By Ahmad Hathout
Carriers will have to come to an agreement over the wholesale rate charged for domestic roaming, with the CRTC only acting as the decider of last resort, the regulator announced Monday.
The announcement means the CRTC is moving away from what is called “Phase II” costing methodology, which involves the national carriers submitting cost studies, typically for a five-year forward-looking period, so all regional competitors are paying the same rate.
This time, the commission is choosing to go the commercial negotiation route guided by rate benchmarks it will publish on an annual basis, which it said will include weighted average retail revenue per gigabyte of data in the country. The guide exists to ensure there is no information asymmetry the commission said may exist with a large versus smaller carrier.
As such, the CRTC has currently set the benchmark at $7.21 per gigabyte, which it said is the weighted average retail revenue from mobile data usage for the national wireless carriers in 2022. While the commission said this is not a rate cap, it said it expects wholesale rates to be lower than the retail rate – and that’s what it will factor in the final offer arbitration (FOA) process. The CRTC found that between 2017 and 2020, the average retail revenue per gigabyte of wireless data in Canada declined from $17.33 to $8.73; more recent data, the CRTC continued, shows rates between $1.60 and $5 per gigabyte of data.
If the parties fail to come to an agreement, they can request either FOA where the CRTC will pick one of two proposed rates from the parties or the less formal staff-assisted mediation. The commission is also encouraging regional carriers to negotiate rates as a group for efficiency and improved bargaining power.
In the meantime, the existing tariffed rates will remain on an interim basis, it said.
The CRTC said, unlike in a FOA backstop process, having to go through a costing proceeding would require significant resources that will contribute to a “delay” in the benefits of wholesale roaming rates to the detriment of competition.
“By adopting commercial negotiation with FOA as its rate-setting approach for wholesale roaming going forward, the Commission aims to help bring lower rates to the market in an efficient and timely manner,” the CRTC said in its decision.
“Lower wholesale rates will enable regional carriers to offer more competitive plans and promotions, while continuing to invest in their networks,” it added.
There will be an opportunity to negotiate at regular intervals to keep up with market changes, the CRTC said. If a carrier is going it alone instead of negotiating in a group, the regulator said this renegotiation should be done every three years.
The CRTC also said large carriers can resell to competitors roaming service if they already have roaming agreements with other large players.
The commercial negotiation approach is similar to how rates are determined under the mobile virtual network operator (MVNO) framework, which mandates private negotiations before a FOA request can be granted. The CRTC punctuated the timeliness point by saying that the FOA disputes in the MVNO hearings ran all of just three months – notwithstanding appeals.
The decision comes after the regulator fielded a request in May 2022 from Cogeco, Eastlink, Videotron, and Xplore asking for a review of the current wholesale roaming rates because they perceived them as too high and not reflective of the market.
The existing tariffed rates were based on those forward-looking five-year economic studies filed by the national wireless carriers in November 2015, according to the CRTC. Since then, evolutions in equipment and technology meant a reduction in costs to operate, the commission added.
“The Commission notes that it is not persuaded by the argument from the national wireless carriers that evidence of continued investment and growth by regional carriers proves that they have not been disadvantaged by the current wholesale roaming rates,” the CRTC said.
“Wholesale roaming is one cost component among many for regional carriers and rates that are too high would not prevent investment and growth entirely,” it continued. “The fact that regional carriers are continuing to increase the number of customers that they serve and invest in their networks does not demonstrate that the rates they pay for wholesale roaming are just and reasonable.”
The CRTC also said Monday that it holds the preliminary view that if regional competitors agree to terms with Bell or Telus, they should have access to both telcos’ networks in network-sharing areas – which is also the same under the MVNO framework. Currently, competitors must negotiate with both telcos separately for that access.
The deadline to submit comments on that view is November 6.
Photo via Rogers
