When asked how BCE plans to respond to the government’s request, spokesperson Marc Choma said, 'We’ve clearly shown we’re delivering great value in wireless with high-quality networks, new service options and ongoing declines in pricing, and you can expect that to continue.'Ryan Remiorz/The Canadian Press
Ottawa’s plan to reduce cellphone bills – by asking the three national carriers to drop the prices of their mid-tier plans by a quarter – are unlikely to result in real savings, analysts and consumer advocates say.
On Thursday, Ottawa said it will take regulatory action if Canada’s three national carriers – BCE Inc., Rogers Communications Inc. and Telus Corp. – don’t drop the prices of their unlimited talk-and-text plans offering two gigabytes, four gigabytes and six gigabytes of data by 25 per cent each over two years.
But consumer advocates say that the carriers will likely find other loopholes, for instance by removing device subsidies or increasing other fees, while analysts say that the companies could challenge the request legally or simply choose not to comply.
“Any attempt to regulate prices, unless it is done so heavy-handedly that every element of the pricing scheme is actually mandated, gives so much wiggle room that there’s always a loophole that those companies can find – and we know that they will find it," said Laura Tribe, executive director of OpenMedia, an organization advocating for widespread inexpensive internet access.
For instance, the government’s plan doesn’t specify whether the plans have to be made permanent, Ms. Tribe said. That means the carriers could simply offer them for a short period, to satisfy the demands of Innovation, Science and Economic Development Canada, and then remove them from the market, she said.
She pointed to the move by the Canadian Radio-television and Telecommunications Commission (CRTC) to mandate $25 basic TV plans, referred to as “skinny basic” packages, in 2016. After the plans were introduced, consumers wound up paying as much as $7 for each individual stand-alone channel they wanted to add on.
“Any time that there is one element that is regulated, everything else that is not suddenly becomes a free-for-all,” Ms. Tribe told The Globe and Mail. “Just because those plans need to be available doesn’t mean they’ll be visible on their sites.”
Analysts, meanwhile, outlined a number of ways the companies may respond, from scaling back investments in their networks, to cutting employees, to reducing phone subsidies so that customers ultimately end up paying more for their devices.
The Big Three “will likely push back through legal means, but eventually changes in business plans will be needed,” Desjardins analyst Maher Yaghi said in a note to clients.
RBC Dominion Securities analyst Drew McReynolds noted the government’s initiative is not legally binding or enforceable, given that the CRTC, a regulator that operates at arm’s length from the government, is responsible for creating and enforcing wireless regulation.
And TD Securities analyst Vince Valentini outlined a number of possible outcomes, including the telecom companies simply deciding not to comply with the request and waiting to see what consequences arise in two years’ time. Alternatively, a newly elected government could choose not to pursue the price reductions, Mr. Valentini said in a note.
Representatives for the telecom companies pointed to a government study published Thursday that shows wireless prices declined last year compared with 2018.
“We operate in a highly competitive market that continues to deliver more affordability and value, and we always evolve our services to meet the needs of Canadians," Sarah Schmidt, a spokesperson for Rogers, said in an e-mail.
When asked how BCE plans to respond to the government’s request, spokesperson Marc Choma said, “We’ve clearly shown we’re delivering great value in wireless with high-quality networks, new service options and ongoing declines in pricing, and you can expect that to continue."
The office of the Minister of Innovation, Science and Industry reiterated its pledge to reduce the cost of wireless services.
“We will hold the three big national carriers accountable," spokesperson Véronique Simard said in an e-mail. “We established a clear benchmark and will be reporting quarterly, so that Canadians can see where prices are going for themselves. If better options are not offered in the next two years, we will take additional action with other regulatory tools to further increase competition in the marketplace.”
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Alexandra Posadzki