Canada's telecom regulator has capped the amount that Canada's major wireless carriers can charge smaller carriers for allowing their customers to piggyback on the major networks while roaming.
Just after stock markets closed at 4 p.m. ET on Tuesday, the CRTC ruled on the issue of wireless roaming rates.
Such rates are considered key to increasing competition in the wireless market because they allow smaller players to pay to give their customers temporary access to the incumbents' networks until their own infrastructure can be built up.
This is going to affect mobile prices in ways we haven't seen yet — Technology writer Daniel Bader
A federal law had previously set a cap on the amount that the big companies can charge, but that rule was only meant to be temporary until the CRTC could provide permanent clarity on the issue.
Although the new rates do not directly affect what companies charge their customers, the ruling is designed to encourage those companies to pass the savings on to their customers.
Smaller regional wireless companies, including Saskatchewan's SaskTel and MTS in Manitoba, had told the commission that previous regulations imposed by the federal government meant that they had to let Telus, Rogers and Bell use their networks at a discount.
The ruling Tuesday is good news for smaller companies in that it doesn't impose the caps both ways — it asks Ottawa to repeal legislation that currently limits what those small carriers can charge the big players to use their wireless networks.
Wholesale rates will be capped
Tuesday's ruling mandates a cap, but it's not yet clear what the cap will be — rates will be capped where they currently are for the next six months, effective today, until Bell, Rogers and Telus file proposed final rates by November, which will be based on their actual costs of offering services.
Once the rates are established, they will be in effect for five years, which should give more clarity to upstarts looking to invest in the sector to start and expand networks.
Industry Minister James Moore called the decision "good for consumers." The rate cap will inspire more competition, he said.
"We now have a certainty that access to spectrum and roaming is now an essential service. It'll be regulated by the CRTC in a fair way through a negotiated price point, and it'll only, I think, serve consumers well through more competition," he said.
Canadians can also expect fewer dropped calls in rural areas and better service, he said.
"This is going to affect mobile prices in ways we haven't seen yet," said Daniel Bader, a writer with technology website MobileSyrup. "These are going to be rates that are much lower than what they are today."
Interest groups who had pushed for change in the industry declared the ruling a small victory for consumers. "The new rules should ensure that indie providers like Wind outside the Big Three can offer services to Canadians on a level playing field," digital lobby group Open Media said.
"After years of debate over what most Canadians already know about the state of competition in the wireless market, this is a long-overdue recognition that competition in the Canadian wireless market is lacking," said Jean-François Léger of the Public Interest Advocacy Centre. "Today's decision is therefore a positive step forward in the pursuit of more wireless competition in Canada."
But one industry observer criticized the decision, saying it creates "not sustainable competition,[but] phoney competition based on regulatory privileges."
Smaller carriers will be likely to rely on their larger competitors for network coverage, said Martin Masse, a senior editor at the Montreal Economic Institute, an industry think-tank, in an interview with The Canadian Press.
That will discourage them from spending to build their own operations.
"It stifles innovation," he said. "We get less investment because it's cheaper to depend on mandated access."
No help to MVNOs
The ruling stopped short of allowing another change many have pushed for, which was to mandate access for so-called mobile virtual network operators (MVNOs) to use wholesale access to offer inexpensive services.
Unlike major telecoms or regional players, MVNOs have no network of their own, but instead offer wireless services exclusively by piggybacking on other companies' networks. Some MVNOs have complained about their inability to acquire wholesale access from any of the big Canadian spectrum owners.
"The CRTC could have gone further by facilitating innovation through new market entrants, such as mobile virtual network operators," Open Media said.