Major telecom firms must lower prices or face action
Federal government requires 25% cuts for wireless data plans over next 2 years
TORONTO Canada’s telecom providers will be pushed to slash wireless data plan prices by 25 per cent from 2020 benchmark rates over the next two years or face regulatory action to increase competition, the federal government said on Thursday.
The decision to use early 2020 levels as a baseline for the reductions could put BCE Inc., Rogers Communications Inc. and Telus Corp. in a tight spot because the new benchmarks are substantially lower than what the industry was hoping for.
In a speech in Toronto, Innovation Minister Navdeep Bains said the Big Three wireless providers will be expected to slash prices for cellphone data plans between 2 and 6 GB from early 2020 levels.
The government provided a chart to journalists showing current benchmarks at $50 for a 2 GB plan, $55 for a 4 GB plan, and $60 for a 6 GB plan.
Bains expects all those prices to come down by 25 per cent within two years, but that several options were in play if the telecom companies don’t play ball.
In an interview, Bains said that the government might move more toward forcing the big wireless carriers to offer wholesale access to their networks for smaller mobile virtual network operators (MVNOS).
“If they are unable to hit those targets, we will move ahead with additional competitive measures like how we deploy future spectrum and how we look at bringing in new entrants, possibly through mobile virtual network operators,” Bains said.
Liberal policy documents released during the election last year suggested a benchmark price for a phone plan with 2 GB of data would be about $75.
Based on those campaign documents, Telus has already been using a “True North Affordability” logo on various phone plans, to indicate they’re already 25 per cent below the campaign target.
The Liberal promise to reduce cellphone bills has received pushback from the big telcos.
In the course of early 2020, the big three have warned they will cut their investment spending if the government mandates MVNOS.
Over the course of 2019, Rogers, Bell and Telus all introduced unlimited plans that cost more money, but have a lower per-gigabyte cost, because those plans come with higher data allotments.
Bains said a 25-per-cent reduction based on the new benchmarks is what matters now.
“If they achieve those targets they can brag about that as much as they want,” Bains said.
Bains said Statistics Canada will also collect data from phone companies and publish quarterly reports on phone plan prices, so the public can track prices over the next two years.
“Canadians will be able to see in the two to six gigabyte space for each plan with each company in each region, where those price points were at the beginning of 2020 and where they will be at the end of two years,” Bains aid.
Bell and Telus made it clear that they’re unhappy with the marching orders from Bains.
“It is extremely disappointing to see that the 25 per cent decreases are limited to the national carriers,” the Telus statement said. “This is yet another punitive action taken by this government against the companies that have built Canada’s global-leading wireless networks — and which are being asked to invest billions of dollars to ensure Canadians can benefit from next generation 5G technology — and all in the name of solving a problem that numerous independent studies have repeatedly proven does not exist.”
Bell said it will study the government’s direction “but will note that policies discouraging investment, including regulating wireless pricing or continuing to deny fair access to spectrum for all competitors, put jobs and innovation at risk in an industry that’s delivering tremendous value to consumers. It’s the worst time to jeopardize our country’s wireless success as carriers look to ramp up investment for the global move to 5G wireless.”
As part of Bains’s speech Thursday, he also announced new details of the upcoming auction for midband wireless spectrum.
The 3500mhz band is a highly anticipated auction, because the frequency is seen as a key asset for deploying 5G networks in Canada.
The details are extremely complex, because the feds will be selling licences for a 200mhz band of the electromagnetic spectrum, divided up into 10mhz chunks, in 172 geographic areas across the country.
As part of the rules, the government is setting aside 50mhz, which the big three telcos can’t bid on and is intended to allow smaller players to get a piece.
Bains said fostering more competition is part of the government’s push to bring down wireless prices.
“We’re seeing prices are 45-per-cent lower where we’re seeing strong regional players,” he said.