For decades, Canadians have paid some of the highest prices in the industrialized world for what is often sub-standard wireless service. But an encouraging new shift in policy direction by Innovation Minister Navdeep Bains could be about to change that.
There is no doubt that our current policies around wireless pricing and competition have failed Canadians. A Canadian Radio-television and Telecommunications Commission (CRTC) report last year revealed that average household spending on telecommunications increased for the third year running, to a whopping $215/month, with the largest increase falling on mobile services.
We know that sky-high prices hold back our economy and exacerbate our digital divide. Canadian businesses face monthly bills that are often twice as much as those faced by their overseas competitors. And far too many low-income Canadians are forced offline because they simply cannot afford the high cost of service. Another recent CRTC study revealed that one in three of Canada's lowest-income residents do not own a cellphone, compared with just one in 20 of high-income earners.
There's no mystery about the underlying cause of these steep prices -- Canada's wireless sector is woefully uncompetitive, with the Big Three providers controlling over 90 per cent of the market. With so little competition, there is no incentive to reduce rates, and every incentive to price-gouge Canadians. For years, we've been calling on the CRTC and government to lower prices by opening up the market to greater competition and choice.
That's why it was so encouraging to see Innovation Minister Bains order the CRTC to look again at whether smaller, affordable wireless providers -- technically known as wifi-based Mobile Virtual Network Operators (MVNOs) -- should be allowed to enter Canada's wireless market.
Minister Bains was responding to a disappointing CRTC decision in March that permitted Rogers to block customers of Sugar Mobile, an innovative wifi-based provider, from accessing its network. That ruling sparked an outcry from consumer advocates, who argued that allowing Big Telecom to block smaller competitors is a licence to price-gouge Canadians. After all, where's the incentive to lower prices when you're allowed to simply shut out your competition?
As a result of Minister Bains' direction, the CRTC will now not only need to revisit its decision on Sugar Mobile, but also the wider question of whether Canada should join the many other nations around the world which have successfully lowered prices by enabling consumers to purchase wireless services from MVNO providers.
MVNOs are a powerful tool for increasing competition. Instead of having to build out their own networks and infrastructure -- which can be prohibitively costly for a small startup -- MVNOs purchase network access on behalf of their customers from large incumbents, thereby enabling those customers to roam on existing networks. This allows startup providers to compete effectively on a level playing field, with the increased competition resulting in significantly lower prices for consumers.
The U.K. is a great example of this model working successfully -- a country where unlimited wireless plans can be purchased for the equivalent of just $35 a month. Right now, those are prices Canadians can only dream of. But if Minister Bains and the CRTC do the right thing, Canada will finally be moving in the right direction.
David Christopher is Interim Communications and Campaigns Director for OpenMedia, a community-based organization that works to keep the Internet open, affordable, and surveillance-free.
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