Politicians looking to win favour with voters have taken aim at Canada’s telecom industry, but experts question whether the Liberal Party can make good on a vow to simply persuade companies to reduce Canadians’ cell phone and internet bills.
The Liberals pledged on the weekend to bring cell phone bills down by 25 per cent within four years if re-elected, for an average annual saving they pegged at $976.56 for a family of four. Many industry observers agree that Canadians pay too much for cellular and internet service, but are skeptical of the Liberal plan, which would involve working with telecom providers for the first two years and then taking additional measures to increase competition if prices don’t budge.
“It’s a bit of a fool’s errand to think that you can just encourage Big Telecom to lower their prices, when ultimately, they’re accountable to shareholders,” said Laura Tribe, executive director of OpenMedia, an organization advocating for widespread inexpensive internet access. “The 25-per-cent goal is far more achievable by introducing more competition than it is by trying to encourage the providers to lower rates."
Policymakers have long grappled with how to reduce internet and cell phone bills without hampering the investment needed to deliver these services to remote areas. With affordability a key theme in the campaign for the Oct. 21 federal election, the Liberals, New Democrats and Greens have all proposed measures to rein in costs, with the NDP vowing to cap cellphone and internet bills at the global average of OECD countries.
Robert Ghiz, president and chief executive officer of the Canadian Wireless Telecommunications Association (CWTA), which represents the telecom industry, called price caps “unrealistic” and “unworkable.” Mr. Ghiz, a former Liberal premier of Prince Edward Island, cautioned that investments in critical infrastructure would dwindle under such a policy. Ms. Tribe noted that capping prices would be complicated. One telecom company executive, to whom The Globe and Mail has granted confidentiality because he isn’t authorized to speak publicly about the matter, said the industry would likely take the government to court if price caps were introduced.
The Green Party has also promised to make affordable cellular service a priority and says its aim would be to encourage competition. The Conservatives have yet to announce a telecom policy.
The Liberals say they would work with companies to bring prices in line with those of other G7 countries and to offer an unlimited family plan. The party is also promising to force telecom providers to sell network access to mobile virtual network operators (MVNOs), an industry term for wireless resellers. If prices don’t come down after two years, the Liberals say they would further broaden the definition of who can be a wireless reseller, and instruct the Canadian Radio-television and Telecommunications Commission (CRTC) to make affordable pricing a “core objective.”
The CRTC will hold hearings in January on whether telecom providers should be required to sell network access to MVNOs.
“This is, in essence, the government jumping ahead on this," said Gregory Taylor, an assistant professor at the University of Calgary. “The CRTC is supposed to be making this call.”
Ms. Tribe noted that the arms-length regulatory body has already said its preliminary view is some level of access should be mandated for MVNOs. The Liberals are “promising things that are very likely to happen," she said.
Scotiabank analyst Jeff Fan said in a note to clients that such a move would undermine investments in made in recent years by competitors such as Shaw Communications Inc., Eastlink Inc. and Quebecor Inc.'s Videotron.
“These companies have made significant investments in spectrum licenses and network facilities, and mandating MVNOs would undermine their investment over the past decade,” Mr. Fan wrote.
The telecom industry group, meanwhile, said cell phone and internet rates have already fallen. A CRTC report last month found that mobile prices declined by an average of 28 per cent between 2016 and 2018.
The most significant drop was for services offering five gigabytes of data or more. For instance, the average monthly cost of a cellphone plan featuring unlimited calls and texts and five gigabytes of data fell by 35 per cent, from $78.36 in 2016 to $51.05 in 2018, the report said.
Although figures for 2019 are not available, the CWTA said prices have come down even further. Last July, Rogers Communications Inc. launched a new unlimited mobile data plan, and rivals offered counter-promotions.
“Most likely we’ve already seen even more of a decrease in 2019,” Mr. Ghiz said. Forcing providers to resell network access to MVNOs would hamper investment when Canada needs to prepare for 5G wireless technology, he added.
“This is far too important to the economic health of Canada to play politics with these investments."