Critics question Liberals' falling cellphone price claims, budget promises

As the federal authorities touts measures meant to curb the price of Canadians’ cellphone payments, some say there’s a disconnect between what shoppers are paying and the rhetoric surrounding value declines.

On Thursday, Prime Minister Justin Trudeau drew the ire of social media customers when he posted on X, previously referred to as Twitter, that “we’ve cut the cost of cellphone plans in half since 2019 — in part by increasing competition.”

“Next, we’re going after the junk fees on your phone bill, so you can do things like cancel your plan or switch to a cheaper one with no added charges,” Trudeau mentioned.

But the publish raised questions, together with from shoppers saying they don’t really feel as if they’re paying much less on their cellphone payments than they had been 5 years in the past.

“A show of hands please? Has your phone plan cut itself in half? Mine hasn’t,” mentioned X person Ryan Lindley.

“My kingdom for a single person whose cellphone bill has been cut in half since 2019,” tweeted Steve Boots.

Trudeau was selling a plan in final week’s federal funds, which mentioned the federal government would amend the Telecommunications Act to assist Canadians change web and cellphone suppliers. The funds cited Statistics Canada knowledge from December 2023 that confirmed cellphone plan prices declined by 50 per cent because the identical month in 2018.

Industry watchers are considerably divided on how a lot inventory to place into that StatCan knowledge, which is reported every month as a part of its common shopper value index releases.

Some say it’s clear proof of competitors within the market and that customers are getting extra bang for his or her buck by new affords, corresponding to larger knowledge packages, worldwide roaming perks, or voice-to-text voicemail companies.

“Just because you’re paying the same amount of money each month doesn’t mean that represents no price decrease,” mentioned telecommunications guide Mark Goldberg, evaluating it to “getting a Lamborghini for the price of a Honda Civic from five years ago.”

Others argue that whereas clients are paying much less per gigabyte of information, these offers is perhaps influencing individuals to buy larger knowledge buckets than vital. Cellular companies are additionally typically bundled with TV or web, that means financial savings may come on the expense of buying extra issues.

Dwayne Winseck, a professor at Carleton University’s School of Journalism and Communication, mentioned it displays telecoms’ means “to package something up as a benefit when in fact it’s not.”

“If you look at it per gigabyte of data, prices are absolutely going down, there’s no doubt about it,” he mentioned.

“But people are getting data that they may, in many cases, not even need and they’re having to pay for that whether they need it or not. Ultimately at the end of the day, while per gigabyte, data may be cheaper, who’s that good for?”

Shifting metrics

Winseck cited one other metric that tells a distinct story — the typical income per userreported by cellphone firms.

According to the CRTC, telecoms averaged $67.26 in cell phone revenues per person throughout the second quarter of 2023, up from $64.33 in the identical quarter of 2016.

“(it) really is, at the end of the day, the key measure here,” he mentioned.

While Canada’s largest carriers typically level to the StatCan knowledge on the declining price of mobile companies, the federal authorities has beforehand appeared much less inclined to rejoice these numbers unreservedly.

For instance, Industry Minister François-Philippe Champagne mentioned in January that “while some progress has been made to lower prices, Canadians still pay too much and see too little competition.”

He urged carriers “to seriously consider customers over profits” following stories that some firms deliberate to lift charges this 12 months.

Michael Geist, the Canada Research Chair in web and e-commerce regulation on the University of Ottawa, described a “disconnect in the data” that was evidenced by the response to Trudeau’s social media publish.

“It is true that the deals measured by StatCan have declined in relative price as the carriers offer larger data buckets, promotions or move more services toward ‘optional’ ancillary charges,” he mentioned by e-mail.

“While that does mean you get cheaper plans, the carriers’ own financial data as measured by average revenue per user tells us the reality. Canadians are spending more on wireless services than they did five years ago. Moreover, the concern has long been that Canadian prices are high relative to other countries. That remains the case.”

Budget promise questioned

Critics additionally query commitments within the federal funds meant to assist reduce telecommunications prices sooner or later.

The doc mentioned that following Ottawa’s proposed modifications to the Telecommunications Act, carriers “will be prohibited by the CRTC from charging consumers extra fees to switch carriers.”

But Goldberg mentioned there are already protections in place that forestall a cellphone firm from penalizing clients for altering to a brand new supplier.

Those are contained within the Wireless Code, a compulsory code of conduct created by the CRTC in 2013 that applies to all service suppliers. The code states that if a buyer cancels a contract earlier than the tip of the dedication interval, the service supplier should not cost the shopper any payment or penalty apart from a possible early cancellation payment.

That early cancellation payment can also be not relevant if cancelling service after 24 months.

“Since 2013, there’s been no meaningful penalties for early termination of a contract,” mentioned Goldberg.

“The only fee that kicks in is if you have an agreement for your service provider to be financing the device and you leave that service provider early, then the remaining balance is due.”

Asked whether or not the federal government’s funds proposal was redundant, a Department of Finance official acknowledged “there are important protections that already exist in the Wireless Code.”

“These adjustments may complement or reinforce those protections,” mentioned Benoit Mayrand in an e-mail.

“With respect to the specific fees and implementation, Budget 2024 notes that the CRTC will implement these changes following consultation on specific requirements. Confirmation of the precise requirements and changes will follow that process.”

This report by The Canadian Press was first revealed April 22, 2024.

Sammy Hudes, The Canadian Press