CRTC rejects plea from small internet providers seeking wireless access

Do you think your cellphone bill is too high? Tough. It's going to stay that way thanks to a CRTC decision that nixes the possibility of dozens of new wireless carriers springing up, consumer advocates say.

The regulator on Thursday denied an appeal from a group of small internet providers to mandate what are called Mobile Virtual Network Operators.

Such businesses would rent the networks of larger telecom companies at set rates to provide alternative wireless services, likely at lower prices.

This group of 30 or so operators, collectively known as the Canadian Network Operators Consortium, argued that regulated MVNOs and the extra competition they would bring would be the best way to lower Canadian cellphone bills, which are among the highest in the world.

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But the Canadian Radio-television and Telecommunications Commission stuck to its original decision, made last year, that forcing such access would act as a disincentive for companies that have built their own networks, such as Bell, Rogers, Telus and Wind, to further invest.

Small providers are still free to negotiate MVNO deals if they can, but consumer advocates say network owners have few incentives to grant them access at reasonable rates, which is why no cheaper, competitive alternatives currently exist.

"I don't know where these guys can go with this one," says John Lawford, executive director of the Ottawa-based Public Interest Advocacy Centre, referring to the small providers. "There's not much prospect for the short term."

High rates, high profit

Canadians typically pay about $46 US per month for wireless service, or nearly double the $25 average among 22 developed nations, according to a 2015 report from the Bank of America Merrill Lynch.

Canadian wireless carriers are also exceptionally profitable, and ranked near the top of the survey in earnings.

They also rank well internationally when it comes to network quality, suggested a recent report from U.K.-based analysis firm OpenSignal. The Big Three typically rank high in speeds and coverage.

The previous Conservative government fought an at-times vocal war against the big carriers, and attempted to inject new competition into the market through special auctions of wireless spectrum.

Those auctions netted new players such as Wind, Mobilicity and Public Mobile, but all three have since been bought by Shaw, Rogers and Telus, respectively.

Telus and Wind did not return requests for comment on the CRTC ruling. Bell declined to comment, while Rogers applauded it.

"We think the decision strikes a balance by encouraging both additional competition and continued investment in building networks," said Rogers spokeswoman Jennifer Kett. "Consumers want a wide variety of choice, but they also want top speeds and reliable service.

"We need to keep investing in our networks or we'll fall behind other countries."

Up to the Liberal now

The Vancouver-based advocacy group Open Media, which argued for MVNOs, said the impetus to do something about continually increasing wireless bills -- the Big Three all recently announced price hikes -- now falls to the Liberal government.

"We know that this can't continue, this market is too dysfunctional. We need relief for consumers and businesses who are being hit hard," said Josh Tabish, campaigns director for Open Media.

A spokesperson for the minister of innovation, science, and economic development, Navdeep Bains, did not return a request for comment.

Both consumer groups and the industry will be closely watching Bell's ongoing appeal to the Liberal cabinet of another CRTC decision to allow CNOC members access to newer fibre broadband infrastructure.

The CRTC last year reaffirmed wholesale access to the big networks, a move that will allow independent ISPs such as Teksavvy and Distributel to offer customers super-fast home internet services.

Bell wants the ruling overturned and has enlisted the support of numerous parties, including the mayors of Toronto and Ottawa.

However, Toronto's city council recently voted overwhelmingly in support of the CRTC's original decision, while Ottawa will soon hold a similar vote.

Cabinet has until July to overturn or uphold the CRTC's ruling.

Sugar Mobile

CNOC president Bill Sandiford says the CRTC is showing inconsistency in its approaches to wired broadband versus wireless.

On the wired side, the regulator has rejected arguments from Bell and other big network owners that allowing wholesale access will discourage their investment, yet it has accepted that line of reasoning in wireless.

"The big guys are busy competing with each other, and if they don't make these investments they'll lose critical market share to each other," he says. "They're going to continue to make investments regardless of whether there's mandated wholesale access or not."

The industry is also watching a new dispute between Rogers and Sugar Mobile, a small operator that is trying to make a go of it without the support of a CRTC mandate.

Sugar, owned by Ice Wireless, which provides service to the remote North, is offering customers in the rest of Canada a low-cost service that switches between Wi-Fi and cellular connections when needed.

Similar to Google Fi, a service launched last year in the U.S., Sugar customers get unlimited calling and texting over Wi-Fi when they are connected, as well as a small amount of cellular data for when they can't otherwise connect.

The cellular data is being delivered over the Rogers network, which Sugar is accessing thanks to a roaming agreement between its parent Ice Wireless and the bigger company.

Rogers says the scheme is a violation of that roaming agreement and is threatening to cut off both Ice and Sugar.

Ice, for its part, says CRTC rules allow network owners like itself to offer roaming deals to other MVNOs, even if they are their own subsidiaries.

Lawford, at the Public Interest Advocacy Centre, says Sugar's effort is the sort of innovation that MVNOs are delivering in other countries, but the small company isn't likely to make a dent even if the CRTC sides with it.

"Until we get Google up here doing that, nobody has the scale to take these guys on."

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