CRTC limits roaming rates that big carriers can charge smaller carriers

GATINEAU, Que. – Canada’s telecom regulator is rejigging the regime for wholesale wireless roaming rates in the hopes that the changes will eventually lead to lower charges for consumers.

The Canadian Radio-television and Telecommunications Commission released a decision Tuesday that limits the roaming rates that the three biggest wireless carriers charge smaller carriers to piggyback on their networks, based on cost, for five years.

In its decision, the CRTC also asked the Conservative government to repeal legislation that currently limits what small carriers can charge the big players to use their wireless networks.

The decision unravels provisions imposed by the federal government last year, but the intention of the new framework is the same: to give smaller players the ability to expand into new markets and create more competition.

The CRTC decision could eventually result in lower retail roaming costs for customers of the smaller service providers when they leave their home network areas, officials said.

“The measures that we are putting in place today in the wireless market will ensure that Canadians continue to have more choice as well as innovative high-quality services,” CRTC chairman Jean-Pierre Blais said in a statement.

Industry Minister James Moore praised the ruling.

“Today’s decision will create greater competition in the wireless sector, and that is why our government has continuously advocated for these changes,” he said in a statement.

“We know that more competition means more choice, lower prices and better services for Canadian consumers.”

Nonetheless, it was unclear whether removing the roaming cap on local and regional carriers — and allowing market forces to take over — will benefit customers of Bell, Rogers and Telus when they travel with their smartphones or other wireless devices into areas controlled by the smaller firms.

Regional carriers, including Saskatchewan’s SaskTel and MTS in Manitoba, had argued that the blanket regulations imposed by the federal government meant that they were being forced to let Telus, Rogers and Bell use their networks at a discount.

An industry observer was critical of the CRTC decision, saying it will have negative implications for the long-term growth of Canada’s small telecommunications players.

“Essentially it’s not sustainable competition, it’s phony competition based on regulatory privileges,” Martin Masse, a senior editor at the Montreal Economic Institute, an industry think-tank, said in an interview.

Masse said he expects smaller carriers to rely on their larger competitors for network coverage, which 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.”

Effective Tuesday, wholesale roaming rates charged by the big three wireless providers will be set in stone for six months, the CRTC said, until Bell, Rogers and Telus file rate proposals with the regulator by Nov. 4.

Regulatory officials said they expected rates for GSM and LTE services to be set based on the cost of providing the service, plus a markup assumed at 15 per cent, and be frozen for at least five years.

The decision does not apply to newer technologies should service providers adopt them within the five-year time frame.

The CRTC said it made the move because it determined through a public hearing process that there’s not enough competition among the Big Three carriers to benefit consumers.

Wholesale roaming rates that were capped under legislation imposed by the government last year are based on the retail rates provided by carriers.

Officials said there is an expectation that wholesale rates will be lower six months from now, although Bell, Rogers and Telus can argue for a higher markup, on top of costs that they must justify to the CRTC.

“Over the next few months, the next few years, we expect there will be more choice,” said an official who could not be identified.

Josh Tabish of the OpenMedia consumer advocacy group said the CRTC decision makes it possible for new entrants to compete with the largest telecom providers “on a level playing field.”

“We have every reason to believe that it’s going to lead to lower prices,” he said. “The new providers have shown they are eager to serve Canadians with cheaper, more innovative offerings.”

— With files from David Friend in Toronto