Prices Rise Again. We Must Dismantle Canada's Telecom Oligopoly.
You're paying more for less because the country's wireless providers are the ones in charge.
Canada is three telecom companies in a trench coat. Old line. Infinitely adaptable — three mining companies? Banks? Grocery chains? Plenty of trash to talk about all the above, but today we’re focused on the cell phone service providers.
Last week, news broke that Rogers, and likely Bell, are raising prices on certain wireless plans. The increases are due in the coming weeks and, as CBC writes, will run between $7 and $9 more per month and apply to those not on contract.
In their attempt to defend the new pricing, Rogers sings the same old tune: high standards, the best service, connecting Canadians coast to coast to coast. Blah, blah, blah. The fact is they can pretty much increase prices as much as please. The Canadian telecom sector is an oligopoly. There are a handful of companies who run the market like a cartel, and you haven’t much choice in the matter. You dance with one of them or you sit in the corner and mope. I mean what are you going to do about it? Move to Europe?
Rogers had a good year in 2023. Their gross profit for the 12 months ending September 2023 was a whopping $7.12 billion — an increase of nearly 46 percent year-over-year. Bell had a shakier year with some late-quarter profit dips, and yet it still made its billions and managed a strong wireless profits showing. The takeaway: despite the economic uncertainty and high interest rates, Rogers and Bell are thriving within the confines of Canada’s protected, anti-competitive telecom market.
Comparing wireless costs around the globe is an exercise is self-flagellation. But bust out your finest Saint/Sir Thomas More digs because it’s news you can use (to get angry, perhaps weep).
Take data costs. Canada has some of the highest rates in the world. According to Statista, based on 2022 data, North America was the most expensive region in the world, and Canada is most expensive country in the region. On average, North Americans pay just under $5.00 per gigabyte of data, compared to the global average of $3.12. Canada comes in at $5.94.
Israelis paid a mere $0.04 per gig. Italians $0.12. The French and Spanish get hosed at $0.23 and $0.60 respectively. How do they manage!
A 2023 investigation by CBC Marketplace found that Canadians were, indeed, getting ripped off and telecom explanations for the higher prices (such a big, complex, country, etc., etc.) didn’t hold up. For example, Australia is a reasonable comparator country to Canada. Yet, as the authors of the CBC piece point out, Canadian data prices are seven times Australian costs.
The Canadian government admits that cell phone service prices are out of control. Last week, the industry minister complained consumers face high prices and the sector a lack of competition. (If only he knew someone who someone who could do something about that.)
Unsurprisingly, research shows that when there is more competition in the market, wireless prices are lower. That’s even true within Canada, as a handful of provinces — Quebec, Saskatchewan, and Manitoba — have (or recently had) regional competitors to the country’s big providers. But there’s more to it than just competition.
I’ve said it before, but here goes once more: the oligopoly that runs Canada’s telecom industry must be dismantled, and the state will be a necessary part of that dismantling. The dismantling of the telecom regime requires structural separation so that those who own and operate the network infrastructure are not the same folks who sell wireless services (unless the entity is state-owned).
And speaking of the state, if it’s competition we’re after, we need state-run service providers — either a national carrier or more provincial carriers. You want some competition? Boom. Competition!
The Liberal government has been promising the tackle the telecom oligopoly for years. They’ve done a poor job at follow through. If they’re serious about lowering prices for Canadians, they know what they need to do. Whether they have the interest, will, and courage to do so is another question. So far, it seems that they don’t. And you’ll see the fruits of their non-labour on your wireless bill.