Canada’s telecommunications body has ordered a small wireless startup to shut down its current services for allowing customers to improperly use a more established national carrier’s network.

Sugar Mobile, a Toronto-based discount mobile operator who relies primarily on Wi-Fi, has been using an agreement its northern Canadian sister company Ice Wireless has with Rogers Communications to provide cellular service to its subscribers. However, Sugar does not have its own cellular network and the Ice agreement with Rogers is for roaming purposes only, as the company operates solely in the three territories of Nunavut, Yukon and the Northwest Territories.

Sugar has been offering this network access to its subscribers across Canada, and the CRTC has ruled today that this cannot continue, saying that companies who do not own or operate a cellular network in a specific geographic region cannot allow their customers to “permanently roam” on the networks of bigger carriers.

“The commission denies an application by Ice Wireless Inc. for relief against Rogers Communications Canada Inc. on a final basis. Ice Wireless has improperly allowed the end-users of its mobile virtual network operator Sugar Mobile Inc. to obtain permanent, rather than incidental, access to [Rogers’] cellular network,” the CRTC says in its decision published on Mar. 1.

If Ice continues to let Sugar customers use the Rogers network, the CRTC says Rogers is allowed to cut ties with the company and “cease providing wholesale mobile wireless roaming service.”

In a statement given to ITBusiness.ca, Rogers said it is “pleased the CRTC made the right call. We believe in innovation and a fair, competitive market – this was about violating a roaming agreement, plain and simple.”

But the ruling comes as a surprise to Samer Bishay, president and CEO of Sugar Mobile.

“That’s shocking,” he told CBC News. “It’s a big blow. Not just for our company, but for Canadians who we all know pay some of the highest wireless phone rates in the world.”

In defense of its ruling, Canada’s regulatory body said that “in order to provide a stable business environment for wireless providers, the CRTC must ensure that the regulatory policies it establishes are implemented fairly in the market and that all parties abide by the rules.”

Ice launched Sugar in early 2016 and it has grown, largely due to its wireless plans offered for as little as $19 a month, to approximately 5,500 customers. As Sugar’s coverage is mostly based on Wi-Fi access, it uses Rogers’ network only when a cellular connection is necessary.

Interestingly enough, TNW Wireless, another small Canadian mobile carrier startup that relies heavily on Wi-Fi, announced this week that it is expanding its services to northern British Columbia and the Yukon. It will be offering its “iPSCS Smartphone-over-IP service” to subscribers, which TNW believes “is the technology that will permit Canadians to benefit from low cost mobile phone service, while at the same time being fully compliant with today’s ruling by the CRTC.”

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