Canadians pay some of the highest prices in the world for their cell phone plans, forcing them to use less data than people in other countries. Meanwhile, Bell, Telus, and Rogers — the Big Three controlling 90 per cent of the country’s wireless market — accrue more profits from data than companies anywhere else in the world. The Liberals, NDP, and Greens are all promising to reduce our bills if they form government, but would any of their plans make much of a difference?
Trudeau is promising a 25 per cent over cut to our bills over four years by working with the Big Three and allowing the CRTC to step in if the companies don’t cooperate, which provides little confidence this won’t be yet another promise ignored. The NDP proposes a cap on cell phone bills that it says will save Canadians at least $10 per month, and mandating companies to offer a plan that meets basic needs as well as an affordable plan with unlimited data, while the Greens have only vague commitments to increase affordability and competition. But none of those policies challenge the source of Big Three’s power: their ownership of network infrastructure.
Under Stephen Harper, the Conservatives banned three-year contracts after a misguided attempt to woo Verizon to Canada as a fourth national carrier, but that meant higher upfront phone costs. Since Justin Trudeau’s Liberals formed government, the CRTC has forced carriers to offer low-cost data plans that have been as useless as “‘skinny basic’” TV packages and barred MVNOs from operating.
The decision not to allow MVNOs was very consequential. An MVNO, or mobile virtual network operator, is a wireless service that doesn’t have its own network. Instead, it buys wholesale data from network owners — in Canada’s case, the Big Three — to allow its users to permanently “roam” on those networks. They’ve played a major role in bringing down prices in other parts of the world.
Big Telecom’s excuses don’t add up
The telecom giants argue their high prices are necessary because Canada is a large country with a small population, but the same is also true of Australia, which has far lower prices.
If you touched down in Australia tomorrow, you could get 35 GB of rollover data, another 10 GB for streaming video, and unlimited call and text for just $30 AUD ($26.98 CAD) a month — even less if there’s a promotion — from one of the major operators. And that’s on a prepaid plan, which is an expensive hassle in Canada. A report released by the innovation minister showed a plan with 2 GB of data would cost an average of $75.44 CAD in Canada, but just $24.70 CAD in Australia.
So why are rates so much cheaper there even though Australia also has a small population, a large landmass, and three national operators?
The proliferation of MVNOs forced major operators to reduce their prices to remain competitive. Any party serious about reducing prices would legalize MVNOs immediately, and consider further measures to ensure the Big Three can’t reverse this measure in future.
Canada has two national telecom networks — one owned by Rogers and another owned by Bell and Telus — and that infrastructure gives the companies a lot of power. They frequently find ways around CRTC rulings (such as Rogers’ reintroduction of three-year terms through a financing option) and use their infrastructure as leverage. After a recent CRTC decision to lower wholesale broadband prices, Bell said it would cut 200,000 households from its rural expansion program, and Rogers may do something similar. Don’t forget the government has long subsidized the Big Three’s rural service buildouts.
Harper’s plan for a fourth major carrier was never going to work. Entering the Canadian market would require a huge capital investment into a new network, and the whole time the Big Three would be on the offensive, which they were with Verizon. But opening the telecom market to massive foreign conglomerates would also not be in Canada’s long-term interest.
A Crown corporation for telecom infrastructure
Network infrastructure is a natural monopoly — the cost of a new network is too high a barrier for effective competition.
Separating sales and service from ownership of infrastructure would end the Big Three’s ability to hold consumers hostage when the government makes decisions that threaten their world-leading profits. A Crown corporation could manage telecom infrastructure with a mandate to maintain it, upgrade it with the latest fibre and 5G technologies, and ensure rural communities are connected. It could set low wholesale rates just high enough to fulfill those responsibilities on a non-profit basis, selling access at equal rates to the Big Three, other existing companies, and new regional entrants to drive down prices.
Canada Post could even begin offering simple, low-cost, SIM-only plans (where you bring your own phone) at very low prices to ensure small communities can easily sign up while pushing down prices even more quickly.
A policy to pair the allowance of MVNOs with strict regulation of wholesale rates charged by the Big Three would reduce prices for consumers, just as they’ve done in Australia.
But the telecom giants will try to reverse any such decision any chance they get. The only way to stop that would be to take the infrastructure out of their hands and make it a public utility. It’s something any political party serious about bringing down prices and increasing options for Canadians should consider.