Post Tagged with: "telus"

Competition Not Contracts: The Real Reason Canadian Wireless Prices Are on the Rise

This week, Telus and Bell announced new wireless pricing plans based on two-year contracts (Rogers has said their plans will be released shortly). Those plans – particularly those from Telus which seems to be taking its suggestion that Canada should be the most expensive wireless country seriously – feature higher prices, which some claim are the product of the shift from three-year contracts to what is effectively a two-year maximum under the new CRTC wireless code. The narrative behind these cost increases is that consumers are amortizing the cost of their device over a shorter period of time and therefore can expect higher monthly fees. This argument is perfect for the carriers as they get to blame the CRTC (and by extension, the Competition Bureau, consumer groups and consumers themselves) with an “I told you so” for the increased prices. Yet the higher costs are not strictly a function of shorter contracts, but rather a product of Canada’s uncompetitive marketplace. 

Many other countries have two-year contracts with cheaper rates and bigger device subsidies. This is because consumer price is not primarily a function of contract length or device cost, but rather marketplace competition. For example, Spain’s wireless pricing has been dropping in recent months as their four major carriers find consumers more aggressively shopping for better prices or cancelling their wireless services altogether. In response, all four Spanish carriers are dropping prices to stop the churn and attract new customers. For example, BGR reports that Yoigo (owned by Telstra) has offered free iPhone 5’s on two-year contracts for as little as 25 euros (C$34) per month (the article emphasizes how competition through innovative pricing has led to profit declines at incumbent carriers). The decline in price is illustrative of why it is competition, not “regulatory costs” or device subsidies, that are the key factor to consider.

[Update 7/27: A commentator below helpfully points out an inaccuracy in the BGR article since the Yoigo price was for phone only and not service. A fuller comparison of the Spanish offer is as follows: Yoigo for 24 months of 25 euro phone + 25 euro service (unlimited voice + 1 GB data) is C$1636.24. Add another 12 months of service for C$409.56. Total three year cost is $2047.80. Bell’s current offer on an iPhone 5 with the same voice and data for three years is $179.95 for the phone, $35 for the activation, and $70 per month of the service for 36 months. Total three year cost (not including taxes) is $2734.95.]

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July 18, 2013 — 19 comments — News

Telus: Canada Should Be the Most Expensive Wireless Country in the OECD

Telus has responded to my post on the 2013 OECD Communications Outlook, which ranked Canada among the most expensive countries in the OECD for wireless services in virtually every category, with its own post claiming that Canadians should be celebrating our relatively high prices. The post notes the investment that Telus and other companies have made in Canada (Peter Nowak explains the reason behind much of that investment) and argues that:

When you consider our enormous investment, challenging geography, sparse population and outstanding networks Canada really SHOULD be the most expensive country for wireless service in the OECD, but we’re not. That’s a great success story we should be celebrating.

It is a testament to how out-of-touch Canada’s incumbent wireless providers have become that they think Canadians should be celebrating the fact that we are not the single most expensive wireless country in the developed economy world.  Telus says that scratching below the surface of the OECD report will lead people to conclude that Canadians pay about the same as other developed countries. Yet in its own chart, Canada ranks among the more expensive countries within the G7 in every category but one.

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July 15, 2013 — 37 comments — News

Canadian Telcos Change Tune Over Implementation of CRTC’s Consumer Wireless Code With Lawsuit Threat

The CRTC released its consumer wireless code last month, receiving kudos for new measures that should eliminate three-year contracts. Now the major telecom companies are preparing a lawsuit challenging the rules associated with the implementation of the code. While the code will take effect for any new, renewed, or changed contracts starting on December 2, 2013, the CRTC has stated that all consumers should benefit from the code by June 3, 2015 or two years after its initial release. The telcos object to this position, arguing that it retroactively applies new conditions to contracts that existed prior to the start date of the code. According to an affidavit from SaskTel, the major concern involves the potential for consumers on three-year contracts to walk away from those contracts in June 2015 without further payment, despite terms that could run months longer.

Yet during the wireless hearing, some telcos assured the CRTC that customers would benefit from the code within two years. For example, SaskTel told the Commission that its customers now upgrade their devices (and thus would fall under the code) roughly a year and a half after signing the initial contract:

Customers are turning over their devices in the second to third year. We have introduced an early device upgrade program in October of last year which gives customers the ability to upgrade their device at any time. Since we have implemented that program we’ve seen customers upgrading after about 17.5 months.

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July 4, 2013 — 8 comments — News

Government’s Wireless Policy Still Not Connecting as it Kills the Telus – Mobilicity Deal

Industry Minister Christian Paradis surprised some analysts this morning by announcing that the government would not approve Telus plans to purchase Mobilicity. The decision is entirely defensible. The government established clear rules on transfers of spectrum that was set-aside in 2008 that prohibited transfer to incumbents within the first five […]

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June 4, 2013 — 10 comments — News

Debating the State of Canadian Wireless Competition: The Present Isn’t So Friendly

Last week, I posted what I thought was a lengthy post on the state of Canadian wireless competition (and followed that with a condensed version in a column). This week, Telus’ Craig McTaggart showed what a long post actually looks like as he issued a 42 page response to my post as well as recent posts by Peter Nowak (here and here) and Open Media. While I won’t address everything in McTaggart’s post – Nowak responds here and Open Media can address the issues focused on their writing if they wish – a few responses are in order.

McTaggart is clearly passionate about these issues, going so far as to suggest that claims that Canada’s wireless market is uncompetitive is an “insult to TELUS’ team members.” Yet while he decries the use of older data, confusion of different issues, and cherry picking some statistics, he proceeds to do exactly that in his response. In fact, the oldest data I’ve seen in the myriad of recent posts on these issues can be found in McTaggart’s response as he relies 2005 data to argue that Canadians use their wireless devices more than most people in the world (page 16).

McTaggart starts his commentary on my post on page 11, going through each of my ten points. I’ll follow the same format:

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March 21, 2013 — 47 comments — News
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