Discount wireless startup Sugar Mobile could be crippled by dispute with Rogers

A new Canadian wireless provider that offers service for $19 a month could lose its ability to operate in Canada because of a dispute with Rogers.

Sugar Mobile'swireless service throughout Canada usesa combination ofWi-Fiand roaming cellular service from other carriers.

The ability to roam on Rogers's network is "essential to the service," allowing users to do basic things like make 911 calls when not connected toWi-Fi,says parent companyIce Wireless in a complaint filed Mondayto Canada's telecommunications regulator.

However, Rogers indicates it intends to terminate its roaming agreement with Ice Wireless, disconnecting both Ice Wireless and Sugar Mobile, Ice Wireless told theCanadian Radio-television and Telecommunications Commission (CRTC).

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If we don't get a ruling in our favour, we as a company can thenexpect that anybody can do this at anytime.- Samer Bashay, CEO ofSugar Mobile

Ice Wireless alleges the disconnection would violate a telecommunications regulation requiring national carriers like Rogers to allow wholesale partners like Ice Wireless to roam on their networks for a regulated fee. It's asking theCRTCto prevent Rogers from disconnecting both companies while it looks into the issue.

The CRTCagreed to that on Tuesday,saidSamerBishay, president and CEO of Sugar Mobile and Ice Wireless, in an interview with CBC News.

Ice Wireless has a roamingagreement with Rogers because it operates a cellular network in Canada's North. The agreement allows Ice Wireless customers to roam on the Rogers network when they're travelling in the south. In return, Rogers customers can use Ice Wireless's network when they're in the north. Sugar Mobile has been piggybacking on that agreement.

That's something a CRTC ruling last year specifically allowsfor, saidBishay.At the time of the ruling, he added, Rogers explicitly agreed.Now, he wants the CRTC to clarify that part of theruling, given that Rogers appears to interpret it differently.

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Rogers says roaming deal violated

Rogers alleges Sugar Mobile's use of its network is a violation of its roaming agreement with Ice Wireless.

"We value our relationship with Ice Wireless and hope these violations of our agreement will be resolved," said Aaron Lazarus, senior director of public affairs for Rogers, in an email to CBC News Wednesday.

He added"Rogers has never had an agreement of any kind with Sugar Mobile."

Ice Wireless suggeststhe real reason for the disconnection is that "Rogers clearly feels threatened by the innovation and competition represented by Sugar Mobile."

The company told the CRTC that being cut off by Rogerswould cause irreparable harm to both Ice Wireless and Sugar Mobile.

Sugar Mobile customers have no access to cellular service in some places. And while they theoretically could still roam on other networks like Bell or Telus, Bishay is worried that Rogers could be setting a precedent.

"If we don't get a ruling in our favour, we as a company can thenexpect that anybody can do this at anytime," Bishay said.

He added that the uncertainty would prevent Sugar Mobile from operatingin Canada, although it could still operate in the U.S. and Mexico, thanks to roaming agreements there.

"It would just be a shame that Canada would not be part of it."

The company would also suffer "irreparable reputational harm," it told the CRTC.That wouldn't just affect Sugar Mobile, but other companies, it says, as the problem would "likely prevent many Canadians from willing to try the service or other innovative mobile wireless services."

Meanwhile, if Ice Wireless is disconnected, the company says there could be"a massive loss of subscribers to other operators. In these circumstances, Ice Wireless would have difficulty sustaining itself as a viable business."

That, in turn, would reduce wireless competition in Canada's north, it says.

• Sugar Mobile could shake up cellphone oligopoly in Canada
• CRTCcaps roaming rates that Big 3 can charge small rivals