Could Wholesale Wireless be the Answer to Canada's Competition Crisis?

Posted by Jacob Serebrin

It’s no secret that Canadian cell phone users pay some of the highest rates in the world. And competition is getting thiner, new entrant Public Mobile was snapped up by Telus—who promptly raised prices.

Meanwhile, other new entrants such as Wind Mobile and Mobilicity haven’t expanded their coverage areas in years and have been unable to raise necessary capital to bid in recent spectrum auctions.

“The auction opportunities are no longer there … the recent round did not see any new entrants,” says Elliot Noss, the president and CEO of Tucows, a Toronto-based domain registrar.

Tucows is also the parent company of Ting, a wireless service provider that doesn’t have its own network. Instead the company buys network access at wholesale prices and resells it to consumers providing, its says, lower prices and better customer service.

But while Ting is based in Toronto, the company’s services are only available in the United States. Noss says he’d like for Ting to be available in Canada but “no one here will sell us network.”

“Canada is simply not a competitive market,” says Noss. “Nobody’s really aggressively competing; it’s a pretty cozy market.”

While the U.S. only has four nation-wide wireless companies, he says Sprint and T-Mobile are smaller than the two largest providers and they’re “hungrier.”

Interestingly, Noss says he doesn’t think companies like Ting cut into Sprint’s retail business.

“Over 70 per cent of our customers come from other networks,” he says. While another 20 per cent were looking for a new provider and “would have left Sprint.”

He says he’s tried to buy wholesale access and hoped that “one of the incumbents would embrace it” to no avail. Now he thinks it’s time for the government to step in.

“I have a strong preference for a market solution to a regulatory solution,” he says, but “would I prefer a regulatory solution to no solution? Yes, as a citizen of Canada.”

There is a precedent, Canadian phone and cable companies are required to sell wholesale access to third-party ISPs. And while that solution seems to be working, despite somewhat low penetration rates by resellers, Noss says around 10 years passed between the time the CRTC announced it would mandate wholesale internet and when the agency actually forced companies with the pipeline to actually start selling wholesale.

Noss says that’s his “greatest fear” that politicians will say they’re going to implement wholesale wireless to score points but not actually put it into practice.

“Clearly this is any environment where there seems to be a will on the part of the government to be more consumer friendly,” says Noss. “Hopefully they want to see this done.”

If it does happen Noss says Canadians will enjoy “lower prices and better service,” but he doesn’t think it’s all that likely. “I’m not counting on it.”

Photo: Aaron Harris/Bloomberg News

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Jacob Serebrin

Jacob Serebrin

Jacob Serebrin is a freelance reporter based in Montreal. He specializes in covering small business and the business of tech. His work has appeared in publications including The Globe and Mail and The Toronto Star. Having previously covered higher education and politics, he started covering business almost by accident, but talking to passionate people about interesting things soon had him... more




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