Why is wireless telephony more expensive in Canada than elsewhere?

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Why is wireless telephony more expensive in Canada than elsewhere?

No matter which calculation methods are used, there are costs more for a cellular plan in Canada than elsewhere in the world, on average.

A survey by the show Marketplace, CBC, on the costs of telecommunications services in Canada revealed that the excuses often used by the industry to justify higher prices than elsewhere – expensive operating margins and a population scattered over a vast territory, for example – are not enough to explain the more affordable plans offered not only in other countries but also in some Canadian provinces.

Rewheel, an independent telecommunications research firm based in Finland, publishes studies on mobile data costs in 50 different countries twice a year.

The most recent version of this survey, released in May of last year, again ranked Canada among the countries with the least affordable plans.

Per gigabyte of data, it costs 7 times more in Canada than in Australia, 25 times more than in Ireland and France and 1000 times more than in Finland, according to this analysis .

Canada was not one of the most expensive countries [in terms of mobile telephony] when I started taking my measurements, about 10 years, says Antonios Drossos, one of the managers and researchers at Rewheel. According to him, although prices are falling in Canada, this decline is much slower than in most other countries.

And the cost of a gigabyte of data isn't the only way to compare wireless phone affordability in various countries. Several experts, both in Canada and abroad, have measured the cost of mobile data usage using various methods and with multiple datasets, but it doesn't matter which tools are used: Canada is almost always the country where this service is the most expensive.

In fact, in its 2021 analysis of wireless phone services, the Canadian Radio-television and Telecommunications Commission (CRTC) pointed out that the only study that did not rank Canada as the country with the most expensive – study provided to the regulatory agency by Telus, a large Canadian provider – was at fault because it artificially lowered the average price by excluding several packages.

The federal government tried to tackle these high prices in 2020 when then-Innovation Minister Navdeep Bains demanded that companies cut by at least 25 % the cost of their data-efficient plans, otherwise they would face tougher regulations. According to the ministry, suppliers have indeed met this target.

Critics argue, however, that Ottawa must do more if the state wants the government to industry stop imposing heavy bills on Canadians.

The only thing that makes economic sense when there are three players who each own about a third of the market is to keep prices the same or even try to raise them, argues Drossos. /p>

“When a new vendor comes into the market, they start from scratch and want to occupy 15 to 20 % of the market, it must do something to attract customers. »

— Antonios Drossos, manager at Rewheel

Also according to Mr. Drossos, prices have fallen in several markets around the world with the arrival of a single company that offers greatly reduced costs, which comes to shake the columns of the temple.

Federal Minister of Innovation, Science and Industry Francois-Philippe Champagne, who is ultimately responsible for overseeing the CRTC and the telecommunications industry, did not would not give an interview to Marketplace but said in a statement that his department is committed to doing everything possible to make life more affordable for Canadians.< /p>

When it comes to the state of competition in Canada, most consumers have more than one option when it comes to picking a vendor and maybe even picking a brand. at low price. However, many of these marks are actually owned by Rogers, Bell, or Telus.

In fact, Marketplace has found that in provinces where there is another good-sized regional competitor not owned by Rogers, Telus, or Bell (or not recently purchased), the prices offered by the Big 3 are lower.

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The websites of the big three providers in Saskatchewan and Manitoba show discounts of at least $10 compared to the same plans offered in Ontario or British Columbia. This could be because in Saskatchewan, Sasktel, a Crown corporation, is a strong competitor.

In Manitoba, MTS was up Recently another competitor that was helping to drive down prices. Bell acquired it in 2017.

In Quebec, where Videotron is a major player in the market, the websites of the big three providers also offer more options, including more affordable plans with less data.

When Bell purchased MTS in 2017, an in-depth Competition Bureau review of the deal found that cellular plan prices in Saskatchewan, Thunder Bay, Ontario, Quebec and in Manitoba – all places where there is strong regional competition – were much lower than elsewhere in the country, where coordinated moves between Bell, Telus and Rogers are driving prices up.

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For Pierre Larouche, professor at the Faculty of Law of the University of Montreal and specialist in competition law, the very high prices in Canada can be explained very simply: the competition is not enough to bring prices down, he says.

It's a conclusion that is well known, he said on the air from RDI.

However, beyond this market largely occupied by the big players, who each have their stable of more affordable brands, this question of package costs mainly revolves around; a business philosophy, believes Mr. Larouche.

What do we want to do with the operators? In Canada, there is still this vision [according to which] there is a lot of [profit] margin to be made with a telecommunications service. In Europe and the United States, we have abandoned that, mentions the professor.

We consider that these are consumer services with relatively low margins.

The solution, according to this specialist, would be to promote the arrival of a new major player who would have his own network. This strategy is already working: in Quebec, says Professor Larouche, the arrival of Videotron has reduced the price of packages by about 20%.

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Bell, Telus and Rogers don't x27;didn't want to give an on-camera interview for Marketplacewhen this current affairs program asked them to comment on pricing policies as well as their competitive tactics.

Rogers noted, however, that prices have been declining over the past six years. Both this provider and Bell have invited to turn to the Canadian Wireless Telecommunications Association (CWTA) for comment.

In a statement provided to CBC, ACTS argues that it simply costs more to operate wireless networks in Canada compared to most other countries, noting that the relatively low density of population in Canada made it difficult to recover its costs.

However, the industry does not go it alone when it comes to paying for telecommunications infrastructure: taxes federal and provincial taxpayers are also involved.

Since 2015, Ottawa has invested $7.6 billion to develop this infrastructure, while the provinces have also added billions. In Ontario alone, Queen's Park spent $4 billion during this period to build the networks to connect remote areas to the Internet in places where private companies do not invest to do so.

Meanwhile, the profit margin of the industry is larger in Canada than in other countries.

There are certain factors that justify in a certain sense higher prices in Canada, argues Ben Klass, a researcher with the Canadian Media Concentration Project and a doctoral candidate at Carleton University. However, for him, companies here go too far.

“In countries that have a similar population density, for example the Scandinavian nations and in particular Australia, even if the economic conditions are similar there, they offer a cheaper service or with much more data.

— Ben Klass, researcher with the Canadian Media Concentration Project

Also according to Mr. Klass, the Australian government has taken steps to ensure that the market to be more competitive, including allowing foreign-owned companies to enter the market.

While [these countries] do not directly regulate the price of cellular plans, I believe that they have adopted measures which ensure that the market remains more dynamic than it is. x27;is here, he said.

This researcher believes that Canada is at a turning point and that the government must renew its commitment to promote competition within the industry or to adopt drastic legislative changes to control companies that tend more towards monopoly.

One ​​of the next big issues in competition and affordability is the planned merger between Rogers and Shaw. Under the terms of the agreement, the latter would transfer its cellular provider Freedom Mobile to Videotron.

The Competition Bureau, however, appealed the green light granted by the Competition Tribunal.

In Mr. Klass' eyes, even if the Competition Bureau runs the risk of losing its fight to block the merger, it is possible to hope that this whole affair will influence the consultation on the future of competition policy which was launched last November by Minister Champagne.

I hope that from the wrong court ruling we will get relatively progressive reform of the system as a whole, says Mr. Klass.

With information from CBC News

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