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Jesse Brown: how big wireless companies, the banks, and even the actors’ union are keeping our mobile bills the highest in the world

Give Us Your MoneyGetting gouged by cellphone providers is such a routine part of life in Canada that it barely seems worth complaining about. Yet we complain all the time. We trade tales of shocking bills and awful customer service at every opportunity. We complain to friends and we complain to strangers. I complain professionally. To be a technology journalist in Canada is to constantly feed the nation’s seething consumer outrage.

Yes, Canadians pay higher monthly wireless bills than citizens of any other country, according to a report by Bank of America Merrill Lynch. Yes, our data roaming fees are higher than those in any other country, according to the Organisation for Economic Co-operation and Development. Yes, a cartel of three carriers—Bell, Rogers and Telus—still controls 95 per cent of our market, despite the emergence of budget providers Wind, Public and Mobilicity. And yes, text message fees in Canada are ridiculously marked up, by as much as 4,900 per cent, according to academic estimates. Each story solidifies our right to kvetch. We truly are the most screwed-over cellphone users in the world.

Is there a way out? It turns out that this is an exceptionally difficult question to answer. Many people who claim expertise in the area (lawyers, consultants, academics) are either directly employed by the cartel or somehow financially connected to it. These analysts will shrug off piles of independent research, denying that we have a problem in the first place.

One exception is Hudson Janisch, a University of Toronto professor emeritus of telecommunications law and a highly respected figure in the Canadian phone industry. Janisch’s research was instrumental in the crafting of our Telecommunications Act, and his name is listed alongside Alexander Graham Bell’s in Canada’s Telecommunications Hall of Fame (yes, this exists). More importantly, semi-retired at 73, he has no links to the telecom providers. Janisch can speak freely, and he does. “Canada is horribly out of step,” he tells me. “The reason is, year after year, government hasn’t been able to make the basic decision to let foreign capital into the wireless industry.”

The costs involved in launching a new wireless brand are massive—frequency licences alone are auctioned off by Ottawa for billions, creating an instant debt load for new entrants, before they spend a penny on infrastructure or marketing. Previous homegrown, independent companies, such as Fido and Clearnet, ran out of money and were quickly gobbled up by the cartel.

With such a robust Canadian cellphone market, you would think that smaller start-ups could easily find additional financing through our banks. But Canadian banks, Janisch explains, do so well by Bell, Rogers and Telus that they see little upside in backing new competitors who stand to drive everyone’s profits down by waging price wars. The big three make more money than any other wireless providers in the world. Why would the banks mess with a good thing?

The only way we will have true competition in our wireless market—and probably lots of it—is with an injection of foreign capital. And Canada would have no shortage of worthy and well-heeled suitors. International wireless companies like Vodafone and Orange have recently partnered with governments in the unlikeliest of places—Africa, the Middle East, South America. With deep pockets, these companies build local networks and then reap the rewards. Wireless bandwidth is a limitless commodity. Unlike oil, there is no set cost per unit below which a provider would lose money. Once the infrastructure is in place, rates are pegged to whatever a population can afford. Profits are built not by hiking prices to the maximum customers will pay, but by dropping prices and improving service to attract as wide a subscriber base as possible. As a result of this business model, there are now more cellphones in India than toilets. Developing nations may not keep the lion’s share of the mobile profits they generate, but they’re left with state-of-the-art communications networks upon which new industries are built. Visit Slovakia and you can enjoy mobile data speeds twice as fast as we have here.

Why won’t Ottawa allow foreign companies to spend their money building up our networks while driving down costs to a point where every Canadian can afford a cellphone? As the Internet moves from desktops to handsets, there is globally recognized value—economic and cultural—in keeping a citizenship wired on the go. Canada’s mobile penetration rate is perhaps our most embarrassing statistic: only 75 per cent of Canadians subscribe to a wireless plan, placing us dead last among comparable nations. High bills are one thing; becoming a communications backwater, eclipsed by developing nations, is quite another.

 

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