GATINEAU – New entrants and would-be wireless providers find themselves trying to again convince the federal telecom regulator that it needs to intervene in the wireless market. At the same time however, the incumbent operators tell the CRTC everything is working just fine as it is.
The comments come as the CRTC is studying the wholesale wireless services market with the goal of determining if the market is competitive enough or whether it needs to impose more regulations on roaming, tower and site sharing and others. All interventions can be found here. The public hearing is scheduled for September 29.
Bell, Rogers and Telus, collectively the Big Three, leave no doubt what they believe will be the impact of increased regulation on wholesale wireless services. They warned the Commission imposing additional regulatory measures on roaming and towers would lead to decreased network investments.
Telus says more wholesale regulation could alter the competitive environment to such an extent “that WSPs delay or stop entirely the investment and innovation in mobile wireless services,” adding as an example that this would lead to competitors relying on roaming rather than building their own networks. “As a result, all WSPs might need to take a second look at where and when they invest, and to what extent. Rural and remote areas are most at risk, but so too are other deployments to upgrade facilities or to close coverage gaps.”
With respect to tower sharing, Bell says that nearly 40% of those owned by the incumbents have a second tenant. The company argues that it’s “impossible to conclude that the existing wholesale regulations are insufficient or inappropriate or that additional regulatory intervention is necessary,” when “no requesting operator seeking commercial tower sharing services from a responding licensee has ever required an arbitrated outcome in the more than five years that the Industry Canada COLs have been in existence.” (Ed note: The above picture is a site near the Halifax airport showing a Rogers, Bell and Eastlink tower all on the same site.)
EastLink notes, however, that just because there hasn’t been any arbitration for tower sharing means the process is functioning properly. It adds that it had no choice but to accept the tower sharing agreements because neither Industry Canada, nor the host communities would have approved a second tower near or next to an incumbent one.
“This choice provides the incumbents with the market power they need to apply discriminatory wholesale rates for use of their towers.” – Eastlink
“This choice provides the incumbents with the market power they need to apply discriminatory wholesale rates for use of their towers,” states Eastlink, adding its comments to Telecom Notice of Consultation 2013-685 highlighted “why the expensive and time-consuming arbitration process is not a viable option for securing reasonable wholesale rates.”
In its intervention, Mobilicity argued that because of gaps in coverage from the regional carriers, it had no choice but to ink a wholesale roaming agreement with at least one of the national providers. Because of this, the company also had to accept the terms and conditions of the deal offered. “The roaming agreements that are currently in the Commission’s possession may suggest that the incumbent carrier had exercised this power,” adds the company.
Mobilicity acknowledges that the rollout of wireless services from the likes of Vidéotron and EastLink could provide additional wholesale roaming partners. But “it remains to be seen how motivated these new potential roaming candidates will be to negotiate terms that are both fair and reasonable when the existing roaming agreements expire.”
The CRTC is also seeking input on policies that may help encourage the development of a greater number of mobile virtual network operators or enablers (MVNOs and MVNEs). Cogeco Cable and the Canadian Cable Systems Alliance (CCSA) both expressed concern that current wholesale wireless regulations are preventing growth in this market. Unlike the experience in the U.S. and the UK where MVNOs have been able to bring additional competitive pressures at the retail level, the national incumbents here “effectively blocked entry of independent MVNOs in the market.”
To correct the situation, Cogeco argues that the Big Three should be mandated to provide wholesale radio access network (RAN) services through an approved tariff and refrain from imposing provisions that would hinder the activities of any MVNO.
“Yet, in spite of its best attempts, the incumbents delayed in responding to CCSA’s requests and ultimately decided not to continue the communications at all.” – CCSA
The CCSA says it’s attempted to negotiate MVNO agreements, but they’ve gone nowhere. “Yet, in spite of its best attempts, the incumbents delayed in responding to CCSA’s requests and ultimately decided not to continue the communications at all,” adds the association.
Rogers notes it has agreements with eight resellers and the company argues mandatory wireless resale won’t lead to more retail competition, but will instead hurt both new entrants and incumbents alike. “Mandating resale by MVNOs will not stimulate competition in retail markets that are already workably competitive. It will in fact cut into the market share of both new entrants and incumbents by providing network access at non-sustainable rates,” states Rogers’ intervention.
The Competition Bureau of Canada has also weighed in the issue. As an example, it notes there are incentives for the incumbents to raise wholesale roaming prices above competitive levels because incumbents benefit when new entrants face higher wholesale costs; new entrant customers may switch to the incumbent because of these higher costs; and the incumbents earn a margin on these recaptured customers that reflects their retail market power.
The bureau points to comments from Wind Mobile and EastLink in the CRTC’s 2013 wireless roaming proceeding as evidence that the incumbents’ have the ability to thwart retail competition through wholesale service pricing. Both companies have used the pricing zone concept where “home network” customer prices are lower than in regions where customers have to roam onto a host network. While Wind saw slower acquisition growth as a result this price differential, EastLink decided to absorb the financial loss every time one its customer roamed outside of its home network.
Cartt.ca will have more from Wind later this week after it appears before the Standing Senate Committee on Transportation and Communications to discuss much of this.
