Reaction to the federal government pledge to reduce cell plan prices over the next two years split along predictable lines. Consumer focused groups argued it was too little, while the national providers argued it was too harsh and would stifle innovation.
Minister of Innovation, Science and Industry Navdeep Bains gave the three national carriers – Bell Canada, Rogers Communications Canada and Telus Communications – two years to lower prices for mid-range cellphone networks by 25 per cent in a March 5 announcement. The release was accompanied by the publication of an annual cost comparison prepared for the Canadian government that showed average prices were up to 45 per cent higher from national providers than smaller regional networks, and that Canadian prices continued to be notably higher than other G7 nations and Australia.
Bains’ announcement was a “good step” but would not substantially lower rates already offered by regional providers such as Freedom Mobile, according to Open Media, an internet advocacy group that works to keep the Internet open, affordable and surveillance-free and had more than 18,000 members endorse its submission on wireless issue to the CRTC. “Unfortunately, a 25 per cent reduction of low and mid-level plans is a band-aid solution to a systematic problem; we lack real choices of providers and plans here in Canada,” said Laura Tribe, executive director. She added that more concrete intervention would be needed to expand the choice of plans and providers. “Our prices have been among the highest in the world for too long.”
In its response to the announcement, Quebec-based consumers group Union des consommateurs expressed general support for the initiative because it targeted markets that have previously been neglected. It noted that prices have decreased recently for the smallest and largest plans, but not in the middle tier, most popular with Canadians. It also noted that consumers in Quebec and Saskatchewan will not enjoy the full price reduction as prices are already below average in those provinces.
Unsurprisingly, response to the Bains announcement was negative from the national providers. A Telus statement published in the Financial Post noted that the price decreases were exclusively for national carriers, and called it “yet another punitive action taken by this government against the companies that have built Canada’s global-leading wireless networks – and which are being asked to invest billions of dollars to ensure Canadians can benefit from next generation 5G technology – and all in the name of solving a problem that numerous independent studies have repeatedly proven does not exist.”
A Bell statement in the same article also noted that it could hamper investments in an industry “that’s delivering tremendous value to consumers” as it prepares for 5G. It said that “policies discouraging investment, including regulating wireless pricing or continuing to deny fair access to spectrum for all competitors put jobs and innovation at risk.:
The Canadian Wireless Telecommunications Association told the CBC that prices are declining and have fallen further since carriers introduced unlimited data plans. “Our members will continue to compete to win the business of Canadian consumers and deliver what has been recognized by a recent U.S. independent study as the highest mobile value among the G7 nations plus Australia,” read a statement from the industry association.
The regional carriers largely avoided commenting on the price reductions for large carriers and instead focused on the simultaneous announcement that a portion of of the 3500 MHz spectrum auction crucial to 5G technologies would be reserved for small and regional telecom companies.
Brad Shaw, CEO of Shaw Communications which owns leading regional provider Freedom Mobile endorsed the spectrum allocation and said Bains announcement “reflects the success that Freedom Mobile and other regional providers have had in creating a truly effective wireless competition across Canada. He noted, however, that regional providers can only continue to provide cost-effective alternatives “if there is a predictable, stable and supportive regulatory environment.
In a e-mail statement to the Consumers Council of Canada, SaskTel said the price study illustrates the important role that regional providers play in delivering advanced services at competitive rates. The regional network also was pleased with the allocation of 50 MHz of spectrum for new entrants and regional carriers “to have an equitable chance at securing some of this critical spectrum.”