Wireless Carriers’ High Flying Prices

Last week, Mobile Syrup reported that the big 3’s flanker brands, Virgin, Fido, and Koodo (including zombified competitor Public Mobile) would be raising prices on their wireless plans at the same time. Then, the news broke today that Bell, Rogers, and Telus, moving in lockstep, have quietly raised their prices for wireless services as well. Prices for plans (including the new changes) at each carrier appear to be identical.

These rate hikes come on the heels of the 700MHz auction results, which are shaping up to look like a continuation of the status quo – free range for the Canadian wireless oligopoly. Telus has purchased Public Mobile, Mobilicity is in creditor protection and is likely to be bought up shortly, while Wind’s financial backer seems to have had enough of its foray into Canada. Brace yourselves, consumers, it’s going to get worse before it gets better.

Wind is by no means out of the game – it has over 600,000 subscribers, and there is some speculation that part owner Tony Lacavera may make a disruptive play. But without additional capital or new spectrum, it seems as if its fate as a niche provider may be sealed.  Vidéotron has some analysts holding out hope for a new competitive champion in Ontario and westward, although representatives for the company have been decidedly ambiguous about its prospects for expansion. For the time being, it seems like the incumbents are taking advantage of their privileged position by putting the squeeze on customers who face few prospects for finding a fair deal elsewhere.

This isn’t exactly a shocker. What is interesting is that this strategic move pours fuel on a fire that started late last year. Following the summer’s theatrics, the CRTC got down to business by looking into discriminatory wholesale roaming practices on the part of the incumbents. During this process the Competition Bureau raised eyebrows with a strongly worded submission, which pointed out that:

“In the Bureau’s view, mobile wireless markets are characterized by high concentration and very high barriers to entry and expansion. Furthermore, Canadian mobile wireless markets are characterized by other factors that, when combined with high concentration and very high barriers to entry and expansion, create a risk of coordinated interaction in these markets.” (Emphasis added)

The Competition Bureau notes that those other factors include “the ready availability to market participants of information regarding prices, rival firms and market conditions”.

This weekend’s news removes all doubt (if there ever really was any) about the existence of such factors and highlights the incumbents’ facile willingness to capitalize on the sore lack of market discipline. Although it’s clear that Bell, Rogers, and Telus are collectively cocking a snook at the Canadian public, it remains to be seen how regulators will react – or if they will at all.

The decisive moment could be the CRTC’s upcoming hearing on wholesale wireless competition – open for comment until May 1 – but given how flagrantly the wireless carriers are flaunting their market power, something doesn’t smell right. The big three may, as Peter Nowak suggests, really just be acting dumb, dumb, dumb, or they may be courting regulation in the hope of shaping the process to ensure stability and security for future profit margins.

At the moment, we’ll have to wait and see what happens. One thing, however, is certain – Canadians will for the time being feel the effects of price hikes, as anyone signing a new 2-year contract will have to grin and bear the consequences of unchecked anti-competitive maneuvering.

That is, unless you live in Manitoba or Saskatchewan, where voice and data plans cost nearly half as much in some cases as identical plans in other provinces. Unlimited voice with 1GB of data from Telus, for instance will cost a prairie customer $55 a month, or $1320 over 2 years. A Telus customer in Alberta, on the other hand, will pay $85 a month for the same plan, or $2,040 over the span of a 2 year contract.

1GB Telus plan – $720 off if you live in SK.

For those who rely on mobile data a bit more, Rogers offers prairie customers unlimited voice with 10GB of data for $75 a month, or $1800 over 2 years, while a Rogers customer in Ontario or Québec will pay $145 a month for the same plan, adding up to $3480 over two years.

10GB Rogers plan – $1680 discount for living in MB.

If you find yourself wishing your province had a competitive fourth provider, you could move to friendly Manitoba or set up shop under Saskatchewan’s living skies. But you wouldn’t have to stay for long. It’s hard to believe, but this is the truth: it’s cheaper to buy a roundtrip plane ticket to Regina or Winnipeg, subscribe to one of these plans and then use it back home, than it would be to sign a contract in Toronto or Calgary.

For the Telus 1GB plan, you could fly roundtrip from Calgary to Regina for $369 and save yourself $350 (after paying for the plane ticket) on a two year 1GB plan.

For the Rogers 10GB plan, you would save a whopping $1,180 dollars after the price of airfare if you flew from Toronto to Winnipeg and signed up for service there.

It might sound crazy, but check for yourself. If you decide to fly to Winnipeg, look me up. I’ll even pick you up at the airport.

Aside from pushing up demand for air travel, it’s hard to see how this kind of pricing is beneficial to anyone but the wireless carriers’ shareholders and management. Canadian carriers like Bell, Telus, and Rogers are supposed to be affected with the public interest – not opposed to it.

We as a country won’t even get close to having a fair market until you can walk, not fly, to a provider offering reasonably priced service.

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11 comments

  1. Daniel Klass · ·

    Nice work Ben

    Sent from DJK iPad

    >

  2. Hi Ben,

    Sarah from the Rogers Social Media team here. I want to share a few facts about our new plans and prices. First off, prices were not changed on all plans. Many of our plans including our talk and text plans, our Smart Picks plans and our popular 1GB Share Everything plan remain at the same price. As well, our smart picks at plans still start at $60/month for 500 MB.

    Like any business, we regularly adjust our prices and the services we offer. We do this not only in our wireless business but across all products we offer our customers.

    Our most recent changes have raised some questions. We can’t speak for any changes made by our competitors, but we can tell you what was behind the changes we made.

    The needs of our customers are shifting and they’re using more data than ever before. The majority of our customers use between 1GB and 2GB of data per month. That’s why we did not change the price of our popular 1GB plan ($85/month) and why we introduced a new 2GB plan for only $5 more.

    We’re also added an extra 1GB of data to our 3GB plan for only $5 more, which is a great new option for couples or families sharing data between users. All our plans are shareable and allow customers to add an additional device for as little as $10 per month.

    These changes do not affect a customer’s current plan. They only apply to customers who choose to sign up for one of these new plans.

    1. I hope you’re getting paid well, Sarah. It must be a drag having to scour the web for criticism of your employer, and then copy and past a statement about how some of their plans didn’t change, but are still overpriced.

      You say that the majority of your customers use between 1 and 2 GB and then tell me that $90 would cover that much usage. Do you mean to imply that Rogers thinks $90 a month is a fair price for average cell phone usage?

      Also, why are you quoting me the “rest of Canada” prices? I live in Manitoba, where Rogers charges $65 for 5GB because it has to compete with MTS. “For just $10 more,” I could get 10GB from your company. But those plans aren’t on offer to people who live in provinces where Rogers doesn’t have to compete. How do you explain that?

      I’ll be holding my breath for a reply.

      1. Well written Ben, two thumbs up! Don’t hold your breath for too long though.

  3. As a systems engineer of 30 years standing and a pioneering wireless user I have watched the entire fiasco unfold. The Big 3 have become the Railroad Robber Barons of the 21st century, and like the original Robber Barons, I’m afraid they will have to be dealt with the same way, through draconian federal legislation. As it stands today these companies are not only fleecing virtually every Canadian, from lowly consumers like you and me to the members of the CRTC and the politicians themselves, but they are now actively holding back innovation and the economy, simply because no one can afford to use their services to the extent necessary. Cloud computing, as an example, is at a standstill because of artificially low upload speeds and the dreaded data caps. Something has to give, but I fear it will take legislation to break the dam these people have created.

    1. Thanks for the comment Gerry, couldn’t have said it better myself. Have you heard of a book called The People’s Network by Rob Macdougall? It’s a recently published, insightful history of the independent telephone movement in Canada and the US, and efforts by the organizers of the Bell system to centralize North American telephone networks. Worth checking out for sure.

      http://www.robmacdougall.org/the-peoples-network/

  4. I believe it is time that every Canadian cancelled their cellphone. This is the only voice we have. Unfortunately I don’t think in todays “must have” generation understands the concept. Seriously paying 700 for a phone that will be worthless in 3 years at best is absolutely ridiculous. Yet we as consumers line up year after year for the latest bell and or whistle. We have the power to stop this trend, however I believe it will be lost on us. I will be cancelling my phone contract in May when it expires. I think Bell will survive without my 1080.00 a year, unfortunately.

  5. Well hooray for the heritage of public telephone systems. I think that Canadians should band together and form a national public communications co-operative. We could compete with the big three and even form a national broadcasting co-operative when the Conservatives finally drive the CBC out of business.

  6. I switched from 85.00 a month to 75.00 a month for 1GB of data and unlimited calling nationwide with my provider. I wonder how much flak the Big 3 are getting from consumers for the price hikes?

    1. Who is your provider? Bell, Rogers, and Telus offer 1GB plans for $85/month.

  7. The caps is the root of this problem and must be gone with. Network cards do not give a damn what file type or size. They do 1 thing and that it transfer it to you at a certain speed. The speed is the true cap. These caps the Telecoms have put on us are pure scams and this stinking gv allows it.

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