GATINEAU – The American industry association which represents some of the biggest names in tech and telecom have told the CRTC it wants to see mobile virtual network operators (MVNOs) mandated in Canada.
In a short submission to the CRTC’s review of wireless services last month, the Computer and Communications Industry Association (CCIA) told the Commission it believes MVNOs “under the right regulatory circumstances, can promote competition, connectivity, and economic growth.”
MVNOs typically don’t own their own networks and instead lease space on an incumbent’s network and sell service to customers. There are a number of them operating successfully in the U.S. and other regions around the world. Canada has very few MVNOs such as Petro-Canada Mobility, PC Mobile and Speak Out (7-Eleven’s brand) which together, it’s thought, hold less than 1% of the market.
The CCIA submission notes the same things others have: that Canadians use less mobile data (no one disputes this) and that it is generally more expensive here (the incumbents dispute this) than the United States. The expense of data – and the reticence to use their mobile devices lest their monthly bill balloon – leave Canadians behind the curve, less able to participate in the digital economy and innovate.
While mentioning dotmobile by name as a potential leader in the MVNO space in Canada, CCIA “posits that a marketplace promoting MVNOs and offering consumers more choices, like dotmobile, could offer the following benefits to Canadian consumers: lower prices and more pricing options; increased service availability; service differentiation; network investment; and better customer experience.”
The CCIA insists resellers are good for the facilities-based incumbents (all of whom oppose CRTC-mandated MVNOs, as readers will recall) because the different kinds of wireless providers improve market efficiencies as incumbents can use wholesale revenue earned from MVNOs to help defray network costs – and fund further network investments.
It also used Ting Mobile – a Canadian company which operates as an American MVNO and has not been able to launch here – as an example of an innovative company that offers differentiated pricing plans, the ability to better-target underserved communities, and better customer service.
“Tucows, a Canadian company, offers Ting Mobile as an MVNO in the U.S. and provides customers with options for service on a monthly basis, no fixed contracts, ‘pay-for-what-you-use pricing’, and bring-your-own-device activations. In July 2018, it reported having about 286,000 subscribers on 165,000 accounts,” reads the CCIA submission.
Ting has opened stores in underserved urban markets as well as rural areas, says CCIA, and Tracfone (the largest MVNO in the States – which is owned by billionaire Carlos Slim and uses Wal-Mart as its distribution) allows customers to go into their outlets to pay in cash, if they wish. The submission quotes the non-profit Benton Foundation which said MVNOs “are playing a vital role in reaching communities that have fallen through the cracks of the big carrier market.”
“This can create an efficient and symbiotic relationship for the national provider.” CCIA
“In many cases in the U.S., MVNOs can offer nationwide coverage by utilizing the major, nationwide mobile networks. Part of this is the greater efficiencies achieved when an MVNO can purchase capacity from a national provider, whose network may be underutilized in certain areas. This can create an efficient and symbiotic relationship for the national provider,” adds the CCIA submission.
It notes that certain MVNOs have branched out into serving the business market and begun to build their own networks, too.
Happy customers is something MVNOs specialize in, too, said the CCIA. “For example, in 2017 and 2016, Consumer Reports surveys in the U.S. found that Consumer Cellular, Project Fi from Google, and Ting received the highest customer support ratings,” and that Ting claims its service calls are answered on the first ring by a real person trained and empowered to handle everything without a handoff to anyone else.
Being a reseller is seriously challenging, however, notes the CCIA. Even without owning and operating a network – or acquiring spectrum – costs and risks are high. “In order to be profitable, MVNOs must grow a significant customer base. As a result, a major cost for MVNOs is advertising and attracting customers,” reads the submission.
“MVNOs also face costs from leasing capacity on a facilities-based provider’s network, which some argue leaves MVNOs permanently disadvantaged because they rely on national providers’ networks. However, Ting and Rakuten Mobile have shown that MVNOs can branch out into other lines of business, including building out fiber networks.”
Canada is known, concludes the CCIA, for a highly concentrated wireless market, lower than average mobile data consumption, high costs and almost no MVNOs – and the CRTC has given itself the chance now to mandate them into existence so they can “help lower prices and provide more options for consumers, increase service availability, promote service differentiation, increase network investment, and encourage better customer experiences.”
The CCIA’s members include: Amazon, BT (British Telecom), Dish Network, eBay, Facebook, Google, Intel, Netflix, Pandora, Samsung, Sprint, T-Mobile, and Uber, among others.
The Washington-based group has long advocated for “advocated for open markets, open networks, and open competition in the United States and international venues,” it says.
