Consumer groups say it’s worth risking network quality for MVNO access
GATINEAU – The only two telecoms which appeared in front of the CRTC on Tuesday during day six of the Commission’s wireless policy review took some time to urge the commissioners to look at the limitations of Cogeco’s hybrid mobile network operator model.
That model would allow MVNOs which already own and operate wired or wireless networks to lease network space from the big three national players – Bell, Rogers and Telus – in exchange for continuing to invest in their own infrastructure in their own operating territories.
Quebecor said it has no tolerance for any MVNO, going so far as to say mandating such resellers would mean the federal government has reneged on its contractual agreement with Videotron in 2008 when it purchased the first AWS wireless spectrum. The company said it went on to spend over $1 billion on spectrum, plus more on networks, on the grounds that it would be able to achieve certain returns that a pro-MVNO regime would jeopardize.
“The Commission and the federal government would therefore have to bear responsibility for the loss suffered by Videotron if such regulations were introduced, and Videotron would have no alternative but to seek redress through the courts,” Quebecor CEO Pierre Karl Péladeau said in French in his opening remarks.
The Montreal-based company would, later in its appearance, launch a more pointed attack on a Montreal-based telecom with no wireless services: Cogeco. Quebecor said under no circumstances would it support even the Competition Bureau’s regional player-focused limited MVNO model, which the watchdog said would actually help regional players like Freedom and Eastlink compete with the larger national carriers. But it gave special attention to Cogeco’s version.
“We believe that the hybrid model proposed by Cogeco is an illusion; it’s a pitch for regulatory sale and it’s a packaging that is hiding the fact that Cogeco is looking for roughly the same thing as everybody else that’s been here before you,” Dennis Beland, vice-president of regulatory affairs of telecommunications. “That is, they want a mandated MVNO access.”
Beland said there are three problems with the hybrid model. First, Cogeco is being dishonest with the small population pockets it says are not covered by a fourth player. He said Quebecor covers 94.4% of Quebec and Cogeco said it would be able to service 1.4 to 1.6 million people to their hybrid offer. “I think that’s purely fictional,” Beland said.
The second “falsehood,” Beland said, is that Cogeco is trying to pitch the regulator on the idea that it wants to cover just those areas that are uncovered by the fourth player when, Quebecor alleges, it may really be going after the 4.2 million subscribers in the most populous areas.
Third, Beland challenged Cogeco on whether it would be increasing investments in its own infrastructure – as its model requires – when it has made no commitments under questioning from the commissioners.
“Our conclusion is there is really no hybrid model,” Beland said. “There is just one extra player that wants the same thing everybody else wants that all other carriers want…the mandated MVNO model – that is they want to be able to serve large cities with no risk whatsoever and without providing any investment – that’s the hybrid model.”
“The HMNO model would only introduce a few new players in very limited areas and leave out consumers who don’t live in these areas.” – Samer Bishay, Ice Wireless
Péladeau added if Cogeco wanted to enter the wireless business, it should have “put its money where its mouth is” and bought spectrum in the 2019 600 MHz auction, which it backed out of because it said it was too expensive.
Also appearing on Tuesday, Ice Wireless – in arguing for a full MVNO regime – said the hybrid model is simply too restrictive for its liking. “Allowing it to be an MVNO where it is already an MNO brings nothing to the table,” said Samer Bishay, president and CEO of Ice parent Iristel. “The HMNO model would only introduce a few new players in very limited areas and leave out consumers who don’t live in these areas.”
Bishay said, however, that if the CRTC adopts the Competition Bureau’s own limited MVNO model, then it should modify it to allow those facilities-based regional companies to operate “beyond the limit of their spectrum area in return for making facilities-based wireless network investments where they do have spectrum.” He added a five-year limit on mandating MVNOs is not practical because it takes “decades” to build high-quality wireless networks and suggested an “open ended” timeframe for regulating that space.
That timeframe echoes a similar suggestion made from other smaller players earlier in the hearing.
Bishay also said that MVNO revenues would go to improving facilities and wouldn’t change its business plan over the next five years. He said the money that Sugar Mobile, another one of his companies, earned was used for building facilities in its operating territories in the North.
Also appearing on Tuesday were the Internet Society of Canada Chapter, which argued that MVNOs can harness innovation, and the Coalition for Cheaper Wireless Service (CCWS). The CCWS, which acknowledged the speed of Canada’s networks, pondered whether it was worth trying to add services to the big three’s infrastructure to see how it would do under load.
“Maybe it’s worthwhile questioning if we can take a risk in seeing if the networks will be so robust if you let other competitors in,” said John Lawford, executive director and general counsel at the Public Interest Advocacy Centre (PIAC). “One of the big suggestions is that our networks aren’t full of data… the pipes are empty so they run fast, and if you had more competition, more people using them, wholesaling, then sure, maybe there’d be a few more connection problems but much more utility being used at much lower cost.
“So that’s why, perhaps, MVNOs would help; increased regional access to the major networks would help; and that’s why we’re saying there’s room for competition to do this.”
The hearing continues Wednesday morning with Rogers Communications leading off the day.
