Wireless providers from Manitoba and Saskatchewan say government caps on what they can charge competitors for roaming have hurt their ability to negotiate with Canada's three biggest carriers.
MTS Inc. and Saskatchewan Telecommunications Holding Corp., as well as Northern Ontario carrier Tbaytel, told a Canadian Radio-television and Telecommunications Commission hearing Thursday that caps the federal government introduced on wholesale roaming services are already having a negative effect on regions where they say competition is healthy.
The regional carriers asked the CRTC to "fine tune" wholesale rates to exempt them from letting BCE Inc., Rogers Communications Inc. and Telus Corp. roam on their networks at a discount.
"We are already experiencing the harm caused by blanket regulation," Dan Topatigh, chief executive officer of Tbaytel told the CRTC panel, speaking on behalf of MTS Inc. and SaskTel as well. "Already having built their own urban networks in our territories, the national carriers can now roam on our rural networks at blanket rates that are not reflective of what it costs to provision rural service."
For the past year, the CRTC has been examining whether the market for wholesale roaming service – the rates cellphone carriers charge other wireless companies when their customers roam outside of their home networks – is sufficiently competitive. The federal government set temporary rates in this year's budget implementation act, capping wholesale costs at no more than what carriers charge their retail customers.
The regional carriers say those caps were intended help new entrants such as Wind Mobile and Eastlink Wireless negotiate agreements with the incumbents that would allow the small players to offer nationwide coverage at competitive prices. However, they argued, those same caps can work the other way too. For example when a Telus customer roams on an MTS system, Telus pays the capped amount to the Manitoba telco.
MTS also said customers in the province are already enjoying competitive rates. The company submitted an exhibit showing prices for monthly plans with one gigabyte of data were less than $60 in Saskatchewan, Manitoba and Tbaytel's territory in and around Thunder Bay, Ont., compared with more than $80 a month in Ontario, British Columbia and Alberta.
The regional carriers suggested the commission should exempt wireless operators with less than 10 per cent of national market share from having to provide the Big Three with roaming at a mandated cost.
According to recent CRTC data, the incumbents together took in 92 per cent of wireless revenues in 2013, so the regional carriers' proposal would exempt every other Canadian operator from giving the Big Three discounted roaming access.
CRTC chairman Jean-Pierre Blais pointed out that Parliament did not see fit to take regional differences into account in its legislation and asked the regional carriers why the commission should do so now.
The carriers said when Ottawa was considering the legislation, they approached their local members of Parliament as well as the Minister of Industry and were told the CRTC hearing was the place to voice those concerns.
"Our understanding was there would be an opportunity to get it right at these hearings," said Ron Styles, chief executive of SaskTel.
"The challenge we have is that Parliament has adopted a regulatory regime that does not create specificity for your particular operating territory and, I don't want to undermine your argument, but it just seems a bit of a contradiction: If Parliament didn't do it, why should we?" Mr. Blais said.
Executives from the regional carriers said the commission has the expertise and evidence before it to make a reasoned decision on what is necessary to sustain competition.
Representatives from BCE Inc. – the last of the incumbents to appear at the hearing – argued Thursday that the commission should continue to refrain from setting wholesale rates, a policy it has followed since the late mid-1990s when it determined the wireless market was sufficiently competitive.
BCE urged the CRTC to revert to commercial negotiation for wholesale roaming agreements but improve the mandatory dispute resolution process and include detailed guidelines on what is "commercially reasonable." (BCE owns 15 per cent of The Globe and Mail.)
A complication with that – the chair, several commissioners and CRTC staff all pointed out – is if the commission does not set an amount for wholesale rates, the legislated caps remain in place unless the federal cabinet moves to repeal them.
Asked to comment on whether the government was concerned about the effect the legislated caps had on the regional players, Jake Enwright, press secretary for Minister of Industry James Moore said in an e-mail, "Our Government believes that lower roaming costs will benefit consumers with more competition in the wireless market and the current cap will remain in place until the CRTC makes its decision on roaming rates."