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A CRTC logo is shown in Montreal in this file photo. (Graham Hughes/THE CANADIAN PRESS)
A CRTC logo is shown in Montreal in this file photo. (Graham Hughes/THE CANADIAN PRESS)

CRTC rejects appeal by small Internet players over wireless access Add to ...

Canada’s telecom regulator has denied a challenge to its ruling that wireless carriers are not required to share access to their networks with companies that don’t own cellular airwaves of their own.

The Canadian Network Operators Consortium (CNOC), an industry group representing independent Internet providers, asked the Canadian Radio-television and Telecommunications Commission (CRTC) to “review and vary” part of its 2015 decision on competition in the $22-billion wireless industry.

The May decision was primarily focused on wholesale roaming access between existing wireless carriers that build and operate their own networks. The CRTC took a significant step in finding there was insufficient competition at the wholesale level and said it would step in to regulate how much the Big Three – Rogers Communications Inc., Telus Corp. and BCE Inc. – charge smaller competitors when their customers roam outside of their areas of network coverage.

But the commission did not go as far as to mandate network access for “mobile virtual network operators” (MVNOs) – companies that do not build their own cellular networks or own wireless airwaves known as spectrum.

The business models of MVNOs can range from reselling airtime under a different brand name, to more involved structures that operate some of their own network elements but rent access to the carriers’ spectrum and cell towers. CNOC argued that the CRTC should have supported the more complex model, known as “full MVNOs,” as a means of promoting more competition in the retail wireless market.

There is nothing preventing MVNOs from operating in Canada, but it is not a common model because it depends on the willingness of the established carriers to negotiate access with potential new competitors. In the U.S. last year Google Inc. launched an MVNO after arranging to buy airtime from Sprint and T-Mobile, the smaller competitors of AT&T and Verizon.

In an August application, CNOC asked the commission to reconsider its decision. The group said several of its members – which buy wholesale access to Internet and other landline services under a separate regime that does mandate network sharing – would be interested in offering cellular services as well. Cogeco Communications Inc. supported CNOC’s position and said it too would expand into wireless services if MVNO access was mandated.

Canada’s wireless carriers, from the Big Three, to regional players and new entrants such as Wind Mobile and Videotron Ltd., opposed CNOC’s application, arguing it would curb incentives to invest in building their networks.

The CRTC said in a decision released Thursday that it did not make an error in law or fact in its original decision or fail to consider basic principles and that there had been no fundamental change in facts or principles since the decision was issued.

The commission said it did not ignore the specific opportunity of granting full MVNOs mandated access but that the investments new entrants and regional carriers make “are principally in the access component of the network ... [and] would far exceed that of potential full MVNOs.”

The CRTC said it found that mandating MVNO access services would “significantly undermine the investments of other wireless carriers, such as the new entrants, particularly in non-urban areas, and … likely discourage continued investments by such carriers since they could rely on the MVNO access services rather than investing in their own infrastructure.”

Wireless service providers invested $7.5-billion in their wireless network infrastructure in 2014, the CRTC said, noting that represented more than half of all network investment in the telecommunications sector (it also said that was a particularly significant year for spending on wireless as many carriers invested heavily in spectrum licences during a public auction).

The previous federal government took steps over several years to bolster competition in the wireless market but focused on encouraging new players to invest in purchasing spectrum licences and building networks.

CNOC also challenged the CRTC’s decision not to regulate access to tower and cell site sharing services. The commission rejected that application as well.

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