Canadian Wireless Service Providers Now Prohibited From Using Exclusivity Provisions In Wholesale Roaming Agreements

In a decision released July 31, 2014, the Canadian Radio-television and Telecommunications Commission (CRTC) concluded that certain provisions of wholesale roaming agreements between Rogers Communications Inc (Rogers) and regional wireless service providers were in contravention of section 27(2) of the Telecommunications Act. Wholesale roaming agreements are routinely negotiated between mobile wireless carriers; for example, between Canadian and US-based wireless carriers, or between Canadian wireless carriers with national network coverage and smaller regional Canadian wireless carriers with more limited network coverage. Such agreements allow one carrier to use another carrier’s network in order to continue providing their voice, data and/or text services to a customer even as that customer travels beyond their own network’s service area (i.e. it allows a customer to “roam” from their home network to another). The CRTC made two main findings. First, the CRTC found that Rogers had been inappropriately charging other Canadian carriers up to 10 times the roaming rates that they were charging US-based carriers. However, the CRTC declined to order a remedy on this issue, noting that a recently enacted amendment to the Telecommunications Act provides a new cap for all Canadian wireless carriers on the roaming rates they can now demand from another Canadian carrier (see new section 27.1 of the Telecommunications Act, given royal assent as part of Bill C-31 on June 19, 2014). The CRTC is now inquiring with national wireless service providers on how they are calculating their roaming caps based on the new legislation. Second, the CRTC found that the incorporation of exclusivity clauses into Rogers’ wholesale roaming agreements with smaller service providers was unjustly discriminatory and unduly preferential, as it prevented those carriers from later seeking more favourable terms from someone else. In a broad decree, the CRTC prohibited any Canadian wireless service provider from using exclusivity provisions in wholesale roaming agreements for service in Canada. All such clauses in current contracts are now inapplicable. In a news release, the CRTC cited the promotion of “fair and sustainable competition in wireless services for Canadians” as the underlying rationale for the new rule. A second CRTC proceeding that will examine the competitive state of the wholesale wireless services market more generally is scheduled to be heard on September 29, 2014. For news reports on the CRTC decision, see below: Globe & Mail CBC Summary by: Michael House and John Lucas