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Cogeco's move into the Canadian mobile market remains hazy

The precise timing of Cogeco's entry into the Canadian mobile market is still up in the air as the Canadian Radio-television and Telecommunications Commission (CRTC) works toward finalizing the terms and conditions for Cogeco to rent access to existing mobile networks while it builds out its own.

Cogeco intends to launch into the mobile market under a hybrid mobile virtual network operator (H-MVNO) model that would enable the operator to piggyback on incumbent mobile networks and, eventually, provide customers with access to a newly built mobile network powered by Cogeco's own licensed spectrum.

Cogeco has secured 38 spectrum licenses in the 3500MHz band at auction, and says it now has spectrum licenses covering about 91% of its broadband footprint in Quebec and Ontario, representing a population of 3.6 million Canadians.

Cogeco is sizing up its entry into the Canadian mobile market following a decision in April by the CRTC. That decision supports an H-MVNO framework by which regional players can rent access to the wireless networks of incumbents such as Rogers Communications, Bell Canada, Telus and SaskTel for a period of seven years while newcomers such as Cogeco build out their own mobile infrastructure.

But a few more puzzle pieces need to fall into place before Cogeco can move forward. It's not clear when that will all come together.

There's an open, public process underway where there's been some back and forth between the incumbent MNOs, Cogeco and others that are keen to enter the market. It will be up to the CRTC to finalize the terms and conditions.

"There is a multi-step process to enter the mobile market" in Canada, Cogeco CEO Philippe Jetté said Friday on the company's fiscal Q4 earnings call. "All of this framework is supposed to encourage competition and create a framework that is fair and reasonable. This is a very obvious step that we need to clear."

Jetté is not sure when all the hurdles will be passed, noting that it's unlikely that the CRTC process will be completed before the end of the winter, and that it could linger beyond that should the regulatory agency require more info from the incumbent players.

Once the CRTC finalizes its piece, Cogeco will then enter a commercial rate negotiation period with the MNOs.

"This will take time," Jetté warned. "It would be super-fast if we find the rates that we need to support a good business case." If not, there's a "backstop" in the form of an arbitration process with the CRTC, he said.

"This obviously will add even more time," possibly extending the timeline into the spring or summer of 2022, Jetté said. "It could be longer depending on the intensity of the negotiation, as well as the pushback that we're seeing from the incumbent MNOs right now."

Capital plans

Jetté offered a bit of color on how Cogeco expects to deploy capital for mobile. Early on, Cogeco expects to spend a "small portion" to put in place the pieces needed for service activations and billing for services that run on incumbent mobile networks.

The speed and pace of the buildout of Cogeco's own network will be targeted to where the operator is gaining the most traction in the market. "We're going to build the network as we find success," he said. "We are not going to aggressively build a network to start before we find success."

The seven-year element of the CRTC ruling does not represent a "cliff" whereby the network has to be fully built out. "We have to demonstrate to the CRTC that we are investing [and] we're not just leasing capacity," Jetté said, noting that the CRTC will monitor the investments and ensure that Cogeco and others are living up to their commitments.

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— Jeff Baumgartner, Senior Editor, Light Reading

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