French carrier Orange, Competition Bureau intervene in wholesale review

Orange Horizons, an arm of French telecom giant Orange SA tasked with exploring new markets, said in a CRTC filing on Wednesday that it is taking a close look at the Canadian wireless market. Orange, which claims in the filing to have mobile operations in more than 30 countries, made the filing as an intervention in the CRTC’s ongoing review of competition in the wholesale wireless market. The company said that it “has been reviewing the opportunity to expand its footprint into the Canadian wireless market” and that it met with Canadian authorities in October 2013 to discuss “potential options for a market entry.” The Wire Report detailed some of the contact Orange has had with Canadian officials in an article published in November. To create the conditions for success for mobile virtual network operators (MVNOs), which do not own their own towers and lease network space from those with the infrastructure, “the regulatory environment must support the achievement of fair and reasonable wholesale agreements,” Orange said in the filing. “It is unlikely that any new wireless-only entrants will emerge without significant changes to the current regulatory environment,” the company said. The French company said MVNOs have “stimulated competition resulting in significant price decreases” in European countries, including France, the United Kingdom and Germany. Orange said the profitability of Canada’s three wireless incumbents, BCE Inc., Rogers Communications Inc. and Telus Corp., is among the highest in the world for wireless companies, and that national roaming retail prices per minute for regional players and new-entrant carriers are twice as expensive or more than the average price per minute for the incumbent carriers. “This suggests that the national incumbents are achieving high margins on traffic from subscribers from regional and new entrant networks who are roaming on their network,” the company said. The CRTC will hold a public hearing on competition in the wholesale wireless market on Sept. 29. Meanwhile, the federal government’s budget bill, C-31, will cap wireless wholesale rates at approximately what carriers make from retail operations. That provision is meant to be an interim measure until the CRTC issues a decision on wholesale wireless rates, which is expected in the coming months. The SeaBoard Group, a technology research company, said in a recently released report that wholesale wireless rates should be “significantly lower” than what carriers charge for retail usage. Competition Commissioner John Pecman filed an intervention in the case on Thursday that said the incumbent wirless carriers have the power to distort the market and that the CRTC should take steps to "address the incentives for the incumbents to raise their retail competitors’ wholesale prices." "Where market forces are insufficient to prevent the abuse of market power by market participants ... the CRTC may need to impose regulatory measures to ensure that Canadians enjoy the benefits of greater competition in wireless markets, including lower prices, higher quality service and greater innovation," Pecman said in the intervention, which was posted to the bureau's website on Thursday. In the filing, Pecman said competition from a fourth national carrier could save consumers up to $1 billion per year. In a February filing, Pecman called the rates charged to new-entrant carriers by incumbents “unjust,” which the incumbent carriers have disputed. In its own filing to the CRTC on Thursday, Rogers said the Canadian wireless market was already competitive and that price caps were unnecessary and could be counter-productive if they allow network access at unsustainable rates. "What happens when you have too many people riding on your investments for cheap? You stop making those investments, and that's exactly what's happened in Europe," said Ken Engelhart, senior vice-president of regulatory affairs at Rogers, in a phone interview on Thursday. Engelhart said more than three quarters of Canadians have access to LTE coverage, while in some European countries the number is below one quarter. " don't create jobs, they don't really create benefits for consumers,” he said. “They only create a nice business for themselves.” — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

French carrier Orange, Competition Bureau intervene in wholesale review

News | May 15, 2014

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French carrier Orange, Competition Bureau intervene in wholesale review

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