Cogeco Cable Inc. wants Canada's telecom regulator to give it access to the wireless networks of the country's biggest cellphone carriers, with a view to launching its own mobile business.
The Montreal-based cable and Internet provider has asked the Canadian Radio-television and Telecommunications Commission to put rules in place that would make it easier for mobile virtual network operators, or MVNOs, to launch competitive wireless services at the retail level. MVNOs typically don't own their own networks and rent access to larger competitors' networks.
Cogeco doesn't own spectrum, the radio waves used to provide cellular service, so regulations supporting an MVNO model could help it get into an increasingly important part of the telecom business.
Louis Audet, Cogeco's chief executive officer, held a conference call with media Thursday to highlight what he plans to say on Monday when he argues in favour of such a system during a week-long CRTC hearing on the wireless industry.
He said efforts to promote competition among "facilities-based" operators, which are companies that own spectrum and have full wireless networks, have been unsuccessful and that MVNOs could help change that.
However, Mr. Audet did not make a specific commitment to launch a mobile business even if the system is adopted. "We're indicating an interest if the conditions that come out of the proceeding are acceptable to us," he told reporters.
MVNO-style businesses can take the form of branded resellers which operate their own sales and administrative systems but rely on larger carriers' networks to provide cellular service. There are a handful of these operating in Canada today, such as 7-Eleven Speak Out Wireless and Petro Canada Mobility, but the model is not widespread.
Cogeco is proposing a more involved model, known as a "full-MVNO," that would see it operate its own core network and infrastructure to transport data but allow it to tap into the "radio access networks" of one or more of the large incumbent carriers, Rogers Communications Inc., BCE Inc. and Telus Corp.
Essentially, Cogeco wants access to the large carriers' spectrum and cellular towers, the part of their networks that communicates directly with customers' mobile devices. (BCE owns 15 per cent of The Globe and Mail.)
There is nothing stopping the company from negotiating such access today. However Mr. Audet said that over the past 12 years such discussions have gone nowhere.
"We are seeking regulated mandated access," he said, explaining Cogeco needs an order from the regulator to provide access at set rates. "If this doesn't happen, there will be no MVNOs in the country, as is the case today," he added.
The Canadian Network Operators Consortium – a group that represents smaller Internet service providers such as TekSavvy Solutions Inc. and Distributel Communications Ltd. – is also urging the CRTC to mandate wholesale access for full MVNOs. CNOC's members operate wireline networks in whole or in part and typically rely on rules already in place mandating access to what is often referred to as the "last mile" of telephone or cable infrastructure into customers' homes. Rules to support an MVNO model could allow its members to expand into wireless services.
The model is more common in Europe and occasionally proposed as a means of increasing retail competition. The Big Three oppose it, arguing it would discourage network investment.
Regulations to support an MVNO model are not the main focus of the CRTC's hearing. The commission is examining the competitiveness of the wholesale roaming market and is primarily looking at the ability of small, new entrant carriers – such as Wind Mobile and Quebecor Inc.'s Vidéotron Ltd. mobile business – to negotiate agreements for their customers to roam on the incumbents' large national networks.
Ottawa has already legislated interim rates and industry watchers expect the CRTC will set roaming rates for text, voice minutes and data coverage. However, analysts say it is much less likely to put rules in place to support an MVNO model, which would move the industry away from the facilities-based model the federal government has long favoured.
Macquarie Capital Markets' Greg MacDonald said now that Wind has struck a deal for a consortium of private equity backers to buy it, there is less pressure on Ottawa to consider supporting an MVNO model.