Canada’s telecommunications regulator is banning the use of “exclusivity” clauses in roaming agreements between wireless carriers as it gets ready to review the overall state of competition in the market this fall.
The Canadian Radio-television and Telecommunications Commission said Thursday it found “clear instances of unjust discrimination and undue preference” by Rogers Communications Inc. in the roaming agreements the country’s largest wireless company negotiated with new entrant providers.
The commission found Rogers charged new entrants higher rates than it charged large U.S. carriers and other Canadian providers and also included exclusivity clauses in roaming agreements that prevented new entrants from negotiating better rates or conditions with other carriers.
Startups Wind Mobile and Mobilicity launched after a 2008 auction for wireless airwaves and technology constraints meant they turned to Rogers to negotiate roaming agreements, as it was the only national carrier at the time that allowed roaming on networks based on Global System for Mobile Communications, or GSM, technology.
As part of a broad policy to encourage competition in the wireless industry, Ottawa made it mandatory for carriers to allow competitors to roam on their networks. This was intended to allow startup carriers with small networks to offer national cellular coverage. However, the new entrants often complained that they were unable to negotiate favourable roaming agreements.
Rogers said Thursday it was “surprised and disappointed” by the CRTC’s ruling, noting that “every signatory had a choice” on the exclusivity clauses.
“They could sign a long term or a short term agreement or a deal with an exclusivity clause. Some carriers chose to sign exclusive agreements because they got a discounted rate,” spokeswoman Jennifer Kett said in an e-mail.
She said Rogers was also surprised by the CRTC’s comments on rates but noted the federal government has already put caps on those prices in any case.
The CRTC has refrained from setting rates for mobile services but has been investigating the state of competition in wholesale roaming since last year and will hold a hearing on the matter starting Sept. 29.
In the meantime, the federal government set interim rates – capping them at no more than what the carriers charge their retail customers – as part of its budget implementation bill, which gained royal assent in June.
The CRTC said Thursday that since those rates are now in force, that addresses the issue of unfair rates and therefore it was only necessary to ban the use of exclusivity clauses in roaming agreements at this time.
The commission sent Canadian wireless service providers a letter on Monday asking them for information on how they are calculating the rates they charge under the new caps. They have until Aug. 27 to respond.
Quebecor Inc. has said it would consider a national expansion of its wireless business if it could count on what it calls “fair” rates on wholesale roaming.
Drew McReynolds, an analyst with RBC Dominion Securities Inc., said Thursday’s decision was relatively neutral for the Big Three wireless carriers, adding that it is the outcome of the CRTC’s hearing in the fall that will be a “major determinant to whether Quebecor proceeds with national wireless expansion.”
Also Thursday, Bragg Communications Inc. said it greatly expanded its Eastlink Wireless network coverage through a new roaming agreement with one of Canada’s three national carriers. The Nova Scotia-based company that sells wireless service in the Atlantic provinces already had a long-term roaming agreement with Rogers and said it recently struck another deal with one of the other two incumbents, Telus Corp. and BCE Inc., although it could not name the specific partner.
Spokesman Dan MacDonald said the terms it was able to negotiate were made possible by the sense that change to roaming rates is inevitable.
The privately owned company launched its wireless business in early 2013 and does not disclose its subscriber numbers but Mr. MacDonald said it has seen “momentum” in customer additions. Eastlink operates its own LTE or 4G network in most urban areas in the region but the new roaming agreement allows it to expand its coverage.
“Customers have always been a bit skittish of coverage, whether that’s a real or perceived problem,” he said. “What we have done through this unique arrangement with two network partners is taken the coverage issue off the table.”Report Typo/Error