Canada's telecom regulator is opening the door a crack to more wireless competition, by allowing a small number of regional companies to piggyback on the networks of the established players.
The Canadian Radio-television and Telecommunications Commission (CRTC) said Thursday that regional telecom providers with their own established networks in Canada will now effectively be allowed to become de facto Mobile Virtual Network Operators or MVNOs — companies that buy access to other networks at wholesale rates, and then resell them to consumers.
True MVNOs have no spectrum, towers or wireless infrastructure of their own. That allows them to offer wireless services at far cheaper rates, in general, because they don't have to bear the cost of establishing and maintaining the infrastructure.
Companies must have existing Canadian networks
MVNOs are major players in places like the U.S. and Europe, but thus far they have not been allowed to operate in any meaningful way in Canada.
Companies that choose to take advantage of the CRTC's move on Thursday won't be true MVNOs because they do have their own wireless infrastructure, but functionally they will be acting like one in certain parts of the country.
"Regional providers that invest in network infrastructure and spectrum will be able to offer competitive services to millions of Canadians as mobile virtual network operators in areas where competition is limited," the CRTC said.
"These companies have already been contributing to greater competition and helping to lower prices."
The move would apply to smaller companies with regional wireless networks, but who have thus far have not invested in creating national networks due to the prohibitive cost. Some companies that would theoretically qualify include Atlantic Canada's Eastlink, Quebec's Videotron, rural provider Xplornet, Ice Wireless in Canada's North and TBayTel in Ontario.
While this opens the door a crack to MVNOs, it has not been completely kicked in. The CRTC says the only companies that will be allowed to become MVNOs must have existing Canadian networks.
A purely foreign MVNO such as Mint Mobile — which is owned by Canadian Ryan Reynolds and has 15 million customers in the U.S. but couldn't sell wireless services to Canadians previously because none of the big companies were willing to let them use their networks — will not be mandated access.
The new rules do theoretically allow for a foreign MVNO to find a back door into Canada by working with Canadian regional players willing to resell their MVNO access, but that would have to be negotiated on a case by case basis.
The regulator isn't mandating any companies to allow that.
The regulator also did not mandate the price at which the bigger companies must provide access to their networks.
A lobby group called the Competitive Network Operators of Canada (CNOC), which represents more than two dozen independent telecom companies across Canada, says the move doesn't go far enough.
"Without the flexibility afforded through a full MVNO model, independent carriers are not set up to innovate on services and pricing," CNOC chair Matt Stein said.
"We've long advocated for fairness and choice for Canadians to help the country catch up to the global telecom landscape. Unfortunately, this decision sends us in the opposite direction and is simply bad for Canadians."
CRTC wants to accelerate competition
The move also comes as Ottawa is considering the massive proposed merger between Rogers Communications and Shaw Communications, which will see the second largest wireless company in Canada buy the fourth largest, which will lessen competition.
Against that backdrop, CNOC said in a statement that moving to allow unfettered MVNO access would have "levelled the playing field somewhat," but instead, "this decision rewards the national incumbents' oligopolist behaviour and puts profits before Canadians."
Consumer advocate Laura Tribe with OpenMedia agreed, calling the move "incredibly disappointing and a huge missed opportunity for the CRTC."
"It really doubles down on the idea that a regional provider will be sufficient to correct the extreme market share that Bell, Telus and Rogers have," Tribe said.
On the whole, Canadians pay far more for wireless services than consumers in other countries.
"While there are encouraging signs that prices are trending downwards, we need to accelerate competition and more affordable options for Canadians," CRTC chair Ian Scott said.
"The competitive model we are introducing today will result in greater choice and cheaper mobile wireless services for Canadians, who rely on their smartphones now more than ever."
In addition to opening the door to MVNOs, the CRTC says the incumbent telecoms including Rogers, Telus, Bell and SaskTel are "expected to offer low-cost and occasional-use plans in most markets" for seniors and other low income earners who use cellphones only sparingly, but currently are locked into expensive plans they don't need.
Norma-Jean Quibell works with Acorn Canada, a national organization that speaks for low and moderate income families. She says she's glad to see the regulator taking some sort of action, but doubts it will have much of an impact.
Wireless service in Canada is simply unaffordable "and it hasn't been for several years," she told CBC News in an interview.
"The gap between the wealthy and the low income is going to get bigger because now everything is online," she said, noting that it's not as if cellphone services are a luxury, or something people can do without.
Without affordable cellular service, "families are going to be more isolated from health care, government programs and education," Quibell said.
"Everything is online, it's almost impossible to find a job today without being online."
Article by Pete Evans for CBC News