In a much-awaited decision, the Canadian Radio-television and Telecommunications Commission has laid out terms and conditions for a policy aimed at increasing competition and lowering prices in mobile wireless services.

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The decision, released Wednesday, will govern the upcoming mobile virtual network operator (MVNO) regime in Canada that will allow regional players to buy bulk access to incumbent networks at wholesale rates for seven years while they build their own.

The regulator stopped short of setting specific tariffs. But incumbents must now begin good-faith negotiations with regional players, upon request. If the companies are unable to reach an agreement on commercial terms, the CRTC will oversee a rate arbitration process.

“We are one step closer to implementing our policy that will enable regional providers to offer wireless services in areas where competition is limited,” said Ian Scott, chairperson of the CRTC.

“This will help provide more affordable options to millions of Canadians while increasing competition. We expect the large providers to negotiate in good faith and come to an agreement as quickly as possible with regional wireless providers.”

The CRTC said mobile prices in Canada —  often tagged as some of the highest in the world — have already been dropping over the past several years, with the average monthly cost of a 5GB mobile package falling by 11 per cent between 2016 and 2021.

Pierre Karl Péladeau, chief executive of Montreal-based Quebecor Inc., who has been pushing for the MVNO regime to help subsidiary Vidéotron establish a wireless footprint outside Quebec, said the latest decision from the CRTC solidifies Videotron’s ability to launch.

“We… expect the incumbents to act in good faith, quickly negotiate the terms of a wholesale access agreement, and allow Videotron access to their networks as soon as possible,” Péladeau said in a statement.

On a conference call with analysts in May, Péladeau said big national telecom players had so far been reluctant to negotiate the wholesale MVNO arrangements, suggesting that they were putting up roadblocks to thwart competition.

The following month, it was announced that Vidéotron would purchase Freedom Mobile, which has wireless operations in British Columbia, Alberta and Ontario, in a transaction to facilitate the merger of Shaw Communications Inc. and Rogers Communications Inc.

The $2.85-billion Freedom acquisition is subject to approvals from Innovation, Science and Economic Development Canada and the Competition Bureau.

Maher Yaghi, a telecom analyst at Scotia Capital Inc., said the CRTC decision will please MVNO hopefuls such as Quebecor because the wireless sector regulator mandated that access to networks must feature “seamless hand-off functionality” to prevent dropped calls when users move in and out of coverage zones.

“Incumbents did not want seamless hand-offs and having it included going forward will make the MVNO service easier for consumers to appreciate,” he wrote in a note Wednesday evening, noting that a “hard handoff situation” was a problem for Freedom when it debuted and relied on network coverage supplemented by incumbents.

“We could see this decision marginally helping companies like Quebecor if they decide to need extra coverage from incumbents in certain areas without causing customers to know that the service is being provisioned by another provider,” Yaghi wrote.

While new entrants will need to have already deployed a home public mobile network and actively sell wireless services on a commercial basis to retail customers, they will not need to have minimum spectrum holdings to launch. The first item would potentially delay Cogeco Communications Inc.’s entry, analysts said, because the company doesn’t have commercial operations up and running.

Jerome Dubreuil, a telecom analyst at Desjardins Securities, said the CRTC’s terms and conditions could be positive for Quebecor, depending on ultimate pricing. But he does not expect a rapid launch of any MVNO operators.

This week’s decision represents a step towards establishing new competitors, the analyst said, but “the most important update” will be the rate negotiations between regional operators and incumbents.

“Indeed, as long as rates are unknown, it is impossible to assess the impact of the… regime on the Canadian wireless landscape,” Dubreuil wrote in a note to clients. “We do not expect MVNOs to launch this year.”

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