GATINEAU – Submissions to the CRTC on its wholesale domestic roaming rates proceeding break down just where most would expect.
In December, the CRTC launched a review of the rates Rogers, Bell and Telus charge smaller wireless service providers when customers of those smaller companies use their phones to roam outside of their own provider’s home network. The primary accusation of the Commission is that the big three are charging the likes of Wind and Eastlink more than they charge American operators whose customers roam on networks here when they travel.
In the summer of 2013, the Commission began a fact-finding exercise regarding the rates, terms and conditions associated with wholesale wireless roaming arrangements in Canada. In August, the CRTC asked wireless service providers to provide information on their roaming arrangements with other Canadian and U.S.-based wireless companies. Then, in October 2013, the CRTC created a wireless task force to further analyze this data. After that, the federal government jumped in, saying in its Throne Speech that it wanted to take action on roaming rates. Industry Minister James Moore then said in December he would cap those rates while the CRTC completes this proceeding.
In the submissions filed with the CRTC January 29th, newcomers like Wind and Eastlink said the contracts offered to them (and signed) are horribly onerous, conferring an unreasonable disadvantage upon them, in contravention of section 27(2) of the Telecom Act (on undue preference), and which will eventually drive them from the wireless business, should these rates be allowed to persist.
“These incumbents directly benefit from imposing such limitations on wholesale access to their networks via the financial gain from imposing unreasonable costs on new entrants." – Eastlink
“The incumbents control our access to the national wireless networks and make such access onerous by 1) charging commercially unreasonable rates, 2) limiting our access, and 3) by imposing conditions such that the quality of access to their networks is artificially deteriorated,” reads the Eastlink decision. “These incumbents directly benefit from imposing such limitations on wholesale access to their networks via the financial gain from imposing unreasonable costs on new entrants. The incumbents also benefit indirectly as the artificial limitations imposed on new entrants’ national networks may discourage consumers from switching service providers, and by imposing unsustainably high costs on new entrants such that the margins on customers who do switch are severely reduced or eliminated. This impedes our ability to develop our wireless network footprint, and further limits the sustainability of our ability to compete.”
The rates the big three incumbents charge their competing company clients are not only more expensive than the rates paid by foreign wireless companies for their customers to roam in Canada, but are also more than the actual retail rates Rogers, Bell and Telus charge their own customers who roam.
“Wind submits that the Commission should regulate the rates for domestic roaming services to remove the discriminatory, preferential and disadvantageous conduct so that it no longer undermines the Canadian telecommunications policy objectives as well as Industry Canada’s framework for the provision of wireless services to Canadians,” reads the Wind submission.
It suggests the CRTC decide on a “cost-plus-markup” scheme which it has used in prior telecom decisions, to ensure “wholesale roaming rates should never be higher than the average retail rates (per unit) paid by consumers for that service minus a reasonable margin reflecting forgone costs such as handset subsidies, individual account maintenance, billing, customer service etc. Wholesale roaming rates should never be higher than rates paid by sharing partners for network access outside the shared network, or by resellers and Mobile Virtual Network Operators, or by U.S. carriers for access to domestic networks. The Commission could thus impose a cap on domestic wholesale roaming rates such that they could not exceed any or all of these amounts.”
The incumbents are having none of this, stating that the Canadian wireless market is competitive, that one-way domestic roaming contracts are very different than bilateral international deals and that the wireless newcomers freely entered into these roaming deals without taking it to a CRTC arbitrator to decide, as is their right.
Rogers (and this is mostly a Rogers issue since Bell and Telus no longer have any domestic roaming agreements with Canadian wireless newcomers) told the Commission that while the rate paid by American cellcos for their customers roaming into Canada might be less than what Canadian companies pay, it’s because an international operator has more to offer – such as reciprocal roaming for Rogers customers.
“The… U.S. roaming agreements, which provide for the… inbound roaming rates (on Rogers’ network), are two-way agreements that in aggregate provide Rogers with access to virtually the entire U.S. market that has cellular coverage, enabling Rogers’ customers to roam almost everywhere in the United States. This is a huge advantage to Rogers, for which it is willing to give up some of the revenue that it would otherwise obtain from these carriers if they did not have a two-way agreement with a large up-side for Rogers,” says its submission. (The submissions here were redacted to keep certain information, like rates and other contract language, confidential, such as the name of the U.S. carrier and the inbound rate referenced in the above quote.)
“A finding that… U.S. roaming agreements… might contain voice and data prices that are the same or lower than the rates charged to Canadian carriers for one-way roaming does not make a case of discrimination. We are looking at two different classes of agreements,” adds the Rogers submission.
"New entrants should not now be able to argue that the commercial rates they agreed to result in unjust discrimination.” – Rogers
Besides, adds Rogers, the wireless newcomers knew what they were doing when they signed the contracts and if they didn’t like them, they could always face an arbitrator. “(T)he fact that this process has been available all along, and to Rogers’ knowledge, has yet to result in an imposed settlement, means that it is working and new entrants should not now be able to argue that the commercial rates they agreed to result in unjust discrimination.”
To Eastlink and Wind, that characterization is a misrepresentation of the state of the market when those agreements were signed. “(T)he rates offered by Rogers at the time Wind was seeking to launch its service fell far short of the Conditions of Licence standard requiring ‘commercial rates that are reasonably comparable to rates currently charged to others for similar roaming services’,” wrote Wind.
In 2009, Rogers had the only national network operating on the GSM technology standard, and wireless handsets compatible with Wind’s AWS spectrum operated solely on the GSM (now HSPA/LTE) standard. So, “when WIND was licensed, Rogers was the only wireless operator in Canada that could provide the necessary and mandated roaming services to Wind. Given its monopoly position, it was not surprising that Rogers was only willing to offer artificially-inflated rates and restrictive terms, essentially on a ‘take it or leave it’ basis,” reads the Wind submission.
“The unreasonably high wholesale domestic roaming rates also reduce the resources we have to expand our network,” adds Eastlink. “The incumbents have further benefited by using the size of our existing footprint to make false claims about our network and roaming fees that they claim customers have incurred. Eastlink has recordings of certain incumbents’ retail staff claiming that we do not have coverage in areas where we in fact have 4G LTE service, and claiming that our customers have received large roaming charges; claims that are simply not true.”
Replies to interventions are due February 10.
