Bell says new roaming rules undermine AWS licences; Telus supports buildout rule

Industry Canada is creating uncertainty for the wireless sector by proposing changes to the roaming and tower sharing rules four years into the licence terms of 10-year AWS spectrum licences, Bell Canada Enterprises Inc. said. Industry Canada in March announced new rules for next year's auction of valued 700 MHz spectrum. At the same time, the department launched a consultation on changes to the regulatory framework for roaming and tower-sharing. The department proposed to extend indefinitely the five-year roaming requirements it imposed on incumbent carriers in advance of the 2008 AWS spectrum auction and to shorten the timeline for the arbitration of roaming disputes, which can be sought through Industry Canada. In consultation documents published on Industry Canada's website last week, Bell Canada and Telus Corp. said they take issue with the department's proposal to change the rules to require incumbents to offer roaming to competitors “indefinitely,” where technically feasible, and “in all its licensed service areas.” The companies wrote that Industry Canada is effectively removing a distinction between in-territory and out-of-territory roaming, which would allow a competing carrier to use roaming on incumbents' networks within its own licence areas, or markets, where it may have weak service. Bell said in its submission to Industry Canada that the department is prematurely changing the licence conditions agreed to in the purchase of 10-year AWS (1700 MHz and 2100 MHz) licences acquired in the 2008 auction. Bell spent more than $780 million on AWS licences in 2008, the company said, and the wireless industry collectively spent $4.2 billion. “he Company has concerns about the Department's proposals that would change a comprehensive tower sharing and roaming regulatory framework that is barely four years old and less than half way into the 10-year licence term of the Advanced Wireless Services (AWS) spectrum licences,” Bell wrote. “The industry did so in complete reliance upon an Industry Canada policy framework and that were the subject of multiple consultations and a transparent auction framework,” the company said. Bell added: “The AWS regulatory framework, including the roaming and tower sharing , should be respected and left unchanged. Doing otherwise serves only to undermine certainty and confidence in future Industry Canada auctions.” Bell said the department's proposal to eliminate the distinction between in-territory and out-of-territory roaming risks reducing the incentive for incumbents to invest in their own networks and would reward carriers that wait to build out wireless infrastructure. The company said the proposed change is not in line with the department's policy of relying on market forces to the maximum extent feasible. Telus, which has a wireless infrastructure sharing agreement with Bell, put forward a similar position, arguing that network buildout requirements are necessary under the revised framework. “Because Licensees that acquire spectrum hold a scarce resource, all Licensees should be encouraged to build network facilities within their licensed spectrum areas, rather than solely relying on the roaming capabilities of other providers, so that acquired spectrum is not underutilized,” Telus said. The company said the existing, five-year limitation on roaming agreements is a more balanced approach that encourages carriers to build and improve their own networks in the markets where they have spectrum licences. “Without a time limit prescribed for all-carrier roaming, and in the absence of any substantive build out requirements, even the largest carriers might have incentives to piggy back on existing rural facilities rather than construct their own,” Telus wrote to the department. The company proposed that mandated roaming should be required under renewable five-year terms, subject to departmental reviews of carriers' network buildouts at the end of each term. The department would review the buildouts and “examine whether mandatory roaming has had any deleterious effects on carriers building facilities,” Telus proposed. SaskTel has taken a similar position. John Meldrum, president of corporate counsel and regulatory affairs at the provincial Crown corporation, told The Wire Report in an interview in March that Industry Canada's proposed rules did not include an effective buildout requirement, which combined with the department's roaming rules, will encourage the country's largest wireless carriers not to roll out rural services in the 700 MHz band. Provincial incumbent MTS Allstream Inc. supported this point in its consultation submission to Industry Canada. MTS said the department’s buildout requirements “and other aspects of the proposed auction framework … have the potential of limiting the use of 700 MHZ spectrum to more densely populated urban communities at the expense of rural deployment.” Shaw Communications Inc., in its consultation submission, said mandating in-territory roaming would remove a barrier to new entrants looking to compete in a market and would spur additional investment. “Without mandated in-territory roaming, it is particularly challenging for new entrants to deploy networks in less urban and rural areas, making it even less likely that rural consumers can gain access to competitive alternatives in wireless,” the company said. Shaw wrote that it abandoned plans to roll out a wireless network last year after the company “encountered numerous challenges” while trying to negotiate roaming, tower sharing and site sharing agreements with incumbent carriers. Last September, when Shaw announced its cancellation of a wireless rollout, analysts said the company dropped the plans after spectrum and tower sharing negotiations with Rogers fell through. Wind Mobile, in its submission to the department, said the proposed new rules could spur investment by new entrants after the framework introduced in 2008 “created a material disincentive to constructing facilities.” The company added: “Without in-territory roaming, a carrier seeking to provide service in a community must build out their network to a much greater degree than otherwise, before they can provide a competitive service to consumers.” In many cases, this means new entrants cannot compete in a market until its service footprint matches those of the incumbents, which “have had years to finance and slowly expand their networks,” Wind said. “Thus without mandatory in-territory roaming over an extended period of time, there is a significant build-out barrier when considering network expansion to less served areas,” Wind said. “This ‘head-start’ advantage can constitute a significant hurdle to network expansion.” Rogers, Public Mobile Inc. and Bragg Communications Inc. also supported Industry Canada's proposed extension of the roaming requirements. Rogers said wireless carriers have already extended competing networks to “95% or more of the population” in Canada, but that economics would prevent those companies from investing more heavily in rural and remote areas. “There are simply not enough potential customers living in these areas to justify the investment required to serve them,” Rogers wrote. “It is unlikely that demand there will justify the construction of more than a single network. In fact, the construction of multiple networks in such areas has slowed, if not stopped entirely,” the company said. Bell told the department that, under the current roaming rules, it has not faced arbitration for the two roaming agreements it has entered into, and no changes to the regulations are necessary. “We were able to arrive at commercially reasonable terms without having to resort to binding arbitration, which is the ultimate confirmation that market forces worked,” Bell said. The company said the arbitration process remains mostly untested and there is no evidence of a need to shorten the timelines for reaching agreements. news@thewirereport.ca

Bell says new roaming rules undermine AWS licences; Telus supports buildout rule

News | 05/24/2012 7:41 pm EDT

To keep reading, get a free trial.

Already a Subscriber?

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us