OTTAWA – The majority of Canada’s mobile wireless carriers have told the CRTC that redefining home network to include public Wi-Fi will have serious negative consequences on the mobile market while smaller providers Ice Wireless and Execulink argue Wi-Fi First providers are needed to inject much needed competition to an already highly concentrated market.
The final round of submissions on the CRTC’s Governor-in-Council demand that it reconsider its March wholesale wireless roaming decision were due December 1st. This is something ISED Minister Navdeep Bains announced during June’s Canadian Telecom Summit.
For Bell Canada, the only issue for the Commission to consider is whether to extend the definition of home network to include public Wi-Fi. It says doing so would make voice over IP a ubiquitous connectivity service, undermine the long standing policy of facilities-based competition, reduce investment in networks, and result in nothing more than a Wi-Fi First in name only.
Evidence demonstrates, the company says, that investments in network infrastructure would be harmed to the tune of a 17% decrease in investment intensity if the home network definition is expanded in the way being contemplated. That means an annual hit of $350 million in wireless capital expenditures from Bell alone.
“Now is precisely the wrong time to put this level of investment at risk. First, doing so would undo nine years of effort and the investment of significant regulatory resources and over $4B in public subsidies (in the form of reduced spectrum auction payments) into a policy that is just now on the verge of producing strong, stable, fourth facilities-based competitors in each of Canada's geographic regions,” reads Bell’s submission.
On the latter point, SaskTel adds that the federal government’s fourth carrier policy is beginning to pay off as Freedom Mobile amps up investment in its network and introduces new pricing and packages. In addition, Xplornet Communications has secured a mobile customer base as a result of Bell’s acquisition of MTS (and will launch in Manitoba in 2018). This policy would be jeopardized by allowing alternative wireless service providers (AWSPs) using Wi-Fi.
“The end result of this change in definition would be the retrenchment or closure of 4th facilities-based carriers.” – SaskTel
“The end result of this change in definition would be the retrenchment or closure of 4th facilities-based carriers, the birth of a plethora of small AWSPs with insufficient market power to become serious market factors and no business interest in cellular network expansion and technology innovation, and the failure of the federal government’s 4th facilities-based carrier policy, just as it is beginning to bear fruit,” reads the regional wireless carrier’s submission.
Throughout the several rounds of comments, the Big Three and their smaller brethren have argued that allowing Wi-Fi First providers into the market through mandated wholesale roaming would have a significant negative impact on network investment. Shaw Communications (owner of Freedom Mobile) notes though enabling these AWSPs into the market could actually strengthen the Big Three’s hold on the market.
Adopting rules that allow for Wi-Fi First providers “will weaken the only players capable of dismantling the incumbents’ dominance, which will preserve the deficient level of mobile competition in Canada today,” argues Shaw in its submission.
The company adds that if the CRTC is going to expand the definition of the home network, then it has to attach stringent conditions on those new providers. First, there must be a cap on monthly usage so mandated roaming doesn’t become permanent. As well without a high enough mandated roaming rate – Shaw proposes three times the final tariff – facilities based competition will be undermined.
“A distinct rate for Wi-Fi First roaming is essential as a counterweight to the extreme and unjustified advantages that Wi-Fi First providers would otherwise enjoy in the marketplace, in comparison with facilities-based new competitors who bear the risks and obligations of investing billions of dollars in alternative networks and are already competing at a significant disadvantage to the incumbents,” writes the company.
While the majority of the mobile wireless sector is lined up against changing the definition of home network, Ice Wireless and Execulink believe the Commission has to allow these types of new and innovative providers in the market. They can help reduce the significant concentration of subscribers in the hands of the Big Three, they say.
“Expanding the definition of ‘home network’ to include alternative connectivity, is crucial in the pursuit of affordability in the retail mobile wireless market. By doing so, the Commission will foster much needed mobile wireless competition in Canada with associated consumer benefits,” argues Execulink’s submission.
It notes that the CRTC has its own evidence demonstrating the extent of concentration in Canada’s wireless market – 89% of subscribers are with the Big Three and 91% of revenue. These numbers don’t demonstrate a robust competitive mobile wireless market in Canada, Execulink adds.
“As often as not, greater competition breeds greater, not lesser investment.” – Execulink
The independent Ontario communications company also questions arguments that there will be a chilling event on investment if Wi-Fi First providers are allowed to enter the market.
“National carriers will choose to invest in their respective cellular networks to remain competitive in a rapidly growing marketplace. Based upon past history and experience, threats by national carriers to reduce investment as a shield against what they perceive to be adverse regulatory changes rarely if ever come to pass. As often as not, greater competition breeds greater, not lesser investment,” says Execulink.
The emerging wireless carrier that has the most to gain from an expanded home network definition, Ice Wireless, argues the incumbents have used faulty and illogical arguments to support their call for the status quo. Ice is a facilities-based provider in the Far North and tried to grow its business using the Sugar Mobile brand it created – and that the CRTC ruled violated the regs.
They can’t, on one hand, argue Wi-Fi First providers have little to contribute to the wireless market yet, on the other, say they will have disastrous impacts on the sector. Both can’t be true, it adds.
“If, as the incumbent wireless carriers argue, Wi-Fi first service providers have nothing to contribute to the Canadian market, then presumably they will be unable to gain any market share, and thus there can be no negative impacts on investment by the incumbent wireless carriers. The logical inconsistency of these arguments means that both should be discounted,” reads the Ice Wireless submission.
The upstart also takes issue with suggestions that the Commission impose stringent roaming requirements on Wi-Fi First providers if they are allowed to enter the market. Ice says there is simply no justification for inflated roaming costs associated with incumbents having to alter their networks and systems.
“None of the incumbent wireless carriers making this claim have actually put any evidence on the record detailing these alleged problems or the upgrades to their networks that would be required. The fact that Rogers was able to host Sugar Mobile on its network, and Ice Wireless continues to do so, without any modifications being required is indicative of the fact that this argument has no basis,” says Ice Wireless.
But if the CRTC were to approve an expanded definition of home network and allow mandated wholesale roaming for Wi-Fi First providers, the mark up should be reasonable, the company argues. It suggests a 10% markup over and above the traditional 30% used for wholesale services.
The Commission has not yet set the timeline for the next steps to this proceeding.
