We pay too much for cell phone plans in Canada

Photo Credit: Paul Hanaoka from Unsplash

Photo Credit: Paul Hanaoka from Unsplash

It probably isn’t news to you that we have very expensive cell phone and internet bills here in Canada. But did you know they are some of the most expensive in the world?

According to a 2017 study by Nordicity, wherein they compared the cost of phone plans between Canada, Japan, Germany, Italy, France, the United Kingdom, the United States and Australia, Canadian prices were either the highest or second highest in every category that they measured.

But why is this the case? The main reason is because of the non-competitive nature of the Canadian telecommunications market. The major telecom companies, Bell, Rogers and Telus (who collectively cornered 91 per cent of the wireless service market in 2016 according to the CBC) have a chokehold on the market.

With their thug-like power, the ‘Big Three’ have all simply decided to maintain a non-competitive relationship with one another, wherein they all charge virtually the same ludicrous prices (so much for natural competition in the free market).

While their behaviour is inexcusable and all three companies should be broken up immediately (on the grounds of their mafia-like triopoly on the telecom market), there is one major culprit to blame for how this anti-consumer system has been set up: the government.

For starters, the government has refused to get into the telecom game themselves, despite there being precedent for it throughout the world and even in Canada. Many provincial governments, including Saskatchewan, Quebec and the Maritimes provinces, operate provincial telecom companies to increase competition and drive down prices in those provinces, which they have done to great effect.

The government ‘regulates’ telecom companies through the Competition Bureau and the Canadian Radio-television and Telecommunications Commission (CRTC). They are both largely ineffective at least when it comes to consumer rights, but are always eager to protect the ‘Big Three’.

While the government recently announced that they would be giving the ‘Big Three’ two years to cut their pricing by 25 per cent, this announcement is all bark and no bite when you get into it. For starters, the government made it clear that they would not levy fines on the ‘Big Three’ if they failed to make this reduction, removing the majority of the announcement’s teeth right from the start.

One of the major ‘punishments’ that they floated was forcing them to allow smaller providers to use ‘their’ cell towers (paid for largely with taxpayer money) to provide services at a cheaper price (THE HORROR!). These types of companies, that don’t actually own the networks that they are using to provide service to customers, are very common throughout the world and are proven to increase competition and lower costs for consumers. So given that they ‘want to decrease prices,’ why wouldn’t the government just force the ‘Big Three’ to let other companies use their networks in the first place?

Because they are in the pocket of the telecommunications companies, who are all notoriously greedy whiners when it comes to antitrust regulation and attempts to increase competition. For instance, last week in response to this announcement from the government, the CEO of Telus threatened to slash 5,000 Canadian jobs if they were forced to open the market and make phone plans more affordable (a move that ensured I will never do business with Telus again).

It is however a perfect example of why we need the government to step in and step up for Canadians against the Big Three. They don’t have our interests in mind, they don’t care about the well-being of Canada (which Telus made clear with that retaliatory announcement), so all that’s left is the government, who is (at least in theory) elected to represent us and fight for people, not corporations.

If they need some inspiration on how to properly go about this issue, look no further than Israel. In 2009, they had a similar ‘Big Three Triopoly’ who crushed their competitors and consumers in the process. But after a strong regulatory push in 2009-2010, prices were down 60 to 80 per cent by 2011 according to reporting done by The Tyee.

While there were a number of complicated reforms that they introduced that did the trick, some of them are rather simple that the government could introduce whenever they want. Some of the things they did include: separating your phone payment and your service plan, meaning that if you found a better deal for talk, text and data with another company, you could leave your service plan and start the new cheaper one, without facing any penalty.

They also favoured smaller companies in giving out new radio frequencies in auction, instead of simply selling to the highest bidder. This let smaller companies get into the market quickly without some of the major overhead expenses of buying up radio frequencies, which let them set prices lower. This saved consumers over $5 billion in five years according to The Tyee.

And last but not least, they opened the existing networks to smaller companies who didn’t own the cell tower infrastructure (sound familiar). As the numbers bear out, all three of these reforms together had a profound impact for Israeli consumers and guess what, the sky didn’t fall in the process (despite what Bell, Rogers and Telus might want you to believe).

While it’s clear that the government may be on the right track, a lot more will have to be done to fight the ‘Big Three’ and help Canadians before we will see any truly substantial savings.

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