CRTC wants to know if big telcos charge small players too much for network use

MONTREAL – Canada’s big wireless companies are coming under scrutiny for how much they charge their small competitors such as Wind Mobile, Mobilicity, Videotron and Eastlink to use their networks.

The federal telecom regulator wants to know if big players are putting these small players at an unfair disadvantage with the wholesale roaming rates they charge.

Some of the larger companies are charging _ or want to charge _ the small carriers “significantly” higher wholesale roaming rates than they charge wireless companies in the United States, the Canadian Radio-television and Telecommunications Commission said Thursday.

Chairman Jean-Pierre Blais said the CRTC has a “duty” to make sure there isn’t any “unjust discrimination” and added the CRTC has the authority to rectify the situation.

As a result, the regulator will look at wholsale rates charged by Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T) as well as established regional players like Bell Aliant (TSX:BA), SaskTel and Manitoba Telecom Services (TSX:MBT).

The small carriers rely on the larger telecom companies to offer their local customers national cellphone overage, Blais said in an interview from Gatineau, Que.

“It is to make sure that people have a fair chance to compete for subscribers in the marketplace,” he said. “You never know where your business and residential customers may be travelling in Canada.”

The wholesale rates the small carriers are charged can impact the rates they charge their customers, he added.

Canada’s telecom industry has been in the crosshairs of the federal government, which wants more competition and more choice for consumers.

The end result could be more regulation for the industry.

The CRTC said that in early 2014 it will look at the state of the wireless industry and “what regulatory measures may be required if the CRTC were to find the market is not sufficiently competitive.”

The regulator is already looking at roaming rates paid by cellphone users when they’re travelling in Canada and the United States, which is considering possible regulations as a result of consumer complaints. But Rogers, Bell and Telus have already lowered their international roaming rates.

Blais said much of the information the CRTC will collect on how much established telecom companies charge small competitors for roaming will remain confidential because they’re commercial agreements.

Ottawa has said it wants more competition for cellphone services and consumers to have more choice in picking their TV channels. The federal government has also said it want improvements in high-speed Internet services for rural communities.

A Rogers spokeswoman defended the company’s practices in an email.

“All of our roaming agreements with domestic carriers are based on negotiated, mutually agreed upon rates,” Patricia Trott said.

“There is an arbitration process in place that all carriers are entitled to use should they have any concerns, but those carriers have chosen not to avail themselves of that process,” she added.

Meanwhile, Wind Mobile welcomed the CRTC’s move.

“This is a very positive step for WIND and it is clear the CRTC has now seen the serious anti-competitive behaviour from Bell, Rogers and Telus and intends to do something about it,” CEO Anthony Lacavera said in an email.

“Roaming is a very significant issue for Wind and while much needed regulation at the wholesale level is on the horizon, some interim relief from these practices is required,” he added.

Canaccord Genuity analyst Dvai Ghose said Industry Canada decided some years ago that established wireless players would have to allow new entrants the use of their networks, but the terms were left to be worked out between them.

“Since then, new entrants have complained that the rates that the incumbents charge are too high and the CRTC seems to agree,” Ghose said in a research note.

Ghose also questioned if the CRTC’s announcement is coming too late.

“We wonder how many new entrants will be left to take advantage of potentially lower domestic wholesale roaming rates,” he said. “For us, the CRTC’s long look at domestic roaming rates just underlines how unsuccessful the government’s wireless policies have been.”

He noted that Mobilicity is now operating under creditor protection and is looking for a buyer and new player Public Mobile has been sold to Telus. Meanwhile, Russian telecom VimpelCom would like to sell its stake in Wind Mobile.

“In reality, perhaps the only real beneficiaries of lowering domestic roaming rates will be Videotron and EastLink’s wireless customers who may avoid paying big roaming charges when roaming onto incumbent networks,” he said.

He said Rogers has wholesale deals with Wind, Videotron, EastLink and Mobilicity and assumes it generates less than $50 million a year in domestic roaming revenue.


© 2013 The Canadian Press


Received Id 1512346928 on Dec 12 2013 19:11

Note to readers: This is a corrected story. An earlier version had an incorrect name for Manitoba Telecom Services.