Surprise cellphone roaming bills are a frequent occurrence in Canada as consumers are often shocked
to find bills in the thousands of dollars for data roaming when they travel outside the country. A new OECD report
helps the explain the reason why – Canadians face the highest data roaming costs among all OECD countries. The new report looked at the cost of using 1 MB in a single session for a traveller assuming they travel to all OECD countries. The result left Canadians paying the most at an average of $24.61. By comparison, Greek consumers pay $4.17 and Iceland customers pay $4.42. The OECD average is $9.48. The report includes several other baskets of roaming data with Canada typically ranking among the most expensive (with the exception of 20 MB packages). With Canadians paying five times as much as some other consumers for the same data roaming, the report is yet another illustration of the high cellphone costs faced by Canadian consumers and the desperate need for a more competitive marketplace.
You can’t mandate competition
I would love to see more competition, lower prices, better selection, etc.
But you can’t mandate competition. The market only supports so many suppliers. Even if we opened telecom up to foreigners we probably wouldn’t get any new players – we’d probably only get a buy-out of an existing company (which ironically would reduce choice & competition in the investment market).
No one’s going to give data away for $5 when there’s so many chumps willing to pay $25 for the same megabyte! You might sell a few less mega bytes but at those margins you’re making a lot more money!
Until consumers dump their data plans and tell the suppliers they’re too expensive the price won’t come down one cent!
I think you underestimate the power of greed, it works both ways … for the incumbents to maintain and the infiltrators to acquire.
telecom should be made entirely public. the way electric service is in quebec.
That would not necessarily make it more cost effective. Competition is still the best way but with infrastructure requirements imposed for the right to operate.
That is bad. But the CRTC will not do anything about it because it is staffed by ex Bell management.
I now live in Europe where Vodafone allows me to roam in 16 European countries for 2 EUR for 35MB for a 24 hour period. Each extra 1 MB costs 50 cents. A very nice deal. I check my email without thinking twice now when I travel.
Hey, Telus just said they can cut roaming costs by 50% and remain profitable! Good for Telus but bad for everybody for housing us in the first place. Good to see call outs & public opinion making some difference anyways.
I couldn’t agree more. The free market works best when the consumer is an active participant, looking for a better price. Unfortunately a large number of Canadian consumers are passive, in that they are unwilling to vote with their pocketbooks if there is a better price available. In the cellular world, number portability was supposed to assist this.
Now, there is a reason for SOME of the higher cellphone costs in Canada, especially if you compare against some countries. For the vast majority of Canadians the phone is subsidized by the carrier. For instance, I own a Rogers branded Samsung Galaxy S Captivate. I paid full price to get it on a no contract setup (I use pay as you go). However, on a 36 month contract you get the phone for $500 less than I paid (plus taxes). Since Rogers needs to recoup this difference, about $15 of your monthly bill (assuming the 36 month contract) goes to pay for the phone. This reduces the plan cost for the $40/month so called “unlimited voice and data” plan to about $25 per month effectively. I say some, because once the contract is expired you continue to pay $40 per month.
I can get the Samsung Galaxy S II for free with a 2 year contract from Vodafone NL for 30 EUR/month.
Canada needs more competition, period.
Well, has anyone noticed that rogers charges $50/MB (so does bell) to roam in their OWN network without a data plan. New players (Mobilicity and Wind) charges $5/MB to roam on ROGERS – which ISNT their own network.
MAny people will STILL stick to rogers/bell.
Number portability helps, but extremely long contracts prevent consumers from switched cost-effectively. What should be done is a split up of bills so that people know how much of their bill is going to paying for their phone in order to compare in the future, allowing for cost comparisons.
Besides that, with these long contracts, some people develop a sort of “Stockholm syndrome” where even when people keep telling them they are wasting money they will stubbornly stick with their old carrier. We need to do something to shake up this stagnant market and get people thinking again.
“MAny people will STILL stick to rogers/bell. ”
And they should remember that Bell and Rogers brands (Chattr, Fido, Virgin, Koodo, etc.) are still Bell and Rogers.
Skype In, Skype Out.
Seeking the lowest price…
The tendency of consumers to seek the lowest price can actually help a dominant company preserve their control of a market. It makes the practice of selective pricing that much more effective. All the dominant player has to do is lower prices in areas with competition and the consumers will enthusiastically help run the smaller company out of business. Any losses can be quickly made up after the dominant company regains the ability to set prices at will.
… which is yet another reason that opening the market to foreign companies will not really help in the present environment. Canada needs effective fair competition law and the political will to wield it effectively.
Where you have a small number of very large companies and a large number of small companies I agree with you. Part of the issue is the diversification that has occurred with the providers, in that they are now involved in a number of areas (for instance, Rogers, Bell, etc, are involved in cable or satellite, as well as acting as an ISP). This size is both good and bad. It means they may be able to survive a downturn in one of the sectors they serve better, however it also means that they can, as you described, artificially create a downturn in sector revenues both for themselves and their competitors.
@Harrison Gross: I can’t disagree with you there. However, remember that the cancellation fees also cover any outstanding subsidization on the phone. To a point the company has to protect themselves against people who buy a cheap phone from them and then immediately leave. Are the cancellation fees too high? Probably. I personally think it should be based on the amount of subsidization left to be paid off (I tend to think of the reduced price for the phone as a no-interest loan from the company which is paid off over the lifetime of the contract. This means that the contract price should go down once the initial contract is done so long as you are using the same phone).
@Christian: I don’t believe that I said that we don’t need more competition. What I did say was that just because there is more competition it does not automatically follow that prices will go down. If the consumer is willing to pay $X for a service, and isn’t willing to migrate to the new company, then the price will stay at $X. There is a number of reasons for this… in addition to what schultzter said, if the new company doesn’t have the geographical coverage the customers are after (and don’t have roaming agreements in place), they are unlikely to get the customers. In the end, what drives prices down is not the number of competitors but the willingness of the customers to walk away from the offers that are being presented by the competitors.
When it comes to international roaming fees, having multiple Canadian carriers dividing up the market will actually drive prices up not down. Carriers always trade traffice first and then settle on the imbalance with cash. Smaller carriers bring less traffic to the table and a larger traffic imbalance so the lack of decent economies of scale mean that the customers of smaller carriers will pay more to roam. The entirety of Canada with its 23 million wireless subs is actually a pittance compared to other more populous countries so we are unlikely to ever see roaming rates as low as bigger countries with larger carriers. More wireless carriers for our smaller population just makes the problem of international roaming rates worse.