CRTC hearings could open door to mobile disrupters — and possibly cheaper cellphone rates

Canadians love to talk about their cellphone bills, and today the country's telecommunications regulator will jump into that conversation as it launches nine days of hearings.

The Canadian Radio-Television and Telecommunications Commission (CRTC) hearings are expected to be a showdown between the nation's big mobile wireless providers — Bell, Rogers and Telus — and smaller providers who are bent on shaking up what some call an oligopoly-style market.

The hearings, according to the CRTC, will focus on whether Canada's mobile wireless market adequately serves Canadians and its preparedness for the next phase of the communications network: 5G.

Commissioners will home in on issues such as affordability and whether the regulator should mandate the three big providers to open up access to their network to smaller carriers. These smaller carriers typically don't have an established network of cell towers and fibre optic cables. Instead, they purchase access to larger national networks through wholesale agreements. 

Using that approach, these smaller operators have been able to offer plans at more affordable rates. Ting, Google Fi and Straight Talk have used this model in the U.S. 

Mobile Virtual Network Operators

The industry calls these smaller carriers Mobile Virtual Network Operators (MVNOs), but Samer Bishay calls them disrupters. This Canadian CEO knows the business well because he used to lead one of them.

His company, Sugar Mobile, offered customers wireless plans for as little as $19 a month when it launched. That was before the CRTC shut down the wireless upstart in 2017. 

Bishay, who is also the CEO of Ice Wireless and its parent company Iristel, doesn't have too many kind words about the state of the country's wireless market.

"Right now, it is basically an oligopoly in Canada. We're lacking affordability, choice and flexibility," Bishay said.

The CRTC, which regulates telecommunications, broadcast and wireless services in Canada, ruled Ice Wireless, through its affiliate Sugar Mobile, was inappropriately using its roaming agreement with Rogers to support an MVNO business.

At this hearing Bishay will call on the CRTC to reverse its position and force Canada's national carriers to open up their networks to wholesale MVNO access.

"If there is no room for MVNOs in Canada, well then let the consumers make that choice," Bishay said. "Let the free market economy dictate who succeeds and who doesn't."

Industry wary of mandating MVNOs

If Canada moves in that direction, it will become the second country, after Norway, to regulate wholesale MVNO access.

The Canadian Wireless Telecommunications Association (CWTA), which represents some of the industry's big players, isn't opposed to selling MVNOs access to their networks. But, it doesn't think carriers should be forced to. 

At the moment, it's up to the national carriers to individually sign agreements with MVNOs.

The CWTA says Canada's existing wireless providers offer a good mix of affordable plans and reliable coverage. But the association's senior vice-president, Eric Smith, said if the CRTC forces carriers to open up their networks to MVNOs, investment in 5G could take a hit. 

"That's a very rare regulatory intervention around the world and would actually negatively impact the investment capacity of our network operators," Smith said. "And it would be detrimental to the quality of service that we can offer Canadians." 

CRTC leaning toward mandating MVNOs

But all indications point to a future where, like it or not, MVNOs will play a more significant role in Canada's mobile wireless future.

The federal Liberals campaigned in 2019 to slash cellphone bills by 25 per cent within two years, saving the average middle-class family of four $1,000 a year.

The mandate letter for Science and Industry Minister Navdeep Bains instructs him to work with companies and the regulator to get more MVNOs in the market.

The CRTC also acknowledged during its consultation ahead of Tuesday's kickoff to the hearings that it was leaning toward mandating MVNOs on a limited basis. 

According to Michael Geist, a University of Ottawa law professor and the Canada Research Chair on the internet and e-commerce, the time for MVNOs has arrived.

"I think the real question is whether not they are going to jump in with both feet or just dip their toe in the water," Geist said. "If I had to guess, it is probably a more of a dip their toe in the water approach, where they open it up slightly to MVNOs and see what kind of impact that it has."

This could look like, Geist said, the CRTC directing Bell, Telus and Rogers to open up their networks to MVNOs, but on the condition that these smaller companies eventually invest in their own physical infrastructure. 

After the hearings, the regulator's decision is expected later this year or in early 2021.