New urgency for MVNO hopefuls following Rogers-Shaw deal

Monday’s announcement of a deal for Rogers Communications Inc. to acquire Shaw Communications Inc. has altered the playing field in the Canadian telecommunications, and specifically in the wireless sector. Observers across the wireless sector, and especially those trying to get into the mobile virtual network operator (MVNO) space have been eagerly awaiting the CRTC's decision on whether or not the regulator will mandate access for MVNOs. For Algis Akstinas — CEO of Data On Tap Inc.'s dotmobile, which has registered as a full MVNO — the Rogers acquisition of Shaw is a double-edged sword. On one hand, he says, the merger is “in a way, good news." The merger "removes that regulatory darling," describing Shaw as an "example of competition that were using to distract from MVNOs, and especially a full MVNO mandate," he said in a phone interview with the Wire Report. "After this acquisition, there will be no pretending that they can do that everywhere in Canada." Indeed, at the CRTC’s February 2020 wireless hearings, Shaw's president of wireless Paul McAleese said that his company had been the chief force in driving down prices in the wireless market, and campaigned against mandated MVNO access on that basis. “MVNO resale regulation simply does not make sense. It will hurt Freedom — the strongest, most credible champion for wireless affordability — much more than it will disrupt the big three,” McAleese said at the time. “Several years ago, Canadian regulators developed a strategic plan to create sustainable competition that would eventually be strong enough to challenge the big three. The strategy is working — in the past two years alone, Freedom’s presence has achieved more than a resale MVNO regime could ever hope to. Do not abandon it now,” McAleese told commissioners. Akstinas said this week that the Shaw acquisition positions his dotmobile brand to enter into a promising space in the market, selling wireless service to niche markets that he sees as still being underserved. If Innovation, Science, and Economic Development Canada and the Competition Bureau — two of the authorities that have to approve the Rogers acquisition — force Shaw to divest of its mobile subscribers in Ontario, Akstinas said, that could allow Quebecor Inc.'s Videotron to move into the Ontario market. "That might be a negative outcome for MVNOs that are afraid of competition," he said, pointing to the possibility that Shaw's Freedom Mobile brand could more aggressively target the same types of demographics that an MVNO might. Competitive Network Operators of Canada (CNOC) chair and Distributel Communications Ltd. CEO Matt Stein wrote in an email to the Wire Report that the Rogers acquisition of Shaw "shakes up the leaderboard for market share, but what it really does is further concentrate market power, so we would expect the CRTC to take notice of this." "It simply cannot be that Rogers be allowed to absorb the fourth player scot-free when it’s clearly established — by Competition Bureau evidence — that the incumbents possess market power, so we will be looking for either a competitive framework that allows smaller competitors to act as a check on that market power, or constructive conditions on the transaction," Stein wrote. The CRTC itself declined to answer questions this week about whether it would consider the impact of Shaw’s acquisition in any decision about mandated MVNO access. Speaking at Tuesday’s Affordable Internet Day of Action online event, organized by consumer advocacy organizations and wholesale internet service providers, Iristel Inc. vice president of regulatory affairs Jean-François Dumoulin said that "unfortunately the wireless policy in Ottawa can be described as 'madly off in all directions.'" "I think really need to — if you're gonna talk to your MP — you really need to stress the need for a coherent vision that all of these groups need to come together," Dumoulin said. At the online event, Distributel chief financial officer Brad Fisher pointed to the statement issued by Innovation Minister François-Philippe Champagne following the announcement of the Rogers acquisition, in which Champagne said “we have been clear that greater affordability, competition, and innovation in the Canadian telecommunications sector are as important to us as a government as they are to Canadians concerned about their cell phone bills.” "We like what we hear, we see the benefits , we're glad that the government sees benefits at the end of this as well, but we need to see some action. It takes a long time for these things to work through the regulatory system. We need to accelerate that while the problems are still before us," Fisher said. — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Tim Forster at tforster@thewirereport.ca

New urgency for MVNO hopefuls following Rogers-Shaw deal

News | March 18, 2021

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New urgency for MVNO hopefuls following Rogers-Shaw deal

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