Channels of appeal

Data on Tap, otherwise known as DOTmobile, says that it has appealed the CRTC’s recent Regulatory Policy – Review of Mobile Wireless Services to Cabinet.

Recall that the Telecom Act prescribes three channels of appeal for a CRTC decision: to Cabinet (the Governor in Council); to the Federal Court of Appeal; or, back to the CRTC itself.

A “petition” to Cabinet must be filed within 90 days of a CRTC Decision. The Commission’s policy was issued on April 15th, less than 3 weeks ago; Cabinet has a year from the date of the decision to respond.

The press release says:

“The CRTC decision misinterprets Canada’s wireless policy. Industry analysts, telecom experts, competitive regional providers and even the dominant carriers all recognise that this decision will not have any meaningful, immediate or nation-wide effect on the wireless market,” said Algis Akstinas, CEO of Data on Tap Inc. “It is not addressing the pain points that kicked off the Review of Mobile Wireless Services and were validated by the Commission and Competition Bureau Canada during the proceeding.”

Given that the CRTC’s model largely adopted the competitive framework proposed by the Competition Bureau, it is hard to understand the validity of this statement.

In its Application, DOTmobile asks Cabinet to:

  1. Make wholesale access to dominant networks available to Full MVNOs by removing the requirements targeting regional MNOs:
    • Remove all spectrum licensing requirements.
    • Remove the seven-year limitation on mandated wholesale access.
    • Remove the requirement to own and operate an existing radio-access network.
  2. Set a maximum wholesale rate to allow Full MVNOs to offer plans that meet the affordable and occasional-use plan requirements identified by the CRTC:
    • $0.0070 per voice minute (based on 500 average minutes of usage)
    • $0.0010 per SMS message (based on 500 average minutes of usage)
    • $0.0060 per MB of data (based on 3GB of average data usage)
    • Wholesale cost for the $35/month 3GB plan would be $22.00, leaving a moderate 37% average retail margin to cover operating costs and investments.
  3. Direct the CRTC to review maximum mandated wholesale rates every two years to determine if they allow for competitive retail pricing, based on a margin equal to the average reported wireless EBITDA margin of the dominant networks in the CRTC’s Communications Monitoring Report.

It is a hefty request with a degree of specificity that is extremely unusual to expect from Cabinet.

DOTmobile’s Application itself recognizes the close relationship between the CRTC’s Decision and the Competition Bureau’s proposed model. Recall that the Competition Bureau is an agency that reports to the Minister. As the CRTC observed, “The Commissioner [of Competition] suggested that, relative to facilities-based competitors, service-based MVNOs are inferior because, without any networks of their own, they must rely on network operators and the regulator to set the bounds in which they operate” and “proposed that the Commission [CRTC] adopt a narrowly focused, facilities-based MVNO access policy.”

It is worthwhile looking at a part of the introduction to the CRTC’s Policy Decision:

the Commission considers it necessary to apply certain targeted regulatory measures to ensure that the needs of Canadians are met, having regard to the policy objectives of the Telecommunications Act and both the 2006 and 2019 Policy Directions.

In considering its regulatory approach, the Commission must take care not to disrupt the competition that is already occurring, but instead foster an environment where this competition can grow and be sustainable over the long term.

I suspect the Minister will follow a similar approach, taking care not to disrupt the competition that is already occurring.

We’ll be following this file.

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