By Ahmad Hathout
The mobile virtual network operator (MVNO) regime, once confined to individual consumers and small businesses, has been expanded to include internet of things (IoT) and enterprise customers now that the CRTC on Wednesday ordered the large telecoms to modify their tariffs to enable competitors to wholesale network space to serve those particlar clients.
The regulator affirmed Wednesday its preliminary view that the IoT segment, which includes the machine-to-machine market, and the enterprise market, defined as companies with 100 or more paid employees, see similar market dynamics as the rest of the segments under regulation – that is, a concentration of market power in the hands of incumbents Rogers, Bell, Telus, and SaskTel. In other words, more competition is needed, it said.
“The record confirms the Commission’s preliminary view that the enterprise and IoT markets are highly concentrated,” the CRTC said. “In both markets, the national wireless carriers together hold the overwhelming market share across Canada, except in Saskatchewan.
“The Commission is of the view that enterprise and IoT customers would have limited access to economically feasible and practical substitutes if the incumbents chose to increase their prices,” the commission said, noting other wireline and wireless technologies would not be sufficient substitutes to the network coverage, mobility, reliability, throughput and low latency offered by mobile wireless services.
The CRTC determined that the relevant product market for enterprise services consists of retail mobile voice, text and data services offered to business and institutional customers. For IoT services, it’s defined as text and data services provided over all wireless generations, from 3G to 5G and beyond, offered to retail customers that allow internet-connected devices to communicate with each other.
IoT devices include various monitoring sensors including for traffic and agriculture, cameras and transit fare terminals. Many more of these internet-connected devices are expected to emerge as 5G wireless becomes more commonplace.
The relevant geographic market for both those segments will be on a provincial and territorial, rather than national basis, which the CRTC said would run the risk of “excluding regional differences in prices” and other regional market conditions.
Services provided by regional providers had seen some market share gain for enterprise and IoT customers, the CRTC said, but those are exceptions to the rule, the CRTC said.
The CRTC added that restrictions on MVNO access to serve IoT and enterprise customers from the national players “results in undue or unreasonable preference and undue or unreasonable disadvantage.”
In submissions to the CRTC last spring, the large telecoms argued that the enterprise and IoT markets are unlike the retail consumer mobile wireless markets in that they are sufficiently competitive. In other words, none of the incumbents – Rogers, Bell or Telus – by themselves or together hold market power in these additional segments, making it unnecessary to regulate, they said.
“Regulatory intervention is not required to create this competition and is not reasonably likely to enhance competition or investment,” Rogers said in its submission last year. “There are already numerous commercially negotiated wholesale arrangements for the provision of mobile wireless IoT/M2M connectivity services, and there is robust service-based competition in the downstream markets for IoT/M2M connectivity and bundled IoT/M2M connectivity and solutions.”
Part of the argument is that the IoT market includes foreign competition. Telus said in its submission last year that there are “several foreign companies” that provide IoT connectivity in the country, including the big three American firms: AT&T, Verizon and T-Mobile. It said it must compete with those foreign and international companies for major enterprise and IoT contracts.
The CRTC said in its decision Wednesday that foreign IoT service providers in the Canadian market “rely on access to the [radio access network] of a Canadian incumbent to offer mobile wireless services. They are, therefore, effectively resellers. Furthermore, many of these service providers are only able to operate in the Canadian market because they provide the incumbents with reciprocal roaming agreements or network access agreements in their home countries. By contrast, the national wireless carriers have no need for reciprocal agreements with regional wireless carriers and therefore lack the same incentive.”
Both Telus and Bell noted that the CRTC has not taken into consideration the impact of Videotron’s purchase of Freedom Mobile, which they say must first be evaluated before it makes any further regulation in this market. Bell noted that the Competition Tribunal – in its examination of the Rogers-Shaw merger proposal – said Videotron’s purchase of Freedom would give the combined entity the “ability to offer new incentives to businesses that operate nationally.”
The CRTC responded Wednesday by saying, in fact, that the lack of MVNO access to the IoT and enterprise segments may slow its progress to successfully compete as a fourth player.
“It is unclear to what extent the Freedom Mobile acquisition will affect its ability to compete in the enterprise and IoT markets,” the regular said Wednesday. “Videotron does not have RAN coverage to the same extent as the national wireless carriers, even after acquiring Freedom Mobile, and this may impede its ability to compete effectively for some enterprise and IoT customers.”
