It is with great irony that the Industry Canada home page states “Our Wireless Policy is Clear. More Choice. Lower Prices. Better Service. ” http://www.ic.gc.ca/eic/site/icgc.nsf/eng/home. Had Industry Canada earlier accepted the input of the new wireless operators it is now flailing to save, it may have succeeded in this claim. Now it all seems like too little too late for Industry Canada, but maybe the CRTC can bail them out.
Clearly, it is no secret that the Conservative government is looking to provide consumers with more attractive cell phone rates. The AWS spectrum auction that led to new cellular offers from Wind Mobile, Mobilicity and Public Mobile has provided some consumer relief with lower rates in the markets in which they offer service. However, Public Mobile is being purchased by TELUS, Mobilicity is in bankruptcy protection and Wind Mobile’s foreign financial backers hired investment bank UBS to explore strategic options.
Verizon was widely reported to be courted by the government as it sought to ensure a fourth player in all wireless markets in Canada. Verizon decided not to participate in the upcoming 700 MHz spectrum auction nor to proceed at this point in acquiring an existing Canadian wireless player. The sustainability of competition from independent wireless operators and a fourth wireless operator in all markets is certainly questionable at this stage.
The irony is that Industry Canada had an opportunity to help the new wireless operators and competition succeed through modifying roaming and site sharing policies but did nothing of consequence to improve rates for roaming and access to cell sites. Having done so would have permitted these new wireless operators to offer more attractive roaming rates, improved their financial performance and potentially provided improved access to critical financing through having a more viable operating model.
I went to the Industry Canada website searching for information on roaming after reading the Globe and Mail article that indicated the CRTC is looking at setting up a task force to review roaming rates and practices. “The mandate of the task force is to present options for Commission consideration at the upcoming December commission meeting,” wrote Chris Seidl, the CRTC’s executive director of telecommunications, in an internal memo obtained by The Globe and Mail (see story here). http://www.theglobeandmail.com/report-on-business/roaming-fees-are-crtc-priority-as-regulator-expands-investigation/article15198434/
The article goes on to state that:
“Initial indications from the CRTC’s fact-finding exercise showed mark-ups sometimes of more than 1,000 per cent for data roaming services, according to a source. That refers to the difference between the rate that incumbent carriers charge their own customers and what they charge their competitors.”
In March 2012, Industry Canada published DGSO-001-12 — Proposed Revisions to the Frameworks for Mandatory Roaming and Site Sharing to propose changes to the conditions of licence for mandatory roaming and antenna tower and site sharing, as well as to the arbitration rules and procedures. The new entrants participated in this process and identified a number of shortcomings associated with current roaming rates, among them that rates were established in a monopoly environment and that the wholesale rates with US carriers were substantially lower than those available from Canadian carriers. They noted that wholesale rates in Europe are regulated and that data rates in Europe would decline by 90% from 2012 to 2014. They requested wholesale rates be regulated or at least be non-discriminatory, fair and reasonable and compared to other benchmarks including retail roaming rates. Mobilicity recommended that Industry Canada gather roaming information on a confidential basis to monitor and assess the effectiveness of the mandatory roaming policy.
When the Industry Canada issued “Revised Frameworks for Mandatory Roaming and Antenna Tower and Site Sharing” on March 7, 2013 there were no changes to the roaming rate definition. There was no comment on Mobilicity’s suggestion to gather information.
The lack of action on roaming rates was a major setback for the independent wireless operators. In September 2013, the CRTC determined that it would review roaming rates based on consumer complaints and gathered information from wireless operators that Industry Canada did not feel was warranted. In the process, it is conceivable that they could establish roaming rates for wholesale and retail, but it may be too late for wireless competition.
The CRTC roaming review: Too late to bail out the Conservatives wireless competition policy?
In the CRTC review, they could decide to regulate roaming rates on a wholesale and retail level. Mobilicity in its 2012 proposed revisions submission suggested that roaming had satisfied the tests of being an essential facility consistent with CRTC Telecom Decision 2008-17 and therefore should be subject to a 15% mark-up over costs. Had such an assessment been made by Industry Canada and reflected in the Revised Frameworks for Mandatory Roaming and Antenna Tower and Site Sharing in March 2013, prior to the required submission of 700 MHz auction deposits, it may have had a much more profound impact on the Canadian wireless landscape than we will see at this point.
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