TORONTO – Wednesday’s announcement by the federal government to curb domestic wholesale roaming rates was welcomed by at least one new wireless entrant, but panned by an industry analyst who described the move as “too little, too late”.
Wind Mobile chief regulatory officer Simon Lockie said that the decision makes it clear that the government “is taking the realistic and committed actions necessary to create a level playing field for competition in the wireless space”.
“Today's announcement shows that Prime Minister Harper's Government is serious about competition and serious about consumers”, he said in an emailed statement. “Minister Moore has said this Government is going to do something about domestic roaming, and he clearly meant it. This is an important step in the right direction for those, like Wind, who believe Canadians deserve true choice and competition in wireless.”
But Dvai Ghose, Managing Director/Head of Research for Canaccord Genuity said in a research note that, in theory, such a move should help new entrants, to the detriment of incumbents, but “…we continue to believe that this is too little too late”.
Noting that Wind is the only surviving independent new entrant, (with Public Mobile now owned by Telus and Mobilicity operating under creditor protection), Ghose questioned whether lower domestic roaming rates will encourage Wind’s parent VimpelCom to invest more in the carrier.
“This is because 1) Wind’s results to date have been very disappointing; 2) VimpelCom CEO, Jo Lunder, has said he wants to exit Canada; and 3) any changes in domestic roaming rates may only be implemented well after the January 2014 700 MHz spectrum auction, as such changes will require an amendment to the Telecom Act.
“However, the Government has said that it wants to make changes in the coming weeks. In our view, the only potential beneficiaries may be Videotron and EastLink customers when they roam off-net. Videotron charges $0.30/min. and $2/Mb for domestic roaming, but EastLink recently eliminated such fees.”
Noting that Rogers is the main incumbent provider of wholesale new entrant roaming services, Ghose estimated that its domestic roaming revenue is $50 million or less, compared to an expected $6.8 billion of network revenue in 2013, implying that its domestic wholesale roaming revenues are largely immaterial to the bottom line.
– Lesley Hunter
