OTTAWA – “A suitable framework” and “a good interim measure” were the words Simon Lockie, chief regulatory officer at Wind Mobile, used to describe the federal government’s domestic wireless roaming plan as proposed in amendments to the Telecommunications Act during an appearance before a Senate committee on Tuesday.
In his opening remarks to the Standing Senate Committee on Transportation and Communications, Lockie launched a scathing indictment of not only the negotiations it held with its roaming partner, Rogers Communications, but also the terms of the roaming agreement. He described talks with Rogers as “an artifice of negotiations” that “were going so badly” that ultimately ended with Wind spending nearly $500,000 preparing for an arbitration hearing that didn’t happen. It didn’t take place, Lockie said, because his company had no choice but to accept the terms and conditions of the roaming agreement or risk delaying service launch by upwards of one year.
The terms of the deal were “absolutely terrible”, with data roaming rates that amounted to a $1,000 per GB. “Now compare that to the $5 per GB you could get at the retail level, and you get the sense for how egregious that rate was,” he noted.
The agreement also stipulated charges on inbound text messages. On this point, Lockie noted that of the 200 roaming agreements the company has around the world, only three included charges on in-coming text messages: one with the Cuban government, another with a line of cruise ships and the last one with Rogers. And because the industry standard is to not charge subscribers for text messages received, Wind had no choice but to absorb this cost, which amounts to approximately $1 million annually, he said.
To give committee members a sense of how expensive the domestic Canadian roaming rates it has been subjected to are – and where the government’s proposed roaming formula fits in, Lockie highlighted the difference between the fees it pays to Rogers and those it pays to its roaming partner in the United States.
“The rate they offered us was a thousand times less than what we were able to get from the domestic incumbent.” – Simon Lockie, Wind Mobile
“The rate they offered us was a thousand times less than what we were able to get from the domestic incumbent,” he said. “Even with the retail rate cap that’s proposed in this legislation, the rate that we were successful in getting from this U.S. carrier to whom we mean nothing, is three and a half times less than what these legislated caps will provide.”
The Wind executive explained the significant disadvantage it found itself when trying to reach a roaming agreement with Rogers. Because the deal also had an exclusivity component, Wind couldn’t avail itself of other possible roaming opportunities if they became apparent. As well, Rogers was the only carrier in Canada at the time that operated a GSM-based network, which meant Wind had no choice but to sign an agreement with the national incumbent.
“We had one provider and one provider only in a monopoly position which I think goes some way to explaining why we couldn’t … generate any competitive tension and we couldn’t avail ourselves of potential roaming opportunities with other new entrants as their networks became developed," said Lockie (pictured).
All of this led to significant negative impacts on the company’s ability to compete in the market. In fact, Lockie argued that the roaming agreement “dictated our commercial proposition.” Because Wind had come to market with simple, flat rate plans that included unlimited talk, text and data, yet was faced with these high roaming rates, it had to “artificially constrain the accidental consumption of data in particular,” he said, adding that roaming was limited to 2G.
“And we had to do that because the consequences of someone accidentally or ignorantly checking out their Facebook profile or something like that could easily get to $500 to $1,000 or more (in data charges) and that simply was not something that we could pass on,” explained Lockie.
He concluded his remarks by lauding the federal government for getting involved, proposing the interim measure and recognizing that its previous efforts to stimulate greater competition in the mobile wireless arena didn’t pan out as predicted.
“I think it’s important to understand that it is only an interim measure. The CRTC is fully seized of this matter now and we’re very optimistic, given the facts frankly, that we’re going to get a much more reasonable outcome down the road. And I think that’s going to be anywhere from five to 10 better rates on a wholesale basis that are very fair and reasonable than what we pay per this legislated cap,” he said.
