CRTC finds Rogers’ treatment of Wind Mobile ‘unjust’

The CRTC issued a decision Thursday in the first of its two reviews of wholesale wireless roaming in Canada, finding that Rogers Communications Inc. committed “unjust discrimination” in its domestic roaming agreements and banning roaming contracts that prevent smaller carriers from using other carriers’ networks. The telecom regulator said it found “clear instances” of discrimination by Rogers in its agreements with “certain new wireless services providers.” Although the CRTC did not identify the new carriers in question, the wireless carrier in question is presumed to new-entrant Wind Mobile, which has complained in the past about its exclusive agreement with Rogers. These exclusive contacts were banned in order to “to further enhance sustainable competition in the wireless market,” the regulator said in a release. The CRTC deferred judgement on wholesale domestic roaming rates, citing recent legislation that instituted a cap on such fees. “Competition in the wireless industry benefits society and the economy by providing innovative communications services at reasonable prices,” CRTC Chair Jean-Pierre Blais said in the release. “But that is only the case when true and sustainable competition is at play.” The decision is separate from the CRTC’s broader ongoing review of overall wholesale wireless competition, for which a hearing is scheduled Sept. 29. Simon Lockie, chief regulatory officer at Wind Mobile, said in a phone interview that Thursday’s decision is an important indicator of how the CRTC views the wireless marketplace in advance of the hearing. “To me it answers definitively one of the questions that the wholesale proceeding would have to open with, which is whether or not the wholesale market is sufficiently competitive,” he said. “It clearly isn't, otherwise Rogers wouldn't have been able to impose these terms on us.” Lockie called the decision a “tremendous vindication” of his company’s position, though he was confident before the decision was released that the process would work out in their favour. “The situation was so egregious I don’t think the outcome was ever in doubt,” he said. “This simply reinforces what we’ve been saying since the beginning, which is that we’ve been subject to anti-competitive behaviour from Rogers. That’s now been established by an independent regulator, it’s not just us saying it anymore.” Without the ability to negotiate with other providers after Wind signed its roaming deal, Lockie said, the company was forced to pass on its high costs because of an exclusivity clause that he said was “foisted upon” Wind by Rogers. At the time Wind was negotiating to launch its first services in 2008 and 2009, only Rogers had the HSPA network with which Wind’s devices were compatible, Lockie said. “When you only have one option, you’re forced to accept terms like that,” he said. Lockie pointed to the domestic roaming rate caps instituted in June as part of the recent budget bill, a series of filings from the Competition Bureau calling for more wireless competition, and the upcoming CRTC hearing. “They went so far, they exerted their market power in such an unfettered way, that they couldn't help but attract the attention of the regulator,” he said. These interventions into the wireless market are the inevitable result of the incumbents’ anti-competitive approach in the past, he added. “These are circumstances of the incumbents' own making,” he said. “If they had not let their own anti-competitive interests prevail and instead focused on basically getting as much wholesale revenue into their coffers as they could, then it would've worked out well for everyone and they could have focused on competing with us in the market.” Rogers spokeswoman Jennifer Kett said in an email that the company was “surprised and disappointed” by the CRTC’s decision. “Every signatory had a choice,” she said. “They could sign a long term or a short term agreement or a deal with an exclusivity clause. Some carriers chose to sign exclusive agreements because they got a discounted rate.” Kett said the company was also surprised by the CRTC’s finding that the rates themselves were examples of unjust discrimination, not just the exclusivity clause. “Our agreements are based on a number of factors including volume,” she said. “As with any sales agreement across any industry, the higher the volume the lower the rate.” Kett said roaming prices in the United States, which Wind has claimed are far lower than what it pays domestically, are affected by the fact that American carriers have far greater roaming volume than Canadian carriers. “In addition, there’s mutual benefit,” she said. “Our customers get to roam broadly on these U.S. networks. Our customers don’t roam on new entrants’ networks in Canada.” Canaccord Genuity telecom analyst Dvai Ghose said in an interview on Thursday that the finding of unjust discrimination was “totally expected,” and that the decision doesn’t mean much without knowing the results of the September hearing. “We’re still left in the dark,” Ghose said. "The real question is when are we going to get the wholesale rates. That's going to take a long time.” He pointed to the upcoming AWS-3 auction, which Industry Minister James Moore said earlier this month would be completed before April 2015, as a problem for any company, such as Quebecor Inc., that intends to invest in nation-wide wireless service. “I think the sequence of events is totally wrong here, they should have come out with the wholesale decision first,” he said. “I'm not saying everything can be done overnight, but if indeed we take Videotron seriously and their No. 1 criterion as to whether to go national is what the roaming rates are, and you're going to do an auction before that, it makes it very difficult.” Ghose said the CRTC's reproach of Rogers was unlikely to herald a return of last summer's public spat between the big wireless companies and the government. "There's no Verizon in sight," he said, referring to the giant American carrier's expression of interest in the Canadian market in July 2013. "The equation is very, very different. I think it's amusing that people continue to think that Videotron is as scary as Verizon." Ghose said the end of exclusivity deals will have little effect on the market because the historical circumstance of Wind’s deal with Rogers, in which it had no other alternative, is unlikely to be repeated. "That's fine, but why would you sign exclusivity?" he said. "Maybe Rogers forced them to, to be fair. If that's the case, then shame on Rogers. But going forward I don't expect any exclusivity agreements anyway because everyone's got an HSPA network up and running." Jake Enwright, spokesman for Industry Minister James Moore, said in an interview he was “pleased” to see the CRTC’s decision. “We have been consistent in saying wireless prices are too high, and that is why we passed legislation to cap wholesale roaming rates,” he said. “The decision is a positive step towards levelling the playing field for all wireless providers.” Jean-Francois Mezei, a telecom consultant with Vaxination Informatique, said in a phone interview that the biggest beneficiaries of the CRTC decision are Wind and Mobilicity. “Wind and Mobilicity are the outliers who are shunned black sheep, with whom the companies don’t want to deal,” he said. “For them, that is a big advantage.” Yet, he added, “I don’t think it will have much of a difference elsewhere.” Mezei said players in the industry are “signing all these deals together,” and while the government thinks that its stated goal of having four carriers requires four separate physical networks, “in fact the industry is moving totally in the other direction.” Eastlink, for instance, announced Thursday that it was adding a second roaming partner in addition to its deal with Rogers, in its operating territory. The deal came into effect yesterday morning. Dan MacDonald, vice-president of marketing, said the company believes it’s the first time a roaming deal with two different carriers for the same region has been reached in Canada, though he said he could not name the second partner. MacDonald said the CRTC’s decision on exclusivity is “great news for the industry,” and he agreed that the ban was likely to help make more such deals with multiple partners possible. Mezei said the CRTC reached the “obvious” decision that was limited by the scope of the process. “It’s a factual decision, basically,” he said. “It rules on the fact that the way the contracts were written at the time, it did have discrimination and the exclusive clauses in it that are not correct.” He said that given the upcoming wider CRTC process of wholesale wireless services, there was no point in this decision “ruling on the actual rates.” Mezei added banning exclusive contracts would allow Wind to sign a contract with Quebecor in Quebec and other companies in the rest of Canada. “Whether they will take advantage of it, we don’t know, and it all depends of who buys whom,” he added. He said the decision would be a factor in Quebecor’s decision in whether to roll out in the rest of Canada, but “a small factor, because the other aspects for Videotron … are more important.” — With reporting by Peter Henderson at phenderson@thewirereport.ca and reporting and editing by Anja Karadeglija at akarad@thewirereport.ca

CRTC finds Rogers’ treatment of Wind Mobile ‘unjust’

News | July 31, 2014

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CRTC finds Rogers’ treatment of Wind Mobile ‘unjust’

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