Canadians with mobile contracts with budget carriers like Wind Mobile and Mobilicity will no longer have to pay high roaming fees when travelling outside their coverage areas, thanks to a domestic roaming cap being enforced by Ottawa.
While it is sure to play well to the masses, it's yet another signal to foreign investors that Canada's wireless market is one in which the government is willing to move the goalposts for political gain, according to industry insiders.
In the coming weeks, the federal government plans to amend the Telecommunications Act and place caps on what telecoms can charge other carriers for roaming over their networks.
How the caps will affect Telus (TSX:T) – headquartered in Vancouver – is unclear, as the company is not commenting.
But industry insiders say the change will mainly affect Rogers Communications Inc. (TSX:RCI).
Telus and Bell (TSX:BCE) have a tower sharing arrangement, so their customers can roam throughout Canada without being charged domestic roaming fees.
It's mainly customers with small carriers who roam onto Rogers networks who pay the high domestic roaming fees.
"The roaming rates that Canada's largest wireless companies are charging other domestic providers can be more than 10 times what they charge their own customers," Industry Minister James Moore said in a prepared statement.
Smaller carriers like Wind and Mobilicity do not have national wireless networks. They tend to concentrate in larger urban areas, so they only build cell towers in those areas.
Canada's major telecoms, on the other hand, have spent billions building national wireless networks.
In an attempt to foster more competition in Canada's wireless space, Ottawa forced the major telecoms to allow new entrants like Wind and Mobilicity to piggyback on their networks, but did not regulate how much they could charge for domestic roaming.
Moore now plans to cap domestic roaming rates at the same level that the big telecoms charge their own customers.
"This morning's announcement is welcome news to long-suffering Canadian wireless users, who pay some of the highest prices in the industrialized world for what we all know is horrible and often disrespectful service," OpenMedia.ca executive director Steve Anderson said in a press release.
But Emir Aboulhosn, who built a new company – Roam Mobility – on the high roaming charges Canadians pay when travelling to the U.S., said the Harper government may be shooting itself in the foot by continuously changing the rules for telecoms in Canada – something telecom analyst Mark Goldberg has dubbed "Calvinball."
For years, Canada's wireless market was largely unregulated, and now it's being micro-managed to the point where it might scare off the very competition that the federal government says it wants to foster.
"The problem with the Conservative government today, they've managed to put the carriers in their sights, because they're picking up votes off of it," Aboulhosn said. "They're running a $9 million ad campaign to tell Canadians that they're being over-charged.
"The effect of it is that they're making Canada look like fools. If you want to force carriers to come into the country, dream on. You're scaring them away. What you're showing is the government is ready to step in and tell you how to run your business."
Although his own company was built on the high roaming fees Canadians are charged when travelling to the U.S., Aboulhosn has some sympathy for companies like Rogers, which are being ordered to share the infrastructure they spent billions building with companies that contributed nothing to the cost of those networks.
"I know this sounds crazy, but from my perspective, Rogers, they're the guys that invested billions of dollars," Aboulhosn said. "Ted Rogers put his company on the line dozens of times. They're protecting their turf."
