AN ECONOMY THAT IS DOMINATED BY A FEW LARGE COMPANIES
Bell, Rogers, Telus. The “big three”, as these companies are affectionately called. They have become ubiquitously known for their expensive voice and data plans, collusion, and exceptionally rude customer service representatives. They also control many subsidiary brands that are owned and controlled by these same companies. Consequently, Canadians pay a high price for their mobile plans:
Here are some typical features of the Canadian market:
- Cell phones are locked into three-year plans and usually cannot be bought off-plan.
- It takes a hefty unlock fee to free up a phone, even after a plan has expired.
- It used to be very expensive to terminate a plan early, with excessive cancellation charges and fees, but this is starting to change.*
Here is what a typical plan could cost at one of the big companies:
- Voice plan including 200 minutes evenings and weekends - $35
- Data plan including 2GB and tethering - $35
- Voicemail and caller ID - $10
- Unlimited messaging - $5
- Taxes and other fees - $12
- Total – $97/month
Aye Karumba! That is a heck of a lot of money to be forking over every month, for what is really a basic feature set for a smart phone these days. Take out the data and you’re still looking at a plan in the mid-$60s. Mobile phone companies are struggling to not turn into dumb pipes, but are they really delivering value for all of that expense?
ROLE OF THE CRTC
The CRTC, or Canadian Radio-television and Telecommunications Commission, is the Canadian regulatory agency tasked with regulating the telecommunications market, and keeping it competitive. Are they doing a good job of it?
Nearly all subscribers are still captive to the big three and their subsidiary brands, which doesn’t look like real competition to me. Upstart companies are finding it difficult to acquire the necessary capital to compete, as at least 53.3% of total investment must be Canadian. This naturally grants artificial monopoly privileges to the entrenched big businesses, at the expense of upstart competition and at the expense of the consumer.
There is also a revolving door between the CRTC and the very companies it is supposed to regulate, which causes a serious conflict of interest and is yet another example of crony capitalism damaging the interests of the consumers.
WHEN WILL THINGS IMPROVE?
It might take the introduction of a wireless mesh network, or other ways of increasing competition. If the government ever gets around to eliminating some of the artificial barriers to entry, such as the foreign ownership restriction, it would make a big difference in the Canadian market. The big companies have benefited from high prices for too long, and it’s time that consumers start to see more value for their money.