Sugar Mobile not quite dead yet, as analysts dream of more wireless competition

Sugar Mobile, the small startup provider offering wireless plans for as little as $19 a month that was effectively given a death sentence by the CRTC, is not quite dead yet.

And the fact that it still exists even on life-support and as a shell of its former self should give hope to Canadians desperate for more competition in the country's wireless sector, according to industry analysts.

"We're operating in a handcuffed mode right now," said Sugar Mobile's president and CEO, Samer Bishay.

"But I believe we've kind of set the stage for what's coming next. And because we already have everything kind of ready to go, the minute we hear something positive, we're going to go full throttle again."

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Launched in early 2016, Sugar Mobile appeared to have found a back door into the Canadian mobile market, which has long been largely closed to new entrants that don't own their own cellular networks.

Sugar Mobile is owned by Ice Wireless, a small mobile network operator and telecommunications company based in Canada's North.

As the owner of a mobile network, Ice Wireless has reciprocal roaming agreements with the big Canadian telcos, whose customers roam on the Ice Wireless network in northern cities like Whitehorse, Yellowknifeand Inuvik.

Through its Sugar Mobile brand, Ice offered a Canada-wide, Wi-Fi-first mobile service, relying on those reciprocal agreements to offer its customers access to Rogers' 3G networks outside of Ice Wireless territory.

But Rogers filed a complaint with the CRTC, saying Sugar was essentially selling retail access to Rogers' network and arguing that was in violation of their roaming agreement.

The CRTC agreed, ordering Sugar off Rogers' network in March and all but shutting down the company.

"I think it was about 80 per cent or 90 per cent of our subscribers that had to get off." said Bishay. "It was painful, man."

Biding its time

The only reason Sugar didn't lose all of its subscribers was because the company struck a deal with Rogers to maintain Sugar's roaming access to Rogers' network but only if the original subscriber is based in Ice Wireless territory. (The three territories and northern Quebec.)

Since sales of Sugar SIMcards are now limited to those areas, new subscribers have slowed to a trickle.

It was a death knell.

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Because of his other businesses, including Ice, Bishay was able to hold off on burying the Sugar brand. He held out faint hope there would be some movement on the issue.

And earlier this month, Innovation Minister Navdeep Bains threw Sugar a lifeline, instructing the CRTC to reconsider the Sugar Mobile decision, saying Canadians deserve more affordable options.

"It came as a complete surprise. We didn't lobby for it." said Bishay. "That was a good boost for us, for sure."

Others cheer it on

It was also a boost for others interested in getting into the wireless business in Canada.

"There's no doubt that if we had access to the radio access network we think we could be in a position to assemble a pretty compelling service that would look a little bit different than what's out there in the market," said Bram Abramson, chief legal and regulatory officer for TekSavvy.

As a small internet and home phone provider, TekSavvy is able to lease access to the incumbents' wired broadband networks. But unlike in other countries, such as the U.K. and the U.S., smaller providers are not granted similar access when it comes to Canada's wireless or radio access networks.

Without that access,Abramson said new entrants are faced with the prohibitively pricey requirement of building their own wireless networks something two of the Big 3 telcos even determined was not economically viable, he says.

"We don't have three national carriers in terms of wireless networks. We have about two; Bell and Telus share a national network," Abramson said, noting they opted to avoid building over one another's infrastructure for the cost-savings.

"And if we want to see more wireless competition in this country at the end of the day, the answer is not going to be a third national radio access network in parallel."

Instead, it needs to follow a similar path to what's already been done in the wired segment, he said. "Some sort of negotiated or tariffed access at commercial or reasonable rates, so that you can build it into a service."

U.S. and U.K. have it why not us?

Such a system in the U.S. and the U.K. has led to greater competition and lower prices, said OpenMedia's David Christopher.

"[In the U.K.], you can pick up a plan with unlimited everything, including unlimited data, for the equivalent for about $35 [per month]," said Christopher. "That's a price Canadians can only dream about."

Sugar Mobile is a now a test case that could lead to some of those dreams being realized, he said.

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That's what Bishay is counting on.

While the majority of Sugar Mobile's subscribers lost their access to Rogers' 3G network, they are still provided with Wi-Fi access. And in an effort to maintain a relationship with that initial subscriber base, Bishay has offered those customers free Wi-Fi access for life.

"The minute we get a decision back [from the CRTC review], we have a database of, like, 30,000 to 40,000 customers or potential customers that we would just go right after and get them back on board."

The CRTC is expected to wrap up its review by March 2018.