Price-Gouging in a Global Context

Many respondents compared the Canadian market to their experience of wireless providers in other countries, and were appalled by how Canada compares.

One respondent commented on the availability of unlimited data plans in Europe and Asia, which are not available at comparable prices in Canada.⁹¹ Similarly another respondent complained that wireless usage is more affordable in Ecuador than Canada, and that “[w]e in Canada are being gouged by greedy corporations whereas the rest of the world gets affordable cell phones”.⁹² Some citizens found the prices and services in Canada so bad that they maintained long-distance cell phone plans in other countries, because this was cheaper or better service than a plan in Canada. One respondent reported having used a U.S. calling plan while living in Canada for seven years because he finds the rates to be cheaper.⁹³

Others also expressed concern with the limitations that our broken wireless market puts on innovation and economic growth; one respondent had a story from using an Asian wireless service in Canada, and noted that this was necessary when cell phone use “is an integral part of economic growth by means of providing affordable communications to small businesses, individuals and large companies”.⁹⁴ Another respondent who is a mobile app developer commented that, “I see all sorts of cool apps in countries like Chile, Brazil, India, South Africa that customers in Canada could never use because they would see huge charges if they did. Canada is allowing greedy telecoms to kill innovative technology”.⁹⁵ As mobile devices are increasingly the means used by Canadians to access the Internet, the affordability of data plans is of great importance to innovative technology. Research from the Organization for Economic Cooperation and Development (OECD) shows that Canada is still lagging in terms of wireless broadband access, ranking 23rd out of 34 countries, behind Israel, Austria, and Spain.⁹⁶ Only a small portion of this access represents dedicated mobile subscriptions.⁹⁷ According to the OECD, data caps and high prices also leave the networks under-utilised.⁹⁸ Citizen comments highlighted this problem as a number of respondents complained of outrageous charges for Internet access in particular.

The high cost of mobile Internet access in Canada mirrors the high cost of wireless services generally. Using figures released by the OECD, the CBC compared the cost of cell phone use in Canada to that of 19 other countries. They found that in Canada a mid-range cell phone package costs an average of $572.86 US per year, which is almost $175 more than the OECD average.⁹⁹ These comparatively high prices are matched by low mobile penetration rates. The OECD found that between 2005 and 2007, Canada was one of only nine countries that had a less than 100% penetration rate (number of wireless subscriptions per 100 people); Italy led the field with 151 2G and 3G subscribers per 100 inhabitants, while Canada trailed near the bottom of the list with only 62%.¹⁰⁰ This was still the case in 2009, when the OECD cited Canada as having the lowest penetration rate at 71 subscriptions per 100 inhabitants.¹⁰¹

Figure Five

CBC Chart of Cell Phone Plan Costs by Country

Research from UK regulator Ofcom, supports these findings, and suggests that Canada’s poor global standing is a long-term problem. In comparing eight developed countries between 2005 and 2010, Ofcom found that the amount Canadians pay each month for their wireless services is the second highest. Ofcom also found that from 2005 to 2010, with the exception of Australia, prices fell for all other countries’ in the group, whereas Canadian prices increased.¹⁰² According to a 2009 OECD report, Canadian wireless providers charged higher than average rates for ‘low’ usage of cell phone services, as compared to 19 other OECD countries. For ‘medium’ usage (defined as 780 voice calls, 600 SMS messages, and eight MMS messages over one year) Canadian providers charged some of the most expensive rates, at $42 USD per month. Canada was also above the OECD average price for ‘high’ usage of wireless services.¹⁰³

Figure Six

OECD Graph of Average Prices for "Low" Usage Plans by Country

Research by the New America Foundation (NAF) adds more detail to these reports. The NAF looked at “cell phone voice, text and data services for prepaid, regular postpaid, and unlimited postpaid plans provided by prominent cell phone carriers in 11 countries”.¹⁰⁴ Canadian customers have the highest minimum monthly charge for a complete postpaid cell phone service at $67.50.¹⁰⁵ Canadian rates for various services also consistently fell in the high- to middle-price tiers. Canada was found to charge one of the highest rates for voice plans with costs of $0.37 to $0.38 per minute, much higher than the rates for India ($0.01/minute), Hong Kong ($0.02/minute), and Sweden ($0.04/minute).¹⁰⁶ Canada again had some of the highest rates for texting; the cost for 250 texts in Canada was $4.80 ($0.02 per text) while in countries like Japan and South Korea, which charge customers by usage, a text costs $0.003 and $0.01 respectively.¹⁰⁷ In the case of texting however, Canada does have the advantage of being one of the only nations that offers unlimited texting plans. In a comparison of data rates across countries, Sweden set the bar with unlimited data plans for $13.80 per month, while Canada’s plans were much more expensive at $72.90.¹⁰⁸

Figure Seven

Unlimited Data Plan Costs per MB by Country

In other countries, mobile customers also have more options for different pricing models. Indian service providers use a pay-per-use model which charges a low monthly fee of $12.90, plus low per-usage charges. Hong Kong uses a variation on this model, charging a minimum monthly amount of $13.50, and allowing this charge to be used for voice minutes, text, or data.¹⁰⁹ AT&T in the U.S. and Tele2 in Europe are allowing customers to carry over their unused minutes to the following month, so as to encourage cell phone use rather than having customers consistently under-use their cell phones, fearful of exceeding their limits, and then losing the remainder of the time they have paid for.¹¹⁰

Generally, when looking around the world, we see Canadians at a comparative disadvantage. High prices have significant consequences not just for individual citizens, who are forced to ration their use of wireless services, but also for our digital economy as a whole.