2. What licence restrictions should Industry Canada place on successful bidders in order to encourage competition and consumer choice? Option 1: Wholesale Access (RECOMMENDED)
Option 2: Mandatory Roaming (RECOMMENDED)
The large upfront investments required for network infrastructures — not to mention spectrum licences — create a high barrier for new entrants to the marketplace. However, a licensing restriction that mandates wholesale access to other parties would allow new companies to enter the market without the need for them to create a Canada-wide infrastructure of towers and base stations. Increased competition through a services-based competitive environment. In the same manner that a mandatory wholesale environment complements facilitiesbased competition in the household broadband Internet market, mandatory wholesale at reasonable rates could achieve the same results in the wireless marketplace.
Advantages
Prevention of monopolies in rural areas. In regions with less dense populations, the infrastructure cost per subscriber can be too high for more than one service provider to set up a network infrastructure in the region. Where this is the case, wholesale access would at least bring services-based competition where the facilities-based competition is lacking.
Industry Canada already imposed mandatory roaming as a licence condition on licensees of the 2008 AWS spectrum. As Industry Canada stated in the applicable notice, the purpose of these provisions was to “encourage the deployment of advanced networks that provide the greatest choice of basic and advanced services available at competitive prices to the greatest number of Canadians.”14 Unfortunately, the implementation of mandatory roaming provisions from the 2008 auction proved difficult. Disputes over the requisite level of service arose. In one case, a dispute even lead to a formal
Space for new business models. As Industry Canada notes, “long-term spectrum licences have a high expectation of renewal”.13 This licensing approach does not necessarily leave any spectrum available for new and alternative service business models that may be driven by future types of wireless devices. Wholesale access could help rectify this drawback by ensuring that newcomers always have a “place to go.”
Disadvantages
Spectrum crowding. If the wholesale load on a particular provider becomes too heavy, the provider could, potentially, end up without sufficient bandwidth or spectrum allocation for its own customers (though today spectrum is vastly underutilized).
Industry Canada, “Renewal Process for Cellular and Personal Communications (PCS) Spectrum Licences” (March 2011), online: <http://www.ic.gc.ca>
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Thus, the mandatory roaming stipulations would benefit from adjustments. These should include indefinite roaming obligations (regardless of whether the operator is seeking roaming inside or outside its licensed area, as is the case in the U.S.), seamless hand-off of calls between operators when subscribers are roaming, setting up a streamlined arbitration process, and the imposition of financial penalties for uncooperative practices.
Advantages
Availability of Canada-wide service for all consumers. Mandatory roaming agreements help ensure that customers can always obtain wireless services across the vast majority of Canada, while still requiring fair compensation to the roaming providers.
Disadvantages
Difficult to enforce the requisite co-operation. There is an incentive for roaming providers to give their own customers undue preference, such as by providing roaming customers with degraded or less desirable service. This can unduly encourage customers to switch to the roaming provider’s own services based on the promise of better wireless access.
14
Industry Canada, Client Procedures Circular CPC-2-0-17, “Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements” (November 2008), online: <http://www.ic.gc.ca> [License Conditions].
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CRTC complaint over whether mandatory roaming needed to also include seamless call transition to roaming customers.15
CRTC, Telecom Decision 2011-360, “Globalive Wireless Management Corp., operating as WIND Mobile – Part VII application regarding roaming on Rogers Communications Partnership’s wireless network” (2011).
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