By Canadian Press

Cellphone, internet bill election promises need competition focus, telecom watchers

Aug 25, 2021 | 2:40 PM

TORONTO — NDP leader Jagmeet Singh promised to shave significant sums off cellphone and internet bills Wednesday, but telecommunications experts say consumers would benefit more if parties help smaller providers enter and expand their presence in the market. 

Singh’s promise, made at a Windsor, Ont., campaign stop, focuses on working with the CRTC to force internet and cellphone service providers to reduce prices and cap fees below global averages.

Singh estimates that would save the average family $1,000 annually. He would also push for unlimited internet plans that are truly unlimited, with speeds that aren’t slowed down once a limit is reached.

While many support reducing prices, industry observers have seen such promises before and think more meaningful benefits would come from helping smaller players compete with giants Rogers Communications Inc., BCE Inc. and Telus Corp.

“You need to make systemic changes to the marketplace to drive down prices and increase competition long term,” said Matthew Hatfield, campaigns director at Open Media, an advocacy group fighting for affordable telecommunications services.

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“That’s why we think that it’s important to introduce more small providers who will compete on price, and really sustainably bring prices down rather than setting a one-time target that will just be passed and we’ll be back where we were.”

Canada already has dozens of independent operators, including TekSavvy Solutions Inc., which market themselves with lower prices than the giants. 

These companies buy access to the phone and cable networks owned by the large telcos, and then sell internet and other services to consumers.

The CRTC reversed a 2019 decision in May that would have substantially lowered wholesale internet prices charged by telecoms to piggyback on larger firms’ networks.

TekSavvy sought a leave to appeal in the case earlier this summer.

The sector has seen competition become a hot topic after Rogers announced in March that it would buy Shaw Communications Inc.

The $26-billion deal could combine Canada’s two largest cable operations, but the Competition Bureau is currently studying whether the deal should be allowed to proceed. 

Hatfield thinks it’s likely to be permitted to move forward, “so we’re actually going to see less competition in the market than we’ve seen in the past.”

That won’t help already high prices, he said.

A November 2020 study of 168 global mobile network operators by Finnish telecom research firm Rewheel showed Telus, Bell and Rogers had the least competitive monthly prices.

The study comparing 4G and 5G monthly prices also showed Canada was the country with the least competitive monthly prices.

Telus did not respond to a request for comment. Rogers and Bell deferred to the Canadian Wireless Telecommunications Association.

Statistics Canada’s latest monthly consumer price index report shows that while the Consumer Price Index for all items has risen by 3.7 per cent over the last year, the cellular service index has decreased by over 18 per cent, and by 25.7 per cent from July 2019 and July 2021, said Robert Ghiz, CWTA president and chief executive in an email. 

Michael Geist, a University of Ottawa law professor who has long followed Canada’s telecommunications sector, said “there are no easy answers to the high prices.”

He pointed out the Liberals made a $1,000 promise like Singh’s last election and claimed they would reduce wireless service costs by 25 per cent within four years.

The Liberals planned to reach that goal by working with telecom companies to offer plans at globally comparable prices, encouraging Canadian competition, allowing the CRTC to intervene if competition doesn’t lead to lower prices, and prioritizing affordability over the highest bidder, when awarding wireless expansions.

A tracker the party set up after announcing that goal shows prices for most phone plans have since decreased between 9 and 25 per cent. 

Geist called the Liberal promise a “disappointment.” 

Hatfield was equally unimpressed with the results, but has more optimism about Singh’s plan because it has an emphasis on global prices.

But Geist isn’t as hopeful.

“Given that the NDP release today does not even mention competition, I have my doubts about whether it will make a difference,” he said.

“I’m not convinced that ‘working with the CRTC’ is going to achieve very much. The CRTC has not been helpful on affordability either and there is little reason to think that cajoling them to prioritize affordability will help.”

He wants parties to ensure independent providers can enter the market as viable competitors, remove foreign investment barriers, and block mergers that decrease competition.

Put simply, he said: “the starting point has to focus on competition.”

This report by The Canadian Press was first published Aug. 25, 2021.

Companies in this story: (TSX: RCI, TSX:BCE, TSX:T)

Tara Deschamps, The Canadian Press