GATINEAU – In its submission to the CRTC’s review of mobile services, Cogeco – which already offers cable, Internet and local phone in various markets in Quebec and Ontario – has proposed another way to get into wireless without losing its shirt.
With less than 800,000 wired subscribers, the company can hardly afford the cost of entry in the wireless club but definitely wants to add mobile so it can provide the entire bundle of services to customers. For years, Cogeco has been advocating a mandated Mobile Virtual Network Operator (MVNO) regime to piggyback on larger wireless operators at cost set by the CRTC, but with this submission, it’s proposing something a different.
Lack of competitive behaviour, apparent price coordination and the consumer perception that prices were too high forced the government look into its toolbox to try to stimulate competition. Spectrum set-asides during auctions and MVNOs were promoted as potential solutions by the federal government and now the CRTC through this proceeding.
However, in its submission, Cogeco noted “the evidence in Canada suggests that the business model for mobile-only operators is unsustainable.” Wind Mobile was acquired by Shaw Communications in 2016. Public Mobile Inc. was acquired by Telus in 2013. Mobilicity was acquired by Rogers Communications in 2015. Microcell, acquired by Rogers in 2004.
Mandated MVNOs might trigger the launch of several mobile-only players but it would not help provide sustainability in the marketplace, says Cogeco’s submission which goes on to explain its solution: the Hybrid Mobile Network Operator (HMNO).
“While facilities-based competition may deliver a great combination of competition and investment, building a mobile wireless network from scratch today—no matter the size—is a massive and improbable undertaking.” – Cogeco
“Under Cogeco’s proposed regulatory framework, the large players would offer mandated radio access network (“RAN access”) to a facilities-based carrier on a permanent roaming basis in those spectrum licence service areas where the HMNO has existing wireline or wireless telecommunications network facilities to serve retail customers, on condition that the HMNO continue to invest in network facilities,” reads its submission.
“While facilities-based competition may deliver a great combination of competition and investment, building a mobile wireless network from scratch today—no matter the size—is a massive and improbable undertaking. For this reason, Cogeco is affirming that an operator without a strong underlying network infrastructure will not succeed, particularly in light of the increased need for faster deeper backhaul of 5G networks.”
One of the criticisms of the MVNO model was that it discourages investments in facilities but with the HMNO model, Cogeco argues that to remain competitive, the HMNO would need to continue to invest in their networks.
Finally, Cogeco argues that network agreements between competitive larger players are commonplace, citing the Next Generation Network Agreement between Bell and Telus, to provide access to competitors.
The HMNO model has recently emerged in the USA through a market-based approach but Cogeco submits: “It is highly unlikely that a similar HMNO model could emerge in Canada without being mandated through regulation.”
