On Wednesday, Canada's federal telecom regulator ordered a small, affordable competitor in the country's oligarchic mobile market to shut down.
Sugar Mobile is an Ontario-based provider owned by Ice Wireless, a company that also owns a wireless network in the North. For just $19 per month—an exceedingly low price for a mobile plan in Canada—Sugar Mobile allowed customers to call and send texts over WiFi, only using Ice Wireless' network when WiFi was unavailable. It's very similar to how Google's Project Fi works in the US.
Like Project Fi, Sugar Mobile is what's known as an "mobile virtual network operator," or MVNO. This means that although Sugar Mobile doesn't own any of its own infrastructure, it piggybacks off of the network of a larger provider—in this case, its parent company.
Because of a roaming agreement between Ice Wireless and Rogers, one of Canada's "big three" telecom companies, Sugar Mobile also used Rogers as its network when both WiFi and Ice Wireless weren't available. This was helpful for Ice Wireless' customers in the North, especially when travelling to cities where the provider doesn't have coverage. The order to shut down Sugar Mobile came about because Rogers complained that customers outside of the North would always be using Rogers' network, violating the roaming agreement.
It's a big mess that could have been easily avoided if the Canadian Radio-television and Telecommunications Commission (CRTC) approved mandatory access for MVNOs.
"It's like, welcome to Canada"
In a landmark ruling in 2015, the CRTC effectively put the kibosh on MVNOs operating at scale in Canada by declining to mandate that large providers lease their networks to smaller competitors. The reasoning at the time was that mandating small companies to be able to buy network access would disincentivize building new wireless infrastructure. Some organizations pushed back, but their appeal was ultimately denied by the CRTC.
While there's nothing stopping Canadian telecoms from approving MVNO services on their networks, without a rule making such access mandatory, they've so far elected to not play nice with competition.
"[Being an MVNO] was part of the initial discussions, and Rogers was not open to entertaining that," said Sugar Mobile president Samer Bishay over the phone. "They said, 'We have these requests every day and we decline all of them.'"
"It's like, welcome to Canada," Bishay continued. "In the US, you have 250 MVNOs. Of course this could have been avoided, but who's going to do it?"
Rogers, when asked for comment on whether Sugar Mobile being an MVNO on the Rogers network was part of the initial negotiations, sent Motherboard an emailed statement from David Watt, Rogers' Senior Vice President of Regulatory Affairs, that did not directly respond to Bishay's allegations.
"We're pleased the [Canadian Radio-television and Telecommunications Commission] made the right call," Watt said in the emailed statement. "We believe in innovation and a fair, competitive market—this was about violating a roaming agreement, plain and simple."
Still, it's a familiar story. Consider the case of an MVNO based in Toronto: Ting. While Ting is rather successful in the US, working with Sprint and T-Mobile, it hasn't enjoyed the same generous reception from Canadian telecom giants.
"Sprint and T-Mobile are our providers in the states—there's no legal requirement for them to offer service, but it makes sense for them to do that," said Andrew Moore-Crispin, Ting's head of content, in a phone interview. "Canadian carriers are disincentivized to invite competition in. We all know we're paying $80 for our single cell phone plans, so there's a disincentive to change that."
Right now, small providers have precious few options in Canada, Crispin-Moore continued. "You either build your network from scratch, and you find a backdoor and see what happens," he said.
Sugar Mobile arguably chose the latter option, and it didn't end well. As long as the Canadian mobile market is dominated by three companies, ordering that they share their networks with smaller competitors may be the only way to ensure that companies with similar ambitions don't get burned.
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