Canada issues new rules to foster competition via MVNOs

The CRTC has published new rules governing cellular networks known as Mobile Virtual Network Operators, or MVNOs — rules the telecom regulator says it hopes will provide greater competition in the wireless market.

True MVNOs are cellular networks that have no infrastructure or spectrum of their own, but simply resell wholesale access to incumbent networks to consumers, typically for much cheaper.

Mint Mobile, owned by Canadian actor and entrepreneur Ryan Reynolds, is an example of a U.S. MVNO, which sells unlimited data, talk and texting plans within the U.S. for $30 a month. The company has no cellphone towers or spectrum rights of its own, but simply buys “space” on other companies’ cellular networks and resells access to it to consumers.

Last year, Canada’s telecom regulator established a policy to set ground rules for MVNOs wishing to operate in Canada. Under those new rules, a company like Mint still can’t operate in Canada because the CRTC requires any MVNO to have its own network somewhere in Canada, in order to piggyback on existing networks in the rest of the country.

Specifically, they must already have their own spectrum license, and plan to build a network in the region they want to piggyback in within seven years. If they can meet that bar, they qualify — but the only companies that meet it are existing ones.

On Wednesday, the regulator released more ground rules for any quasi-MVNOs wishing to set up shop. The telecom regulator didn’t change any of the basic framework it established in 2021, but did provide some more detail on what it wants to see happen now.

The major incumbents “must now begin accepting requests for access to their networks and enter negotiations with regional wireless providers to agree on wholesale MVNO rates,” the CRTC says.

The regulator says those negotiations will help ensure that qualified MVNOs have access to 5G networks where applicable, and that calls on their networks are not dropped as customers travel between coverage zones.

The regulator also says it has denied several provisions that would have made MVNOs more restrictive or difficult to use by regional players, and says it will block any move that would restrict regional providers from reselling their wholesale access to other MVNOs.

“We are one step closer to implementing our policy that will enable regional providers to offer wireless services in areas where competition is limited,” CRTC chair Ian Scott said in a press release. “This will help provide more affordable options to millions of Canadians while increasing competition. We expect the large providers to negotiate in good faith and come to an agreement as quickly as possible with regional wireless providers.”

Consumer advocacy group OpenMedia says the regulator is doubling down on a policy that was a mistake in the first place.

“They have just been 100 per cent committed to the facilities-based or or physical infrastructure-based competition model, which simply hasn’t served Canada,” said campaigns director Matt Hatfield. “We’ve been trying it for over a decade and it doesn’t actually happen.”

The new rules make it look like the door has been opened to MVNOs but “in practice it actually locks out those kind of competitors from almost every circumstance,” he said.

Anthony Lacavera, who co-founded Wind Mobile, which launced in 2009, says a major problem with Canada’s telecom landscape is that there are no purely wireless companies. Incumbents like Bell and Rogers started in landline telephones and cable, respectively, before moving into wireless.

“We’re the only OECD country that doesn’t just have a wireless-only competitor,” he told CBC News. “That’s why prices are higher in Canada, that’s why the customer service experience is so much worse and that’s why the networks are not as reliable as in other OECD countries, full stop.”

He doesn’t think MVNOs are the answer because good wireless networks require investment, but ultimately he thinks the issue is a distraction to the real problem anyway.

“The ability to enable resellers is really truly just shuffling deck chairs on the Titanic — we’ve got to focus on the big problem,” he said. “If we really want lower prices, we got to fix it structurally.”

Consumers feeling squeezed
Cellphone user Karima-Catherine Goundiam is among those who thinks the current system needs fixing. A technology entrepreneur, she travels abroad extensively for work, and says she’s always shocked by what’s available in terms of deals for cell service compared to what she’s used to in Canada.

She’s not particularly familiar with the new rules for MVNOs but, based on her experience, is skeptical that they will help much.

That’s because in general, Canada’s wireless market “creates an apathy on the part of the customer who just … basically throw their hands in the air and say ‘whatever’ because you know all of them are the same,” she said. CBC