New entrants call for penalties to ensure good practices on tower sharing, roaming

New wireless entrants Mobilicity and Public Mobile Inc. are calling on Industry Canada to institute penalties to ensure incumbent carriers respect their tower sharing and mandated roaming agreements. “Currently there are no concrete repercussions (or any positive incentives) for the incumbents to share their towers,” Public Mobile wrote in its submission Industry Canada for its consultation on a policy for the 700 MHz band. “Industry Canada must prohibit carriers from using ... anti-competitive tactics and adopt a system of penalties or incentives for carriers to create the economic persuasion to cause the incumbents to share their towers at usable heights.” Industry Canada is conducting a consultation on a policy framework for the 700 MHz band, which the Conservative government intended to auction next year. One of the aspects of the consultation is the possible need for measures such as mandated national roaming and tower sharing to promote competition. As part of its advanced wireless services (AWS) auction in 2008, the Industry Department said providers had to enter five-year mandated domestic roaming agreements. The department also mandated tower sharing and prohibited exclusive site arrangements. But the new entrants have complained that the incumbent telcos have been dragging their feet to settle tower sharing agreements and are using hard handoffs (in which calls are dropped when moving from one carrier's network to another) as an anti-competitive measure. In late November, then-Industry Minister Tony Clement announced that the government would begin a review of the effectiveness of its roaming and tower sharing policies. An industry official told The Wire Report in February that the department was reviewing technical data submitted by the carriers before launching a formal consultation on the issue. The 700 MHz consultation, however, offers a preview into the different companies’ recommendations. Mobilicity told the department that, while it supported the mandated roaming and tower sharing requirements attached to the 2008 auction, in practice, they were challenging to implement. “While a lack of mandated access to tower and site sharing was perceived to be a significant barrier to entry, Mobilicity and other new entrants have made it to market and are offering services, albeit at an incremental cost factored into business plans. Mobilicity has been able to get very limited access to towers or sites owned by the Big Three,” the company wrote. Mobilicity said the department should hand down penalties if incumbent operators are inconsistent with the framework objectives for roaming and tower sharing. The company said the department should consider mandating soft handoffs (in which calls aren't dropped when switching networks) and extending the roaming agreement term beyond five years. Public Mobile called for incentives or penalties if the incumbents are reluctant to share their towers. The company also called for an improved mediation or alternative dispute resolution process. “Possible methods to deal with this area could be through Industry Canada appointing an ombudsperson or staff mediator. The Department could also direct the CRTC ... to expeditiously solve issues and disputes; thereby making the site sharing process more effective and efficient,” the company wrote. Public Mobile has suggested that all incumbents provide the department with a list of all their towers and the space available on each for co-location. The company said it supports mandated, seamless handoffs and an extension of the five-year mandated roaming agreement. Shaw Communications Inc. similarly told the department that it supports soft handoffs and 10-year roaming agreements. Rogers Communications Inc. told the CRTC last November that hard handoffs are not the norm anywhere in North America. EastLink took issue with the price of mandated roaming. “Where government policy objectives are to limit the proliferation of towers, and towers are necessary for new entrants to build a wireless business, it is appropriate to establish cost-based rates rather than leave it to commercial negotiations between incumbents and new entrants,” the company wrote. “New entrants have very little negotiating power since incumbents do not want to share towers, lest it increase competition.” Globalive Wireless Management Corp., which operates Wind Mobile, is taking issue with existing roaming rates. Although the department has mandated domestic roaming, it did not regulate wholesale rates. Globalive told the department that it has noted in its own dealings that the rates for Canadian roaming are substantially higher than agreements for U.S. roaming. “Mandatory tower sharing represented a constructive attempt by the Department to reduce the high cost of entry by minimizing the number of towers required to be built by the new entrants. In theory, mandatory tower sharing should have enabled ... new entrants to build fewer towers and therefore to reduce their speed to market and costs ... In practice, the anticipated benefits of the policy were not fully realized,” the company wrote. Globalive said it supports requirements for soft handoffs and 10-year roaming agreements. “The Department’s decision not to mandate seamless handoff as part of the AWS auction has resulted in no new entrant being able to provide this service to its customers (to WIND’s knowledge) and has meant that seamless handoffs has become a competitive issue,” the company wrote. “This became particularly apparent when Rogers launched a national advertising campaign for its flanker brand, Chatr, in which it relied on Chatr’s ability to offer seamless handoff as a competitively distinguishing feature from new entrants.” The issue of Rogers' Chatr advertising is now before the Ontario Superior Court following an application filed by the Competition Bureau. The incumbents, for their part, have been much less vocal on rules surrounding roaming and tower sharing. Bell Canada said spectrum auctions should not be used to make artificial adjustments to the level of competition in the market. In November, Bell told The Wire Report that it follows the department's policy and does not see a need for incentives to encourage tower sharing. Rogers also said at the time that the tower sharing negotiation process is “easy and fast” and that incentives are already in place to encourage it. Telus Corp., in its submission, noted that tower sharing has helped the new entrants, but took the argument a step further by saying that the policy ultimately disadvantaged the incumbents. “The Department mandated tower/site access to ensure the viability of entrants, effectively devaluing the network investments the incumbents had made over decades,” the company said. Iain Grant, head of telecom consultancy the SeaBoard Group, said in an interview that the incumbents have built their towers at their own cost. “What hurts the incumbents most is competition. The expense of the incumbents is making it easy it for competitors to compete with them in their marketplaces. That's the biggest penalty,” he said. “They built those towers with their money. Mandated tower sharing at some sort of mandated rate is essentially expropriation.” But Grant noted that it took a long time before the new entrants could get the incumbents to enter tower sharing agreements. “And when they did, it wasn't very much fun ... They had a bad experience,” he said. Grant added that, at a certain stage in the new entrants' development, it will be more effective for them to build their own facilities. kfournier@thewirereport.ca

New entrants call for penalties to ensure good practices on tower sharing, roaming

News | March 28, 2011

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us