Wind Mobile is calling on regulators to cut the rates large wireless players charge smaller rivals for roaming services, arguing that while Ottawa has capped some rates the charges are still too high.
Currently these rates are "far higher than what is just and reasonable, and certainly above the level that will support vigorous and effective competition in the interests of consumers," Simon Lockie, Wind's chief regulatory officer, told a Canadian Radio-television and Telecommunications Commission (CRTC) hearing on Monday.
The commission is examining the wholesale market, or what wireless providers charge competitors when their customers roam outside of their home networks. These rates are crucial for players with smaller networks such as Wind Mobile. The carrier, which has 770,000 customers, operates primarily in urban centres in Ontario, British Columbia and Alberta, but subscribers expect to be able to use their mobile devices wherever they go in Canada.
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The federal government introduced temporary limits on wholesale roaming rates in June, capping them at no more than what carriers charge customers at the retail level.
Wind executives said Monday that these caps made a difference – the company reduced its roaming rates significantly in August, cutting the price for data to five cents a megabyte, down from $1. But they argued that wholesale caps tied to the retail rates charged by the incumbent players Rogers Communications Inc., BCE Inc. and Telus Corp. still "need to be substantially lower." (BCE owns 15 per cent of The Globe and Mail.)
Executives from fellow new entrant Mobilicity, which is under creditor protection, said on Monday that had the caps been in place when it launched, it would have saved "millions and millions and millions of dollars and been in a much healthier position." Mobilicity is also asking the CRTC to set lower rates.
Although the focus of the hearing is on the wholesale market, Peter Menzies, vice-chair of telecommunications at the CRTC, pushed executives from Wind to address apparent signs of healthy competition at the retail level.
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Mr. Menzies noted that Wind has actually won more customers in recent quarters than Rogers and pointed to evidence that the annual overall "churn rate," or rate of customer turnover, in recent years has been about 20 per cent.
Mr. Lockie attributed some of Wind's subscriber wins to "pent-up dissatisfaction with the incumbents."
"People are looking for an alternative to them and that is something we've benefited from," he said.
Mr. Menzies also noted that the Big Three spend significant amounts on marketing to fight for subscribers, running hundreds of print advertisements and dozens of television and radio spots last year.
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"Banging garbage can lids together and buying ad space and comparing networks and so on – that's all well and good. … but when you look at the pricing, [the incumbents] are virtually indistinguishable," Mr. Lockie responded. "I think if they really were rivalrous, what they would do is compete on price and that's something you don't see."
Earlier in the day, representatives from the Competition Bureau urged the CRTC to implement regulatory measures to curb the incumbent players' ability to raise the rates they charge competitors for wholesale services.
The bureau filed an expert report with the commission arguing that the Big Three are making "above-normal returns on their investments, consistent with the exercise of market power."
Montreal-based cable and Internet provider Cogeco Cable Inc. also appeared at the hearing to argue in favour of regulations to support a mobile virtual network operator or "MVNO" model.