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Business Commentary There’s a simple solution to outrageous wireless fees. Will the new CRTC chair have the guts to try it?

Canadians love to hate their wireless carriers—and with good reason. The three-year contract is dead, but monthly bills keep rising. Switching carriers is a nightmare, add-on charges multiply like cockroaches, and being off contract doesn't guarantee that you'll find a substantially better deal if you shop around.

Many blame the CRTC. The regulator has tinkered with the rules, but it has largely failed to keep major carriers in check. Now there's a new guy running the shop, and suddenly, there's hope.

The new CRTC chair, Ian Scott, is a former Telus executive, so some worry he's too cozy with the big telecoms to regulate them. But he's also familiar with the ideal solution: Before he worked for Telus, he was a lobbyist for Call-Net Enterprises, the former parent of Sprint Canada. Sprint was a telecom reseller—rather than build its own network of phone lines, Sprint would lease space on the existing network and sell phone services directly to consumers. By doing so, the company created more competition and helped drive prices down (until it was acquired by Rogers, anyway).

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A similar plan could be the perfect fix for wireless: Canada could finally empower companies known as "mobile virtual network operators" (MVNOs) to rent space on the existing wireless networks built by Rogers, Bell and Telus. The MVNOs could then resell wireless services to consumers under their own brands at cheaper prices.

Such a reseller strategy is already popular in Europe and other parts of the world. But although some Canadian companies, such as Petro-Canada Mobility and PC Mobile, operate under MVNO deals, the model hasn't caught on here. The reason? Major carriers either refuse to do deals or demand a king's ransom to get them done.

So far, the CRTC has been reluctant to meddle. About two years ago, the regulator said it wouldn't compel major carriers to sell network access to MVNOs. Then in March of this year, it quashed an attempt by one MVNO, Sugar Mobile, to piggyback on Rogers's network, and the CRTC issued a related ruling to block MVNOs from using regulated roaming rates to tap incumbent networks.

The federal government, unfortunately, has also complicated matters. It has long preferred that new carriers build their own networks, partly because the government's spectrum auctions are major money makers (see graphic below). But lately there have been tentative signs that Ottawa is warming to MVNOs. In June, the Liberal government asked the CRTC to review its March decision on roaming and MVNO access, citing the "high rates" Canadians pay for cellphone service.

The Big Three telecoms will do everything they can to keep out competition, so wireless reselling will only work if the CRTC forces them to lease space on their networks to third parties at a reasonable price. But even that isn't enough, says Gregory Taylor, an assistant professor at the University of Calgary who specializes in communications. He says the CRTC must also ensure the incumbents play nice, which means implementing "regulatory vigilance" to solve disputes.

While some might argue that it isn't fair to force major carriers to share their networks after they've spent billions building them, it's important to remember that the incumbents initially built their hugely profitable businesses using public property. In the 1980s and 1990s, Ottawa effectively gave away valuable spectrum to major carriers. And while carriers have paid some fees to maintain those licences, the airwaves remain the property of the Canadian public—the same people those carriers see fit to overcharge.

European countries have already seen the benefits of the MVNO model over many years. In the United States, MVNO deals have allowed new players, such as cable company Comcast, to offer wireless services. Some Canadian telecoms, including Roam Mobility and Tucows Inc., have also secured MVNO deals with major U.S. carriers. Allowing more competition has helped improve service and produce lower prices.

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Why should the Canadian market be any different? Cogeco Communications has said it would become a wireless player if there were mandated access for MVNOs, and foreign carriers such as América Móvil and Orange have previously explored entering Canada via MVNOs. Consumers are frustrated, and the CRTC has until the end of March to wrap up its review. Let's hope the new chair is listening.

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