By Alastair Sharp
TORONTO Dec 18 Canada will introduce
legislation to cap wholesale roaming rates that big
telecommunications providers charge their smaller rivals, aiming
to breathe life into the federal government's sputtering drive
to foster competition in the wireless industry.
In announcing the new rules, Industry Minister James Moore
said on Wednesday that Canada's big wireless companies charge
small carriers as much as 10 times the rate they charge their
own customers for roaming voice, data and text services.
The difference ratchets up costs for the small players and
their retail customers, while bolstering the competitive
position of the three national carriers, Rogers Communications
Inc, BCE Inc and Telus Corp.
"For too long, Canadian consumers in the wireless sector
have been the victims of these high roaming costs," Moore said
in a statement announcing Ottawa's plans to submit an amendment
to the Telecommunications Act within weeks. The governing
Conservatives hold a majority in the House of Commons, assuring
passage of the bill.
The legislation would allow the Big Three to charge their
competitors no more than the rate they charge their own retail
customers. BCE, parent of Bell Canada, shares a coast-to-coast
network with Telus.
The government hopes the cap on wholesale rates will
encourage smaller carriers to cut consumer prices and improve
service outside their own coverage zones, which tend to be
confined to major metropolitan areas.
"This move neutralizes the 'reach' dimension of the
incumbents' advantage," said Iain Grant, managing director of
telecom consultancy Seaboard Group, adding that it was "a big
Moore told Reuters in an interview that a cap would send a
clear message "that the status quo is not going to continue,"
encouraging newcomers to enter the market ahead of January's
government auction of 700 MHz wireless spectrum.
"This is yet another ingredient that we think will help spur
more competition in the marketplace, and that's the ultimate
goal of our policy," he said, adding that the increased
competition should change the plans of the big telecoms.
Rogers said its domestic roaming agreements with rivals are
based on negotiated rates and that new entrants have not used an
arbitration process for disputes. Telus declined to comment and
BCE said it was awaiting details of the legislation.
In addition to the cap, the government said it would step up
enforcement of existing regulations, giving the telecom
regulator and the industry department the power to fine
companies that break rules on such things as the sharing of
Previously, the department could only withdraw a license
from an operator, an option that was never used, Grant said.
The high cost of roaming has had a damaging effect on
wireless newcomers, which have sought to win customers with
low-cost plans and must rely on the established carriers to
provide coverage in many areas of the country.
In a 2008 auction of wireless airwaves, the government set
aside spectrum for newcomers to loosen the dominance of the
three big providers.
Since then, however, the new entrants have found it hard to
survive. One of them, Public Mobile, was recently acquired by
Telus, and another, Mobilicity, is under creditor protection as
it seeks a buyer. That leaves Globalive's Wind Mobile as the
last newcomer standing.
Some analysts and company executives, however, complain that
government policies have confused and discouraged companies
weighing a move into the country's telecoms industry.
Ottawa has twice blocked Telus, which has no wholesale
roaming deals with new entrants, from buying Mobilicity.
Verizon Communications Inc had offered to buy Wind
and was in talks to acquire Mobilicity, sources said in June,
but the U.S. company ultimately decided to stay away.
Globalive's main backer, Europe-focused Vimpelcom Ltd
, has said it is considering leaving the market, and the
upcoming auction of airwaves, due to start next month, has
failed to draw interest from any major foreign telecoms.
TOO LITTLE, TOO LATE
Canaccord Genuity analyst Dvai Ghose said a cap on roaming
rates was likely to be too little, too late, and would have a
negligible effect on the bottom lines of the big carriers.
He said Rogers, the main provider of roaming services for
newcomers, likely brings in some C$50 million from the business,
compared with C$6.8 billion in network revenue this year.
Supporting that view, the shares of Rogers, BCE and Telus
all closed higher on the Toronto Stock Exchange on Wednesday.
Still, Wind's chief legal officer, Simon Lockie, said the
new rule shows that Ottawa is serious about creating a level
"Game-changer," he wrote on his Twitter feed.
The government move preempts a review in progress by the
industry regulator, the Canadian Radio-television and
In August the CRTC sought information from the industry on
wireless roaming. It said it would consider next year whether
Canada's big carriers are unfairly imposing more restrictive
terms on domestic rivals than on U.S.-based carriers.
The government said on Wednesday its measure would remain in
place until the CRTC makes a decision on whether to limit
It is not the first time the Conservative government has
sought to influence policy at the CRTC.
In 2011, the CRTC backed away from its own ruling that would
have effectively stopped small Internet providers from offering
unlimited downloads after the industry minister threatened to
block the decision.
In the same year, the government went to court to argue that
Globalive qualified as a Canadian enterprise after the CRTC
said it was not. Canadian status meant Globalive did not run
afoul of limits on foreign involvement in telecommunications.
Ottawa has since lifted those restrictions for small carriers.