Tensions between new entrant carriers and some incumbent players are heating up as the federal telecom regulator scrutinizes domestic roaming rates.
Wind Mobile is criticizing BCE Inc. and Telus Corp. for challenging the Canadian Radio-television and Telecommunications Commission’s authority to regulate the wholesale fees that carriers pay each other for domestic roaming services, arguing those incumbents are being “disingenuous” and “absurd.”
Since newer players rely on domestic roaming to provide wireless services to their customers who travel outside of their network’s coverage area, they are hoping to persuade the CRTC that robust competition at the retail level hinges on regulation of those behind-the-scenes rates.
At present, domestic roaming agreements are commercially negotiated, but new entrant carriers have complained they overpay big carriers. Some are urging the CRTC to regulate those carrier-to-carrier fees now that it is undertaking a broad study on the impact of roaming fees on competition in the wireless market.
“Bell and Telus have been spending a lot of time and money lately challenging the government’s, and now the CRTC’s, authority to take action against their consumer-abusing practices, rather than changing their behaviour or arguing the merits,” said Simon Lockie, chief regulatory officer for Wind.
“The CRTC’s mandate is to promote competition and affordable prices for Canadians. … If the market for domestic roaming is competitive, which it most certainly is not, the CRTC will not act and the Big Three have nothing to worry about.”
In August, the CRTC told carriers that it wanted to gather more information on both domestic and international roaming rates. Carriers had until Sept. 27 to provide the regulator with those details. Chairman Jean-Pierre Blais has said it would be “premature” to speculate about the CRTC’s plans.
As part of that process, BCE and Telus told the commission that any regulatory action on wholesale roaming rates would conflict with new roaming and tower-sharing regulations introduced by Industry Canada earlier this year.
“Even the threat of Commission regulation would undermine the negotiation regime established by Industry Canada. It would not be good policy for the Commission and Industry Canada to impose rules that create such operational conflict and could lead to confusion and interference with existing contracts and competitive market forces,” said BCE’s submission. (BCE owns a 15 per cent stake in The Globe and Mail.)
Telus echoed those sentiments, adding that all of its roaming agreements were negotiated at “mutually beneficial” terms. “Forcing artificially low domestic roaming rates will discourage investment in rural areas,” said spokesman Shawn Hall. “Also, if it is cheaper for a new entrant to just piggyback on our network, why would they build their own? So, it would actively discourage companies from making their own investments.”
In March, Industry Canada expanded domestic-roaming and tower-sharing obligations for incumbents and reduced timelines for arbitration. But Industry Canada also stated, “the CRTC may consider applications relating to rates and terms for matters such as roaming and tower sharing.”
“To suggest that the CRTC is somehow usurping the government’s authority by inquiring into roaming and tower sharing is disingenuous and actually absurd,” said Mr. Lockie.
Wind Mobile is not alone in its criticism. Eastlink also told the CRTC that incumbents charge “inflated roaming fees.”
“The result is clear. Incumbents are left with substantial profit margins, in part because of commercially unreasonable wholesale roaming rates they collect, while new entrants who require profits to expand our network are left with only narrow gains for investment,” reads Eastlink’s submission.