Bell urged Bains not to send back MVNO decision a second time

Innovation Minister Navdeep Bains weighed sending back the CRTC’s decision not to mandate wholesale access by WiFi-based mobile virtual network operators (MVNOs) for a second time, according to a letter from BCE Inc. “Your office has informed us that the government is giving consideration to reversing the CRTC’s March 22, 2018 decision on Wi-Fi first mobile resellers,” Bell CEO George Cope said in a letter urging Bains not to do so. “The CRTC has now comprehensively examined this issue twice — in this most recent case, an analysis lasting more than 8 months — only to reach the same inevitable conclusion: that the WiFi proposal would be technically unworkable and counter to the public interest.” The letter, obtained by The Wire Report through an Access to Information request, is dated April 16, 2018, three weeks after the decision in question, which capped off a saga that began in 2016. That’s when Iristel Inc. filed a Part 1 application asking the CRTC to step in and compel Rogers Communications Inc. to allow the continued use of its roaming network by Sugar Mobile. Sugar Mobile customers used WiFi connections for calls, text messaging and web browsing, with an additional 200 MB of non-WiFi data per month, supported by the Rogers network when outside of the Ice Wireless service area. In March 2017, the CRTC ruled that Rogers didn’t have to provide roaming services to Sugar Mobile, in a decision that appeared to close the door on mandated MVNOs in Canada. But three months later, Bains announced at an industry conference that he was ordering the CRTC to reconsider that decision, saying it prevented low-cost services based on the “new WiFi based model” from reaching customers. The CRTC took another look but held firm on its initial ruling on the issue, opting instead to mandate the offering of low-cost data plans. Bains said in a statement at the time that the government would “review the CRTC’s decision to determine its next steps,” but since hasn’t offered any detail on what those steps might be. On Tuesday, his office did not directly respond to questions about whether the minister has now, almost 11 months later, ruled out overturning the decision or whether that’s still on the table. Under the Telecommunications Act, the government has a year after a decision has been issued to vary, rescind or refer it back to the CRTC. “We are taking steps in the right direction but there is more that must be done to make prices more affordable for Canadians. Accessibility and affordability are key concerns for Minister Bains, which is why he referred back the decision to the CRTC and asked to look at the possibility of Wi-Fi First MVNOs,” Bains’ press secretary Danielle Keenan said in an emailed statement. “We are pleased that the CRTC is moving in the right direction with the low-cost data plans. Ultimately, it’s about providing greater competition in the telecom sector. Prices in the low and high tier bands for cellphone prices also declined 16 per cent year over year.” A move from cabinet to send back a CRTC decision for a second time is rare. Tim Denton, head of the Internet Society of Canada Chapter and former CRTC commissioner, said in a phone interview the last time he remembers something like this happening was a decision about resale and sharing of telephone lines in the 1980s. He said he was in the ministry’s office when the government twice sent back the CRTC’s decision to limit that kind of competition. According to a book called Continentalizing Canadian Telecommunications, Call-Net Communications Ltd. twice successfully applied to have an order-in-council extend its telephone interconnection with Bell, after it was denied by the CRTC as illegal reselling. There are indications the government was caught off guard when the CRTC declined to change its mind in March 2018. Emails from Innovation Canada staff in Jan. 2018 outlining notes for a communications assessment on the decision prepared messaging for a scenario in which the CRTC did mandate wholesale access for WiFi-based MVNOs. The email, obtained through an Access to Information request, outlined that a “high profile” pro-MVNO decision would be a “positive message for us to help communicate,” and suggested a strategy for the minister’s office to capitalize on that, through press releases and news coverage, and potentially reaching out to “supportive, consumer group stakeholders.” “If, by chance, the CRTC rules against, I am assuming we’d use the standard holding lines ‘We are aware of the CRTC’s decision. We will review it to determine next steps’,” the email said. It also noted that the incumbent wireless service providers “will be paying close attention. We can expect them to publicly and strongly oppose MVNOs.” Bell did just that in the letter its CEO sent to the minister following the CRTC’s March decision, warning that wireless is a “capital-intensive industry, and there should be no doubt that capital markets in Canada and globally will view a reversal of the CRTC’s Wi-Fi decision negatively. Wireless carrier share prices, which are already depressed, will deteriorate further and the cost of capital, particularly for smaller facilities-based carriers, will increase.” It said Bell and the other carriers access around 30 per cent of their required capital on the global markets. “Changing the rules to favour Wi-Fi resellers would certainly impact the market value of the communications sector in Canada severely, immediately and over the long term,” Cope argued. “Minister, Canada cannot afford a negative global perception of our communication policies and industry structure at any time -- and certainly not when capital requirements for our industry are rising alongside the growing economic structural challenges facing our country.” It said the higher financing costs will be especially harmful given how much the carriers will have to spend on 5G infrastructure, and warned that investment will “flow from Canada to the United States.” Bell also hinted that if the government did go ahead with sending the decision back, its low-cost Lucky Mobile prepaid brand could be a casualty. “Already available in multiple markets, we plan to roll out Lucky across the country -- and fully expect our competitors to respond to our renewed focus on the prepaid market with their own new or enhanced low-cost alternatives,” Bell wrote in April. Quebecor Inc.’s Videotron launched a low-cost flanker brand in September. “If the Wi-Fi decision is reversed, however, all facilities-based carriers will need to reevaluate their plans in this segment of the market.” The letter was included in notes prepared for ISED deputy minister John Knubley ahead of a meeting with Cope. “As I’ve stated more can be done and we are reviewing our options moving forward,” reads one of the speaking notes prepared for Knubley. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and reporting and editing by Ahmad Hathout at ahathout@thewirereport.ca

Bell urged Bains not to send back MVNO decision a second time

News | February 12, 2019

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Bell urged Bains not to send back MVNO decision a second time

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