CRTC shuts down Sugar Mobile in big victory for Rogers, Big 3

The CRTC has ordered Sugar Mobile, an upstart provider offering wireless plans for as little as $19 a month, to shut down its current service as it exists now within 50 days, in a big win for Rogers and the Big 3 telcos.

"The commission denies an application by Ice Wireless Inc. for relief against Rogers Communications Canada Inc. on a final basis. Ice Wireless has improperly allowed the end-users of its mobile virtual network operator Sugar Mobile Inc. to obtain permanent, rather than incidental, access to [Rogers'] cellular network," says the CRTC in its decision. 

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"Should Ice Wireless continue to allow Sugar Mobile end-users to make unauthorized use of [Rogers'] cellular network, [Rogers] may cease providing wholesale mobile wireless roaming service to Ice Wireless, as described in this decision."

"That's shocking," says Samer Bishay, president and CEO of Sugar Mobile.

"It's a big blow. Not just for our company, but for Canadians who we all know pay some of the highest wireless phone rates in the world."

Sugar Mobile, which now has about 5,500 customers,was launched in early 2016 by the small northern based telco Ice Wireless, using what appeared at the time to be a backdoor into the Canadian cellphone market, which has long been largely closed to new entrants who don't own their own networks.

Ice Wireless owns a mobile network in Canada's North.

As the owner of a mobile network, Ice Wireless has reciprocal roaming agreements with the big Canadian telcos, whose customers roam on the Ice Wireless network in cities like Whitehorse, Yellowknife and Inuvik.

So Ice Wireless, through the Sugar Mobile brand, is essentially selling the network access that it has through roaming agreements in the southern part of the country to retail customers. 

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Today, the CRTC says that has to stop.

"The commission's determinations in this decision are consistent with its determinations in Telecom Regulatory Policy 2015-177, one of the objectives of which was to promote facilities-based competition," says the
CRTC.

"In order to provide a stable business environment for wireless providers, the CRTC must ensure that the regulatory policies it establishes are implemented fairly in the market and that all parties abide by the rules." the CRTC says.

"They mention 'to promote facilities based competition'. Well what is Ice Wireless then?" says Bishay.

"It was Ice Wireless's decision to allow Sugar Mobile to roam. (On Rogers' networks, as per reciprocal agreement).

"I'm actually still confused as to where we are in violation." Bishay says.

Sugar Mobile's service is run using an app designed to work on both Wi-Fi and 3G networks.

When the customer is in a Wi-Fi zone, all calls are made over the Wi-Fi network.  When the customer is outside a Wi-Fi network, the app switches the calls to a 3G network owned by Rogers.

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You need an unlocked phone, but for a one-time startup fee of $29 and a monthly cost of $19, Sugar Mobile customers get unlimited talk, text, and data over Wi-Fi and 400 MB of non-Wi-Fi data.

While new to Canada, this type of service has been around in the U.S. for a while now.

Google's Project Fi is a similar service that prioritizes calls and texts over Wi-Fi. 

Fi automatically connects to open Wi-Fi networks (locked Wi-Fi networks will require previous log-in) and when Wi-Fi isn't available, Fi switches to the local cellular network in the area. 

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Google is able to do this by acting as an MVNO, or mobile virtual network operator.

MVNOs are wireless providers that don't own their own network. Instead, they lease network access at wholesale rates and then turn around and sell that access to customers at retail prices.

The CRTC does not mandate the Big Three and other owners sell space on their mobile networks to wholesale operators such as MVNOs. 

"New wireless carriers have made, and are planning to make, significant investments in spectrum and their wireless networks. The Commission considered that mandating wholesale MVNO access would significantly undermine these investments, particularly outside urban core areas." the CRTC says. 

The ruling affects Sugar Mobile customers.Ice Wireless customers, which are generally located in the north, can still roam on Rogers' networks. 

"This is really bad news for consumers in general. Wireless prices are continuing to increase way in excess of the rate of inflation and what we need, what we've needed for years, is more competition in the market. And we're moving in completely the wrong direction," says David Christopher of the advocacy group Open Media. 

"We're seeing all these smaller providers basically being forced out of the market or being acquired by the big telecom companies.

"For us, this is a real sign that it's time for the federal government and Navdeep Bains to step in and tackle this whole issue of competition," he says. 

"We're pleased the CRTC made the right call. We believe in innovation and a fair, competitive market — this was about violating a roaming agreement, plain and simple," says David Watt, senior vice-president of regulatory affairs at Rogers, in a statement to CBC News.