Canadian Oligopoly

Your phone plan is too expensive, eh

Tia Kutschera Fox // Opinions Editor
Illustration by Taylor Lee

No matter who your carrier is, you’re probably with one of the Big Three — Rogers, Bell and Telus. Koodo is owned by Telus. Fido and Chatr are both divisions of Rogers. Virgin Mobile runs through Bell. Freedom? Well, okay, Freedom isn’t with the Big Three, but its name change from Wind was a part of the company’s rebranding that coincided with being bought by Shaw last year so Freedom users still haven’t really escaped the big corporations.

Welcome to a Canadian oligopoly, where the plans are expensive and limited, all with the illusion of variety. While there is no hard evidence of collusion, Bell, Telus and Rogers have an interesting history of matching price hikes, ensuring we all pay the piper whatever the hell he wants.

Additionally, according to a 2015 OpenMedia article, Bell lobbied the Canadian Government to give them a “free pass” from a ruling by the the Canadian Radio-television and Telecommunications Commission (CRTC) that “sets out fair, open access rules that would allow smaller, more affordable Internet providers to access ultra-high speed fibre infrastructure.” This ruling is meant to protect customers from unfair price hikes for data. Thankfully, the appeal was rejected, but it goes to show how these companies operate when it comes to business.

The opinion of Bailey McDonald*, a former sales employee at Shaw, is that “the government is also responsible. The CRTC – they dictate what we can and cannot do.”

The CRTC created the Wireless Code in 2013, which mandates that cell service providers cannot charge more than $100 a month in international roaming charges nor $50 in data overage fees, unless the customer agrees to it. This is a decent start but is far from perfect, as the customer is defined as the cell phone user, not the account holder.

A recent CBC article demonstrated the problem with this, noting that Rosemary Pick received a bill for more than $1,700 in data charges when her son agreed to go over the $50 cap without her knowledge. Often cell companies don’t warn users when they’re going over their data limit, and simply charge for it.

The Wireless Code also doesn’t say anything about keeping phone plan costs down, which could be a deliberate oversight in telecommunication companies’ favor as it allows prices to skyrocket and increases the chances of smaller companies being bought out or disappearing altogether.

In a 2016 analysis of data usage by Tefficient, a Telecom research firm, it was found that out of 32 countries, customers in Canada pay the most per gigabyte (GB) of data. On average, Canadians pay $57 a month for just under one GB of data. According to the same chart, for an equal amount of data, customers in France pay about $20 CAD. On the extreme other end of the spectrum is Finland, where Finnish users have the highest average data usage at 9.9 GBs per month. In Finland, seven GBs of data only costs around $22 CAD per month. For anyone reading this in Canada, try not to cry too much.

“While there is no hard evidence of collusion, Bell, Telus and Rogers have an interesting history of matching price hikes”

There is no simple answer as to why phone plans in Canada are so expensive, but Canadian phone companies continue to give the same explanations. The first explanation is simple geography. Adam Jones*, a sales employee at Telus, put it plainly: “We have the most area to cover and the least people. Here, the square kilometres of how much they need to cover is way bigger than how much they have to cover in the UK. [Providers] have to make sure people have coverage in the most remote areas.”
 McDonald agreed, “I think it’s just because of Canada; the way it is. All of our population is so concentrated on such a southern part that anything up north is hard for anybody [to work with].”

This also aligns with the experience of second-year Capilano University General Arts student Kiley Kurahashi. Kurahashi moved from Japan to Vancouver last year to study and quickly learned that phone plans in Canada worked differently and were vastly more expensive. In Japan, Kurahashi used a pay-as-you-go plan with the company Freetel, which gave him three GBs of data, calling and texting. Freetel is similar to Freedom and Koodo as it’s a smaller company that uses a bigger company’s (Docomo) tower and offers cheaper prices. He paid ¥1040 a month, which is about $11 CAD. The data, Kurahashi explained, was tiered. “If you used one GB it was X amount, if you used three GB [it was another] X amount. There was no in-between, so if you used more than one GB it made sense to just use three.”

Here in Canada, Kurahashi is with Fido. He gets three GB of data, unlimited evening and weekends for calls and texts, and is otherwise charged per call and per text — he pays $60 a month. His father came to Vancouver ahead of him to research the best phone plans, even visiting the University of British Columbia campus to ask students what the best phone plans were. Even with this research, Kurahashi is currently paying almost six times the amount he paid in Japan for the same services. It makes sense that in such a small and densely populated country users can get good network connection at such low prices — the entire country is about the size of British Columbia which means less towers are needed, bringing down the cost.

This brings us to the second explanation: overhead and profit margins. “[There are] so many people [phone companies] have to pay before it’s actually considered profit. There’s the call centre people, directors, VPs… then it goes down to district managers, operations, retail — they have to make sure all those people get paid… and then there’s people actually installing the towers, fixing the towers, making sure they run properly,” said Jones.

Out of 32 countries, customers in Canada pay the most per gigabyte (GB) of data. On average, Canadians pay $57 a month for just under one GB of data.

McDonald added to this point, saying, “Koodoo uses Telus towers and it’s still miles cheaper. Because they’re smaller, they have less overhead, they have less consumers, because they’re targeting a specific type of consumer.”

The same applies to Freedom; smaller competitors like Koodo and Freedom can offer lower prices largely because they don’t have as many employees to pay or as many other expenses.

Although, their cheap plans do come at a price — network limitations. If a user doesn’t leave downtown Vancouver, they won’t notice a difference in network quality between Freedom and Telus. But the minute they go to Burnaby, or say, a parking garage, the network is gone with the wind. McDonald also pointed out a huge cost these companies need to make up for. “The equipment. We need good routers in order to have the internet. Do you sit there on your phone waiting for an hour and 45 minutes for a page to load? No. Nobody wants to wait for it.” That speed and convenience costs.

These explanations are hard to believe when compared to other countries. There are plenty of large telecommunications companies all over the world that manage to keep their phone plans at a reasonable rate while still providing fast internet. While Jones made a fair point that setting up a network in smaller regions is cheaper due to the size, he is ignoring one big, sunny elephant in the room — Australia. With small, highly dense populations spread across the continent, much like Canada, their phone plans still don’t come close to the expense of those in Canada.

Avril Robinson lived in Canada for three years before moving back to Australia and in her opinion, the Canadian system only has one bene t. Robinson described breaking a contract in Australia as an expensive ordeal that would have cost her around $1,400 CAD as they require the customer to buy out the contract in its entirety, regardless of the remaining duration of their term. “Canada is so much better. I had to break contract when we were leaving and all I paid were administrative fees, which was about $250.” However, actually having a plan in Canada was a different story.

“I basically couldn’t afford a phone when I got to Canada. In Australia our prepaid plans work a little differently. In Australia you can buy $40 of credit and that gets you $120 in calls and texts. In Canada, I would buy $30 of credit and most of it would be taken up by administrative fees and then I’d be left with $5 of credit.” Robinson explained that unlike Australia, Canadian prepaid plans also charge users to receive calls, which is a huge hindrance to service. “How do Australian plans compare?’ Our cheapest ones here are about $45 and go up from there. All phone plans come with data. My $45 plan comes with seven GB of data,” Robinson said.

With all of this information to consider, our telecom providers’ explanations seem a little weak. Unfortunately, while Canadian customers can hope that our great country will decide to follow in Australia’s (or literally anyone else’s) footsteps, for now, it’s likely we will continue playing a long and expensive game of Canadian Oligopoly.

*Names have been changed

2 Comments
  1. Tia, stay tuned for some serious positive changes coming to the Canadian market. We are counting on your support and every other Canadian out there having the same problems you described.

  2. I’ve checked with most providers and the prices do have the appearance of being fixed no matter how you look at it. Even with TEKSAVVY and other ISPs… everything taken into consideration… the differences were negligible. It doesn’t take a genius to figure out how something fishy is going on here… Unfortunately, I believe not much will change in the future.

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