Business

Bell and Telus beef up data plans after Rogers sparks 'unlimited' price war

After Rogers announced an unlimited data plan on Wednesday, the company's two big rivals came out with expanded data plans of their own.

Higher data plans more common in the U.S. finally starting to come to Canada

Bell Mobility has matched a cellphone data plan offered by its competitor Rogers on Wednesday. Both plans have no overage fees, but after 10 gigabytes of data have been used, customers will experience reduced speeds. (Sean Kilpatrick/The Canadian Press)

Bell Canada has followed Rogers by matching an "unlimited" cellphone data plan with no overage fees for downloading more than 10 gigabytes of data each month.

But like the Rogers plan announced yesterday, customers will experience slower speeds once those 10 gigabytes have been used. Both companies are offering the service starting at $75 per month.

The announcement on Bell's website said that beyond 10 gigabytes, "speeds will be reduced for light web browsing, email and texting." 

The offer from the Montreal-based company is available until June 30.

Telus, meanwhile, also came out on Thursday with a beefed up data plan that would allow customers up to 15 GB per month for $75. Unlike Rogers' plan which the company says is permanent, and similar to Bell's which is a promotional offer, the Telus offering is only for a limited time, available to anyone who signs up by July 2.

"We're always making enhancements to our customer experience. We currently have a promotional offer for new, renewing and existing BYOD customers," spokesperson Brandi Rees told CBC News.

While offering a higher data limit, the Telus offer is not "unlimited" in that any customer who goes over the 15 GB limit in a month would be charged the usual pay-per-use overage rate of $10 per 100 MB.

Nonetheless, the beefed up data plans represent a shift in Canada's cellphone service landscape, where companies have been slower to adopt unlimited plans than their counterparts in the United States.

However, unlimited data plans have been available from regional competitors, such as SaskTel in Saskatchewan and Freedom Mobile, which operates wireless networks in Ontario, Alberta and British Columbia.

An analyst report from Bloomberg said the Rogers offer is at least  25 per cent cheaper than the company's comparable plan. While likely to be welcomed by consumers, report author John Butler called the announcement "a worrisome development for the company and the Canadian wireless industry."

That's because the price drop is likely to bring about a "prolonged decline" in the amount of revenue wireless companies earn per customer. 

"Even if more users upgrade to the new plan, Rogers' ability to monetize data-usage growth in the long term will be limited."

However, a similar report from TD Securities' Vince Valentini said the bank was in favour of "both the timing and the magnitude of the pricing changes," but that its forecasts for Rogers would depend on whether all major carriers follow suit.

BMO analyst Tim Casey echoed that sentiment in his own written statement, which said competitive reactions would be critical to determining the outcome of the move.

The changes are not unexpected, however, Casey said.

"We believe the timing reflects the evolution of the industry."