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After a lengthy review, Canada’s telecom regulator has decided to force the Big Three national wireless carriers and SaskTel to sell access to their networks to regional competitors who commit to building their own network infrastructure.

The Canadian Radio-television and Telecommunications Commission came to its decision after determining that the three national carriers – BCE Inc.’s Bell Canada , Rogers Communications Inc. and Telus Corp. – together exercise market power in the wireless industry in all provinces except Saskatchewan, where Sasktel has sole market power.

The CRTC will force the large carriers to sell network access for a period of seven years to regional carriers in the areas where those players own spectrum. (Spectrum refers to airwaves used to transmit wireless signals.) The move would allow regional carriers, such as Shaw Communication’s Inc.’s Freedom Mobile, Quebecor’s Videotron and Bragg Communications Inc.’s Eastlink, which have been credited with driving down wireless prices in the areas they operate, to generate revenue while building out their own infrastructure.

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The regulator opted for a middle ground between the requests of companies such as internet provider TekSavvy Solutions Inc., which were seeking network access for competitors with no wireless infrastructure, and the big telecoms, which have opposed any form of mandated access. The CRTC said the model it is introducing strikes a balance between stoking competition in the wireless market and encouraging capital intensive network building.

The wholesale rates will be negotiated between the parties, with final-offer arbitration available if they cannot come to an agreement. The CRTC, which already mandates access to broadband networks at regulated rates, decided not to set the rates for wireless access because that can be a lengthy process, according to its chief executive officer and chairman Ian Scott.

“This is what we earnestly believe at the commission is in the best interest of Canadians – it is this framework that will continue to drive prices down, and that’s a principal concern,” Mr. Scott said in an interview.

“We have good technology. We have good coverage. Pricing is clearly the most problematic issue, and we believe this is the best model to intensify competition and continue to drive rates downwards,” he added.

The regional carriers will also have the option of reselling their wholesale access to competitors without their own networks, known in the industry as mobile virtual network operators, or MVNOs.

The highly anticipated decision was made amid a merger agreement between Rogers and Shaw Communications Inc. that has thrust wireless competition into the spotlight. The deal, valued at $26-billion including debt, is expected to face intense regulatory scrutiny as it would eliminate Shaw-owned Freedom Mobile, Canada’s fourth-largest wireless carrier. Some, including Quebecor Inc. CEO Pierre Karl Péladeau, have argued Shaw’s wireless business – which operates in Ontario, Alberta and British Columbia – should be excluded from the merger to prevent a lessening of competition.

Mr. Scott said the regulator did not factor the potential merger into its decision.

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“It had no impact on the decision or the process leading up to its release,” Mr. Scott said. The regulator based its decision on the extensive public record of its wireless proceeding, which closed in July, he added.

The decision follows months of deliberation, as well as public hearings. The CRTC heard from a diverse range of stakeholders – including national wireless carriers, regional telecoms, independent providers and consumer advocacy groups – on the issue over nine days in February, 2020. The CRTC operates at arm’s length from the federal government, which has been pushing to lower wireless prices.

During the hearings in Gatineau, consumer advocates and independent telecom providers argued forcing the national carriers to rent out capacity to MVNOs without their own networks would result in lower prices. Bell, Rogers and Telus have opposed any mandated wholesale access, arguing it would dissuade them from investing in their networks and slow the rollout of 5G wireless services.

Matt Stein, CEO of independent telecom provider Distributel and chair of the Competitive Network Operators of Canada, an industry group for independent internet service providers (ISPs), said he’s disappointed with the CRTC’s decision.

“Without the flexibility afforded through a full MVNO model, independent carriers are not set up to innovate on services and pricing,” Mr. Stein said in a statement. “This decision is bad for Canadians and bad for the country,” he added.

The decision is in line with the predictions of industry observers, who have been anticipating that the regulator would opt for a compromise solution, such as those proposed by the Competition Bureau and Cogeco Communications Inc.

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The Competition Bureau had cautioned that opening up national wireless carriers’ networks to resellers must be done carefully to avoid hurting regional carriers such as Freedom Mobile, Videotron and Eastlink. In its submission to the CRTC, the bureau credited regional competitors with driving competition; its analysis found wireless prices are 35 per cent to 40 per cent lower in markets where regional competitors have reached a market share of more than 5.5 per cent.

The CRTC is also ordering Bell, Rogers, Telus and SaskTel to offer low-cost plans to seniors, low-income earners and people who use their phones infrequently by July 14, and to promote the plans widely.

SaskTel, Bell and Telus said they are reviewing the decision. Telus also highlighted its low-cost high-speed internet and Mobility for Good programs to support low-income Canadian seniors, families and youth, while Bell said it is considering its options. Rogers said it remains focused on offering affordable services and building out its 5G network.

Innovation, Science and Industry Minister François-Philippe Champagne said Ottawa is reviewing the CRTC’s decision to ensure it aligns “with the government’s goals of promoting competition, affordability, consumer interests and innovation.”

Ottawa has been pressing Bell, Rogers and Telus to lower the prices of wireless plans offering between two and six gigabytes of data by 25 per cent within two years. “The government has been clear that if these options are not offered to Canadians by then, we will look at other regulatory tools to further increase competition in the marketplace and help reduce prices,” Mr. Champagne said in a statement.

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