Telecom Decision CRTC 2023-335

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Ottawa, 10 October 2023

Public record: 8622-V3-202300416

Final offer arbitration between Bell Mobility Inc. and Quebecor Media Inc. regarding wholesale mobile virtual network operator access rates


The Commission sets out its decision resulting from the final offer arbitration (FOA) proceeding initiated by Quebecor Media Inc. (QMI) regarding the establishment of wholesale mobile virtual network operator (MVNO) access rates between Bell Mobility Inc. (Bell Mobility) and QMI.

The Commission selects Bell Mobility’s offer and directs the parties to enter into an MVNO access agreement consistent with Bell Mobility’s offer so that QMI can expand its mobile wireless services to Canadians as quickly as possible. Offers were assessed based on whether they were just and reasonable and were evaluated on a number of public policy factors. Based on those factors, the Commission has selected the offer proposed by Bell Mobility since it best meets the evaluation criteria. Further, the Commission determines, as a finding of fact, that Bell Mobility’s offer is just and reasonable as per section 27 of the Telecommunications Act (the Act).

This decision helps to promote access to affordable telecommunications services for Canadians and to foster sustainable competition and continued investment, in accordance with the Act and the 2023 Policy Direction.

The Commission concludes that Bell Mobility’s offer will promote competition, affordability, and continued investment by both companies in their networks. The Commission is committed to providing as much transparency as possible on FOA processes to provide guidance to the industry, while maintaining confidentiality over information appropriately filed in confidence with the Commission.

In addition, as a final procedural matter, the Commission determines that it is excluding QMI’s 16 August 2023 submission from the record of this proceeding.


  1. On 22 June 2023, Quebecor Media Inc. (QMI) requested final offer arbitration (FOA) to establish wholesale mobile virtual network operator (MVNO) access rates between itself and Bell Mobility Inc. (Bell Mobility).
  2. On 13 July 2023, the Commission issued a conduct letter accepting the FOA request and setting out the scope and procedures of the FOA process and the following terms:
    • the length of time the rates to be determined will be in effect; and
    • what services those rates are for.
  3. On 4 August 2023, the parties filed their respective final offer submissions, in which they confirmed that they are seeking only a rate for data on a price-per-gigabyte (GB) basis.

Regulatory framework

  1. In Telecom Regulatory Policy 2021-130, the Commission directed Bell Mobility, Rogers Communications Canada Inc. (RCCI), Saskatchewan Telecommunications, and TELUS Communications Inc. to provide access to their networks to regional wireless carriers via an MVNO access service. The Commission indicated that carriers should negotiate rates for MVNO access among themselves and that, in the event such negotiations failed, the Commission could establish access rates through FOA.
  2. FOA is a dispute resolution method used for disputes that (i) are exclusively monetary in nature, (ii) involve only two parties, and (iii) otherwise meet the criteria set out in Broadcasting and Telecom Information Bulletin 2019-184. In Telecom Information Bulletin 2022-337, the Commission supplemented its guidance on FOA as it applies to MVNO access, setting out factors on which the Commission could rely in establishing MVNO access rates.
  3. As indicated in Telecom Regulatory Policy 2021-130, the objective of the MVNO access framework is to expedite competitive expansion by regional wireless carriers to provide Canadians with more choice. In accordance with this objective, the Commission opted for the use of FOA as a backstop to negotiation between carriers to produce decisions in a timely manner, as opposed to engaging in a lengthy Phase II process to establish cost-based rates for MVNO access. By design, the incentives built into the FOA process enable the Commission to rely more on high-level filings than would be typical of a full cost study. Since the Commission must select one of the offers put forth by the parties in its entirety or neither offer, parties are motivated to put forward offers containing the best possible rate.
  4. The Commission assesses rate offers with a view to achieving the strategic objectives of Telecom Regulatory Policy 2021-130. These include the objective of bringing new competitive choice into the retail mobile wireless service market (retail market), while also encouraging network expansion and sustainable, long-term competition. These strategic objectives build on the policy objectives set out in section 7 of the Telecommunications Act (the Act) and are reflected in Telecom Information Bulletin 2022-337. The Commission applies the policy objectives consistently across FOA decisions.
  5. The Commission, as arbitrator, assesses the final offers submitted by the parties with the objective of selecting an offer that would result in both a just and reasonable rate, as required by subsection 27(1) of the Act, and that would best advance the relevant policy objectives. The Commission cannot accept an offer that it does not consider just and reasonable. 
  6. As was the case in Telecom Decision 2023-217, the Commission will apply these criteria to determine which offer constitutes the best offer.
  7. While subsection 27(1) of the Act requires all Canadian carriers to charge rates for telecommunications services that are just and reasonable, sections 25, 32, and 47 of the Act grant the Commission a broad discretion to set rates for telecommunications services. The Act expressly allows the Commission to use any method it considers appropriate to evaluate whether a rate is just and reasonable.
  8. In addition, section 47 of the Act requires the Commission to make every decision with a view not only to ensuring that rates are just and reasonable, but also to ensuring that the decision furthers the policy objectives in section 7 and is in accordance with any direction provided by the Governor in Council under section 8, including the 2023 Policy Direction.Footnote 1 If both offers are considered just and reasonable, the Commission must determine which offer would best advance the relevant policy objectives in section 7 and the relevant objectives of the 2023 Policy Direction.
  9. As per subsection 27(3) of the Act, determining whether rates for telecommunications services are just and reasonable is a question of fact. Moreover, section 52 of the Act provides that the Commission’s determinations on questions of fact are binding and conclusive.

Bell Mobility’s offer

  1. Bell Mobility proposed as its final offer a data access rate per GB that, in its view, would enable QMI to compete and would provide Bell Mobility with a fairer compensation that is better aligned with comparable agreements than QMI’s offer. In this context, Bell Mobility submitted a confidential report that included a quantitative analysis of the impact of its proposed rate on QMI’s profitability under various assumptions. Bell Mobility also submitted an analysis of the costs to provide MVNO access service to QMI and a few agreements it argued are most comparable to the rate being determined in this FOA proceeding.
  2. Bell Mobility provided a cost range per GB for MVNO data access by reusing a past cost study updated with the latest financial parameters it filed with the Commission in December 2022. Bell Mobility submitted that the most just and reasonable rate would be the one that comes closest to the submitted cost range.
  3. Bell Mobility added that the submitted cost range was based on its average costs across its network, which understate the potential incremental costs of serving QMI. This is because, Bell Mobility claimed, QMI would disproportionately use the MVNO data access service to serve suburban and rural areas, where the costs to serve are higher than average,Footnote 2 since it already has an extensive network covering nearly all of Canada's large urban population centres. Bell Mobility argued that, as a result of the higher costs to serve suburban and rural areas, QMI would have little incentive to expand its network into suburban and rural areas if the Commission selects what Bell Mobility considers to be an artificially low rate proposed by QMI.
  4. Bell Mobility explained that it does not believe its own offer would provide it with fair compensation and that it made its offer reluctantly to limit the potential negative consequences if QMI’s offer were selected in this instance. In Bell Mobility’s view, accepting QMI’s offer would result in substantially reduced investments for network expansion or enhancement on the part of Bell Mobility. In this regard, Bell Mobility submitted that the temporary nature of MVNO agreements does not mitigate its underlying concern.
  5. QMI replied that Bell Mobility’s offer is unjust and unreasonable because it does not provide QMI with sufficient flexibility to continue to discipline the market by commercializing lower-priced plans, to react to incumbent carriers’ competing offers, and to generate cash flow for network investments, all amid a new market reality in which carriers are offering higher data allowances for the same or lower prices than before, resulting in declining retail revenues on a per-GB basis.
  6. On the issue of fair compensation, QMI argued that the Commission should take into account what QMI considers as the excess profit that Bell Mobility has garnered as a result of its market power over the past decades as well as from the allegedly inflated wholesale roaming rates in effect since 2015.
  7. With respect to comparable rates, Bell Mobility noted that it had entered into a commercially negotiated agreement with a regional wireless carrier to provide MVNO access, which provides for a higher price per GB than its present offer. Bell Mobility submitted that this agreement constitutes a determinative precedent, and that the further a proposed rate departs from this commercially negotiated rate, the less just and reasonable it will be.
  8. With respect to roaming agreements, Bell Mobility submitted that the ones which are relevant to this proceeding are those in which it is compensated predominantly through the agreed-upon rate, rather than through in-kind compensation. In this regard, the company put forth its one-way roaming agreement with one carrier, and permanent roaming agreements with two other carriers.
  9. Bell Mobility argued that the European wholesale roaming caps, which the Commission identified as a factor for consideration in Telecom Information Bulletin 2022-337, are irrelevant to this proceeding, given that (i) international roaming is reciprocal in nature, whereas MVNO access is unilateral; (ii) factors such as lower population density and higher spectrum costs mean that Canadian carriers incur considerably higher capital expenditures than European ones; and (iii) the caps are intended to support the European single market policy and not to foster facilities-based competition.

QMI’s offer

  1. QMI proposed as its final offer a data access rate per GB that it submitted would ensure its continued ability to discipline prices in the retail market, with a sufficient profit margin to fund its network investments. QMI added that its offer was in line with European data caps. In this context, QMI highlighted its ongoing efforts to foster affordability by launching several large data plans since May 2023, particularly its $39/20 GB, $45/30 GB, $50/40 GB, and $65/50 GB plans.
  2. To justify the reasonableness of its offer, QMI submitted that the profit margin on the sale of wireless services in MVNO access areas cannot be loss-making; otherwise, the possibility of successfully marketing a service offering based on MVNO access would be illusory. In this context, QMI submitted a sensitivity analysis that illustrates the profitability of various plans based on the rate per GB it must pay. The analysis included the costs QMI claimed it would incur to provide services to its subscribers and expected margins for different packages.
  3. In reply, Bell Mobility described QMI’s offer and justifications as an attempt to seek risk-free high margins without appropriate regard for Bell Mobility’s costs as a service provider. In this context, Bell Mobility submitted that the MVNO access framework set out in Telecom Regulatory Policy 2021-130 is not intended to guarantee the profits of regional wireless carriers.
  4. Bell Mobility added that an operator’s profitability and ability to compete should be assessed holistically by considering all of its rate plans and services, both as an MVNO and on its own network, rather than by looking at specific plans in isolation.
  5. With respect to comparable rates, QMI submitted that the offer chosen by the Commission in Telecom Decision 2023-217, as well as a recent off-tariff roaming agreement it has signed, are relevant to this proceeding. It submitted that in contrast to the tariffed wholesale roaming rates, the rate in the recent agreement does not include the 40% markup approved in Telecom Order 2018-99,Footnote 3 nor was it informed by outdated and inflated costing data from 2015.
  6. Further, QMI submitted that the European wholesale roaming caps are relevant for this proceeding, since they apply to both one- and two-way roaming agreements. QMI added that European carriers often agree on national MVNO data access rates that are below €1 per GB.

Comparison of offers

  1. As a preliminary matter, the Commission notes that it could not fully validate the costs submitted by Bell Mobility. The Commission identified and twice requested specific costing information from Bell Mobility for the purpose of assessing its costs as a service provider, which Bell Mobility declined to provide. Further, regarding the costing evidence that Bell Mobility did provide, the Commission notes that it was incomplete and that Bell Mobility did not include a sufficient explanation of its assumptions. Nevertheless, this deficiency was mitigated by the fact that the FOA process provides significant other means to assess the reasonableness of the proposed rates in addition to the costs of providing the service.

Advancing the relevant policy objectives in section 7 of the Act and the relevant objectives of the 2023 Policy Direction

  1. To determine which offer to select, the Commission must consider (i) which one would best advance the relevant policy objectives in section 7 of the Act and the relevant ovjectives in the 2023 Policy Direction, and (ii) whether the offers are just and reasonable.
  2. Based on the practices and procedures outlined in Telecom Information Bulletin 2022-337, and on the arguments raised by Bell Mobility and QMI, the Commission considers that certain sets of policy objectives from section 7 of the Act and key objectives from the 2023 Policy Direction are most relevant to evaluating the offers submitted.
  3. The first set of objectives relates to affordability of services:
    • the policy objective set out in paragraph 7(b) of the Act: to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada; and
    • paragraph 2(b) of the 2023 Policy Direction, which requires the Commission to consider the extent to which its decision would foster affordability and lower prices, particularly when telecommunications service providers exercise market power.
  4. Whether the proposed rates would allow for more affordable retail plans than those currently available and generally exert enhanced competitive pressures in the retail market is an important line of inquiry the Commission has applied in evaluating offers against these first two objectives.
  5. The second set of objectives relates to enhancing and fostering competition in the telecommunications sector:
    • the policy objective set out in paragraph 7(c) of the Act: to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications; and
    • paragraph 2(a) of the 2023 Policy Direction, which requires the Commission to consider the extent to which its decisions encourage all forms of competition and investment.
  6. The Commission has considered whether there is fair compensation for Bell Mobility, as a service provider, which maintains its ability and incentive to invest in its network and does not undermine its ability to compete. At the same time, the Commission has considered the impact of the rates on QMI’s ability to compete in the retail market, innovate, and develop its own network.
  7. Finally, the third objective is related to efficient regulation and fostering reliance on market forces:
    • the policy objective set out in paragraph 7(f) of the Act: to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.
  8. To evaluate this objective, the Commission has considered how the rates on offer compare to those in previous MVNO access agreements involving the wholesale MVNO access provider and the regional wireless carrier in question. The Commission also considered how the rates on offer compare to tariffed roaming rates and European wholesale roaming caps.

QMI’s ability to foster affordability

  1. It appears that QMI’s ongoing efforts to expand its market share nationally may already be having an impact on retail prices. Following QMI’s introduction beginning in May 2023 of several large data plans at lower prices than available previously, its competitors introduced similarly priced plans. These plans are now significantly cheaper than the plans from March 2023, the ones used in the analysis in the proceeding that led to Telecom Decision 2023-217. Accordingly, there are indications that there is already progress on the policy objective set out in paragraph 7(b) of the Act and the objective in paragraph 2(b) of the 2023 Policy Direction.
  2. Irrespective of these trends, based on QMI’s adjusted sensitivity analysis, in which it incorporated Bell Mobility’s proposed rate, the Commission considers that Bell Mobility’s offer would enable QMI to continue to advance affordability by at least maintaining its current prices. Therefore, the Commission is of the view that either offer would enable QMI to provide its current lower-priced mobile wireless service plans in new markets.

QMI’s ability to compete

  1. The Commission considers that, as argued by Bell Mobility, the MVNO access framework is not intended to guarantee a risk-free profit margin for QMI’s MVNO operations, and QMI’s ability to compete should not be assessed by looking at only the profitability of specific plans, but rather by looking at all of the wireless plans it offers.
  2. In its submission, QMI relied heavily upon the consideration of reasonable profit margins for its MVNO data plans resulting from its or Bell Mobility’s offer. However, the Commission considers that its role does not extend to guaranteeing profitable margins for each and every MVNO plan, particularly as QMI introduces larger data plans that are generally less profitable.    
  3. In any event, irrespective of the outcome of this proceeding, QMI has already been able to introduce new, lower-priced plans since the implementation of the MVNO access framework. While the Commission supports the introduction of lower-priced plans, in advancement of the relevant policy objectives, it also needs to consider the potential negative consequences on sustainability of competition and incentives to invest that could result from increasingly lower MVNO access rates.
  4. In light of the above, the Commission considers that both offers would at least maintain QMI’s demonstrated ability to compete.

Fair compensation for Bell Mobility

  1. In its offer, QMI argued that fair compensation for Bell Mobility should be considered in light of what QMI qualifies as the excess profit Bell Mobility generated as a result of its market power over many decades. QMI also pointed to the wholesale roaming rates Bell Mobility receives as evidence of this, which QMI alleged have been inflated since 2015.
  2. Although the Commission stated in Telecom Decision 2023-217 that it does not necessarily have to ensure that costs are recouped over the short term for a rate to be considered just and reasonable, fair compensation for the wholesale MVNO access provider is still an important consideration in evaluating offers, as outlined in Telecom Information Bulletin 2022-337. QMI’s analysis, which downplays the costs of the wholesale MVNO access provider on the basis of its dominant position, is inconsistent with the MVNO access framework and the policy objectives of the Act.
  3. QMI’s position regarding Bell Mobility’s alleged excess profits is not supported by the MVNO access framework, which is not intended to claw back any alleged excess profit that the incumbent may have had in the past.
  4. While the costing evidence submitted by Bell Mobility did not allow the Commission to quantitatively assess what fair compensation to Bell Mobility would be, based on the parties’ evidence and submissions, the Commission concludes that QMI’s offer would be unlikely to fairly compensate Bell Mobility, and that Bell Mobility’s offer would likely provide it with fairer compensation.

Both parties’ incentives to invest

  1. Bell Mobility alleged that QMI’s offer, as compared to its own offer, would have a significantly greater impact on its incentives to invest in its network, which would be disproportionately felt in suburban and rural areas. However, the Commission considers that Bell Mobility did not prove its allegation, given that it did not provide the Commission with all of the information needed to fully validate its submitted costs.
  2. In any event, the Commission considers that the agreement being contemplated in this decision would have a negligible impact when compared to Bell Mobility’s overall wireless operations, whether in terms of the estimated data footprint or revenues accrued resulting from QMI’s MVNO operations. Accordingly, the Commission considers that either offer would maintain Bell Mobility’s incentives to invest, especially when considering its overall wireless operations.
  3. Nevertheless, the Commission considers that Bell Mobility has raised a valid concern regarding the long-term impact of artificially low wholesale rates on the policy objective of fostering network investments, which is particularly relevant in suburban and rural areas. While lower retail prices backed by lower wholesale rates are desirable, as discussed earlier, these different interests must be balanced with the wholesale MVNO access provider’s incentives for continued network investment. Accordingly, the Commission is of the view that Bell Mobility’s offer best strikes the balance of maintaining both parties’ incentives to invest.
  4. With respect to QMI’s incentives to invest, QMI submitted that, while MVNO access rates would facilitate its investments, its incentives to invest are driven primarily by the MVNO access framework and its limited duration. Accordingly, the Commission is of the view that Bell Mobility’s offer would not likely have a significant impact on QMI’s incentives to invest, particularly when considering QMI’s wireless operations at large.
  5. As such, the Commission considers that Bell Mobility’s offer will maintain the incentives to invest for both parties, and will better advance this objective than QMI’s offer.

Comparable rates

  1. With regard to comparable MVNO agreements, the Commission considers the limited number of agreements to date to be of minimal probative value in evaluating Bell Mobility’s and QMI’s offers.
  2. The Commission has two MVNO access agreements on the record of this proceeding, including the one between RCCI and QMI at issue in Telecom Decision 2023-217, and a commercially negotiated agreement between Bell Mobility and a regional wireless carrier. Given that the rates selected in the course of FOA proceedings are not commercially negotiated, the RCCI-QMI agreement cannot be relied upon to establish fair market value.
  3. Regarding the commercially negotiated agreement, the Commission notes that the rate it contains is closer to Bell Mobility’s offer than to QMI’s. However, while it provides some guidance, one commercially negotiated agreement is insufficient to establish a fair market value.
  4. With respect to domestic roaming agreements, the Commission is of the view that Bell Mobility’s agreements are not similar enough to the two present offers to be given much weight in evaluating them. QMI’s agreement with the other regional wireless carrier is, likewise, not directly comparable to an MVNO access agreement.
  5. Regarding the European wholesale roaming caps that QMI submitted as relevant, the Commission considers that these have very limited comparative value given the different contexts in which European and Canadian carriers operate, resulting in different cost structures.
  6. Considering the relative lack of market information at this time, the Commission will put more weight on other factors than on the comparable rates filed during this FOA process.

Commission determination on a just and reasonable offer

  1. As per the Act, the Commission may only approve rates for telecommunications services that are just and reasonable. Havingevaluated the offers, the Commission determines, as a finding of fact, that Bell Mobility’s offer is just and reasonable, based on the reasons above.

Conclusion on the FOA process

  1. In this decision, the Commission determines the rates for the MVNO data access service that Bell Mobility will provide QMI over a pre-determined agreement period. The Commission considers that this decision is consistent with the relevant policy objectives set out in section 7 of the Act and is in accordance with the 2023 Policy Direction.
  2. The Commission has assessed the offers and the evidence submitted by the parties in the context of this structured FOA process with a view to determining which offer would best promote competition, affordability, consumer interests, and innovation. The Commission has considered which of the offers presented would best serve to encourage all forms of competition and investment and to foster affordability and lower prices for retail mobile wireless services. For the reasons above, the Commission finds that Bell Mobility’s offer is just and reasonable and would best serve to promote those objectives.    
  3. The Commission therefore selects Bell Mobility’s offer and directs the parties to enter into an MVNO access agreement consistent with Bell Mobility’s offer so that QMI can expand its competitive mobile wireless services to Canadians as quickly as possible.

Procedural matters

QMI’s 16 August 2023 submission

  1. In addition to the substantive issue, the Commission notes that several procedural matters arose throughout this proceeding.
  2. On 16 August 2023, following the 14 August 2023 close of record date, QMI filed comments on Bell Mobility’s reply comments to QMI’s offer and responses to Commission staff requests for information.
  3. On 17 August 2023, Bell Mobility filed a response to QMI’s comments, requesting that Commission reject the “out of process” submission or allow a two-week extension to allow parties to further comment on each other’s replies.
  4. The Commission considers that in addition to being filed after the deadline, QMI’s submission contained information that was unnecessary for the Commission’s determination in this proceeding, since it relates to very specific technical information regarding seamless handoff capacity between Bell Mobility’s and QMI’s networks.
  5. Accordingly, the Commission excludes QMI’s 16 August 2023 submission from the record of this proceeding. The information in that submission, as well as Bell Mobility’s 17 August 2023 reply, were not considered as part of the FOA decision.

Note on procedural fairness, information designated as confidential, and the FOA process

  1. Over the course of the proceeding, Bell Mobility, in particular, expressed its view that the FOA process is flawed and that Bell Mobility’s position had been prejudiced. The Commission acknowledges the parties’ points of view and wishes to clarify the use of confidential information in FOA proceedings.
  2. The Commission is responsible for its own processes and for ensuring its procedures are fair to the parties before it. The Commission can rely on evidence obtained outside of a given FOA process and, in such cases, it intends to inform parties in a timely manner. In the course of this proceeding, the Commission relied on certain costing information from the RCCI-QMI FOA to inform itself in the evaluation of offers. This is because much of the information contained in that proceeding was submitted on the record of the present proceeding, thereby giving parties appropriate notice that the Commission may consider that information.
  3. With respect to confidential information filed in final offer submissions, the Commission notes that the nature of the FOA process does not require that the parties have perfect information to respond to competing offers. Rather, FOA is a rate-setting exercise designed to produce a binding rate in an efficient manner. The Commission conducts FOA for MVNO access services with a view to issuing a decision in a short time frame based on the offers parties have put forward, taking into consideration whether the offers are just and reasonable and which offer would best advance the applicable policy objectives in section 7 of the Act and the objectives in the 2023 Policy Direction.
  4. Parties’ final offers will almost invariably contain commercially sensitive information that is designated as confidential. As such, the opportunity to reply to the other party’s final offer will almost always result in replies being based on incomplete information. This does not necessarily prejudice any given party’s reply, especially considering that each party has the same recourse to the confidentiality regime under the Act and that each party has the same understanding of the timelines and process surrounding FOA.
  5. Given that the FOA process follows strict timelines, often there will not be enough time to challenge confidentiality designations prior to the strict reply deadline. Absent any evidence of bad faith on the part of the parties in their application of confidentiality designations, the Commission is of the view that any prejudice accruing to either party would be minimal, if any, given the fast nature of the process and considering that the Commission itself would have access to all confidential information on the record.

Secretary General

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