A Canadian Radio-television and Telecommunications Commission decision that forced a wireless startup to halt its low-cost service is a blow to competition in the industry, says the company’s president.
Sugar Mobile took a back-door route to the Canadian cellphone market using mandated roaming agreements between its affiliate Ice Wireless, which owns spectrum in northern Canada, and larger telecom companies across the country.
While Sugar customers relied mainly on Wi-Fi access to make calls via an app, the roaming agreements kicked in when it wasn’t available, moving calls on to a 3G network owned by Rogers Communications Inc.
However, in a March 1 decision, the CRTC ruled it was improper for mobile virtual network operators such as Sugar, which don’t own any of their own infrastructure, to allow users to permanently roam on the networks of incumbent national carriers.
Such an arrangement was also a breach of Ice’s roaming agreement, which provided only for “incidental” roaming on Rogers’ network, the commission ruled.
Since April 20, Sugar customers without a home or business address in one of Ice’s operating jurisdictions — which include Yukon, Nunavut, Northwest Territories and parts of northern Quebec — have been unable to roam on Rogers’ network.
Even if Sugar users have a valid address, Rogers can now cut them off if they clock up more than half of their wireless data on Rogers’ network.
“It’s very disappointing, and kind of a shocker, not just for us but for Canadians, because it sets back the industry again,” says Samer Bishay, president and CEO of both Ice and Sugar.
“People here are already paying some of the highest wireless phone rates in the world.”
The company had attracted more than 5,000 users since its launch last year, with the promise of wireless plans for less than $20 per month.
But David Watt, senior vice-president of regulatory affairs at Rogers, hailed the decision.
“We’re pleased the CRTC made the right call. We believe in innovation and a fair, competitive market — this was about violating a roaming agreement, plain and simple,” he said in a statement to Law Times.
Paul Beaudry, an associate researcher at the Montreal Economic Institute, says persistent concerns about the lack of competition in Canada’s wireless market are overblown.
Despite the dominance of Canada’s Big Three telecom giants — Telus Communications, Bell Canada Enterprises and Rogers, which together hold around 90 per cent of the national market — he says those numbers don’t tell the full story.
“People often look at competition in a market based on the number of players, but, unfortunately, in a country as large as Canada, you can’t support a dozen companies,” he says.
Keith Rose, a communications lawyer with McCarthy Tétrault LLP in Toronto, says the roots of the CRTC’s Sugar Mobile decision lie in its earlier verdict to cap the wholesale roaming rates charged by the Big Three to smaller network owners such as Ice.
In 2015, the commission said it would intervene to give upstart network operators a chance to build up their limited infrastructure holdings.
“At the time, people were urging the commission to put a similar framework in place to require the incumbent operators to make their networks available to MVNOs, but the commission refused,” Rose says.
“The Sugar Mobile decision essentially just confirms this principle.”
“It would be inconsistent with the wholesale wireless framework to permit mandated wholesale roaming to be used as a means to obtain permanent access to the incumbents’ networks.
Such an approach would render meaningless the Commission’s decision not to mandate MVNO access to these networks and would require the Commission to fundamentally redefine the meaning of wholesale roaming,” the CRTC decision reads.
Rose says the CRTC’s position does not rule out alternative roaming arrangements between MVNOs based out of small home networks and largerspectrum owners.
Indeed, Sugar had been in negotiations with Rogers about its service before launch, but talks broke down in late 2015 and Sugar went ahead under protest from the communications giant.
“Effectively, the decision means that an MVNO that wants to operate nationally is going to have to deal with one or more of the incumbents,” Rose says.
David Christopher, a spokesman for OpenMedia, a non-profit that campaigns for a freer communications industry, called Sugar’s shutdown a “huge disappointment.”
“Canada needs more choice and competition in the wireless sector to help bring down prices,” he says.
Bishay says the decision won’t deter him from trying to innovate in the Canadian wireless realm.
In addition to building out Ice’s existing network in northern Canada, his latest project involves a plan to place nanosatellites in low orbit around Earth for use in telecommunications.
Kepler Communications, co-founded by Bishay, wants to launch its first satellite later this year with the aim of establishing what it calls “cellphone towers in space.”
“It’s going to be really helpful for remote communities where it’s hard to deploy fibre,” Bishay says. “It’s very exciting.”
