Every month, Canadians are jarred out of their daily routines by the hefty cellphone bill that has just arrived in the mail. Questions flash through their minds: How on earth did I spend so much on my phone? Did I really talk to my relatives in Florida for that long? Did I leave the data on during my weekend shopping trip? We always seem to be able to cobble together an excuse, however insubstantial, to postpone the issue for another month. But along comes the next month’s bill and lo and behold, we are back in the same vicious cycle.
The “Great Telecom Jaw Drop,” as it should perhaps be known, is an altogether Canadian phenomenon. Among developed countries, Canadians pay some of the highest phone rates across all types of plans . Not only are plans up to 60% more expensive in Canada than the US, but the variety of plans is also severely limited. Consider the unlimited talk, text and data plans that have recently taken the United States by storm. In the US, these plans cost around $50 per month and can be used nearly anywhere in North America. The Canadian version of these plans, on the other hand, can only be bought in Manitoba and cost upwards of $70 per month; even then, unlimited data is only available province-wide and only local calls are free. If you live in Ontario, a 5 GB plan is as close to “unlimited” as you can get, and comes with a $100 monthly bill . To add insult to injury, most phone plans in Canada “lock” phones to a specific service provider when a plan is purchased. If you want to switch carriers, you are forced to pay a hefty fee to your phone company or take the less legitimate route and get your phone unlocked at a flea market or questionable mall shop.
Why is it that our plans are so expensive and restrictive? One might surmise that it is because Canada’s population is smaller and more dispersed than those of other developed countries. If this was truly the reason, however, Manitoba and Saskatchewan would be paying the highest phone bills in the country, not the lowest.
It doesn’t help that there is no quantitative way to make sense of this issue. Canadian telecommunication companies do not release any information about how much it costs them to provide data and network coverage because they feel it is “competitively sensitive” and “difficult to compute” .
Likely, this uncharacteristic secrecy is due to fears of public backlash if numbers are released. Independent industry experts estimate that the “costs associated with transmission and switching to a modern network is … less than 5 cents per gigabyte” for all the major industry players . If this is true, customers end up paying over a 500% premium every month, an almost criminal notion.
It is shocking that telecom companies have not had to reveal this information or adjust their prices, especially considering that a national regulator exists: the Canadian Radio-television and Telecommunications Council (CRTC). Its mandate is to “ensure that Canadians…have access to a world-class communication system” . And while it is understandable that the CRTC wants to let the market decide the prices for plans, the current oligopoly in the industry is not providing a world-class service.
The CRTC could resolve this issue without direct market interference by increasing competition. Regional companies like MTS and SaskTel have significant market shares in Manitoba and Saskatchewan, leading to lower prices in those provinces. But increasing regional competition does not solve all problems—regional service providers operate only on a provincial basis, and thus, can only offer province-wide plans. Instead, we need more national telecommunication channels.
The simplest way to do this is to allow international companies to participate in the Canadian telecom market. Unfortunately, doing so would allow money to leave Canada and would add to the “branch-plant” economy problems that Canada has been trying to avoid for decades. American economies of scale would take over the Canadian oligopoly, causing negative long-term implications in a vital industry.
A better way to deal with the problem is for the CRTC to break up the three largest companies (Bell, Rogers, and Telus) by forcing them to spin off their subsidiary brands (Virgin Mobile, Fido, and Koodo respectively). This would drastically increase competition in an industry where the top five companies currently own 86% of the market . Prices would have to come down as the new players vied to increase market share.
Telecommunication companies in Canada have had their chance to provide the best services at fair prices, but they have failed to do so. If companies aren’t brave enough to work for Canadians of their own accord, then it is the responsibility of the CRTC to do its job as a regulator and force their hand. Consumers deserve fair prices and versatility for a service that is crucial in today’s world—not subjection to the “Great Telecom Jaw Drop.”