CRTC says No to “backdoor MVNO” Sugar Mobile
The Canadian Radio-television and Telecommunications Commission (CRTC) has confirmed that recent moves to regulate wireless roaming in Canada do not require incumbents to support competitive business models based on “permanent” roaming.
Slightly over a year ago, Ice Wireless, Inc. (Ice) applied to the CRTC for relief in a dispute with Rogers Communications Canada Inc. (Rogers).
Ice is a Mobile Network Operator (MNO), with facilities in the three territories and northern Quebec. Ice relies on reciprocal roaming agreements with Rogers to provide service to its customers in the rest of Canada.
Sugar Mobile Inc. (Sugar) is a Mobile Virtual Network Operator (MVNO) affiliated with Ice. It uses Ice’s facilities to provide service in Ice’s territory. It also relies on Ice’s roaming agreements to provide service outside of Ice’s territory.
However, while Ice’s roaming agreement put limits on long-term roaming use (so-called “permanent roaming”), Sugar offered its service to customers throughout Canada. Some of its customers may never set foot in Ice’s territory and, consequently, may never directly use Sugar’s nominal “home” network at all. These customers use public Wi-Fi, when it is available, or Rogers’ GSM network when no Wi-Fi is available.
Sugar launched its service over Rogers’ objections, after initial negotiations about the planned service model broke off in 2015.
In early 2016, Rogers threatened to cut off roaming access to all of Ice’s customers, for permitting Sugar’s breach of the roaming agreement. Ice applied to the CRTC for an order preventing Rogers from doing so. The CRTC initially issued an interim order preserving the status quo while it considered both the specific dispute and broader policy issues relating to wholesale roaming access in Canada.
On March 1, 2017, the CRTC issued a final decision in favour of Rogers, confirming that Sugar’s use breached the terms of Ice’s roaming agreement and the wholesale roaming tariffs.
Regulatory Principles for MVNOs
The decision clarifies the regulatory principles that will govern MVNOs in Canada.
- Roaming use of incumbent’s networks under the wholesale roaming tariffs by customers of an MVNO must be truly “incidental” to the use of some home network.
- Incumbents must provide roaming service to MVNO’s customers on the same basis as they do to the other customers of the MVNO’s wholesale home network provider. Conversely, MVNO’s customers are subject to the same limitations that apply to the other customers of the wholesale provider.
- Public Wi-Fi does not count as part of the home network for any MVNO. Despite recently concluding that voice is now just an application, the decision asserts that treating public Wi-Fi on par with a traditional mobile wireless service for this purpose would undermine its policy to promote facilities-based competition.
- No incumbent is required to host a home network for any MNO. This must be negotiated.
- No incumbent is required to permit “permanent roaming” on its network.
Effectively, if an MVNO’s home network has a limited territory, it cannot rely on the wholesale roaming tariffs to provide service entirely outside of that territory.
Nothing in the decision closes the door to negotiated alternatives to the wholesale roaming tariffs. But the practical effect is that, one way or another, an MVNO that wants to do business nationally in Canada will realistically have to negotiate with one (or more) of the incumbents.
Ice has a period of 50 days to ensure that Sugar stops making unauthorized use of Rogers’ network. If it fails to comply, Rogers will be entitled to stop providing roaming service to all of Ice’s customers as of May 1, 2017.