A public hearing regarding the wholesale services review is due to run from November 24 to December 5 2014, having originally been scheduled for October. The notice of consultation that initiated the proceeding was issued in October last year, following the CRTC’s ruling to exclude Ethernet from the list of wholesale essential network services subject to regulation in 2008.
Backed by Industry Canada, the CRTC ruling left players such as Bell and Telus free to refuse access to rivals, despite MTS Allstream and smaller ISPs lobbying against the decision. The focus has since switched to considering whether to mandate the sharing of direct fibre access facilities between incumbents and all of their competitors.
“The question now is how much regulation should there be around Ethernet and fibre-based services,” says Christine Pop, GM, Global Carrier Solutions, Allstream. “The decisions coming out of these proceedings will lay the framework for how Ethernet-based services should be mandated, and how they should be priced.”
According to Pop, with CLECs and ILECs looking to replace incumbent legacy networks, this decision will have a major influence on the competitive landscape within Canada. Submission of final comments are due mid-December. The CRTC then has four months to issue its decision (although this can be extended), which is most likely to be in late April or early May 2015 next year.
“Allstream’s position is that access to Ethernet services should be mandated, with rates determined by commercial negotiation. CRTC-assisted dispute resolution would be needed as a backstop where agreement cannot be reached,” says Pop. “Wholesale services that are currently mandated should continue to be mandated under existing terms and conditions. Before any wholesale services are forborne a full, market-based analysis is necessary to demonstrate that appropriate competitive alternatives exist within an appropriately defined geographic market. Ultimately, there should be no universal forbearance without adequate evidence, as happened in 2008.”
There is regulatory uncertainty in Canada’s mobile market too, as the CRTC and Industry Canada look to encourage the entrance of new players. The “digital dividend” 700MHz licence auction concluded in February this year, with all but one of the 98 regional 20-year licences awarded to eight companies – Rogers, Telus, Bell, Videotron, Bragg (Eastlink), MTS, SaskTel, and Feenix Wireless.
This met the federal government’s aim to license at least four wireless players in every province, generating revenue totalling US$4.8 billion, the highest return ever for a wireless auction in Canada.
Meanwhile, Industry Canada has released details of the 2500MHz licence auction. Slated for April 2015 (with the AWS-3 spectrum auction pencilled in for March 2015), the 2500MHz auction framework also aims to foster competition, with spectrum caps and smaller geographic licence areas to encourage rural ISPs to participate.
Industry Canada finalised mandatory roaming and antenna tower and site sharing measures in March last year, but the CRTC’s public hearing on its “Review of wholesale mobile wireless services” that commenced in September 2014 is still ongoing. The deadline for final submissions was October 20.
“We’ve got quite a tipping point situation with the Canadian mobile market, where there are all of these new opportunities on the face of it,” stated Tom Shepherd, research analyst, TeleGeography. “However, there are various problems with under-regulation in regards to the wholesale aspect of mobile, with suspect agreements, exclusions, and unfair rules implemented by the larger operators that do not make it attractive for new entrants to roam on to their networks, and has not encouraged the MVNO sector.”
According to Shepherd, Videotron and WIND are the mobile players to watch, with the former mulling a nationwide 4G roll-out and the latter considering its options having attracted US backing following the exit of VimpelCom.
“These two companies might well link up in some form of merger, but that is contingent on how the consultation on mobile wholesale goes. That will definitely affect their strategy on what they do next, as well as the upcoming licence auctions,” Shepherd adds.
In addition, triple-play cableco Cogeco is considering launching an MVNO service, but only if the CRTC implements stricter regulation regarding wholesale access to the infrastructure of Rogers, Telus and Bell.
“This is something fellow cableco and Atlantic Canadian 4G mobile operator Eastlink has also called for in its review submissions,” suggests Shepherd.
