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Wholesale wireless providers will have access to dominant players' networks, CRTC does not set rates

Wholesale providers, or MVNOs, will be able to access networks of dominant wireless players in Canada, but have to negotiate a price. Image credit: GETTY
Wholesale providers, or MVNOs, will be able to access networks of dominant wireless players in Canada, but have to negotiate a price. Image credit: GETTY (Maskot via Getty Images)

The Canadian Radio-television and Telecommunications Commission (CRTC) announced today that certain regional wireless providers that have invested in network infrastructure and spectrum will be able to access the wireless networks of Canada’s dominant players in regions where they operate.

In its decision on whether to mandate access for wholesale wireless providers to large incumbents' networks, the CRTC did not set rates for that access.

MVNOs, or mobile virtual network operators, are providers that do not have an established network to provide services, and instead rent access to networks provided by larger incumbent players.

The CRTC said in a release that this is a "facilities-based MVNO access model" that will make it easier for regional providers to increase subscribers. It added the decision will “offer Canadians more choice and affordable options.”

According to the CRTC the dominant players are Rogers, Bell, Telus in all provinces except Saskatchewan; SaskTel in Saskatchewan; and Bell Mobility in the Northwest Territories, Yukon and Nunavut. These players have 90 days from today’s decision to file proposed terms and conditions for MVNO access for approval.

To be eligible, MVNOs need to prove they have invested in the spectrum and demonstrate a commitment to maintaining and expanding operations, including networks, the CRTC said.

Eastlink, Videotron, Xplornet, Ice Wireless, SSI Micro and TBayTel, are the players that would be eligible to participate, the CRTC said in an email.

The decision does not include mandating rates, but the CRTC says the rates will be negotiated between providers. It says the arrangement between a dominant players and MVNO will be mandated for a period of seven years from the date it is finalized.

“[This] will give regional carriers time and incentive to expand their wireless networks,” the CRTC said.

CRTC’s Chairperson Ian Scott says the regulator didn’t set rates because the CRTC would have to have a formal proceeding to establish rates.

“You have to base it on something. So traditionally what we would do is have a fulsome proceeding and we would say, okay, file proposed rates. And then the competitors and anyone in the public would intervene and we’d have a long elaborate proceeding,” he said in an interview.

“What we’re trying to accomplish here is to get the rates in place as quickly as possible, so we didn’t follow our traditional path.”

Scott says that if parties aren’t able to come to a decision on rates at the time of negotiating the CRTC will step in as arbitrator. “They don’t have a choice about this, we’re mandating one."

Scott said that if this model doesn't work then the CRTC will "fix it."

"We don't plan to review this for five years... There's a certain logic. Obviously you go, okay somewhere around five years, maybe we take a look at this again and see how things are going," he said. "But if the market is not working as we expect before then, if there are fundamental changes, then yes, we'll look at it as required."

The CRTC also indicated in today’s decision that Bell, Rogers, Telus, and SaskTel are expected to offer low-cost and occasional-use plans in most markets. These players have to report to the CRTC every six months on their low-cost and occasional-use plan offerings, the release said.

The decision comes over a year after the regulator held hearings on whether to mandate and set rates for MVNOs. The push to review mandating MVNOs came after former Innovation Minister Navdeep Bains issued a policy directive to require the CRTC to consider “competition, affordability, consumer interest and innovation” when making decisions. Bains at the time said the directive was prompted by a 2018 decision on MVNOs, which Bains said did not “benefit Canadians.”

Telus and Bell each said by email that they will review the decision.

Yahoo Finance Canada reached out to Rogers for comment, but did not get a response in time for publication.

Matt Stein, CNOC Chair and CEO of Distributel, says today's news is disappointing and will not offer lower prices.

"It's effectively not going to happen. This only helps [those companies] where they already have gone to the trouble of buying spectrum and building a network," he said. "Distributel... offers internet, TV, home phone and other enterprise services. We were looking forward to being able to bring the same kind of vibrant competitive market that we bring for those services to Canadians. This closes the door on that for now," he said in an interview.

Ben Klass, a telecom expert and PhD student at Carleton University, says the decision "isn't going to turn into anything."

"You're not going to see TBayTel selling outside of Northwestern Ontario from this. You're not going to see SaskTel selling outside of Saskatchewan," he said. "There's a real missed opportunity for the CRTC."