Are lower wireless prices on horizon?

Freedom shakes up the status quo

T ORONTO • If all you wanted for Christmas was a lower smartphone bill, you may be in luck come the New Year.

Canada’s three l argest wireless providers sparked a flurry of demand last weekend with unprecedented deals offering 10 gigabytes of data for $ 60 per month for customers in Ontario, Alberta and B.C. that brought their own phones. Data typically costs twice as much.

Rogers Communications Inc., BCE Inc. and Telus Corp. insist their discounts were temporary, but long lines and call centre wait times revealed how badly Canadians want lower wireless prices. Analysts largely credited a smaller player, Shaw Communications Inc.’s Freedom Mobile, for kicking off the price competition by introducing permanent plans with 10 GB for $ 50 in October, albeit on their less extensive network.

Freedom’s role in injecting competition could make it harder for the Big Three to argue that smaller players shouldn’t get an advantage in the upcoming auction for wireless spectrum, said Kaan Yigit, president of Solutions Research Group.

“This episode doesn’t help the Big Three in spectrum auction matters by drawing attention to consumer demand for lower data prices, but makes the case for supporting newer entrants.”

The federal government is poised to announce the structure of the next spectrum auction early next year. Innovation, Science and Economic Development proposed setting aside 43 per cent of the 600- MHz spectrum for new entrants such as Freedom and Quebecor Inc.’s Videotron. Each has about 3 per cent of the national market share, whereas the Big Three providers each control about 30 per cent.

The government proposed set- asides as a way to “address issues of market power,” given that prices are notably lower in regions with four strong players. But the Big Three players argue set-asides inflate the price of spectrum by artificially limiting supply for the national carriers. That cost is ultimately passed to consumers, they say, and is unjustified given Shaw and Quebecor can afford to compete without extra privileges.

For its part, Shaw said it needs the spectrum in order to upgrade its network to compete with the Big Three on their faster, more reliable networks.

Regardless of how the government rules on set-asides, the previously unheard of deals last weekend indicate the fourth player did shake up the status quo even without the extra spectrum.

Yigit expects carriers will be under continued pressure to lower prices from customers. While he doesn’t expect the Big Three to match Freedom i ndefinitely, he said they might introduce improved plans at a similar price point by next spring.