Former Freedom executives champion single MVNO model

GATINEAU, Que. — The CRTC should mandate a single provider to act as a certified MVNO throughout Canada, three former Freedom Mobile executives told the regulator on the fifth day its wireless review hearing. Alek Krstajic, Bob Boron and Bruce Kirby — former Public Mobile executives who all later worked together at Wind Mobile, which became Freedom when it was purchased by Shaw Communications Inc. in 2015 — told the CRTC they were “a little bit annoyed” to hear the incumbents’ arguments against mandating MVNO access, and said their plan would “without doubt bring prices down and allow more Canadians to use more spectrum.” Krstajic — Public’s founder and CEO who also held the top job at Freedom — argued choosing one provider would generate a better result than mandating broad MVNO access, which he labelled as “opening the floodgates.” Under the proposal, the CRTC would mandate one national MVNO, which would offer uniformly priced plans across the country, but perhaps not enter markets where companies were already offering plans at the same or lower rates, Krstajic said. Krstajic — who was also formerly a president of BCE Inc.’s Bell Mobility and a senior vice president at Rogers Communications Inc. — said opting for the temporary hybrid MVNO model suggested by the Competition Bureau would see “some movement” but said the single MVNO model would have the greatest impact on price. “Having a single player with a single strategy and a single objective that’s completely aligned with what you want is easy to manage,” Krstajic said in response to a question by CRTC commissioner Christopher McDonald. “Having multiple players in a more fragmented market causes a lot of, at times, irrationality. It’s a walk before you run strategy… if it’s not enough you can add a second or, but opening the floodgates and then going back creates a bigger headache for you.” Krstajic said Canada would have been “much further ahead” in terms of competition if there was only one new market entrant in 2008 when spectrum set asides were made available. “So if what you’re after is short-term massive price drops, then yeah, open the floodgates. But if what you’re after is a long-term sustainable solution and sustainable low prices, then they have to be done in a way that’s measured,” Krstajic said. Krstajic said more have MVNOs failed than succeeded, mostly because they initially emerged as an extension to a fixed wireless or cable business. MVNOs often underestimate the response of incumbents to their presence in the market, how hard it is to pry customers from their suppliers and the amount of customers who were “locked in” to other providers because they had purchased a device as part of their plan, Krstajic told the hearing. “You can open the floodgates completely to MVNOs and if you do I think you’re going to see a lot of people fail because it’s a lot harder to do than you might otherwise realise,” he said. Krstajic also agreed with claims by incumbents that Canada has great wireless networks, stating that they were “probably more reliable than I’ve seen in Europe and the United States,” but said that was because they weren’t utilized to the same level. The average data use in Canada was “unsurprisingly” lower than in other countries because the average prices for data was “much higher,” Krstajic told the hearing. Asked by commissioner McDonald about threats by the incumbents to cut infrastructure investments if MVNO access was mandated, Kirby said any losses could be easily absorbed. “If those excessive profits they’re able to generate today because of the ungodly position they operate in shrink somewhat, they’ll still be able to make those investments, so the question becomes will they choose not to do so for some other reason,” he said. He said investment cuts only “worked in a vacuum” where other incumbents “colluded” and followed suit, but argued the big three would all invest in 5G as soon as another incumbent opted to build out infrastructure, and it would give regional players added incentive to invest and gain market share. Meanwhile, Canadian Communications Systems Alliance (CCSA) CEO Jay Thomson told the hearing its members had tried for years to gain wholesale access to incumbents’ wireless networks but been unsuccessful. That mirrored evidence provided by Cogeco Inc. CEO Phillipe Jetté on the second day of the hearings, who said he had made multiple failed attempts for access. CCSA members are the only competitors to a single incumbent in many rural and regional markets and being unable to provide wireless services had been a “longstanding challenge” to those companies, Thomson said. “It prevents them from offering a quad play that Canadians demand as mobile devices become more capable and ubiquitous. Rules that support MVNOs can only assist in delivering choice and competitive benefits to all Canadians, regardless of where they live and work,” he said. Thomson also argued SaskTel should be mandated to provide wholesale access to its network, saying limiting the requirement to just the big three was “not sufficient to support MVNO access in Saskatchewan”. One company that would benefit from that requirement is Saskatchewan based not-for-profit Access Communications Cooperative. Its chief operating officer Carmela Haines said it got requests each year from customers who wanted the not-for-profit to offer wireless services. “A cooperative of our size cannot build a network to offer cellular services, however we are very interested in the possibility of offering cellular service as soon as possible and growing toward operation as a full MVNO,” she said. Later in the afternoon session, the British Columbia Broadband Association’s (BCBA) Brenda Bouchette endorsed the hybrid mobile network operator model put forward by Cogeco, saying it would promote investment in underserved regional and remote areas. A negotiated wholesale rate would be the best way forward, Bouchette said, with a strong “regulatory backstop” including mandating a timeline for negotiations and a target level of wholesale business. — With reporting by Adam Langenberg at alangenberg@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Former Freedom executives champion single MVNO model

News | February 24, 2020

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Former Freedom executives champion single MVNO model

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