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Drop in wireless prices reflect competition

Drop in wireless prices reflect competitionA text message is sent on a mobile phone, November 9, 2010 in Montreal.The price of basic wireless phone service has gone up 16 per cent since last year but other packages with more features have held steady or gone down, according to an annual study commissioned by Industry Canada and the CRTC. THE CANADIAN PRESS/Ryan Remiorz

TORONTO - The price of basic wireless phone service in Canada has gone up 16 per cent since last year but packages with more features have held steady or gone down, according to an annual study commissioned by Industry Canada and the CRTC.

Industry Minister James Moore said the report's findings show that average wireless prices have come down 22 per cent since 2008 and smartphone plans have fallen even further, with newer carriers substantially less expensive than the bigger, older carriers.

"We are encouraged by the findings revealed in today's independent report, which confirm that our policies for more choice and lower prices are working to support Canadian families," Moore said in a statement after the report was released Monday.

The pricing of Canadian wireless communications has become a political issue, with the Harper government introducing a number of policies that it says will increase competition and reduce costs for consumers. Since 2008 it has set aside spectrum — required to carry voice, Internet, picture or video over the public airwaves — for new entrants, which led to the emergence of smaller carriers such as Wind Mobile, Mobilicity and Public Mobile as well as a new wireless service from Videotron, Quebec's largest cable company.

Bernie Lefebvre, vice-president at Wall Communications, agreed that the overall trend in Canada has been for wireless prices to fall.

"Whether you can attribute it to government policy, it's hard to say," Lefebvre said in an interview from Ottawa.

"Certainly with the entrants coming into the market some years ago now, prices have trended downwards."

Despite the government's initiatives, most Canadians continue to get their mobile service from Rogers, Telus or Bell that, collectively, account for about 25 million subscribers, or about 90 per cent of the total in Canada, according to the Canadian Wireless Telecommunications Association.

David Christopher, of the Vancouver-based pubic interest group OpenMedia — which is often critical of governments — said the latest pricing report shows that the smaller competitiors have had a positive impact in terms of bringing down prices.

But Christopher expressed concern about higher prices for basic wireless packages — $35.70 per month in the latest report, up from $31 last year — because the talk-only packages are important for lower-income Canadians.

"I certainly think that we'll be keeping an eye on those basic packages. It's really important because we don't want to leave whole sections of our community behind when it comes to being able to access wireless," Christopher said in a phone interview.

Christopher also said the report shows that the smaller carriers are helping to move overall prices lower.

"When it comes to the differential between the new entrants and the big telecom providers, that's really stark — whether you're looking at the most basic talk and text plan or a plan with lots of data."

The Wall report found that the most basic cellphone packages, with 150 minutes of talk and no options, cost about 28 per cent less from the new entrants as a group ($26.04 per month) compared with the established carriers, or incumbents ($36.30 per month).

For mid-level packages, with 450 minutes of call time, 300 texts per month and two features (voice mail and call display), the national average price was $45.26 overall ($45.79 for incumbents, $41.25 for new entrants).

Meanwhile, a third level of service with 1,200 calling minutes, 300 texts, a full selection of features plus up to one gigabyte of data usage, declined in price by 15 per cent to about $80 from about $94 a month a year earlier. But the new entrants' average price of $45.61 was 44 per cent below the incumbents' price of $81.88 per month.

In addition, for Level 4 of service, a new high-end that Wall included for the first time in its 2014 report, the new entrants price was only about half as high — $48.11 per month compared with $95.13 — for unlimited Canadawide talk and text and two gigabytes of data per month.

Lefebvre said that the basic talk-only plans have been kept in the study for consistency with the previous six years but that the trend has been to also having a text and data component.

"I would say that the majority of subscribers today are buying smartphones and, therefore, would have data plans," Lefebvre said from Ottawa.

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