CRTC's wireless cancellation policy boosts cost of basic plans: study

New laws that allow Canadians to change or cancel their cellphone plans after two years instead of three have increased the cost of basic cellular plans, even as prices for heavy-use cellphone plans have come down because of new challengers in the market, a study released Monday shows.

But price of heavy-use plans continues to fall

An annual study commissioned by the government has found that the price of basic wireless plans has been rising since the CRTC introduced new contract rules last year. (CBC)

New laws that allow Canadians to change or cancel their cellphone plans after two years instead of three have increased the cost of basic cellular plans, even as prices for heavy-use cellphone plans have come down because of new challengers in the market, a study released Monday shows.

The price of mobile services has become a hot political issue, with the Conservative government trying to drive prices down by encouraging smaller companies to challenge the dominance of the big three: BCE Inc.'s Bell, Rogers Communications Inc. and Telus Corp.

To a certain extent, those efforts have helped the situation, with several types of wireless plans now cheaper, in certain terms, than they were five years ago. But the Wall Report, commissioned by Industry Canada and published Monday, paints a picture of an industry that is out of whack with its international peers. 

Regulators brought in those new rules in December 2013, putting an effective end to three-year contracts and aiming to stimulate competition by letting people switch carriers. But for the bottom end, this means higher prices.

Carriers typically subsidize the cost of expensive cellphone contracts in exchange for locked-in prices over a fixed term. The Canadian standard used to be three years, but new laws implemented in 2013 cut that to a maximum of two. One of the results of that law is that in many case, monthly service plan prices are now going higher in order to recoup those costs in two years instead of three.

The government-commissioned Wall Report showed the monthly charge for basic mobile wireless service rose to $36 in 2014 from $31 in 2013, and $34 in 2010. High-volume users, however, saw their prices decline to $80 from $94 in 2013, and from $110 in 2010.

"The reduction of contract terms placed upward pressure on service plan prices given there is now a shorter period available to recover the handset subsidies," said the report.

Despite some improvements, the report found Canadian prices are still far higher, almost without exception, than those in other countries.

A basic, light-use, cellular plan in Italy costs the equivalent of $10.85 a month, for example, but $35.70 in Canada. And an "unlimited everything" plan (although it's capped at 2 GB of data) costs $92 in Canada at the Big Three, but that same plan costs $58 in Britain and $50 in France.

"The clear message from this report is that whether you are a large user or a light user of wireless services in Canada, you are paying more than in most other G7 countries," Michael Geist, a law professor with an expertise in telecom policy said. "Across the board, Canadians' pricing ranks in the top 3 most expensive," he said. 

New discounts available

However, it said the main phone companies now introduced alternative no-term "BYOD" or bring-your-own-device plans which can yield a discount of $10 to $20 a month.

The study showed prices by companies newly operating in the market were between 10 per cent and 49 per cent less than the incumbents, and they usually offered higher data allowances.

"Over time, the prices of telephone mobile telephone services have continued a downward trend and they've continued that, generally speaking, this year," Wall told CBC News in an interview.

The Wall Report, which is done annually, introduced a new comparison this year, of international roaming rates to and from the U.S. available to Canadian and American consumers.

It found the big U.S. players' roaming call and text rates in Canada were lower than the Canadian incumbents' rates in the United States, whereas the reverse was true for data — effectively a draw.

But it found that the new entrants in Canada offered far lower roaming rates than the Canadian incumbents, whereas U.S. regional carriers offered either no roaming or very limited roaming in Canada.

With files from Reuters

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