Investment analysts are hailing a series of decisions on wireless competition from Canada's telecom regulator as relatively benign for the fortunes of national carriers, raising questions about whether the federal government will intervene further to address affordability.
The Canadian Radio-television and Telecommunications Commission (CRTC) released three rulings Thursday, saying it recognizes that high wireless prices are a concern and ordering Rogers Communications Inc., Telus Corp. and BCE Inc. to propose new low-cost plans.
The regulator also slashed the rates that smaller, regional carriers such as Freedom Mobile and Videotron Ltd. must pay the Big Three when their customers travel and roam on their networks, but it did not introduce rules that would have encouraged a business model popular in the United States and Europe to grow here. Mobile virtual network operators (MVNOs) do not buy wireless airwaves, called spectrum, or invest in building their own networks; instead, they pay wholesale rates for the use of other carriers' networks and offer discount services to their customers.
The decision came as a surprise to those who expected the CRTC to take steps to increase competition by allowing MVNOs that use WiFi as their primary means of connecting customers to access roaming services at regulated rates. Many predicted the regulator would move on that front because Innovation Minister Navdeep Bains ordered the CRTC last June to review the possibility of "WiFi-first" options.
Financial analysts generally said they viewed the outcome as neutral for the incumbent carriers, saying the CRTC's decisions as a whole indicate its continued support for so-called "facilities-based investment," which refers to measures to encourage companies to buy airwaves and spend money on their own towers and radio equipment. But the decision also drew criticism from those who view MVNOs as an effective way to encourage competition and help Canadians access cheaper plans, including from the entrepreneur who tried to use the model here in 2016.
"Canadian consumers probably got the short end of the stick," Samer Bishay said in an interview Friday. "Another public consultation? We see how slow the CRTC moves. Every decision takes a year and a half."
The review of WiFi-first operators was prompted by Mr. Bishay's startup, Sugar Mobile, which relied on the roaming agreement of Ice Wireless, a sister company that operates a network in the North to serve customers when they are out of WiFi range. Ice Wireless's roaming partner, Rogers, objected to this arrangement, saying it amounted to permanent roaming because most of Sugar Mobile's customers did not live in the North and were therefore never on Ice Wireless's actual network.
He said he would try to reach a roaming agreement with one of the smaller regional carriers – such as Freedom Mobile or Videotron – who will now pay the Big Three lower roaming rates themselves and may have a financial incentive to sell excess airtime to Sugar Mobile.
Montreal-based Cogeco Communications Inc. was also critical of the outcome. Chief technology officer Luc Noiseux, whose company would like to offer its cable customers a wireless option, said, "Cogeco believes that there is a certain urgency in allowing MVNOs in Canada."
MVNOs are more common in parts of Europe, where they have enjoyed some regulatory support, and in the U.S., where some of the large carriers have been willing to strike agreements to sell excess airtime.
But the market has not developed in a similar way in Canada, where the Big Three dominate and the government and CRTC have taken steps to encourage fourth players to compete by building their own networks. Those regional carriers have also argued against mandating MVNO access, saying enabling new players with lower-priced options to enter the market would undermine their own business models as they spend on networks and try to compete with the Big Three.
"We are pleased with the CRTC's decisions released yesterday, which clearly reflect that the commission continues to value facilities-based investment," said Jill Laing, spokeswoman for Halifax-based carrier Eastlink.
Videotron and Freedom Mobile declined to comment Friday.
Rogers, BCE and Telus all said they were pleased with the CRTC's decision to support facilities-based investments.
For his part, Mr. Bains said the fact the CRTC recognized affordability as a problem was "a step in the right direction," but he added: "More can and will be done from my perspective. I firmly believe that true affordability can only be achieved by having true competition."
His office is not saying more at this point, but after making a series of comments on the need for better prices and more competition in the wireless market in recent months, there are questions about what more he might do. The government is expected to release rules for the auction of valuable low-band airwaves in the near future and is likely to earmark a portion of licences for small players.
Beyond that, it could force the CRTC to reconsider the issue or legislate MVNO access itself. But it would walk a difficult line, as the government also has a policy of encouraging companies to invest in building their own networks. Such actions would also come at a difficult time, as carriers start building 5G (fifth-generation) networks over the next few years.
In the meantime, Rogers, BCE and Telus have a month to come up with proposals for lower-cost, data-only wireless plans. CRTC chairman Ian Scott said Thursday he could not specify what that would mean, but he did say they should be available nationally and not subject to any kind of low-income means test for consumers. In remarks to reporters, he pointed to one plan offered by Videotron in Quebec that gives customers 500 megabytes of data for $30 a month.
Yet it is not clear that such a plan would address the frustrations of most smartphone users. The most recent CRTC numbers show that Canadians with a data plan used an average of 1.57 gigabytes of data per month in 2016, and the major carriers say data use is expanding exponentially.