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New Cellular Options for Canada

Mobile Virtual Network Operators do not build their own networks. They buy wholesale capacity from a primary carrier and then resell it under their own brand name. Competition proponents love them, primary carriers hate them. Currently they are commonplace in the US but not legal in Canada. That may change as a result of current regulatory reviews—but will it mean lower prices, more choice and better service—or the reverse?

By Tony van Wouw

Tony van Wouw is an electrical engineer and wireless communications expert with global experience on microwave, broadcast cellular & other systems. His experience includes Canadian regulatory environment, wired transmission & switching techniques


Phone service used to be provided by a single company that owned the wires, the switches that connected calls and even the actual telephones. This model was efficient in its use of resources— and that should have made it a low cost solution.

However, providing rural service was expensive and Canadian policy required that city subscribers subsidize rural subscribers. Universal service was more important than low cost.

The advent of competition changed that model. Rather than laying lots of new cables the competitive model split service into layers with a wholesale rate established to allow new ‘Service Providers’ to buy capacity from the former monopoly operator and then re- sell that to their customer base.

The Cellular World

This service layer approach is basically the Mobile Virtual Network Operator model which has operated in the US market for some time now. Unlike with land-line phone service, Canada doesn’t (yet) license MVNOs. Many say that’s why our cellular costs are higher than those in the US.

Potential MVNO entrants see a business opportunity. They would buy channel capacity in service areas where they think that they can sell the service. Following the US model, they likely would not have roaming agreements to use other carriers where their own coverage is poor.

The Case For

Advocates point out that MVNOs provide low cost service so that low income people can more easily access the service. In the US they account for most pre-paid and limited use plans. The Cellular network carriers here operate their own budget brands to cater to this market and perhaps, to forestall the arrival of MVNOs.

The proposed Rogers/Shaw merger will reduce competition. The introduction of MVNOs might be a way for the CRTC to stimulate new competition in a virtually stagnant market.

While Telus is on record as being vehemently opposed to the concept, Rogers might see them as a bargaining chip to get the CRTC to sign off on the deal.

The Case Against

The big guys say that the core network was expensive to provide and they would need to charge well above cost so the profits can be re-invested in the network. Shareholders, of course, demand dividends and are used to the big guys making lots of money.

Telus has said that they would reduce their build-out of new coverage areas if MVNOs were to be permitted.

Good For Canada?

If you are a customer in the well-served part of the country then probably ‘yes’ as a way to get cheaper options. If you are a shareholder in one of the big guys then probably ‘no’. If you’re in a unserved or underserved area of the country, then certainly no.

If you’d like to comment on this article or explore these ideas further, contact me at .

This article was published in the June 2021 edition of The TMC Advisor
- ISSN 2369-663X Volume:8 Issue:3

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