Ottawa cracks down on wireless providers over roaming fees

Following up on a promise during its throne speech last October to make Canadian wireless services more consumer-friendly, the Harper government announced plans Wednesday to tighten the rules surrounding domestic roaming rates.

“The roaming rates that Canada's largest wireless companies are charging other domestic providers can be more than 10 times what they charge their own customers. For too long, Canadian consumers in the wireless sector have been the victims of these high roaming costs,” Industry Minister James Moore said in a statement.

“Canadians have been clear that they want their government to take action in the wireless sector to provide more choice, lower prices and better service," added Moore. "With domestic roaming rates on networks capped, Canadian consumers will benefit from more competition in the wireless market.”

Legislation before regulation

Moore confirmed plans to amend the Telecommunications Act to limit how much the incumbent wireless carriers can charge smaller, regional players when their customers are forced to roam beyond their own providers’ networks. Under the proposed provisions, national carriers will no longer be allowed to charge other companies more than they charge their own customers for voice, data and text services on their mobile devices. The announcement follows the government’s announcement last week that it was launching an investigation into how national carriers charge smaller players for wholesale roaming access, and a 2012 ruling that forced the national network-owning incumbents to make wholesale roaming access available to all.

Mark Goldberg, a Thornhill, Ont., telecom consultant says the government’s sense of timing may not be optimal – and it may be causing more harm than good.

“The auction for Mobilicity's assets closed Monday at noon,” he said. “One has to wonder whether there might have been a different outcome had bidders or potential bidders known today's announcement was in the works.”

Goldberg also chided Ottawa for moving ahead with legislative changes before its regulatory agency has had a chance to weigh in.

“One might have wanted an independent body to adjudicate based on evidence in advance of legislation being introduced,” Goldberg said.

Temporary fix

The changes set the stage for an eventual permanent solution imposed by the Canadian Radio-television and Telecommunications Commission. The federal regulator is currently investigating the domestic roaming-charge issue and is expected to make a final decision in 2014. The government has repeatedly contended that high domestic or wholesale roaming charges stifle competition by boxing smaller carriers into a corner.

Michael Geist, University of Ottawa law professor and technology law columnist, says domestic roaming has been a significant concern for both regional players as well as new entrants, and while the latest move may not be ideal, it’s a step in the right direction.

“It is clear that the government is focused on fostering a more competitive environment,” Geist said. “New entrants such as Verizon would have been ideal.  In their absence, making the existing players more competitive is an obvious next step and the efforts to address domestic roaming should allow the smaller players to offer more cost-competitive services.

Geist added Canada continues to face some significant competition concerns, but the government is working to address the "low hanging fruit" that may set the stage for future change.

That low hanging fruit wasn’t enough to placate, an industry advocacy group.

“This morning’s announcement is welcome news to long-suffering Canadian wireless users, who pay some of the highest prices in the industrialized world for what we all know is horrible and often disrespectful service,” Executive Director Steve Anderson said in a statement. “These new measures are a great start to rein in the power of our price-gouging Big Telecom giants. Finally our out-of-control telecom gatekeepers will have to face penalties for breaking the rules.”

Ottawa will also tweak the Telecommunications Act and the Radiocommunications Act to give the CRTC the authority to impose fines on carriers that break Wireless Code – introduced earlier this month – and related rules governing spectrum deployment, tower sharing and rural services. The Telecommunications Act will be updated to allow so-called administrative monetary penalties, or AMPs, in cases where carriers violate regulatory decisions, including those related to the Wireless Code. The Radiocommunications Act will similarly be changed to allow AMPs in cases involving license and certification violations.

“Our government is committed to ensuring that companies play by the rules for the benefit of all consumers. Canadian families deserve nothing less,” Moore said. “These new enforcement measures will safeguard consumer interests in the wireless sector.”

However strong the government’s commitment may be, Goldberg says its latest announcement merely reinforces a years-long process that continues to muddy the wireless waters. He says since 2007, when the government released the framework for the 2008 AWS spectrum auction, Ottawa has been trying, to no avail, to simplify the landscape.

“Those regulations have been changed numerous times. The lack of stability in the sector is harmful to the investment climate. Each change seems to be an acknowledgment that the existing rules aren't working,” he said. “For a sector that is so dependent on massive levels of capital investment for infrastructure that is critical for Canada's success in a global digital economy, the financial markets need the government to get it right. If anything, today's announcement places an even greater reliance for the entire industry to offer services on the networks of the major national carriers.”