The Canadian Radio-television and Telecommunications Commission (CRTC) has introduced in 2021 a regulatory framework for Mobile Virtual Network Operators (MVNOs) in Canada, ostensibly aimed at fostering competition. However, while these regulations appear to address some issues, they also introduce significant challenges that may undermine their effectiveness and limit the potential benefits for consumers.
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Historically, Canada’s regulatory environment has been unfavorable to MVNOs. Full MVNOs were unable to obtain Mobile Network Codes (MNCs), and there was no mandate for incumbent operators like Bell, Telus, and Rogers to provide MVNO services. Furthermore, the policy restricted the technology to 2G networks, even though 4G/LTE was already widespread globally.
2021 MVNO Policy
The 2021 policy marked a turning point by requiring these incumbent operators to offer MVNO access across all network technologies, including 3G, 4G/LTE, and 5G, to regional wireless carriers. However, the policy effectively excludes third-party MVNOs that do not hold spectrum and are not already providing wireless services, limiting the entry of new competitors into the market.
To qualify for MVNO access, regional wireless carriers must hold a spectrum license at least at the Tier 4 level, register with the CRTC, and actively offer wireless services. The policy gives them a seven-year period to establish MVNO services and requires them to build their own infrastructure by the end of that timeframe. However, this requirement poses significant financial and operational challenges, potentially limiting the policy’s effectiveness in fostering long-term competition.
The financial aspect of MVNO services is also crucial. MVNO rates tie directly to wholesale roaming rates, and if companies cannot agree on these rates, they may apply to the CRTC for final offer arbitration. A notable example is the 2023 CRTC decision where the Commission selected Videotron’s proposed rates over Rogers’, highlighting the financial hurdles MVNO providers face in the Canadian market.
Concluding Thoughts
In summary, Canada’s MVNO regulations may seem like a step forward in promoting competition, but the challenges within the policy will limit its impact on the market. The exclusion of third-party MVNOs and the financial hurdles tied to building new infrastructure will restrict market entry and price competition. Regional wireless carriers will face tremendous financial and operational challenges in a landscape now dominated by four national carriers.