SaskTel CEO Ron Styles, seen in 2012, says the federal government ‘should be thinking about the fourth carriers across Canada,’ not just Wind Mobile and Mobilicity.Kevin Van Paassen/The Globe and Mail
Saskatchewan's biggest cellular provider is calling on the federal government to keep regional carriers in mind when shaping its policy on the wireless industry.
Ron Styles, chief executive officer of Saskatchewan Telecommunications Holding Corp., said in the course of encouraging new entrants to enter and remain in the market, the federal government has overlooked regional players.
"We just think the government needs to think a little broader than they have been. They're just thinking about the two new companies, Wind [Mobile] and Mobilicity, and they should be thinking about the fourth carriers across Canada," Mr. Styles said in an interview Wednesday, pointing to SaskTel, Manitoba Telecom Services Inc., Tbaytel, Eastlink Wireless and Videotron Ltd.
SaskTel, which Mr. Styles said has about 630,000 wireless customers, dominates the market in Saskatchewan with close to 70 per cent of the province's wireless customers.
Mr. Styles singled out government policies around wholesale roaming services, which are the rates cellphone carriers charge other wireless companies when their customers roam outside of their home networks, as particularly problematic.
The government made roaming mandatory in 2013 in an effort to help upstart carriers offer broader coverage by gaining wholesale access to the networks of the national carriers. But small players still complained they could not negotiate favourable agreements.
Ottawa then set temporary rates in the 2014 budget implementation act, capping wholesale costs at no more than what carriers charge their retail customers, a move that quickly proved beneficial for carriers such as Toronto-based Wind Mobile, which slashed its roaming rates in August.
But it also had the seemingly inadvertent effect of allowing the large national carriers to demand similar roaming rates from providers such as SaskTel, overriding any previous roaming agreements that the companies had already negotiated.
"It just doesn't make sense the way it was set up," Mr. Styles said. "Some deals were struck and for the government to overturn them, we don't think that was the right approach."
The government says the rules were meant to help customers in general, not favour one company over another.
"Our policies are national in scope and they're designed to benefit consumers first and foremost, not any one telecommunications carrier, whether they are a regional incumbent or a national carrier," Jake Enwright, press secretary for Industry Minister James Moore, said Wednesday.
SaskTel lost more than $8-million in roaming revenue in 2014 due to the change, and that only accounts for about half of the year since the rates took effect, Mr. Styles said, noting that it directly affects the Crown corporation's profit as there are few additional expenses associated with selling roaming.
The company has network sharing agreements with BCE Inc. and Telus Corp., which also allow the large carriers to roam on SaskTel's rural networks. It has no current agreement with Rogers Communications Inc.
SaskTel, which also sells home phone, Internet and television services, reported a total profit of $90.1-million on revenue of $1.2-billion in 2013. It is expected to release its annual results for 2014 in mid-April.
Mr. Styles said he understands the rates were meant to be temporary and is hopeful the Canadian Radio-television and Telecommunications Commission will address the problem by exempting regional carriers from the lower rates. The regulator concluded a hearing on wholesale roaming in October and is expected to issue a ruling within months.
He also noted that wireless prices where regional players operate are far lower than in other parts of the country, with the national carriers offering plans outside the province for up to $145 per month but charging just $65 to $70 for equivalent plans in Saskatchewan.
"It means our profitability is not where it should be in terms of wireless in the province – not as compared to what others are making in other places in Canada," he said. "I think somebody at the federal level should be looking at it, that's for sure."
SaskTel has been facing increasing competition from Telus and BCE's Bell Mobility over the past five years. In 2010 SaskTel had 78 per cent of the wireless market while Bell had 4 per cent, Telus had 5 per cent and Rogers had 13 per cent, according to the CRTC.
In 2013, the most recent year for which data is available, SaskTel accounted for 68 per cent of the province's wireless subscribers, with Bell at 12 per cent, Telus at 13 per cent and Rogers down to 8 per cent.
(BCE owns 15 per cent of The Globe and Mail.)