that this would “destroy any appetite for facilities-based competition, because Sugar is getting an advantage over new entrants who must build and invest.” In a French-language intervention, Videotron told the CRTC that allowing Sugar Mobile to operate under its current business model would put the brakes on wireless investment in Canada. New entrants to the wireless market have invested considerably in spectrum licences and deploying their own networks, and to impose an obligation to re-sell their services would put the viability of those investments in question, the company said. It would mean that new competitors could build minimal networks and then use mandated roaming to extend their services across the country, Videotron argued. “Faced with such competition, a real new entrant equipped with its own facilities would have no choice but to revisit its investments,” it said. The Public Interest Advocacy Centre (PIAC) said that while it historically supported facilities-based competition instead of MVNOs, “circumstances have evolved such that MVNO access and other measures may indeed be highly advisable given the fall of the ‘pure play’ wireless new entrants into the hands of incumbents, and given the potential loss of Sugar Mobile.” Large telecommunications companies have now bought up all three new entrants that entered the Canadian wireless market in 2008. Public Mobile was purchased by Telus and Mobilicity by Rogers, and most recently, Shaw Communications Inc. acquired Wind Mobile. PIAC asked the CRTC to “consider the effect of the potential forced exit of Sugar Mobile on the mobile wireless market as a whole,” and said that it “believes the demise of Sugar Mobile, should it occur as a result of this proceeding, ought to spur a fresh review of the wholesale and retail mobile wireless marketplace in Canada.” The Canadian Network Operators’ Consortium (CNOC), which launched a review-and-vary application asking the CRTC to mandate access by full MVNOs that the CRTC later denied, also intervened in the case. It argued that “any restrictive and prohibitive terms and conditions on roaming, such as conditions that prohibit permanent roaming” are not consistent with the CRTC’s wholesale wireline policy. “For example, and in specific regards to the impact of the permanent roaming conditions on the ability of small wireless carriers to provide service to their retail end-users, such conditions would be unduly restrictive as they would apply to roaming usage patterns that occur in the normal course,” CNOC said. That includes scenarios such as a customer choosing to spend a summer at a cottage outside of their providers’ network footprint, or commuting on a daily basis to an area outside of that footprint, for example. “Any permanent roaming conditions would therefore limit the ability of end-users of small wireless carriers from availing themselves of access to roaming as they find appropriate. This would occur despite that small wireless carriers have no control over where their end-users choose to utilize their service (e.g. within or outside of their serving area) or how long the end-user will choose to use service in any given area given the mobile nature of wireless services,” it said. CNOC added that roaming usage would “naturally” be limited by wholesale roaming rates, though “to the extent that an end-user wishes to engage in usage patterns that include high roaming usage, there is no justification for prohibiting the customer to do so.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Sugar Mobile model threatens facilities-based competition: Telus, Quebecor

News | March 18, 2016

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