Canadian Govt. Demands Lower Wireless Prices
TORONTO -- Canadian Telecom Summit -- Seeking to change Canada's reputation as one of the costliest wireless markets in the developed world, the Canadian government has launched a fresh campaign to push the major carriers to offer more affordable mobile and broadband plans, much to those carriers' chagrin.
Speaking at this annual gathering of the nation's biggest telecom, cable and media players earlier this week, Innovation, Science & Economic Development (ISED) Minister Navdeep Bains issued a clarion call for lower rates for wireless and broadband services. In a keynote address, he made it clear that the federal government views high wireless and broadband prices as the greatest hurdle in closing the country's yawning digital divide, exceeding even the lack of access to high-speed Internet service in most rural areas.
"The bigger barrier is prices, which are especially high for low-usage call-phone plans," Bains told the thousands of summit attendees. "Subscribers pay more for basic cellphone service in Canada than for similar services in the US and UK."
Specifically, the federal minister, who oversees communications policy in Canada, said the Liberal-run government "would like to see more package options and price points offered to all Canadian families, particularly in the wireless sector." He urged service providers to follow the leads of Rogers Communications Inc. (Toronto: RCI) and Telus Corp. (NYSE: TU; Toronto: T), which both offer C$10 monthly packages of basic Internet service for low-income households.
In line with his call for cheaper wireless plans and packages, Bains said he's "directing" the Canadian Radio-television and Telecommunications Commission to "reconsider" its recent decision on wireless roaming services, which excluded WiFi-based services from access to regulated roaming services. Thanks to that March 1 ruling, he said, WiFi-based providers are effectively barred from offering their low-cost plans to consumers, unlike in the US.
"For this reason, I am directing the CRTC to rethink its decision and reconsider the WiFi-first model," he said. "This model could provide Canadians with more choice and affordable prices." He cited the example of Republic Wireless in the US, which offers wireless voice, text and data plans for as low as $15 a month.
As might be expected, though, the nation's three major carriers -- Rogers, Telus and BCE Inc. (Bell Canada) (NYSE/Toronto: BCE) (Bell Canada) -- did not exactly jump for joy upon hearing Bains' pricing message. Instead, appearing on a panel together here, they hotly defended their wireless and broadband offerings and took sharp issue with Bains' contention that wireless prices are higher in Canada than in most other developed western nations. They argued that their no-frills, low-end plans are largely comparable to those found in the US, western Europe, Japan and elsewhere and that they generally offer better coverage, higher network quality and faster speeds than their counterparts in the other nations.
David Watt, senior vice president of regulatory affairs for Rogers, said the pricing studies by the Organization for Economic Cooperation and Development (OECD) frequently cited by Canadian telecom critics can be misleading because they don't consider all plans, especially the low-end ones. For instance, he noted, OECD doesn't look at Rogers' low-end Chatr Wireless brand, which offers combined voice and data plans for as little as C$40 a month.
"We tried to convince OECD to look at a wider range of plans in Canada," Watt said. "But we have been spectacularly unsuccessful."
Mirko Bibic, chief legal and regulatory officer and executive vice president of corporate development at Bell Canada, conceded that carriers in such European countries as the UK, France and Germany offer plans with lower prices. But he stressed that those providers don't meet the same high household coverage, service quality and network speed standards as the three big Canadian carriers.
"Their prices are low but they absolutely stink on the other measures," Bibic said. He noted that only Japanese carriers score highly on all four major measures. "Nobody else in the world is hitting a grand slam on all four," he said.
Ted Woodhead, senior vice president of federal government and regulatory affairs at Telus, contended that OECD and other international pricing studies are problematic because they don't always compare actual pricing plans. Instead, he said, the studies may construct imaginary plans for comparison's sake that don't match the real world.
"It's a feeling, not reality," Woodhead said, referring to the popular perception here that Canadian consumers are being gouged by wireless prices. "Politicians will react to that but it's not right."
The other two panelists on stage, however, disputed the arguments by the Big 3 execs. They staunchly agreed with Minister Bains that wireless voice and text prices are still too high in Canada and argued that the major carriers should adjust accordingly.
John Lawford, executive director and general counsel of the Public Interest Advocacy Centre, noted that millions of Canadians still complain about paying too much for wireless service. He urged the federal government to fix the problem by fostering the development of a fourth nationwide wireless provider through spectrum set-asides and other regulatory moves, despite Ottawa's unsuccessful efforts to do so in the past.
"This is the price we pay for not getting a proper fourth player," Lawford said. "Three big players will guarantee high prices … We need a national fourth player," like Sprint in the US.
Bram Abramson, chief legal and regulatory officer for TekSavvy Solutions, asserted that the Big 3 should spend more time giving consumers the price plans they want and less time trying to convince them that they're not being gouged. "Consumers aren't stupid," Abramson said. "We can tell them they're wrong. But people come back from Europe and say it's better over there."
— Alan Breznick, Cable/Video Practice Leader, Light Reading