Wholesale mobile wireless market arrangements
In the notice of consultation leading to this decision, the CRTC stated that the purpose of the review was to determine whether the wholesale mobile wireless services market is sufficiently competitive and, if not, what regulatory measures would be required. The public hearing took place in September 2014. It focused on three main services which comprise the wireless wholesale market: (1) roaming; (2) tower sharing; and (3) mobile virtual network operators (“MVNOs”).
Under conditions of licence established by Industry Canada, all wireless mobile carriers have to offer roaming arrangements to each other. These arrangements allow the customers of one carrier (the Home Carrier) to roam on the networks of another carrier (the Host Carrier) in areas where the Home Carrier does not have a network. This facilitates the provision of a national service to customers regardless of the coverage of the Home Carrier’s own network.
Tower sharing arrangements allow service providers to install their equipment on other carriers’ towers. These arrangements are supposed to make more efficient use of towers by avoiding their duplication in areas where towers already exist.
MVNOs use components of other carriers’ wireless networks to provide their own brand of wireless services to their customers. In order to do this, they require consent and cooperation from the network providers whose network they propose to use to provide their services. Despite sometimes having their own core network elements, operations support systems, and administration systems, MVNOs rely on other wireless carriers for access to their networks.
Prior to the initiation of this public proceeding, roaming rates and terms were subject to market forces and were negotiable between carriers. In cases where the parties were unable to agree, the disagreement was subject to binding arbitration by an independent panel of arbitrators pursuant to Industry Canada’s Arbitration Rules. After the commencement of the CRTC’s review last year, the Government of Canada passed section 27.1 of the Telecommunications Act which caps the maximum amount that a Canadian carrier can charge another Canadian carrier for voice, data and text message roaming services. However, section 27.1(5) of the Act provided that the Commission could change the capped amount if it decided to do so.
In its decision, the CRTC decided that wholesale roaming is not subject to a sufficient level of competition and there is a lack of rivalry between the three large national carriers who are largely relied on to provide roaming services to the smaller regional carriers. The CRTC therefore decided to regulate the rates that Bell Mobility, Rogers and TELUS charge other carriers for wholesale wireless roaming services. The CRTC has set interim rates for these services effective immediately, and is requiring the three companies to file final proposed rates by November 4, 2015 based on the CRTC’s Phase II costing methodology, which identifies the long run incremental cost of providing the service. The CRTC is also recommending that the government repeal the legislated roaming caps that remain in place for the roaming rates that the three large national carriers charge each other and the rates that other regional carriers charge. This would mean a reversion to market forces for these rates, presumably still subject to Industry Canada’s arbitration regime.
The CRTC declined to require mobile carriers to provide “seamless roaming” whereby calls originated on a Home Network would continue to enjoy network connectivity when the customer crossed into a Host Network’s coverage area. Such calls will have to be reinitiated when this happens, as was previously the case.
The CRTC also declined to require the “hand-back” of international long distance calls placed by roaming customers, to the Home Network for termination. This maintains the status quo in which the Host Carrier terminates such calls.
The CRTC has decided to require the identity of the Host Carrier to roaming subscribers when they roam on another carrier’s network.
Tower and Site Sharing
The CRTC has decided not to regulate tower and site sharing. This decision was based on the fact that the Commission could not make an assessment as to the competitiveness of tower sharing arrangements. To do so would have required the CRTC to examine each tower or site on an individual basis and assess whether the tower or site owner has market power, which would have been expensive and burdensome for the carriers and the CRTC.
While not requiring mobile carriers to file rates for tower sharing, the CRTC did state that its existing powers under the Telecommunications Act are sufficient to enable it to address tower and site-sharing disputes. This includes the power to engage in alternative dispute resolution mechanisms, set terms and conditions and determine whether rates are discriminatory.
While the CRTC determined that mandating wholesale MVNO access would have a beneficial impact on the competitiveness of retail wireless retail markets, it declined to take this step out of regard for the regional carriers that are trying to deploy their facilities-based networks. The CRTC felt that mandating MVNO access would curtail the regional carriers’ investment plans, particularly if MVNOs focussed on large urban centres.
The CRTC noted that certain restrictions in wholesale roaming arrangements may impede a wireless carrier from offering wholesale network access to an MVNO. For example, certain restrictions prevent customers of MVNOs from roaming on a national wireless carrier’s networks when they have an MVNO arrangement with a carrier that enjoys such roaming arrangements. The CRTC noted that this represents a barrier to entry to MVNOs.
Therefore, pursuant to section 24 of the Act, the CRTC will require the three national carriers to provide roaming on their GSM-based mobile wireless networks to all subscribers served by their wholesale roaming partners including the subscribers of any MVNOs operating on those networks.
In addition, the CRTC will require the Canadian Steering Committee on Numbering to modify its rules to permit full MVNOs to be issued their own mobile network codes. This will make it easier for MVNOs to change carriers, deal with multiple carriers and negotiate their own roaming arrangements.
Bell Mobility, TELUS and Rogers are required to file proposed tariffs, and supporting Phase II cost studies for roaming services provided to regional carriers by November 4, 2015. In the interim period, these carriers are required to issue interim tariffs for price caps equal to the carrier’s current highest rate charged to other Canadian carriers for each of voice, text and data roaming services.
The CRTC also recommends that the Governor in Council repeal its price cap regime as soon as possible.
Special thanks to articling student Diriana Rodriguez Guerrero for her help in drafting this bulletin.