Taming the beast: The “big three” and sky high cell phone bills

Posted on May 23, 2013 · Posted in Blog

It seems almost everyone has a cell phone, simply unable to live without one. We rely on our mobile phones not just to communicate with others, but to email, surf the net, text, download movies and music, and catch the headlines. But virtually all Canadians, hooked as they are to these irresistible devices, complain that they are being gouged, with unreasonable prices, interminable three year contracts, and poor service. Desperate to seek a more reasonable alternative, Canadians come to the inescapable conclusion that the prospect of an immediate bargain with a rival competitor is slim to none.
The sad truth is, this initial hunch is the right one. Canadian cell phone rates are among the highest in the developed world. An OECD comparative study back in 2009 found that Canadians were paying the third highest rates for “medium usage” cell phone packages in the developed world, with only Americans and Spaniards spending more than us.

And if Canadians were hoping for some good news, they are, at least for the very moment, desperately out of luck.

The lack of competition in our cell phone market is a major contributor to our prohibitive rates and disappointing customer service. Our “big three” cell phone companies, Bell, Rogers and Telus control “nearly 94% of cell phone services,” and as a result, “Canadians pay some of the highest prices for mobile phone service in the industrialized world.”

And if you thought the news was bad, it only gets worse from here. Telus has recently announced its intention to purchase the smaller carrier Mobilicity for $380 million. William Aziz, chief restructuring officer of Mobilicity favours the acquisition, insisting that “Mobilicity has been losing a significant amount of money every month” and that the financial strength of Telus is a win-win, an acquisition being “the best alternative for Mobilicity.

Whether Mr. Aziz was referring to the respective shareholders or the end users is unclear, but the further erosion of competition in the cell phone market is highly unlikely to benefit consumers.
John Lawford, executive director at the Public Interest Advocacy Centre, insists that “losing Mobilicity to Telus means that we are much closer to the big three being the only wireless companies in Canada, and “consumers will face noticeably higher prices and less choice if only three major players control the market.”

There is scant evidence to suggest a reversal in this trend, as rival upstarts Public and Wind, are said to be interested in an acquisition with a larger buyers. Though Industry Minister Christian Paradis insists the Conservative government’s intent has long been to encourage mobile upstarts in order to generate increased competition with the big three in the cell phone market, these pending acquisitions lead inescapably to the opposite conclusion.

Steve Anderson, Executive Director of Openmedia.ca, insists it is “baffling” that the federal government won’t enforce it’s very own rules, with indie providers “being sent a message that it’s time to give up.” What is needed instead is “bold action” as opposed to “half measures to “ensure that independent providers have the resources they need to provide Canadians with the choice we need.”

But not all signs need point to despair. Canadians are signaling to Ottawa their aversion to this lack of competition and disregard to the ordinary consumer in increasing numbers. Over 55,000 Canadians have attached their signature to the attention of Industry Minister, Christian Paradis, at http://demandchoice.ca/, insisting that he stand up to big telecom for choice and affordability in Canada. These numbers are swelling by the day, and many more are expected.
A protracted issue, Canadians should not expect to wake up to overnight cell phone bargains, but vocal, concerted action with electoral implications is certain to raise eyebrows among elected officials in Ottawa. With wind in their sails, Canadian consumers literally cannot afford to stop now.