Why your high cell phone bills have nothing to do with the size of Canada

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Big Telecom’s own lobbyist group, The Canadian Wireless Telecommunications Association, explains that more dense populations (for example in cities) require a larger and more robust network, as it needs to be able to support more people, but these are also the spaces in which it is most cost effective to build. This means that the areas with the greatest network need are also the spaces that are cheapest to service, and house the majority of Canadians

It’s not the coverage that’s expensive, it’s the cell phone plans

So what we have here is not a ‘coverage’ issue but a ‘cost’ issue. Canada’s urban density means that all provinces have close to a 100 per cent wireless coverage rate (with the significant exception of the Northern Territories). Despite this, only around 70 in every 100 Canadians own cell phones. In fact, according to the Organisation for Economic Co-operation and Development, regardless of size or population density, other countries are so connected that not only do most people have cell phones, but they have more than one. When compared to these other countries, Canada ranks dead last.

The coverage is available in Canada, so why aren’t more people connecting? Because the service prices are so high. As award-winning journalist Peter Nowak points out, “[e]ven with multiple SIMs factored in, it still costs more to own just one phone in Canada than it does to own several in other countries".

Perhaps high prices are being used to cover the cost of network upgrades? In 2008 Telus and Bell teamed up to create a shared network, which only cost each provider $500M. This is a great example of how network sharing can reduce costs. Indeed, Telus has trumpeted about their successfully lowered expenditures through this cost-reducing network, but these savings don’t seem to have been passed on to customers.

Big Telecom’s Bottom Line

So if our high service prices don’t seem to be covering the costs of the network, where is all the money going? As Michael Geist recently noted, a report from Scotia Capital (ironically, the report that Big Telecom has been using to argue that the Canadian cell phone market is healthy) illustrates the high revenue that cell phone providers extract from customers—higher in fact than any other country, making Canada the most ‘carrier-friendly’ market in the world.

These findings are supported by the CRTC’s Communications Monitoring Report 2012 which shows that, despite new entrants into the cell phone market, the incumbent providers still enjoy the highest revenue per user in the world. This suggests that a lack of options in a market that is tilted towards the incumbents is the real cause of high cell phone prices.

It doesn't make sense for Big Telecom to argue that our prices are lower than elsewhere on the one hand, and then justify higher prices because of the vastness of our country. In reality our geography is not a decisive factor in pricing, and yet we are paying high prices. This is a clear illustration that the market is dysfunctional and not based on the real costs of providing services.

In order to ensure that Canadians have access to fair prices, policymakers need to address the structural problems in the market. It is past time for bold action to create a level playing field that enables independent cell phone companies to provide effective alternatives to the big three cell phone giants that currently have a stranglehold over the telecom market, our digital economy and our wallets. Big Telecom’s excuses are wearing thin; demand choice in Canada’s cell phone market today.

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