Govt Promises Domestic Wireless Roaming Regulation: Can Wholesale Price Regulation Be Far Behind?

Industry Minister James Moore yesterday took another step toward improving the state of wireless competition in Canada by announcing plans to cap wholesale domestic roaming fees at the same rates the companies charge their own customers. The cost of domestic roaming has been a persistent concern for new entrants and regional wireless carriers, who argue that the national carriers increase wholesale prices for roaming that render the smaller players less competitive. The new government reforms will put an end to those concerns. Moreover, it plans to create tough new penalties for companies that violate the wireless code or other regulatory requirements, a move that may increase compliance rates.

While the usual critics will moan that the latest changes are indicative of a wireless policy with ever-changing rules, the reality is that the government has made a clear commitment toward addressing the state of wireless competition in Canada. Some of its hopes may have been thwarted – the entry of Verizon tops that list – but identifying and addressing competitive barriers should be a continuing process with regular reforms as needs arise.

The lingering question is therefore what other steps the government may take in order to address ongoing competition concerns in a market that seems unlikely to attract significant new facilities-based competitors in the short term. The CRTC has focused on consumer-oriented competition concerns in its wireless code. For example, the Competition Bureau identified switching costs that inhibit competition in its submission to the CRTC’s wireless code consultation, which led to limits on the term of contracts, rules on unlocking devices, and the minimization of termination fees.

Given that the government remains concerned with the state of wireless competition (Moore acknowledged yesterday that “it is not at its maximum potential”), once it is satisfied there is little else that can be done to assist existing players, it may go back to the drawing board in an effort to attract new entrants. Potential policies include a complete removal of foreign investment restrictions, pro-competitive policies on future spectrum auctions, or the creation of a regulated wholesale wireless market that would facilitate the entry of MVNOs – mobile virtual network operators. Critics suggest that MVNOs offer limited potential for serious competition, but a steady stream of new entrants aided by regulated wholesale pricing could shake up the Canadian market. In fact, given the government’s new found willingness to intervene in the wholesale pricing arrangements on domestic roaming, the introduction of policies to facilitate MVNOs may not be far behind.

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  1. It’s all smoke an mirrors by a government desperately seeking public support for their upcoming election campaign.

    Does anyone really believe wholesale domestic roaming fees affect Canadians in a material way? First of all, there is only one new entrant left, Wind. For all intents and purposes the other two are already dead. And Wind has a national wholesale roaming agreement with just one of the big 3.

    So all the PR hoopla surrounding the government’s big announcement is about one wholesale roaming agreement for one new entrant. Whoopty do!

  2. Jean-François Mezei says:

    While it is true that in unregulated environments, MVNOs do not provide true competition to incunbents, this is because incumbenst impose limits to ensure MVNOs complete their own offerings instead of competing against them.

    Now I have to copy the above because I doubt the captcha will work

    If one is to have a regulated cost based wholesale market, if the regulated rates are right, it will allow real competition to happen, while ensuring incumbents are fairly compensated for use of their network.

    This would also allow Bell and Telus to end their regulatory shenenigans that pretend their network is 2 networks and make thing more efficient.

    With only 2 national wireless networks, there is good reason to make a regulated wholesale serevice available to potential competitors.

  3. What makes telecom so special that it requires such a massive regulatory infrastructure? Seriously, what makes it so special?

    Food is far higher up on the pyramid of things needed to sustain life but we have no regulations for how grocery stores compete with each other for customers. Same goes for shelter – there is no regulatory machine in place to control how homebuilders compete with each other and the prices they charge their customers. We don’t force them to share stores, distribution systems, or production facilities with their competitors so their competitors can reduce their operating costs. There are no regulations in place to force these industries to serve Canadians who lack the means to pay full price.

    One could easily argue that we should redirect all those regulatory resources to more fundamental needs to address the very real problems with have with poverty, hunger and homelessness in our country. Helping a Russian firm make more money selling text messages to teenagers doesn’t deserve all the resources we throw at it.

  4. All this razzle/dazzle and ads regarding the lowering of cell phone charges is a waste of taxpayer money. Who really cares what the rates are? O.K. a few who use them all the time, but lets get real. They are not a necessity of life. People survived quite well with their land lines up until the past 15 yrs. They will survive once again like that, if necessary.

    The government might want to deal with some more pressing issues in Canada. How about the child hunger problem. It isn’t as if that has gone away. How about dealing with the living conditions on First Nations reserves. How about dealing with the lack of services for veterans. Lets see the infrastructure is starting to fall apart. How about dealing with that for a change. The people in this country would benefit more if the government was more concerned about the cost of housing, food, drugs, education.

    Harper and his cronies perhaps thought this might distract people, especially younger ones, from the real issues in this country. He is only fooling himself. Harper might want to focus on that little problem he has with the senate. he can stop wasting my tax dollars advertising about something,
    which in the grand scheme of things is nothing.

  5. What makes wireless telecom special is that for any given area there are a limited number of spectrum licenses available, so full competition is not really possible.

  6. Yup. Government constrains the supply of spectrum to the wireless industry which makes it harder for new entrants to get into the business, drives up costs for service providers which get passed along to consumers. Then they need regulatory intervention to force incumbents to share their assets (networks and spectrum) and subsidize new entrants to create the illusion of sustainable competition so they can court votes for the next election. It’s house of cards!!

  7. Roaming Inequity
    A Telus text to the US is $0.40 each however from my US ATT account a text to Canada is only $0.25 each – why? As a frequent visitor to the US, I use an ATT plan because roaming in the US with Telus is so obnoxiously expensive.

    I followed up with Telus regarding the US text rates and they say I should subscribe to a US text plan when when sending lots of text messages, then unsubscribe when I’m not…

    I wish there were more options…

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