Unlimited wireless plans push mobile costs lower
Drop in cellular index offset by jump in smartphone costs
Long a source of consumer frustration, prices for mobile services fell in July following the launch of unlimited wireless data plans from the major carriers — but the gain was tempered by a sudden increase in the cost of smartphones and tablets, Statistics Canada says.
The federal statistical office in its July Consumer Price Index report says consumers paid 2.5 per cent less for telephone services last month compared with June, with the drop following an industry-wide shift in the pricing structure of cellular data plans amid intensifying competition among wireless providers. A Statistics Canada analyst said the agency’s cellular services index component of the telephone category posted a 3.1-per-cent month-over-month decline in July. The introduction of unlimited data plans also coincided with a reduction in the subsidies for wireless devices, shifting more of the cost of devices to consumers, the agency says. Consequently, the multipurpose digital devices index, which includes prices for tablets and smartphones, rose 42.5 per cent in July month-over-month.
Telephone services accounted for 2.29 per cent of the 2017 CPI basket of goods and services while multipurpose digital devices represented 0.24 per cent. Statistics Canada is aiming for a more precise measure of the costs of telephone services and hardware following a move by carriers to separate device and service plan charges on customer bills.
The telephone service price decline comes after the introduction of unlimited wireless data plans by national carriers BCE Inc., Rogers Communications Inc. and Telus Corp. Rogers on June 12 announced the first unlimited data wireless plan from a major national carrier in Canada, a move that analysts said reflected increased pressure from Ottawa to provide more affordable cellphone services. Toronto-based Rogers said its new unlimited Infinite plans start at $75 for up to 10 gigabytes of full-speed data usage per month, followed by unlimited data at reduced speeds but without additional fees for going over the limit.
In a statement, Rogers CEO Joe Natale said the new plans “will help our customers unleash the full potential of 4G wireless services today and 5G wireless services tomorrow.” A Rogers spokesperson added that the plans are designed to ignite growth. “We expect data
usage and penetration to continue to grow.”
Canada’s three national carriers have been slower to adopt unlimited data plans than U.S. wireless networks, although unlimited data plans have been available from regional providers, including Shaw Communications-owned Freedom Mobile. The Big Three have also introduced financing options so customers can pay for devices in installments over at least a two-year period with no upfront costs and without interest, lowering the amount providers pay in device subsidies. Those extended payment plans, however, have drawn the attention of the Canadian Radio-television and Telecommunications Commission, which says the recent trend to offer 36-month smartphone financing may violate a two-year limit on contracts set out in the CRTC’s Wireless Code of conduct governing service providers. The regulator says that while the longer-term financing plans could make device purchases more affordable, the plans could also carry cancellation fees or other clauses that would lock customers in for longer than the two-year limit set in the code.
Telus CEO Darren Entwistle on an earnings conference call early this month said the longer financing plans were about making access more affordable. The CRTC says it has solicited some information from wireless providers but will publish a notice of consultation to examine the financing issue in more extensively.