Falling telecom prices a positive sign, but phone bills still too expensive: experts

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TORONTO — A worth drop for Canadian cellphone and web providers final month has some observers optimistic in regards to the downward pattern, however business watchers say there may be nonetheless an extended solution to go relating to telecom affordability.

Consumers paid 14.7 per cent much less for mobile providers in June in contrast with the identical month final 12 months, following an 8.2 per cent decline in May, based on Statistics Canada’s newest inflation report launched Tuesday.

Overall, the price of phone providers dropped 11.1 per cent in June from a 12 months in the past. Statistics Canada attributed extra inexpensive cellphone payments to each decrease costs for mobile information plans and promotional pricing.

The information aligns with developments that present the prices of telecommunication providers in Canada have been declining lately, mentioned Gerry Wall, whose firm Wall Communications Inc. publishes an annual report evaluating Canadian cellphone and web costs with these of different nations.

“Technology is allowing improvements in the use of spectrum, in the way that networks are run, in the efficiency of networks and so that’s probably a key cause of why prices are coming down,” Wall mentioned.

He added that the entry of Quebecor Inc.’s Videotron to the nationwide market by means of its buy of Freedom Mobile from Shaw Communications Inc. may speed up these declines. That transfer was a requirement of Rogers Communications Inc.’s April acquisition of Shaw imposed to ease competitors issues surrounding the merger.

“Some observers have indicated that they view (the market) as, ‘There’s some complacency in terms of the price competition,”‘ mentioned Wall.

“I do think that having a fourth player, which is pretty rare and could lead to some further price decreases.”

Prices for web entry providers fell 3.2 per cent in June on a year-over-year foundation after growing one per cent in May, based on StatCan. On a month-over-month foundation, costs declined 5 per cent, marking the biggest one-month lower since February 2019.

That was principally resulting from promotions in Ontario and decrease costs in Quebec, mentioned the federal company.

“The recent price reductions are the latest in a multi-year trend of declining prices in Canada’s wireless market and are a sign of the ongoing vigorous competition that is occurring in Canada’s wireless market,” mentioned Canadian Telecommunications Association spokesman Nick Kyonka in an announcement.

He famous a 33.3 per cent drop in mobile service prices over the previous three years, based on StatCan information.

Kyonka added the business is monitoring the results of Freedom Mobile’s new possession on worth developments.

The firm introduced in May it could supply a $50 month-to-month plan that features limitless calls and texts in addition to 40 gigabytes of knowledge. As a part of situations laid out by Industry Minister Francois-Philippe Champagne in March, Videotron should supply plans which can be at the least 20 per cent decrease than these of its rivals.

But Wall’s newest report launched in February, which was ready for Innovation, Science and Economic Development Canada, discovered Canada nonetheless had among the many highest costs internationally for cellphone and broadband service in 2022.

“Our rates are still astronomical compared to what people are paying in other countries,” mentioned David Soberman, a advertising and marketing professor on the University of Toronto’s Rotman School of Management.

“Even if we’ve had a 15 per cent drop in the actual cost that we’re paying for a mobile telecommunications, it’s still significantly higher than is being paid in other countries.”

While he mentioned the Rogers-Shaw deal paved the best way for Freedom Mobile to emerge as a fourth nationwide provider with mandated decrease pricing, Soberman questioned whether or not its presence would outweigh the detrimental results of elevated focus.

“The industry has been under some severe scrutiny in the last year, especially in the wake of the Rogers-Shaw merger, so I suspect the companies are trying to offer slightly more attractive rates,” he mentioned.

“We really haven’t increased the number of competitors. It’s just been a bit of a rearrangement of the deck chairs, but that might explain why we’re seeing somewhat more attractive pricing in terms of mobile phone costs.”

Laura Tribe, govt director of OpenMedia, an advocacy group that promotes web affordability and accessibility, mentioned many shoppers locked into plans aren’t feeling monetary aid.

“This is an announcement that says somewhere, on average, people are paying less and I think for a lot of users, it’s actually quite frustrating to see that when they don’t see that reflected in their own bills,” mentioned Tribe.

“There’s a lot of different lived experiences out there and that’s not necessarily reflected in maybe the celebrations of the telecom executives.”

While she referred to as the June figures a step in the best course, Tribe mentioned Canadian telecom costs are nonetheless coming down slower than they’re in peer nations.

“The average revenue per user is going up for these companies and their profits are still going up,” she mentioned. “So I think it’s indicative of the fact that it’s getting cheaper to provide cellphone services more than we’re getting a really great deal or the telecom companies are taking a hit.”

This report by The Canadian Press was first revealed July 19, 2023.