Cogeco Cable looks to enter wireless market

Internet- and television-service provider Cogeco Cable Inc. is looking to enter the wireless market if the CRTC paves the way with new rules as part of its ongoing review of the wholesale wireless sector, the company’s director of regulatory affairs said in a phone interview this week. Michel Messier said Tuesday that Montreal-based Cogeco will not build its own wireless infrastructure but is interested in becoming a mobile virtual network operator (MVNO), buying services from Canada’s incumbent carriers and re-selling them to its customers. “We want to enter in the market,” Messier said. “We think it's in the interests of the consumer to have a greater choice of service providers. For that purpose, we need to buy wholesale services from the large mobile network operators.” Any MVNO agreements are made between the operator and the infrastructure owner, with rates set only by negotiation between the two parties. Under current rules, BCE Inc., Telus Corp. and Rogers Communications Inc., which is a part-owner of Cogeco, are not required to open their networks or offer discounts to MVNOs. The CRTC is looking at those rules as part of its review of the relationships between carriers at the wholesale level. Messier said his company will pursue wireless services if the regulator takes a broader view and opens up the market to MVNOs by mandating wholesale access — that is, access below the retail cost offered to consumers — to incumbents’ infrastructure for other companies, as European regulators have done. “We tried to negotiate service agreements in the past,” he said. Messier said Cogeco would offer wireless service as part of its bundled packages, lowering prices and allowing customers to deal with one company for all of their telecom needs. On Monday, Cogeco filed an interrogatory in the CRTC’s wholesale wireless review asking Bell Mobility, Rogers and Telus about their regional coverage, the deals the companies have made with one another, including Telus' and Bell Mobility’s wide-ranging and closely guarded sharing agreement, as well as specific questions about costs and the ability of an MVNO to piggyback on any current roaming agreements. Cogeco also asked questions about potential MVNO operations of French wireless carrier Orange SA, which filed its own intervention in the wholesale wireless review in May. Messier said Cogeco would have bid in the government’s recent 700 MHz spectrum auction, held earlier this year, but it was not “tailored” for its territory because Cogeco has many rural customers. He said the cost of bidding in the auction, which ended up raising $5.27 billion, was a deterrent as well, but was not the main reason for its choice not to participate. Messier said his company is waiting to see what the outcome of the wholesale wireless review will be, and that Cogeco is still open to negotiating a wholesale wireless deal without intervention from the CRTC. “If these services are available, for sure we will be interested in entering the market as quick as possible,” he said. A report in the Globe and Mail in January said Cogeco was one of the bidders for wireless carrier Mobilicity, which entered bankruptcy protection in September 2013, although Cogeco’s bid was “not considered to be serious.” Cogeco’s portfolio includes television, Internet and home-phone service in Ontario and Quebec, as well as several U.S. states through its Atlantic Broadband subsidiary. The company bought data-centre and Internet hosting provider Peer 1 Network Enterprises in September 2012, and Cogeco credited the data-centre business with buoying its most recent quarterly result. Jean-Francois Mezei, a Montreal-area telecom consultant with Vaxination Informatique, said every telecom provider, not just Cogeco, is probably hoping for the CRTC to make it easier to access the incumbents’ wireless networks in order to expand their offerings. “It’s not clear to me how far the CRTC is willing to go in this consultation,” he said in a phone interview on Tuesday. “Obviously, some people are going to be pushing for MVNOs, and those people are going to be the ISPs, basically, who want to offer it. Cogeco, like any ISP, would want to have wireless to complete its bundle.” Mezei said the “dream” of facilities-based competition, between those who own the actual wireless infrastructure, is long gone after Rogers sold off and began renting back space on wireless towers in northern Ontario. He also referred to how Bell and Telus share each other's networks in order of provide national coverage. “There are no four national carriers; there isn’t even one,” he said. “The whole concept of facilities-based , if the CRTC agrees that it’s done with, that opens the door for MVNOs.” A public hearing for the wholesale wireless competition review is scheduled for Sept. 29. Analyst Troy Crandall of 3Macs said Cogeco could be using the CRTC review to gauge the rates it should be paying for MVNO services. “Maybe in the past they've talked about MVNOs with some potential partners, so they probably have at least some preliminary rates,” he said in a phone interview on Thursday. “They'll see what the government comes up with on regulatory pricing, and see if it's more favourable under that. If it is, and if they see it could add to their profit or a value-add for their customers, maybe they'll go that route.” Crandall said companies that have previously run an MVNO carrier before building their own infrastructure, including Eastlink and Quebecor Inc., did not make much of a profit yet found adding a fourth service kept customers loyal. “It may have been what pushed a customer over the edge to signing up just because they could get that fourth service, everything showing up on one bill,” he said. “It’s very hard to quantify, from their explanations, the value of the MVNO service. They thought it added value to have it but you could see they weren’t making money on it.” The majority of MVNO profits, Crandall said, go to the companies that own the networks, not to the MVNOs themselves. “Essentially, you’re just a renter,” he said. “The owner calls the shots. You’re basically at the mercy of whoever you’re renting it from.” Crandall said Cogeco’s filing with the CRTC makes sense if the company is trying to set itself up for the future by diversifying its products. “I can see why they’re prodding the government to help them out,” he said. “It sounds to me like Cogeco has come to the conclusion that is something that they need. There are very few cable companies out there left that don’t have wireless.” — Reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Cogeco Cable looks to enter wireless market

News | June 12, 2014

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Cogeco Cable looks to enter wireless market

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