Bains tells CRTC to reconsider MVNO rules

TORONTO — Innovation Minister Navdeep Bains is directing the CRTC to reconsider a March decision in which it set rules for regulated wholesale roaming by wireless providers in a move that could change the landscape around mobile virtual network operators (MVNOs) in Canada. The ruling “excludes Wi-Fi-based providers from access to regulated roaming services. That effectively prevents WiFi-based providers from offering their low-cost plans to consumers, and this lack of choice does not benefit Canadians,” Bains said in a speech at the start of the Canadian Telecom Summit Monday. That ruling, among other changes, amended the terms and conditions of mandated wholesale roaming offered by Rogers Communications Inc., BCE Inc. and Telus Corp. to reflect its decision in a roaming dispute between Rogers and Iristel Inc.’s Sugar Mobile. The CRTC ruled that Rogers doesn’t have to provide roaming services to Sugar Mobile, whose customers mostly used WiFi for voice, text and Internet access. Its plans also included 200 MB of non-WiFi data per month, which was supported by the Rogers network when outside of the Ice Wireless service area. Rogers argued that it had the right to disconnect Sugar Mobile because Sugar was selling service outside of Ice Wireless’ operating territory. Noting that in the U.S., customers have access to wireless plans for as low as $15 a month, Bains said the “new Wi-Fi based model”— which he said relies primarily on WiFi and only falls back on commercial wireless networks when customers are out of range — “could benefit Canadian consumers as well, especially those with low incomes who are not served well by existing plans.” He added that “as the CRTC looks at this model, will also ask it to maintain a strong investment environment that supports facilities-based competition. That’s how Canadians will benefit from faster, more reliable services across the country.” As part of his speech on affordability, Bains said unlocking fees are an “irritant” to consumers, noting that Canadians paid almost $38 million in such fees in 2016. “I know that the CRTC is looking at this issue, and our government will closely monitor the results of the CRTC’s review.” Speaking to reporters following his remarks, Bains said the government hasn’t asked the CRTC to do anything “specific about any particular company, but to look at a WiFi-first model more broadly, to determine how that can be a plan forward for low-usage plans for consumers.” Bains specified that a WiFi model includes the idea of mandating MVNO service. In response to a question about whether the “WiFi-first” model is distinct from the full MVNO model, he said “there’s a lot of overlap, and the objective is pretty much the same. It’s just the terminology that’s used. What we want to achieve is saying, ‘look, how can we use technology to really provide more affordable prices for consumers.’” He said he expects the CRTC to report back to the government by March 2018. In an emailed statement Monday, CRTC spokesman Eric Rancourt said the “CRTC will reconsider, as requested, this aspect of its decision that established the final terms and conditions for access to wholesale mobile wireless roaming service.” Iristel CEO Samer Bishay lauded the decision in an interview Monday. “Great announcement. Definitely caught me by surprise,” he said, noting that having Innovation Canada send a CRTC decision back is a rare occurrence. The decision means Sugar Mobile will be looking for “an opportunity to do something strategic with one of the facilities-based carriers.” “I’m sure there’s going to be a player that will want to play ball knowing it’s coming anyway,” he said. Sugar Mobile isn’t the only Canadian telecom that’s been interested in the MVNO space — Cogeco Inc., the only major Canadian telecommunications company without a wireless division, has long said it would enter the MVNO market if the conditions were right. Ken Smithard, president of Cogeco’s telecom division, said in an interview after the announcement that the company was “very encouraged” by the minister’s comments, noting that the CRTC’s March decision had “closed the door” to MVNOs. “It opens the door, perhaps, to a solution that would be a good fit with Cogeco. We currently have a public WiFi network that we operate within our territory,” he said. “That would give us the ability to leverage the existing WiFi network that we have in our footprint and potentially depending on how the discussions go, marry it up with a reasonable roaming agreement that would make a business case viable.” He added that a lot depends on what the CRTC determines “WiFi-first means and looks like, which will really drive the market reaction to what the final outcome from an offering standpoint would be.” He noted that Cogeco will also be involved in the 5G consultation the minister announced Monday, and will “see if there’s anything potentially there for Cogeco.” Previously, CEO Louis Audet said that the company has no significant plans to integrate 5G into its services. In a research note Monday, Desjardins Capital analyst Maher Yaghi said that the announcement “changes the tone in a slightly negative way with regard to the government–business relationship in terms of the state of competition in Canada.” He said it’s too early to predict where the review will lead, but that the government is clearly sending a signal to incumbents that it wants more affordable wireless plans in the market, which could be a popular policy in the context of upcoming elections in the not-too-distant future.” It’s also likely the incumbents could react to that message and pre-empt “any drastic policy decision” by offering lower-end wireless plans. “What is puzzling to us is that in his speech, the minister yet again said that the government continues to prioritize the need to stick to a facility-based competitive model — which does not create a favourable environment for MVNOs,” Yaghi wrote. David Watt, Rogers senior vice-president of regulatory didn’t comment on the Sugar Mobile dispute in an emailed statement on the minister’s announcement Monday, stating only: “We’re encouraged the government has recognized our investments to deliver world-leading networks and the need for continued facilities-based investment.” He said Rogers shares “the government’s concern about the digital divide for low-income Canadians, which is why we’ve taken action to provide low-cost broadband with Connected for Success and offer a range of wireless plan options through Rogers, Fido and chatr. We look forward to working with the CRTC to examine creative ways to bridge the digital divide and maintain fast and reliable networks.” Small Internet service providers (ISPs) praised the decision in a press release Monday. “CNOC has consistently advocated for fair access to the wholesale wireless services of the large national wireless carriers. This access is critical to enable competitors to provide Canadians with greater competitive choices of wireless services and more affordable wireless service options,” the Canadian Network Operators Consortium said. Advocacy group OpenMedia was also supportive of the decision in a press release Monday, with digital rights advocate Katy Anderson saying that: “We’re excited that the CRTC has been asked to look again at this issue and we hope they’ll come back with a solution that will lift Big Telecom’s blockade and lead to lower prices and greater choice for Canadian consumers and small businesses.” However, John Lawford, executive director of the Public Interest Advocacy Centre (PIAC), was critical of the decision Monday. Speaking to reporters after Bains’ speech, he said groups like his weren’t consulted prior to Bains’ announcement. “It would have been fairer to speak to low-income groups and the users who they’re claiming to trying to help to try to get a better program.” Lawford noted PIAC will continue with a review-and-vary application asking for an affordability subsidy for Internet access. “I think it’s kind of ambitious to think MVNOs are going to offer everybody a low-income product in time,” he said. “We’ve always been skeptical that competition alone is going to do this.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Charelle Evelyn at cevelyn@thewirereport.ca

Bains tells CRTC to reconsider MVNO rules

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Bains tells CRTC to reconsider MVNO rules

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