No Ting for you: Why Canadian wireless is broken

Do you Ting? Can you even get access to Ting if you want to?

Ting sells wireless phone service, but doesn’t have a wireless network of its own. Instead, as a so-called mobile virtual network operator (MVNO), its business model is based on buying access to the major carriers’ wireless networks, then reselling contract-free services to consumers. In the U.S., it uses Sprint’s infrastructure.

Can’t do business here

It’s a different story north of the border. Ting is a Canadian company, founded by Toronto-based Internet pioneer Tucows in February 2012, but it’s been stymied in its efforts to bring its service to Canada. Carriers here have steadfastly refused to give Ting access to their networks, and that’s raising hackles among Canadian telecom market observers, who claim the current regulatory climate favours the major carriers and stifles competition.

“The Big Three have regulated our mobile phone and Internet market by creating a stranglehold on crucial wireless resources (aka: wireless spectrum),” OpenMedia.ca’s Josh Tabish and Darcy Paterson wrote in a blog entry. “Now, they can block people like you and me from accessing alternative and independent mobile services.”

The group accuses the government and regulators of tilting the playing field in favour of the major players.

“After years of being coddled by decision-makers in government and the CRTC, the Big Three have managed to abuse their size and power, and regulate our wireless market by preventing smaller companies, like Ting, from buying fair access to the networks,” they wrote.

OpenMedia.ca recently launched its Unblock Canada initiative to put public pressure on the carriers and the CRTC to open up affordable network access and increase choice for Canadian consumers. Tabish and Paterson say the current state gives players like Ting little room to move.

“These blocking tactics make it very difficult for companies like Ting to offer their affordable services to Canadians,” Tabish and Paterson continued, “and, instead, they are forced to turn their business south of the border, where Americans now have an affordable alternative to their Big Telecom giants.”

A difference of opinion

The CRTC just wrapped up a week of hearings in Gatineau, Que., designed to help it decide whether or not to increase the levels of regulation in the wireless market. While the three national carriers spent much of their time at the hearings claiming the Canadian wireless market is just fine the way it is, the Competition Bureau says otherwise. It told regulators the government needs to step in to keep major carriers like Bell, Rogers and Telus from stifling smaller players.

Patrick Hughes, a senior economist with the Competition Bureau, accused the major carriers of “distorting” the market by charging prohibitively high rates to smaller operators for access to their wireless networks. He called the behaviour anti-competitive, and said consumers are paying the price as the national carriers continue to reap significant profits from the practice.

“We ask why the incumbents are doing this. What’s the incentive?” Hughes told the hearings. “The incentive to us are the margins in the retail market. This … is not in the public interest.”

The Canadian government announced plans last December to cap how much national carriers could charge smaller carriers for wholesale access to their wireless networks. The resulting legislation, first tabled in March, limits domestic roaming rates to what the national carriers would charge their own customers. And while it benefits smaller players like Wind Mobile, it still leaves Ting out in the cold.

An unkept promise

Soon after taking over as federal Industry Minister in July 2013, James Moore issued a statement saying “protecting consumers and increasing competition in the wireless market” would be his government’s priority.

“We want all regions of Canada to benefit from competitive market forces, which is why more progress must be made,” Moore wrote. “We will continue to stay the course by ensuring Canadians benefit from a competitive telecommunications industry.”

Sounds great in theory. But as smaller carriers continue to struggle to gain access to a market that seems to beat them down at every turn, standalone or stopgap tactics like introducing set-asides for regional carriers for wireless spectrum auctions and tweaking foreign ownership rules aren’t working. With the most recent wave of new additions - Wind Mobile, Public Mobile, and Mobilicity - each running into significant headwinds after entering the market in the wake of the 2008 AWS auction, the government has had plenty of time to realize it needs to do more.

Which means it’s time for Moore to deliver on that now-dusty promise. And for the CRTC to stop taking carriers at their word that the wireless market is sufficiently competitive without additional intervention. The noise level would be far lower if that were actually the case.