CCSA says mandated access to 5G nets is a must for rural
GATINEAU – In advising the CRTC to mandate just one national MVNO to boost mobile wireless competition here, three former wireless and telecom executives said threats from the big national players about reduced investments and job cuts are not to be taken seriously.
“The market is so clearly dominated by the Big Three [Rogers, Bell, and Telus],” Alek Krstajic, the former Freedom CEO and past executive at Bell and Rogers, told CRTC commissioners at the beginning of the second week of the Regulator’s review of the wireless industry.
“In fact, when they talk about they’re going to cut jobs if you do this or they’re not going to invest in 5G networks, it’s actually laughable,” he added of the “sense of entitlement.”
“Literally all you’ve got to do is call their bluff.”
Last week, Telus’ CEO Darren Entwistle said the company’s board had prepared a cost-cutting decree in case the CRTC decided to mandate mobile virtual network operators to roam on the incumbents’ networks. Those measures include investment and job cuts to the tune of 5,000 employees over five years as well as cuts to charitable ventures, which the former Freedom executives called “likely a new low.”
A day after Telus’ appearance, Eastlink’s Lee Bragg said it had already slashed its budget and laid off employees over MVNO fears.
(Last year, the major telecoms announced investment reductions following the regulator’s final wholesale wireline rate decision, retroactive to when interim rates were set in 2016. That was set to cost the incumbents $325 million in retroactive fees, to be funneled to resellers, alone, but the incumbents won a stay of the decision in Federal Court. The incumbents do not want third party access mandated on their wireless networks.)
“When they threaten that they’re not going to invest in 5G, it misses the really big point here which is, who are their competitors?” Krstajic said, adding the regional players aren’t the primary competitors, but it’s the Big Three themselves. Krstajic, who said he doesn’t take the threats personally but is “a little bit annoyed” by them, used the big players’ improved churn rate as an illustration, claiming its slightly more than one per cent because subscribers are just hopping between Rogers, Bell and Telus, not to Freedom or Videotron.
“When they’re shifting between them, it’s because someone’s got some advantage,” Krstajic said. “Maybe a price, but sure as heck it’s not going to be that one of them is going to allow the other to have 5G and they won’t, so they will all deploy 5G at very accelerated ways.”
“Any one of those CEOs… who tells you they aren’t going to deploy 5G in the fastest way possible, should be fired.” Alek Krstajic
And if they don’t? “Any one of those CEOs… who tells you they aren’t going to deploy 5G in the fastest way possible, should be fired… because that would be the single-biggest gaffe they could make in terms of maximizing shareholder value.”
Krstajic – also the founding Public Mobile CEO – appeared with Bob Boron and Bruce Kirby (both of whom are also former Bell, Public and Wind/Freedom execs) and noted they are all significant shareholders in Shaw Communications, resulting from the sale of Freedom’s predecessor Wind Mobile to Shaw. Despite this, the three appeared as private citizens and not as individuals interested in boosting Shaw’s case. Shaw presented its case on the first day of the hearing last week.
The three former execs are proposing one national mandated MVNO to be selected by the CRTC in an open process, with the sole focus on the wireless business, which they call a “blood sport.” They said in their opening statement Canadians pay some of the highest prices in the world while using less data and getting less service. And despite Shaw’s Freedom being a solid fourth player that has improved prices, “this has not happened far enough or fast enough,” said Krstajic.
“A wireless-focused provider has the sole incentive to find solutions that allow it to better serve Canadian wireless consumers with lower prices and innovative services in wireless. A wireless-only operator doesn’t have the option to use wireless as part of a bundle. It has to succeed as an MVNO.”
That MVNO would price its offers at below the lowest prices the incumbents’ offer, otherwise called “retail-minus.”
Should the CRTC adopt what the trio are asking, Krstajic said it would likely shave “millions” off the value of their shares. “I’m probably going to lose a few more friends as a result of being here today,” he added.
In the afternoon, the Canadian Communications Systems Alliance (CCSA) argued for mandated MVNOs, including for 5G. Part of that strategy is for the organization’s members to provide mobile services, while being able to bundle other services to reduce prices.
For Stephane Arseneau, executive director of the Coopérative de Câblodistribution de L’Arrière Pays (CCAP), MVNOs aren’t just about competition in the current environment, but also in the next-generation 5G world.
“In my mind, if 5G is half of what it promises, companies like ours are going to have a hard time to stay competitive on the other services we offer.” – Stephane Arseneau, CCAP
“When I think about competition, to me I’m looking a forward on a longer term,” Arseneau said. “In my mind, if 5G is half of what it promises, companies like ours are going to have a hard time to stay competitive on the other services we offer.
“So what we’re asking right now is for a chance to have access to this mobile service and be able to compete on the mobile service but also on the broadband, television, and landline telephony that we already offer.”
The organization also said MVNO access is necessary to connect rural communities to wireless services, something CCSA members would be able to do well, given their long histories of delivering services in such regions.
Earlier in the morning, the CEO of TbayTel, which is also a CCSA member, said that while his company hasn’t fully factored whether it would use an MVNO model if mandated – the company (which is a municipally-owned facilities-based quad-play provider with spectrum assets from Sault Ste. Marie to the Manitoba border) is against a mandated MVNO model of any kind – he said one key factor to consider is brand presence outside its operating territory.
“Replicating that brand presence outside of our serving territories certainly has its challenges,” CEO Dan Topatigh said.
“It would certainly change our risk profile as an organization – being municipally-owned I can assure you that municipalities have a very conservative approach to risk, so as a result of that we would have to do far more work to understand whether that opportunity, and how far-reaching that might be, represents something that we can tolerate.”
In the photo, a cpac.ca screen cap, from left to right, are Kirby, Krstajic and Boron.
