OTTAWA – As part of its campaign pledge to “make life affordable for Canadian families,” the federal Liberal Party says that if it remains in power following next month’s election, it will “take strong action” to have cellphone bills reduced by 25% within four years and save a family of four nearly $1,000 a year.
To reach that target, the Liberals say they will “work with telecom companies to offer plans comparable to global prices,” along with an unlimited family plan, according to their party’s platform on cellphone bills released Sunday.
The governing party also targets Canadian cellcos, stating that they “generate the highest revenue per gigabyte in the developed world,” and singles out “a few large corporate players… driving up prices [that] is unfair to Canadians.”
“According to Canada’s Commissioner of Competition, consistently higher prices in the telecom market reflects a lack of vigorous competition among the three national wireless carriers — and Canadian carriers have higher profit returns than in any other country,” the Liberals say in a backgrounder to Sunday’s wireless pricing announcement.
Robert Ghiz, president and CEO of the Canadian Wireless Telecommunications Association (CWTA) and a former Liberal premier of Prince Edward Island, said “prices are in fact going down.”
“If you look at the CRTC’s own numbers, wireless prices between 2016 and 2018 have already gone down by as much as 35%, let alone the 25% the Liberals are talking about – and that doesn’t even factor in all the unlimited plans that were announced over the past six months,” he said in an interview.
In a note to investors on Monday, Scotiabank telecom analyst Jeff Fan said the Liberals’ 25% price reduction promise “has already been achieved,” and the numbers the party shared in its backgrounder “is based on outdated ‘current’ prices.”
The Liberals said an unlimited nationwide talk-and-text- phone plan with 5G of data costs $87 a month and one for 2G of data is priced at $75 monthly. “These plans have already fallen recently to $65 and $55 BEFORE promotional bonus data, respectively, or by more than 25%,” wrote Fan.
In an email to Cartt.ca, Telus spokesman Richard Gilhooley added, “the significant and sustained investment from telecommunications companies has ensured that Canadians have access to some of the best wireless networks in the world, which stretches from urban centres to some of the most rural corners of our nation.”
Bell and Rogers left it to Ghiz, whose organization represents them, to speak to Cartt.ca following the Liberals’ cellphone-strategy announcement.
“The way for cellphone bills to continue to decline is for governments to continue to support facilities-based competition where we have the three national carriers [Bell, Rogers and Telus] and the new entrants that is creating more competition and leading to lower prices,” he said.
“If you look at the CRTC’s own numbers, wireless prices between 2016 and 2018 have already gone down by as much as 35%, let alone the 25% the Liberals are talking about.” – Robert Ghiz, CWTA
“At the same time, we need to encourage quality and coverage and we know that there will be a $26-billion investment in 5G over a six-year period. The only way to get that 25% rate drop and 5G with more Canadians connected is through facilities-based competition,” he said.
“It’s important that we maintain the track that is leading to the three pillars of quality, coverage and affordability.”
Prior Cartt.ca reporting in June, however, shows the Liberals may well have a more flexible definition of what “facilities” might be.
The Liberals’ platform also says it will encourage competition by expanding the entry of wholesale Canadian Mobile Virtual Network Operators (MVNOs) in the market, and require major network operators to lease their available capacity to “qualified competitors,” which according to the party backgrounder, will be determined not just by an MVNO’s physical infrastructure, but also its “commitment to creating jobs, developing skills or investing in research.”
“If at the end of two years we don’t see prices come down,” reads the platform, “we’ll consider expanding MVNO qualifying rules, which could include:
- lowering the entry and investment threshold for MVNOs;
- lowering the rates at which MVNOs get access to networks; and
- expanding the CRTC mandate to make affordable pricing for consumers a core objective, and giving it the tools it needs to meet that objective.”
However, the Scotiabank report noted an independent CRTC proceeding to mandate MVNO got underway months ago, as we have reported as well.
“The submissions and the hearing will occur (thankfully) AFTER the elections and we expect an evidenced-based process to determine the outcome,” said Fan, adding that the “recent back-to-school period has been one of the most competitive periods in the past decade driven by facility based competitors such as Shaw/Freedom, Quebecor/Vidéotron and Eastlink.”
“These companies have made significant investments in spectrum licenses and network facilities and mandating MVNOs would undermine their investment over the past decade.”
Fan also explained that one of the “key submissions” to the CRTC will come from the Competition Bureau, “which we expect will base their conclusion on recent pricing and competition data, as opposed to outdated prices” upon which the Liberals plan is based.
Ghiz cast a wary eye on the Liberals’ plan to mandate pricing for MVNOs. “It leads to less investment, which leads to lower quality and there’s no proof that prices go down,” he said.
To develop a high-speed 5G network in Canada and promote competition and lower prices, a “re-elected Liberal government will award spectrum access based on consumer choice, affordability and broad access, and reserve spaces for new entrants,” according to the party’s campaign.
“If these commitments are not met, companies would face penalties and potentially lose their spectrum access.”
(Ed note: It is difficult to envision how those conditions might be priced or included in modern spectrum auctions, unless the Liberals are envisioning a return to “beauty contest” instead.)
The Liberals also said they would commit $1 billion over five years to deliver high-speed internet (50/10 Mbps) to all Canadian homes and businesses by 2030, within existing Infrastructure Bank of Canada funds and in addition to the $1.7- billion investment in this year’s federal budget to bring universal high-speed internet access to rural and remote communities.
“Further details regarding costing will be released over the course of the campaign,” said the Liberal cellphone campaign strategy.
