They warn the CRTC about competitive impact of Freedom sale to Videotron
OTTAWA – The country’s largest telecoms are asking the CRTC not to forcibly allow the large enterprise and internet of things device markets to roam on its wireless networks.
The CRTC launched a proceeding in March to explore whether mobile virtual network operators mandated under the April 2021 MVNO framework should also be able to leverage the incumbents’ wireless networks to serve those other markets. It held a preliminary view that the consumer retail markets that are currently regulated are similar to the enterprise (more than 100 lines) and IoT markets.
The original decision only applies to small businesses (up to 99 employees) and individual consumers in areas where the incumbents hold market power.
In submissions to the CRTC this month, the large telecoms argued that the large business and IoT markets are unlike the retail consumer mobile wireless markets in that they are sufficiently competitive. In other words, none of the incumbents – Rogers, Bell or Telus – by themselves or together hold market power in these additional segments, the argument goes, making it unnecessary to regulate.
“Regulatory intervention is not required to create this competition and is not reasonably likely to enhance competition or investment,” Rogers said in its submission. “There are already numerous commercially negotiated wholesale arrangements for the provision of mobile wireless IoT/M2M connectivity services, and there is robust service-based competition in the downstream markets for IoT/M2M connectivity and bundled IoT/M2M connectivity and solutions.”
Part of the argument is that the IoT market includes foreign competition. Telus said in its submission that there are “several foreign companies” that provide IoT connectivity in the country, including the big three American firms: AT&T, Verizon and T-Mobile. It said it must compete with those foreign and international companies for major enterprise and IoT contracts.
Bell added that the CRTC has not shown evidence that the large enterprise and IoT markets should be considered for the MVNO regime, which it said runs counter to the commission’s process for determining essentiality of regulation. It said that the CRTC must first conduct an assessment to determine the competitiveness of these markets before it can put the question out to consultation.
IoT devices include various monitoring sensors including for traffic and agriculture, cameras and transit fare terminals. Many more of these internet-connected devices are expected to emerge as 5G wireless becomes more commonplace.
Both Telus and Bell noted that the CRTC has not taken into consideration the impact of Videotron’s purchase of Freedom Mobile, which they say must first be evaluated before it makes any further regulation in this market. Bell noted that the Competition Tribunal – in its examination of the Rogers-Shaw merger proposal – said Videotron’s purchase of Freedom would give the combined entity the “ability to offer new incentives to businesses that operate nationally.”
Telus said the commission should wait for its study of the off-tariff agreements that Rogers promised Videotron as part of the deal before it makes any decisions on the market.
SaskTel, which is also required to open its wireless network for roaming, said the CRTC should wait for the MVNO regime to actually develop in the market before making a decision. It added, however, that the IoT market at this point “will have no impact on the success or failure of an MVNO, especially given the uniqueness of that market, and other participants involved in the sale of IoT systems or devices”
The Saskatchewan crown corporation suggested the enterprise markets are “very competitive” and that there “is no pressing need to adjust the MVNO regime at this time.”
Future MVNOs, associations urge CRTC to move forward
Cogeco, which is planning to enter the wireless business via the MVNO, said in its submission that excluding the enterprise and IoT markets would “unjustly discriminate against emergent MVNOs that wish to develop and provide those products and services, and would confer undue disadvantage on retail customers who might otherwise benefit from them.”
“Cogeco submits that IoT/M2M and enterprise products and services present significant potential benefits to both consumers and businesses, are evolving rapidly, and the inclusion of those segments as part of the Commission’s wholesale MVNO access service is urgent,” the regional telecom added.
Eastlink similarly urged the CRTC to move forward with expanding the MVNO framework to include those markets. Not doing so “will limit the provider’s ability to offer new and innovative services and will put them at a competitive disadvantage when it comes to government, and other large business contracts which may require provincial or regional coverage, thereby potentially minimizing the business case for expanding into new areas.”
The Competitive Network Operators of Canada, which represents independent providers, said in its submission that the CRTC should open the MVNO framework to these additional market segments or risk undue preference and unjust discrimination. The association said that these market segments rely on scarce mobile wireless spectrum, the vast majority of which is held by the national carriers.
“Mobile wireless spectrum is scarce and prohibitively expensive, which gives rise to a very high barrier to entry and expansion for smaller carriers. Services provided to enterprise customers and IoT / M2M applications rely on mobile wireless spectrum, which provides the incumbents with the opportunity to exercise unfettered market power in the Market Segments,” CNOC said.
Iristel agreed in its submission, stating that the incumbents hold the vast majority of mobile wireless spectrum in the country and that “it is unthinkable that the regional providers have somehow managed to break this hold on market power exclusively in the enterprise or [IoT] markets.”
The Independent Telecommunications Providers Association said in its submission that the additional markets should be incorporate into the existing framework. It said the CRTC should effectively “do away” with customer categories and “any associated restrictions and permit an MVNO to purse any customer regardless of whether the customer could be considered residential, business or enterprise.”
“If the Commission wants the MVNO regime to reach its maximum competitive potential, new entrant MVNOs should be permitted to pursue any customer and all potential applications. Market entry will be a difficult, complex and expensive proposition as it is without the artificial restrictions currently imposed by the regime,” the ITPA said.
The Public Interest Advocacy Centre, in supporting the broadening of the MVNO framework, warned the commission against excluding the additional market segments or else it will it will give the incumbents “a significant foothold” in those markets allegedly similar to when the commission decided against mandating access to the incumbents’ last mile fibre facilities under the current aggregated wholesale framework.
“Almost 8 years later, the Commission now faces the contentious task of rectifying the competitive harms of an unworkable FTTP wholesale access framework. If the IoT/M2M market segments are excluded under the MVNO access framework, the Commission is likely to repeat the mistake,” PIAC said in the submission. “The Commission can best support efficient competition by ensuring full access for competitors now, rather than go through the inevitable pains of bringing them back into the fold later.”
