What’s an MVNO? an OpenMedia FAQ
Questions and answers on how MVNOs would fix Canada’s broken telecom market
It's happened again - you, a friend or a loved one just got back from a trip outside Canada, and they're LIVID about how much great telecom service they could get for pennies on the dollar of what we pay every month here in Canada! But why is Canada like this - and would so-called "MVNOs" help us fix it? Below we answer these questions and more why are prices are so high, what MVNOs are, how they could help, and who we need to pressure to bring them to Canada NOW.
It’s a fact: people in Canada pay some of the highest prices in the world for our cell phone plans. We’ve written a whole other FAQ about why, but put simply: there’s not enough competition in our telecom market, and Bell, Telus and Rogers squeeze us dry as a direct result. That’s not just our ‘biased’ activist position; that’s also the conclusion our Competition Bureau reached when asked.
A mobile virtual network operator (MVNO) is an alternative cell phone provider that can offer differentiated, cheaper, fairer wireless service options compared to what you get today from Big Telecom. Rather than building another expensive layer of cell towers over what already exists in your area, MVNOs use existing national networks and focus their energy on building the rest of the infrastructure and service packages needed to deliver us a better overall service experience.
MVNOs are a globally proven, successful solution to Canada’s staggering lack of competition, choice, and affordability. But infrastructure owners like Bell, Telus and Rogers don’t welcome MVNO competition, and won’t sell access to the infrastructure they control at any reasonable rate unless they’re forced to. That’s why where MVNOs exist elsewhere, they’re mandated by local telecommunications regulators on what’s called a “cost+” basis - a regulator determined fair price for the MVNO to pay for access, which continues to provide a healthy profit to the infrastructure owner.
Lower prices, more choices, more service innovation, and durable competition are key advantages of an MVNO friendly system. It all comes down to good things that happen when it is easy to enter into the telecom market, leading to many more companies competing with each other for our business.
Right now, the Big 3 have very limited incentive to compete aggressively with each other. They know we have few options, and collect the rewards of a sluggish, uncompetitive market. With dozens to hundreds of competitors, the whole game changes. Prices fall naturally to reduce excessive profit margins, but that’s just the start. Companies are also pushed to deliver better customer service, more unique and diverse service plans, and find other innovative ways to attract our business to them specifically - not one of their many, many peers.
Best of all with a large number of competitors and easy market entry, competition-busting buyouts like Rogers’ buyout of Shaw or Bell’s buyout of MTS simply don’t work. If competitors are bought but prices remain excessively high, new competitors will be drawn in. The system maintains itself at a new, consumer friendly price and profit baseline, instead of the dismal, consumer-gouging status quo.
How much could MVNOs save me?
The key difference between MVNOs and regular carriers is that MVNOs have the ability AND the motivation to actually offer competitive rates to people in Canada. Their whole raison d’être is to attract YOUR business by offering lower rates – not just milking customers in the area covered by a given set of infrastructure.
How much cheaper are we talking? While direct comparisons are never perfect, MVNOs in other countries offer substantially lower rates than ordinary telecom companies– and MUCH lower rates than those ‘normal’ in Canada. MVNO customers in the US and Australia enjoy competitive wireless services from $20-30 a month - a far cry from the $70, $80, or $100+ many Big Three Canadian customers are stuck with today!
They’re a show. Each of these brands is a wholly owned subsidiary ‘flanker’ brand that Big Telecom uses to manufacture the appearance of choice and offer a few price-sensitive customers very slightly better deals. Despite this pageantry, people in Canada are overwhelmingly choosing between Bell, Rogers, and Telus, and small brands they own.
And here’s the thing: these companies don’t want you to have ‘too good’ an experience on their flanker brands. The system is set up to punish you with poor service and limited packages for trying to save a few dollars, and drive you up towards their parent companies exorbitant plans as much as they can.
Unlike the dealers and resellers who sell you flanker brand service, true MVNOs control of their own service infrastructure, and are STRONGLY incentivized to offer you a great service experience, however they choose to. That includes: plans; support and billing systems; data policies and how it all works. It’s no surprise that MVNOs operating in other countries are often selected as the service quality telecom of choice by customers in that country; imagine having a Canadian telecom company whose service you actually liked!
No. Canada is one of the only countries amongst our international peers that doesn’t fully allow MVNOs and never has. Despite the desperate need for competition in Canada’s telecom market, there are only two actual, independent MVNOs right now: dotmobile and 7-11 Speak Out.
Canada doesn’t have more independent MVNOs because Canada’s rules don’t let them operate here. In 2021, the CRTC issued a deeply disappointing decision that purported to allow MVNO access – but actually did so only in extremely narrow circumstances, designed to benefit Big Telecom first, NOT ordinary people.
There’s never been a telecom market free of heavy government decision-making and support; they heavily subsidized the rise to dominance of the Big three telecom companies, and they continue to subsidize them today through infrastructure buildout programs that are overwhelmingly awarded to Bell, Telus and Rogers. The question is not whether our government should intervene, but whether it will have the courage to intervene in a way that helps ordinary Canadians against the interests of these long-time collaborators of theirs.
What Canada needs is a healthy level of market competition - and that competition won’t exist in this sector without some ground rule setting by government. This is because any system with the enormous infrastructure investments and barriers to entry of telecom services will have a natural tendency to centralization and monopoly. Unless that tendency is somehow corrected, those markets will disproportionately benefit the small number of companies providing those services, rather than the customers that must use them to function in modern economies.
It might help– but not as quickly or straightforwardly as introducing MVNOs. If they’re forced to build their own infrastructure, it would take a lot of time and be a fairly risky business proposition for them - there’s no guarantee that they’d take the bait. And even if they did, they’d likely concentrate their early investments in the most populated parts of Canada - which does nothing to bring more competition to people in the parts of the country that have the least competition today.
Foreign market entrants might also try to buy one of the established Big 3 rather than build their own network themselves, and if the government allowed them to do it, Canadian consumers might not benefit at all. MVNOs are the best way of bringing widespread competition rapidly across Canada.
There’s two key players who could bring MVNOs to Canada tomorrow: the CRTC, and our federal government. Opportunities to nudge the CRTC come and go, but the Canadian government and Prime Minister Trudeau have the power to decide tomorrow to open our wireless market and allow MVNOs to operate fully in our country. What they need is a PUSH.
Big Telecom are relying on people not knowing or caring about MVNOs, so that they can continue to lobby the federal government to restrict us from accessing these cheaper options. No longer.
We need to take this opportunity to speak up LOUD to demand Ottawa fix these unfair rules that are holding us back from getting the affordable connectivity we deserve. If enough of us make our voices heard, they won’t be able to keep shoving their anti-consumer prohibition of MVNOs under the rug.
It’s never been a better time to apply pressure! Since January 2023 we have a new CRTC chair, Vicky Eatrides, who is trying to rebuild trust with Canadians and demonstrate she’ll do more for them than her predecessor. We also have federal parties looking at a probable election in 2024, and they’re searching for promises and commitments they can make to show voters they’re going to make our lives better. Bringing Canada full MVNO service is an easy choice that would do just that, dropping our prices and getting our sluggish market moving again. If you haven’t already, take action now!