Canada has some of the highest smartphone costs in the world. It is also in the middle of a federal election campaign in which the parties are going hard on the issue of affordability. Put the two together, and you’ve got a bunch of promises being made to lower our phone bills.
This makes for some nice campaign sound bites, but so far the solutions on offer are about as convincing as one of those spam robo-calls telling you to drop everything and call now, because you’re the lucky winner of a free night in a hotel somewhere.
The Liberals say they’ll cut smartphone costs by 25 per cent, which sounds great. Their method sounds less great: The party would “work with telecom companies” to reduce rates. That assumes Canada’s telecom giants will play ball.
Bell, Rogers and others are currently fighting in court against a Canadian Radio-television and Telecommunications Commission (CRTC) decision designed to make internet bills more affordable. Bell said it would cut back on rural internet investments in response; Rogers is considering doing the same thing.
This is the milieu in which the Liberals suggest gentle persuasion will produce big savings for Canadians.
If asking nicely doesn’t pan out after two years, the Liberals say they would get tough and use “the government’s regulatory powers” to expand competition by further opening the door to “mobile virtual network operators” – resellers that rely on the big providers to carry their calls. This is the same strategy the CRTC is pushing for the internet and that the big telecom players are fighting in court.
The NDP, meanwhile, is proposing a cap on prices, one that would limit what Canadians pay to a global average. Capping prices is a major market intervention, with government setting prices and terms of service.
The Greens, as with the Liberals, look to additional competition. They would amend CRTC regulations to improve the competitive landscape, but don’t offer details.
The Conservatives haven’t announced their plans but have been critical of the Liberals’ record on smartphone costs while in government.
The push to more aggressively open competition seems like the first step, rather than, as the Liberals suggest, one to consider in two years. Canada’s big three wireless companies, Bell, Rogers and Telus, control 90 per cent of the market. Research from Tefficient, a Swedish consultancy, shows Canadian wireless companies make the most money per gigabyte of data compared with operators in three dozen countries.
Meanwhile, the promises of lower bills come as the wireless market already faces upheaval. The Liberal government earlier this year issued a new directive to the CRTC to reframe the regulator’s approach on issues it rules on, with a greater focus on competition and affordability.
The CRTC is also in the midst of a review of the wireless market that happens every five years. The regulator is looking at “whether further action is required to improve choice and affordability for Canadians.”
Public hearings are set for mid-January. The CRTC has said that parts of the wireless market “are not, in fact, sufficiently competitive,” and that a key focus will be the rules around mobile virtual network operators. Large companies could be required to provide more wholesale network space to resellers, a reasonable step and one that would jibe with the rules for internet providers.
The big three believe there is ample competition right now. They point to a CRTC report from August that suggests rates are falling.
The report said the average monthly cost for a package of unlimited talk minutes, texts and five gigabytes of data in 2018 was $51, down 27 per cent from $70 in 2017.
But that figure doesn’t reflect what consumers are seeing. A survey of the websites of Bell, Telus and Rogers shows the package the CRTC said can be had for $51 goes for between $70 and $90 a month.
These prices underline the need to take on the high cost of wireless service in Canada. The technology is an indispensable part of working in the modern economy, but the answer to how to spur competition isn’t simple.
The debate is at least heading in the right direction. Vague promises of lower bills on the campaign trail speak to the problem. But the real action on deciding the shape of Canada’s wireless market likely will happen at regulatory hearings early in the new year – not exactly a sexy campaign promise.