Canada's telecom regulator has officially given discount wireless startup Sugar Mobile a reprieve, ruling that the newcomer can keep relying on roaming services from Rogers Communications Inc. – at least for the time being.
Sugar Mobile launched a $19-a-month offer in January and uses a combination of WiFi access and cellular service – for when customers are out of range of an Internet hotspot – to make its model work. (Customers must also bring their own, unlocked mobile device.)
But the startup doesn't have a wireless network of its own and instead relies on its sister company, Ice Wireless, which operates a network in the northern territories.
When Sugar Mobile customers are not in those northern areas, they get cellular service thanks to roaming agreements that Ice Wireless has with other network providers, including Rogers.
Rogers argues that this is a breach of its roaming agreement with Ice Wireless and in early February it said it planned to terminate that contract.
Ice Wireless filed a complaint with the Canadian Radio-television and Telecommunications Commission (CRTC) later that month, asking the commission to rule on whether Rogers is actually required to provide those roaming services to Sugar Mobile.
Rogers said at the time that since most of Sugar Mobile's customers likely do not reside in Ice Wireless's territory and may never use Ice Wireless's home network, they are not actually "roaming" and "have no right to use Rogers."
Other established wireless providers, including BCE, Eastlink and Quebecor, intervened in the matter in support of Rogers. On the other side, public interest and consumer groups as well as the lobby organization for independent Internet providers weighed in on the side of Sugar Mobile.
Despite its opposition to the arrangement, Rogers agreed to keep its roaming services in place while the commission considered whether to grant a temporary order. Almost five months later, the CRTC said last week it will grant a request for "interim relief" and compel Rogers to keep the agreement in place pending the regulator's final decision on the file at a later date.
In a letter to the parties on Thursday, Danielle May-Cuconato, the CRTC secretary-general, noted that Sugar Mobile is "not well established." If the roaming agreement is cut off, she said, "market loss would be inevitable and, given the competitive nature of the wireless industry, it would be very difficult to repatriate customers that were lost."
She also wrote that Sugar Mobile's business relationships with retailers could be hurt if the roaming agreement is cut off.
However, if the agreement is maintained, she said, Rogers will continue to receive payment for its roaming services and is less likely to suffer "irreparable harm" because of its "size and market power."
Ms. May-Cuconato concluded that the situation met the test for a temporary order and said the commission expects to issue a final ruling on the Sugar Mobile case in conjunction with a broader CRTC proceeding on the rates the Big Three carriers – Rogers, BCE and Telus – can charge smaller players for roaming services.
Sugar Mobile now has about 2,000 customers, according to Samer Bishay, the chief executive officer of Sugar, Ice Wireless and the two companies' majority owner, Iristel Inc.