Why Canada Lags on Wireless

Where does Canada stand with respect to the cost of wireless services?  That question recently generated a spirited debate when the Organization for Economic Co-operation and Development released new figures that ranked it as the third most expensive developed country. Critics pounced on the report, calling the results ridiculous and pointing to perceived flaws in the methodology.

Given that consumers have a hard time making sense of the different plans, options, and hidden fees offered by Canada’s big three wireless providers (Rogers, Bell, and Telus), it should come as little surprise that comparisons of wireless services across dozens of countries is exceptionally difficult.  Some countries charge consumers for both incoming and outgoing calls, while many others do not. Moreover, hidden charges such as Canada’s system access fee – which can add as much as 25 percent to a monthly bill – are often excluded from cost calculations.

While the debate will continue to rage, few currently hold Canada up as a model of wireless leadership.  If not pricing, what should policy makers and politicians be focusing on?  My weekly technology column (Toronto Star version, homepage version) argues that four main issues come to mind.

The first is competition, particularly among GSM providers. While this will change later this year, for the moment Rogers is the only GSM provider in the country. Since GSM has emerged as the dominant global wireless technology, this has had big consequences for consumer choice and marketplace competition.  Most new devices, such as the popular Apple iPhone, are available only for GSM providers, meaning that Rogers has enjoyed a virtual monopoly on the hottest devices.

Although the government has been reluctant to publicly acknowledge its competition concerns, recent policies suggest that it would like to see a more competitive environment. The clearest indication came during the 2008 spectrum auction, in which it reserved some spectrum exclusively for new entrants over the objections of the incumbents.

There is another spectrum auction on the horizon that holds the possibility of opening the door to further competitors, particularly if Industry Minister Tony Clement is willing to revisit foreign ownership restrictions.

The auction also provides an opportunity to address the second issue – wireless net neutrality.  The current "walled garden" approach adopted by Canadian carriers in which they frequently control the applications that run on their networks has already attracted the attention of the CRTC.  It has ruled that new regulatory requirements are needed to counter the resulting competition concerns.

Transparency in pricing should also be addressed.  Canadian carriers continue to levy system access fees as a separate charge, despite the fact that they are nothing more than an additional cost to consumers.  Moreover, carriers often bury significant usage restrictions in the fine print, leaving consumers without a true sense of the cost of their mobile phones. Clear guidelines on disclosures would enable consumers to better choose among providers.

Fourth, the length of consumer contracts further stymies competition. Canadian wireless carriers attempt to lock consumers into contracts for far longer than virtually any other developed country, with three-year contracts considered the norm.  Several years ago Canada instituted wireless number portability that allows consumers to keep their numbers when switching providers.  While designed to fuel greater competition, the policy has largely failed, owing to the combined effect of a single GSM provider (meaning consumers often lose their device when switching providers) and long-term contracts.

Debates about wireless pricing may be addressing the right concern with the wrong question.  Instead, Canadians should be focused on competition, walled gardens, pricing transparency, and a cap on contractual terms.


  1. Marc J Ouellette says:

    I have had a cell phone as my sole telephone service now for over ten years (switched providers one time), and often felt a deep sense of unease at the rates I was being offered by all the providers.

    After reading this article I now have a name for that unease: it was frustration. I hate to say the C-word, but this article strongly suggests there has been ongoing collusion among cell phone providers to keep the prices artificially high for at least the past ten years. The cell phone companies have a lot of explaining to do; more importantly, they need to be reined in.

  2. You don’t have to take a contract
    None of the carriers require a contract. If you want a discounted phone, you choose the length of the term. Otherwise, you pay full price. What is wrong with that?

  3. Roger Rogers says:

    Rogers ripped me off and I can’t sue them!
    Rogers promised me that this new device and dataplan would be access fee free because it was part of my cell plan. This was promised in writing.

    Rogers renegged and charges me the hidden access fee anyways. Thanks.

    But I can’t sue them. 2 reasons. Reason 1, they don’t allow me to sue in their contract, it gets arbitrated and I suspect I pay for that. Reason 2, it will take 2 years before I incur enough costs that I can make into small claims court because the fee isn’t that big.

    Not only was I lied to, I was locked in.

  4. City Dispatches says:

    Canadian wirelss operators could learn from the developing world
    I recently traveled throughout Central and South America by motorcycle over an 8 month period. I was amazed to see wireless devices so pervasive and inexpensive.

    I witnessed, for example, young school girls, dressed in traditional clothing, in the mountains of Guatemala, speaking on their mobile phones as they walked around a giant mud slide that had blocked the Pan-American Highway to motor vehicle traffic for days. I was first amazed they had cellphone reception in such a remote area (something I don’t have 15 minutes outside my city). But I also was surprised that people with such little means could afford such ‘modern’ devices.

    How could they afford such luxury? I soon realized my frame of reference was molded by Canadian telco experience.

    Working basic cellphones could be purchased for the equivalent of $5.00 in many countries. No expensive long-term plans required. That’s unheard of in our country.

    Mobile phones are a luxury in Canada only because the Canadian industry uses every trick they can to limit competition and squeeze every penny they can from us. Michael spells out some of their tricks in this article above.

    Canadian wireless carries are not only the third most expensive in the developed world, they are behind much of the ‘developing’ world.

  5. @. (dot)
    You are correct, you can get any phone from the incumbents for full price and use it on a pay as you go (or rather, I know of none that you can’t do that with). I purchased my Rogers branded Nokia E-62 that way. However, it is locked to Rogers SIMs… Rogers won’t issue unlock codes because then they get big time roaming charges ($2 per minute in the US, $4 per minute in the Caribbean, apparently their are parts of Canada where you pay roaming at like $0.60 per minute, such as the north shore of Lake Superior. Let’s not forget to add air time and LD charges). They could have brought in the European model E-61, but that would allow the customer to dial VOIP calls through a wireless router, so they’d have lost money (apparently this functionality was removed at the request of AT&T).

    The problem isn’t that they recuperate the “subsidy” by a more expensive monthly charge. That wouldn’t be as big of an issue if the plan rates varied by if you were paying off a subsidy. However, if you don’t use a subsidized phone, or have completed the initial term (which determines how much “subsidy” you get on the phone) the plan rates are the same. It simply increases the Average Revenue Per Customer (ARPC) which they use as a performance measure.

  6. Its certainly not only about getting “discounted phones” that require you to take out a 3 year contract.
    Ever try to get a decent dataplan on your non-contract paid for phone? Most plans require you to take out a 3 year contract or pay through the nose.
    The same can be said about voice plans. Rogers will gladly give you the WORST possible plans unless you take out a contract.

    This is before we even talk about subsidizing phones. If you don’t get a discounted phone, then what exactly is Rogers subsidizing here?
    They will try *anything* to get you to take out a contract, forget about the phones.

  7. No contract data
    Check Fido for datastick []
    Or for any device []

  8. They close comments pretty quick on The Toronto Star’s site…

    All I wish is I could have the same service I had with Fido when I first signed up with them. This idea that there is true competition or services get cheaper or better over time is just not true.

    Signed up for CityFido the first day it came out. In that time I’ve had my monthly bill increased by $5. Then I got the system access $6.95 added. I also have an unlimited txt plan and they also started to charge for txt to the US. Plus, they locked me into a contract just because I bought an iphone and wanted a data plan.

    Things really don’t seem to be getting better from where I’m standing…

  9. @spike
    Agreed. Let’s not forget that, with the new entrants being (theoretically) on the verge of entry, the Big 3 are doing everything they can to lock in their existing customers, and making it not economically feasible for them to switch carriers. How? In the GSM world, locked cell phones (to go with a new carrier you’ll need to replace the phone if you can’t find a way to unlock it). Restarting 3 year plans if you modify your current plan (then the baseline date for the ECF gets changed). Getting new customers through some really attractive prices, where the prices are advertised as being for the first X months (of course, they don’t say what the price will be after that point in time).

    Dot. These separate data plans are expensive. The least expensive is 500 MBytes for $32 ($0.064 per MByte… the extra data charge is less than half that, add another $6.14/MByte if roaming in the US). Note that the advertised 7.2 MBytes/sec is an “up-to” rate, in areas covered by HSPA. Outside of those areas, it is EDGE (up to 474 kbps) or even nothing if there is no coverage.

  10. The first reason is there is NO COMPETITION
    What ______-ing “choices” do we really have in Canada !!!?
    Just like our Internet -there is no “fair” competition, with no rules protecting this “fairness”. -again, thanks to the ineffectual CRTC.

    The 1st reason is there’e no competition.
    2nd reason -no competition
    3rd reason -no competition


  11. new
    Hi I am new a immigrant from a developing country and I am surprised to see how telcommunication is unreasonably expensive here. In my country even beggers can afford a mobile. Thanks to the service providers and healthy competition that we have cheapest call rates and effective service. Canada MUST come up with solution fast. If realization is there examplethen please take some action

  12. Their “pay as you go” or “pay by the minute” are also very misleading
    Not only do you have to pay the costs beforehand in set increments instead of paying for what you use, but the rates are ridiculous. The rates for local calls from Rogers, Bell or Telus cell phones cost several times more than calling long-distance from a normal phone. You also have to buy at least $10-15 each month you want to use it, with the leftover minutes expiring unless you add more money in. And, if you don’t use it for a certain amount of time, you would have to pay re-activation fees to use prepaid again. Then, there are all those “extra” services you can choose to pay for that escalate the price for prepaid far beyond the price of better plans. Unfortunately, plans only seem to come in 12, 24 and 36 month terms where canceling early would incur huge early cancellation fees. It’s not very nice for people who aren’t in Canada all year round.

    Then there is text messaging. Both Bell and Telus will charge you even for text-messages you receive, unless you specifically have a text-messaging plan. And, unlike phone calls, it’s not like we can choose not to accept the messages. My sister used to get unsolicited text-messages right after she signed up with bell, which added a lot of costs, even though she didn’t actually use text-messaging herself. It only stopped appearing when too many people started suspecting that Bell might be collaborating with those advertising companies to increase their text-messaging revenues. When I talk to my friends in the Asian countries, I find that the cost of text-messaging for them is almost negligible.

  13. Hugh Stevenson says:

    Thank You Michael
    As Canadians, we are blessed to have citizens like Michael Geist. Listen to what he has to say and together we will improve our democracy and our prosperity.

  14. Options do exist and will get better
    We’ve been providing plan comparisons in Canada over at for 8 years now.

    I’ll be first to admit that our application needs to improve. Family plans, SMS, bundling, etc……all need to be considered when making a recommendation. The good news is that these improvements and more are on the way….soon.