Changes are starting to happen in the Canadian Cellular market! The Canadian Radio-television and Telecommunications Commission (CRTC) recently held public hearings to discuss the prices that Canadians are paying for cellular service.
CTRC Chairperson Ian Scott said, “The vast majority of surveyed Canadians were of the view that prices for their cellphone service are not as competitive in Canada as they are in other countries, with 66 percent stating that Canada’s cellphone prices are worse than elsewhere in the world,”
The hearings focused on 3 primary areas – Pricing, MVNOs (I’ll explain later) and 5G roll out.
Starting with pricing. Cellular plans have been coming down in price – between 2016 and 2018 rates decreased by an average of 28%, however there are still concerns that these rate drops still aren’t competitive when compared to other global cellular networks.
This last week, following the hearings, the Trudeau government announced plans to reduce the cost of mid-range wireless services by 25% and further increasing competition.
Minister of Innovation, Science and Industry (ISED), Navedeep Bains released details of a 2019 Price Comparison Study which showed that mid-range plans haven’t dropped in price. However, it also showed that smaller, regional providers offered plans that were up to 45% lower than those offered by the big three national carriers (Bell, Rogers and Telus).
Comparing Canada to Australia, the chart shows the difference in price ($CDN):
Level 1 (Talk & Text)
Level 2 (1GB data)
Level 3 (2GB data)
Level 4 (5GB data)
Level 5 (10-49GB data)
Quite a difference!
Bains announced that the big three national carriers are expected to reduce pricing by 25% over the next two years for plans with 2GB to 6GB of data.
“Canada is at an exciting turning point in the future of connectivity. Wireless services are no longer a luxury. They are a critical necessity—for working, for learning at school and for engaging in modern society. We heard Canadians when they asked for more affordable options for their wireless services, and we have delivered,” said Bains in a statement.
I do wonder how relevant 2GB – 6GB data plans will be in 2 years-time though? With the advent of 5G, 6GB of data could be used up very quickly! It’s odd that the government should choose this range to focus on. Bains’ reasoning for this was “we need to do more, especially in the mid-tier plans, we haven’t seen a significant price decline. The low-end and high-end plans are coming down, but we haven’t seen that with the mid-range plans.” Only time will tell what range of plans we have in 2 years!
Speaking of 5G, Bains also announced plans for 3500MHz spectrum auction which is key to 5G. They will reserve 50MHz for small and regional players “ensuring they are on a more equal footing with the three big national carriers.”
I mentioned that the CTRC hearing were also looking into MVNOs. MVNOs stand for Mobile Virtual Network Operators. These are companies who do not have their own cellular networks but instead buy wholesale access from Bell, Rogers or Telus. For example, PC Mobile is Loblaws cellular network which is actually run on Bell’s network.
The CRTC is looking at enforcing mandated access to networks for MVNOs, but this has the big three very worried. For example, Telus announced that if a mandate is approved, they will cut $1 billion in investments, remove 5,000 jobs and reduce its philanthropic giving over the next five years.
This is a crucial point in the cellular industry for Canada. The big three are investing heavily in new 5G technologies, but at the same time are coming under a lot of pressure to reduce pricing and increase competition! Can we really have our cake and eat it too.