Perhaps the only thing Canadians like to complain about as much as the weather are cellphone costs. It's almost a national pastime; finding the least expensive cellphone plan in the USA or Europe and comparing it, unfavourably of course, to a premium plan in Canada. All, while ignoring the realities of geography, population density, tax regimes, etc.
A common complaint has been the lack of competition within a market being dominated by 3 major national providers. This complaint doesn't seem to recognize that it's 3 major carriers for a population of 33 million vs 4 major carriers for over 300 million in the USA. It also overlooks the reality that, here in the Toronto area, those 3 carriers morph into over 11 vendors, thanks to various distribution and licensing arrangements, each offering its own plans, prices, options, etc.
As populist governments are want to to, the Harper government a few years back, vowed to lower the cost of cell phone services for Canadians. The government auctioned wireless spectrum - the invisible "pipes" in the sky through which cellphones transmit their signals - and reserved a portion of that spectrum for new carriers. The existing companies could not bid or buy. The rationale was that more service providers would mean more competition and prices would come down. A government that normally would not condone protectionism in the market place, built a sort of wall around any new carriers in the name of good public policy - lower prices.
A year and a half after the auction, 3 new carriers were struggling to raise the capital necessary to launch service. It was a task made more difficult by restrictions on foreign ownership of telecommunications in Canada. One company in particular, Wind, came under particular challenge from the established and well as other new carriers for its murky ownership and indeed appeared to be at risk of collapsing before it even launched. That was until Industry Minister Tony Clement stepped-in and changed the ownership rules permitting Wind to obtain an operating licence. All in the name of increasing competition to give Canadians lower prices, quoth the minister. Wind prevailed and went on the air just before Christmas 2009. Since then, two more carriers, Mobilicity and Public Mobile, have launched in the Toronto area and others are preparing to offer service in other provinces.
Common to most of the new carriers is a business strategy that offers low-frill or no-frill "unlimited" wireless service in major urban centres. Unlimited, meaning they don't bill by the minute as do traditional wireless carriers in Canada and the USA. Their Services have been restricted to big cities (Toronto, Montréal, Vancouver, Ottawa, Calgary, Edmonton), not unreasonably, because they need to go where the greatest number of potential customers are as they try to get some revenue flowing while they expand their networks. Notably though, they aren't committing to extending their service to vast areas of low population density Canada where the original three carriers provide service, even if at loss.
Well the government's objective does appear to be being fulfilled, at least for urban Canadians. With lower cost options available at least some customers are migrating to the new carriers. Competition does indeed seem to be leading to lower costs for Canadians.
This leads to a new development this week. Rogers Wireless, the largest carrier in Canada, responded to the new competition by announcing it would launch a new no-frills service of its own within weeks. Like Wind, Mobilicity and Public Mobile, its service, Chat-r, will be a no-frills, unlimited service with prices designed to compete with the other unlimited services.
So what happens? How do the new carriers operating in a protected commercial environment (remember they had wireless spectrum reserved for their exclusive use) respond when increased competition appears to be leading to lower prices? Well Mobilicity for one has already threatened legal action to block Chat-r from launching. In other works, Canadians deserve lower prices but only if its their lower prices. Shameful!
