Big telcos not required to sell wholesale network access to tower-less rivals, CRTC says

The CRTC has once again refused to mandate the big telcos sell wholesale access to their wireless networks to fledgling rivals without towers of their own, a decision critics call a blow for competition and for Canadians fed up with big cellphone bills.

Critics say ruling is bad for competition and bad news for Canadians frustrated with high cellphone rates

Sugar Mobile used to offer cellphone plans for as low as $19 a month. But the CRTC ruled last March that its business model broke the rules. (Shawn Benjamin/CBC)

The CRTC has once again refused to mandate the big telcos sell wholesale access to their wireless networks to fledgling rivals without towers of their own, a decision critics call a blow for competition and for Canadians fed up with big cellphone bills.

At the request of Economic Development Minister Navdeep Bains, the regulator spent months reviewing its ruling from last March that threatened to put Sugar Mobile out of business. On Thursday, the CRTC reaffirmed its decision that the discount Wi-Fi-based provider has no right to resell access to Rogers's network to keep its customers connected.

Sugar Mobile CEO Samer Bishay called the decision "a big blow for Canadians once again."

"It just shows that we have a broken system," he said. "Something is broken and it needs fixing fast."

Sugar Mobile CEO Samer Bishay was very disappointed with the CRTC's latest ruling against the company. (CBC)
 

Launched in early 2016, Sugar Mobile appeared to have found a back door into the notoriously closed-off Canadian cellphone market.

Sugar's parent company, Ice Wireless, owns a mobile network in the North and has reciprocal agreements allowing customers of the big Canadian telecommunication companies to roam on the Ice Wireless network in cities like Whitehorse, Yellowknife and Inuvik.

Through its Sugar Mobile brand, Ice offered a Canada-wide, Wi-Fi-based mobile service, relying on those reciprocal agreements to provide its customers access to Rogers's 3G network outside of Ice Wireless territory.

Rogers complained that Sugar was essentially selling access to a network it didn't own, in violation of Rogers's roaming agreement with Ice Wireless. And in March 2017, the CRTC agreed, ordering Sugar off Rogers's network, all but shutting down the discount service provider.

Wi-Fi-first mobile plans

Sugar Mobile's business model is actually quite common in the U.S. and Europe.

Such providers are known as WiFi-first mobile virtual network operators (MVNOs). They rely primarily on Wi-Fi and don't have a cellular network of their own. Instead, they lease network access at wholesale rates and then turn around and sell that access to customers at retail prices.

The MVNO model is allowed in Canada, but as the CRTC ruling makes clear, it's up to the big telcos to decide if they want to sell wholesale access to their networks to upstarts looking to nudge their way into the market.

So far, they don't.

The advantages of the MVNO model are based on the increasing availability of Wi-Fi and the cost savings of not having to build and maintain a network. People in urban areas spend much of their time in Wi-Fi zones and the cost of keeping a cell tower engaged with a customer's phone is only incurred when it leaves Wi-Fi range. 

We saw prices come down for three days in December and we saw lines that lapped malls because that's how desperate we are for better choice and for better packages.- Laura Tribe, Open Media

Sugar Mobile had plans starting at $19 per month. 

Despite ruling against Sugar Mobile for a second time, the CRTC did say it would conduct a full review of the larger issue of wholesale MVNO access to wireless networks starting sometime in the next year. 

The regulator also announced Bell Mobility, Rogers and Telus will have to provide low-cost, data-only wireless plans to all Canadians. Such plans would not include talk and text.

The three telcos must submit their proposed plans to the regulator by April 23.

Critics not happy

Internet law professor Michael Geist said the takeaway from the CRTC announcement is clear: The big carriers win. 

"Low cost data-only plans may assist some on affordability but won't address broader pricing concerns," the University of Ottawa professor tweeted. "In short, the Commission won't do much on wireless competition. Over to you @NavdeepSBains." 

Laura Tribe of Open Media, a non-profit advocacy group, called the CRTC's ruling on MVNOs "incredibly frustrating."

"It's really hard to be told, 'Keep waiting and we'll try to get it right next time.'"

She said consumers struggling to pay their cellphone bills want more competition and more choice, not more consultation. 

During a conference call with reporters, CRTC chair Ian Scott said wireless prices are falling thanks to increased competition.

"Wireless rates are going down. More low-cost options are in place," he said. "There is evidence that competition is intensifying. And if it doesn't intensify to an extent that's acceptable to the public and to the government, we'll be doing a fulsome review starting next year."

Tribe, however, isn't convinced the current level of competition is having a major impact.

"We saw prices come down for three days in December and we saw lines that lapped malls because that's how desperate we are for better choice and for better packages," she said, referring to a price war initiated by newer entrant Freedom Mobile, owned by Shaw.

"And just because the price can come down for a few days does not actually fix the [overall] problem."

About the Author

Aaron Saltzman

Senior Reporter, Consumer Affairs

Aaron Saltzman is CBC's Senior Reporter for Consumer Affairs. Tips/Story ideas always welcome. aaron.saltzman@cbc.ca twitter.com/cbcsaltzman