Canadians pay some of the highest prices in the industrialized world for cellphone plans, but a new report argues there are good reasons for it.
Published by the Montreal Economic Institute (MEI), a pro-free-market think-tank, the report takes aim at a 2017 wireless price-comparison study, commissioned by the federal government and completed by consulting firm Nordicity.
The annual study found that — once again — Canada’s cellphone rates rank among the highest out of eight countries surveyed.
MEI claims the study is “simplistic and misleading” because it ignores factors that can inflate prices, such as Canada’s geographical barriers and the investments that Canadian telcos have made to provide superior wireless services.
“We have some of the best networks in the world,” said MEI report author Martin Masse. “We’re paying for a Lexus, but it’s worth a Lexus.”
Canada also grapples with a small population spread out over a large region, Masse says, making it more expensive to develop and maintain wireless networks.
“Just think if you had 25 times more clients in an area served by a cell tower,” he said.
Australia offers cheaper plans
The Nordicity study compared wireless rates in Canada, the U.K., Germany, Italy, France, Japan, the U.S. and Australia.
Australia’s average monthly prices for cellphone plans were consistently cheaper than Canada’s — up to $37 less a month.
Yet according to data included in MEI’s own report, Australia has larger geographical challenges than Canada, invested more per capita on telecommunication services between 2005 and 2015 — and offers faster network connection speeds.
“The coverage was excellent,” said Tom Lockyer, of Brantford, Ont., who recently vacationed in Australia.
While Down Under, Lockyer said he scored a wireless deal offering 15 GB of data for one month for $20 — half the price of what he was paying at the time in Canada for a plan with just one GB.
“I don’t know why there’s not that competition here,” he said. “Canada’s paying some of the highest prices in the world and I can’t justify the reason.”
Masse said Australia’s prices have dropped in the past few years and it may be due to telcos investing in their networks, which eventually “paid off at some level.”
Critics weigh in
The annual price-comparison report has been commissioned since 2008 by the federal government or the CRTC, Canada’s telecom regulator. Nordicity says it has always used the same criteria, which excludes factors such as geography and telco investment.
The consulting firm said there’s no proof these features affect wireless prices.
“We haven’t seen anything yet to show that they make such a big difference, that prices will be higher or lower because of those factors,” said Tanveer Ahmed, a partner in the company.
As for the argument that Canada’s wireless services are comparable to driving a luxury car, like a Lexus, not every Canadian can afford — or even wants — Lexus-like services, says Laura Tribe, executive director of consumer advocacy group Open Media.
“Not everyone needs an elite product,” said Tribe. “We have expensive; we don’t have affordable.”
Masse says that’s not the case. His report also argues that the eight-country price-comparison study didn’t include Canada’s discount brands, such as Virgin Mobile, Fido and Koodo, owned by Bell, Rogers and Telus respectively.
The Nordicity study didn’t include smaller players from the other countries surveyed, either. If it did, Tribe argues Canadian wireless prices might appear even higher because of the numerous discount brands in the U.S. and Europe.
“In Canada, we have a handful and they’re marginally able to make an impact,” she said.
The MEI report also argues against continued government intervention in the wireless industry, claiming that the country has already shifted from a monopoly to a competitive market.
“Canada’s telecommunications industry has a regulation problem, not a pricing problem,” Masse wrote in the report.
The CRTC report found that Bell, Rogers and Telus collectively had 91 per cent of all wireless service revenues in 2016.
Tribe argues more intervention is needed to provide Canadians with more affordable wireless plans.
“Without any support from the CRTC and the government, it’s going to get worse.”