Canada Has a Cell Service Problem. It's Time to Fix It.
Updated: Mar 29, 2021
Opinion by Lindsey Keene
The cellphone has become a staple for billions of people around the world. With the COVID-19 pandemic moving work, school, and play to the digital world, cell service has become a necessity. Nearly 75 percent of Canadians have a cell phone plan and many of us can’t fathom a world without the device [1]. What we also can’t fathom are the staggering prices we pay for those plans.
Wireless usage reports over the years have found time and time again that Canadians are paying far more for their wireless rates than cell users in other countries. Even though plan prices have been slowly declining since 2016 [2], the most recent price comparisons from Wall Communications Inc. in 2019 show Canada’s wireless service prices are still far above those of the U.S., Australia, the U.K., France, Italy, and Germany [3]. A two-gigabyte plan with talk and text in Canada will run you $52.07 more than it would in Australia and $14.92 more than the U.S [4]. So, why are Canadians paying so much more than cellphone users in comparable countries?
There is another reason we pay so much. Actually, there are three big reasons: Rogers, Bell, and Telus — a.k.a. Canada’s cellular oligopoly.
Canadian telecoms are quick to draw our attention to population density. The first defense of high bills is the upkeep of providing coast-to-coast-to-coast coverage, where Canadian bills reflect coverage in such a large country [5]. Canadian telecoms also defend their high prices by citing their constant commitment to improving already-exemplary technology with investments in faster coverage such as 5G which is expected to cost $40 billion over the next six years [6].
However, these arguments do not encompass the full problem — especially when some of them aren’t entirely fair. For example, Australia, with a comparable land mass to Canada, charges a fraction for the same plans that Canada does [7]. There is another reason we pay so much. Actually, there are three big reasons: Rogers, Bell, and Telus — a.k.a. Canada’s cellular oligopoly.
In 2019, the Canadian Radio-television and Telecommunications Commission (CRTC) reported that Rogers, Bell, and Telus — the “Big 3” — control 90.7 percent of the telecom market [8]. This small number of sellers taking up such a huge portion of the market is what creates an oligopoly; with such comfortable control over the cellular market, they have little reason to lower the price of your phone plan. If you think that your provider isn’t one of the Big 3, you’re in for a surprise. You’re likely with one of their “flanker” brands: Koodo or Public Mobile for Telus, Virgin Mobile or Lucky Mobile for Bell, and Fido or Chatr for Rogers [9]. The idea of choice in Canada cellular is more or less a façade; the majority of Canadian cell brands all funnel back to the Big 3.
The combination of oligopolistic competition and cell phones becoming an essential item means that Rogers, Bell, and Telus can charge just about as much as they want for their plans — more likely than not, you’re going to buy them. The best way to solve this market power problem, according to the Competition Bureau of Canada, is to open the cellular market for further competition [10]. The Bureau found that in provinces where non-Big 3 options exist, plan prices could be as much as 50 percent lower than those in non competitive provinces. Take Saskatchewan for example, where a $90 Koodo or Fido plan in Ontario was only $48 in 2016. When strong competition is introduced, the Big 3 have no choice but to lower their price to stay viable — after all, if one provider is offering a plan for $40, why would you want the exact same plan for double the price?
Although the introduction of Freedom Mobile has Canadians hoping for better competition, more meaningful competition would mean passing through the industry’s very strong barriers to entry. Networks in Canada are proprietary, and the Big 3 each have their own. Brands that “rent” the networks of another company are known as Mobile Virtual Network Operators (MVNOs), and the only MVNOs that can currently use the networks of the Big 3 are their flankers [11]. This means smaller services must host their own networks to operate, an expensive undertaking that many can’t afford. Smaller service providers have lobbied the CRTC to allow the Big 3’s networks to be rented to MVNOs, and the Big 3 have vehemently fought against it [12].
Around the same time that the Big 3 were protesting MVNO network access, Navdeep Bains, Minister of Innovation, Science and Industry, announced that the Big 3 had two years to cut their prices by 25 percent or face the consequences of government regulation and increased competition [13]. This 25 percent cut, a 2019 Liberal re-election campaign promise [14], is additional to the gradual price decline beginning in 2016. The threat of competition might just be enough to force the price drop, which the Liberals estimate would save an average family of four almost $1000 a year [15]. However, even if price changes are implemented as planned, the government and the CRTC should not rule out heightened competition. The Canadian cellular oligopoly still holds an immense amount of market power, making decisions in corporate self-interest while hoping the government won’t punish them too harshly. Not only has the 21st century normalized digital connections, the COVID-19 pandemic has turned wireless access into a necessity. It is crucial that we prevent the Big 3 from taking advantage of it, because Canadians should no longer be paying luxury prices for an essential service.
S. O’Dea, “Number of Mobile/Wireless Subscribers Canada 2010-2019” (Statista, September 28, 2020), https://www.statista.com/statistics/460060/total-number-of-mobile-subscribers-canada/.
Canadian Radio-television and Telecommunications Commission, “2019 Communications Monitoring Report” (Ottawa: Government of Canada, December 2019), https://crtc.gc.ca/pubs/cmr2019-en.pdf, 60.
Wall Communications Inc., “Price Comparisons of Wireline, Wireless and Internet Services in Canada and with Foreign Jurisdictions” (Ottawa: Innovation, Science and Economic Development Canada, November 7, 2019), https://www.ic.gc.ca/eic/site/693.nsf/vwapj/2019_Pricing_Study_Report_EN.pdf/$FILE/2019_Pricing_Study _Report_EN.pdf, 8.
Ibid; all prices measured in PPP adjusted for Canadian dollars.
Martin Masse, “The State of Competition in Canada’s Telecommunications Industry” (Montreal: Montreal Economic Institute, May 2018), https://www.iedm.org/sites/default/files/web/pub_files/cahier0118_en.pdf, 5.
Sam Fenwick and Hardik Khatri, “The State of Mobile Network Experience 2020: One Year into the 5G Era” (Opensignal, May 2020), https://www.opensignal.com/sites/opensignal-com/files/data/reports/pdf only/data-2020-05/state_of_mobile_experience_may_2020_opensignal_3_0.pdf, 2; Accenture, “Fuel for Innovation: Canada’s Path in the Race to 5G” (Toronto: Accenture, 2018), https://www.5gcc.ca/wp-content/uploads/2018/06/CWTA-Accenture-Whitepaper-5G-Economic Impact_Updates_WEB_06-19-2018.pdf, 2.
Wall Communications Inc., “Price Comparisons of Wireline, Wireless and Internet Services in Canada and with Foreign Jurisdictions” (Ottawa: Innovation, Science and Economic Development Canada, November 7, 2019), https://www.ic.gc.ca/eic/site/693.nsf/vwapj/2019_Pricing_Study_Report_EN.pdf/$FILE/2019_Pricing_Study _Report_EN.pdf, 8.
Canadian Radio-television and Telecommunications Commission, “2019 Communications Monitoring Report”, 303.
Ibid, 304.
Competition Bureau Canada, “Telecom Notice of Consultation CRTC 2019-57 - Final Comments of the Competition Bureau” (Ottawa: Competition Bureau Canada, July 15, 2020), https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04540.html.
Cansumer, “All 32 Cell Phone Companies in Canada” (Cansumer, September 22, 2020), https://cansumer.ca/cell-phone-companies-canada/.
Aisha Malik, “Big Three Reiterate Stance against Mandated MVNO Access in Final Submissions to CRTC,” Mobilesyrup, July 16, 2020, https://mobilesyrup.com/2020/07/16/big-three-reiterate-stance against-mandated-mvno-access/.
Amanda Connolly, “Canada’s Big 3 Telecom Firms Will Get 2 Years to Cut Rates by 25 per Cent,” Global News, March 5, 2020, https://globalnews.ca/news/6634639/big-3-cellphone-price-drop-5g-auction/.
Liberal Party of Canada,“Cell Phone Bills,” 2019, accessed November 29, 2020, https://liberal.ca/our platform/cell-phone-bills/.
Terry Pedwell, “Promised 25% Wireless Rate Cut Is on Top of Recent Reductions: Bains,” BNN Bloomberg, January 14, 2020, https://www.bnnbloomberg.ca/promised-25-wireless-rate-cut-is-on-top-of recent-reductions-bains-1.1373910.