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CRTC outlines rules for virtual wireless companies — but they’ll still need their own networks

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The CRTC has published new rules governing cellular networks known as Mobile Virtual Network Operators, or MVNOs — rules the telecom regulator says it hopes will provide greater competition in the wireless market.

True MVNOs are cellular networks that have no infrastructure or spectrum of their own, but simply resell wholesale access to incumbent networks to consumers, typically for much cheaper.

Mint Mobile, owned by Canadian actor and entrepreneur Ryan Reynolds, is an example of a U.S. MVNO, which sells unlimited data, talk and texting plans within the U.S. for $30 a month. The company has no cellphone towers or spectrum rights of its own, but simply buys “space” on other companies’ cellular networks and resells access to it to consumers.

Last year, Canada’s telecom regulator established a policy to set ground rules for MVNOs wishing to operate in Canada. Under those new rules, a company like Mint still can’t operate in Canada because the CRTC requires any MVNO to have its own network somewhere in Canada, in order to piggyback on existing networks in the rest of the country.

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Specifically, they must already have their own spectrum license, and plan to build a network in the region they want to piggyback in within seven years. If they can meet that bar, they qualify — but the only companies that meet it are existing ones.

On Wednesday, the regulator released more ground rules for any quasi-MVNOs wishing to set up shop. The telecom regulator didn’t change any of the basic framework it established in 2021, but did provide some more detail on what it wants to see happen now.

The major incumbents “must now begin accepting requests for access to their networks and enter negotiations with regional wireless providers to agree on wholesale MVNO rates,” the CRTC says.

The regulator says those negotiations will help ensure that qualified MVNOs have access to 5G networks where applicable, and that calls on their networks are not dropped as customers travel between coverage zones.

The regulator also says it has denied several provisions that would have made MVNOs more restrictive or difficult to use by regional players, and says it will block any move that would restrict regional providers from reselling their wholesale access to other MVNOs.

“We are one step closer to implementing our policy that will enable regional providers to offer wireless services in areas where competition is limited,” CRTC chair Ian Scott said in a press release. “This will help provide more affordable options to millions of Canadians while increasing competition. We expect the large providers to negotiate in good faith and come to an agreement as quickly as possible with regional wireless providers.”

 

Consumer advocate and wireless bill expert Mohammed Halabi helps explain why Canadian internet and cellphone bills are so high — and what consumers can do to negotiate lower prices.

Consumer advocacy group OpenMedia says the regulator is doubling down on a policy that was a mistake in the first place.

“They have just been 100 per cent committed to the facilities-based or or physical infrastructure-based competition model, which simply hasn’t served Canada,” said campaigns director Matt Hatfield. “We’ve been trying it for over a decade and it doesn’t actually happen.”

The new rules make it look like the door has been opened to MVNOs but “in practice it actually locks out those kind of competitors from almost every circumstance,” he said.

Anthony Lacavera, who co-founded Wind Mobile, which launced in 2009, says a major problem with Canada’s telecom landscape is that there are no purely wireless companies. Incumbents like Bell and Rogers started in landline telephones and cable, respectively, before moving into wireless.

“We’re the only OECD country that doesn’t just have a wireless-only competitor,” he told CBC News. “That’s why prices are higher in Canada, that’s why the customer service experience is so much worse and that’s why the networks are not as reliable as in other OECD countries, full stop.”

He doesn’t think MVNOs are the answer because good wireless networks require investment, but ultimately he thinks the issue is a distraction to the real problem anyway.

“The ability to enable resellers is really truly just shuffling deck chairs on the Titanic — we’ve got to focus on the big problem,” he said. “If we really want lower prices, we got to fix it structurally.”

Consumers feeling squeezed

Cellphone user Karima-Catherine Goundiam is among those who thinks the current system needs fixing. A technology entrepreneur, she travels abroad extensively for work, and says she’s always shocked by what’s available in terms of deals for cell service compared to what she’s used to in Canada.

She’s not particularly familiar with the new rules for MVNOs but, based on her experience, is skeptical that they will help much.

That’s because in general, Canada’s wireless market “creates an apathy on the part of the customer who just … basically throw their hands in the air and say ‘whatever’ because you know all of them are the same,” she said.

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‘More than disappointing’: Air Canada to stop direct flights to Calgary from Regina, Saskatoon

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Saskatchewan residents looking to fly direct to Alberta’s largest city will soon have one less airline with which to do so.

CBC News has confirmed that Air Canada will be cancelling direct flights from the Saskatoon and Regina airports to Calgary in mid-January.

“It is a bit disappointing for the airport and the community,” said C.J. Dushinski, the Saskatoon Airport Authority’s vice president of business development and service quality.

“It certainly limits the amount of options available for travellers that are looking to get to Calgary or looking to travel beyond the connect.”

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Dushinski and Justin Reves, the Regina airport’s manager of customer experience and marketing, told CBC News that Air Canada informed their respective airports that direct service to Calgary will end Jan. 16.

The Saskatoon airport authority hopes the airline will add additional seats to other hubs, such as Toronto and Vancouver, and that WestJet will add seats or service to Calgary, Dushinski said.

The Regina airport has contacted other airlines, including WestJet, about potential service, Reves said.

“Calgary is a huge market for the city of Regina,” he said.

“A lot of people, friends, family, business connections [are] there, and it’s primarily going to be disappointing for Air Canada customers who are used to being able to fly that route.”

Air Canada only offered one direct flight per day from Regina to Calgary, he added, in comparison with West Jet, which currently runs several flights daily.

Focus on rebuilding main hubs of Toronto, Vancouver and Montreal, Air Canada says

People flying out of Saskatoon and Regina will continue to see flights to and from Toronto and Vancouver, an Air Canada spokesperson told CBC News.

Saskatchewan residents will still be able to fly to Calgary, but only via other destinations, such as Vancouver.

Public health guidelines aimed to stymie the potential spread of COVID-19 affected all travel. Airports and airlines hemorrhaged money as a result of lower passenger traffic.

Air Canada has made changes to various routes to and from Calgary as it rebuilds from the impact of the pandemic, which means examining the network and where it would be most productive to deploy resources, the spokesperson said.

The airline has decided to focus on rebuilding its main hubs: Toronto, Vancouver and Montreal, they said.

The announcement is a savvy business move, said Karl Moore, an associate professor with McGill University’s faculty of management in Montreal. He has previously consulted for Air Canada, among other companies.

Air Canada is looking at load levels — how many people fill certain flights and how much they pay — to see which flights are unprofitable, or which routes or hubs could be more profitable, Moore explained.

“They spend a lot of time thinking about that and that’s what good business people do,” Moore said, noting that WestJet made a similar move by cutting service on the east coast.

In an open letter to Air Canada, Economic Development Regina also expressed their concern and disappointment about the airline’s move to cancel direct flights from Saskatchewan to Calgary.

The suspension of these routes triples the travel time between Saskatchewan’s capital and Calgary, said Chris Lane, president and CEO of Economic Development Regina.

His organization is asking Air Canada to reconsider their decision and to commit to an expansion of their service to Regina, while looking at the city’s role when it comes to supplying “sustainable food and fertilizer” to the world, said Lane.

“As one of Canada’s fastest growing economies and population areas, the need for connectivity and the opportunity it presents for airlines is as necessary as it is mutually beneficial,” he said in the letter.

“[Regina’s] population will grow by almost 10 per cent in the next five years. Calgary’s numbers are similar and so are Saskatoon’s. That the flag carrier airline of Canada would choose to suspend direct connectivity between these regions at this time is more than disappointing; it is ill-considered.”

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Theranos exec Sunny Balwani sentenced to 13 years in prison for defrauding patients and investors

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The former COO of disgraced blood testing startup Theranos, Ramesh “Sunny” Balwani was sentenced to 155 months, or about 13 years, in prison, and three years of probation. After a three-month trial, Balwani was found guilty on all 12 criminal charges, ranging from defrauding patients and investors to conspiring to commit fraud. Theranos CEO Elizabeth Holmes was convicted on four of these charges and was sentenced to 11.25 years in prison last month.

Despite the disparate outcomes from the two separate juries in two individual trials, Judge Ed Davila calculated Holmes’ and Balwani’s sentencing ranges to be exactly the same: 135 to 168 months, or 11.25 to 14 years. In both cases, prosecutor Jeff Schenk countered by asking for 15 years.

Balwani’s lawyers attempted to argue that he should get a more lenient sentence than Holmes, as he was not CEO.

“He’s not Ms. Holmes. He did not pursue fame and fortune,” said Balwani’s attorney Jeffrey Coopersmith.

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Judge Davila even noted that the court saw another side of Balwani when they were told about his charitable giving, some of which occurred after Theranos. Yet Balwani still received a severe sentence of 13 years.

Holmes and Balwani were supposed to be tried for fraud together, but the former CEO filed for a separate trial, stating that Balwani, who is 20 years her senior, had emotionally and sexually abused her during their long romantic relationship. Though the court was not ruling on those allegations, the judge granted the request.

Throughout the trial, Balwani’s lawyers attempted to make the case that even though he was an investor and executive at Theranos, he was not involved in key decision-making. The defense failed to argue for his innocence, though. In one piece of evidence, the jury was presented a text from Balwani to Holmes that read, “I am responsible for everything at Theranos.”

Balwani’s trial featured the same evidence that indicted Holmes. The prosecution focused on a key piece of evidence relating to Theranos’ relationship with Walgreens. The biotech startup’s faulty technology made its way into 41 Walgreens stores, but unbeknownst to the pharmacy giant, most of the tests were conducted on third-party equipment. Theranos’ own machines couldn’t produce accurate test results, so a lot of patients had blood drawn not with a finger prick but intravenously. So, Walgreens basically spent $140 million in its partnership with Theranos, only for the startup to use the same old tech that was already in use.

Despite claims to the contrary, a Walgreens executive testified that he worked closely with Balwani on the deal. The prosecution also displayed evidence of a text from Balwani to Holmes stating that he deliberately didn’t tell Walgreens that they were using different machines.

For patients that were unlucky enough to have their blood tested with Theranos’ technology, some got wildly inaccurate results that caused significant disruption to their lives. In one case, a mother with a history of miscarriages was wrongly informed that she would have another unsuccessful pregnancy. Another patient, Erin Tompkins, used Theranos for its low costs, got flagged as HIV-positive, and then lived in limbo for three months until she could afford a second blood test. As it turned out, she didn’t actually have HIV. Meanwhile, a patient named Mehrl Ellsworth was given a false cancer diagnosis.

Unlike the jury at Holmes’ trial, the jury at Balwani’s trial held him accountable for defrauding patients, not just investors.

Before the former COO’s sentencing hearing, Balwani’s lawyers filed 40 objections to the probation office’s pre-sentence investigation report, according to tweets from Law 360 reporter Dorothy Atkins, who was present at the hearing. Judge Davila, who also presided over Holmes’ trial, said that only four of those objections were substantive.

“Usually sentencing hearings are morbid regardless of the crime — like watching a car crash where you watch families and lives being destroyed in real time,” Atkins tweeted from the court room. “This one feels more like an accounting class.”

It would certainly not be unprecedented if Balwani decides to appeal this ruling. After Holmes’ own sentencing, the former Theranos CEO told a California federal judge that she would appeal her conviction. She then asked to stay out of custody while her appeal is under consideration, also citing that she is currently pregnant with her second child. As it stands, Holmes’ surrender date is April 27, while Balwani will report to prison on March 15.

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Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

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The Bank of Canada today increased its target for the overnight rate to 4¼%, with the Bank Rate at 4½% and the deposit rate at 4¼%. The Bank is also continuing its policy of quantitative tightening.

Inflation around the world remains high and broadly based. Global economic growth is slowing, although it is proving more resilient than was expected at the time of the October Monetary Policy Report (MPR). In the United States, the economy is weakening but consumption continues to be solid and the labour market remains overheated. The gradual easing of global supply bottlenecks continues, although further progress could be disrupted by geopolitical events.

In Canada, GDP growth in the third quarter was stronger than expected, and the economy continued to operate in excess demand. Canada’s labour market remains tight, with unemployment near historic lows. While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand: consumption moderated in the third quarter, and housing market activity continues to decline. Overall, the data since the October MPR support the Bank’s outlook that growth will essentially stall through the end of this year and the first half of next year.

CPI inflation remained at 6.9% in October, with many of the goods and services Canadians regularly buy showing large price increases. Measures of core inflation remain around 5%. Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum. However, inflation is still too high and short-term inflation expectations remain elevated. The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched.

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Looking ahead, Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target. Governing Council continues to assess how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding. Quantitative tightening is complementing increases in the policy rate. We are resolute in our commitment to achieving the 2% inflation target and restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is January 25, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

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