Why Canadians Pay Some of the Highest Cellphone Bills in the World [Update]

While telecom executives and even government regulators insist that wireless prices in Canada are going down, cellular service (and mobile data in particular) continues to be costly. Consumer affairs watchdog CBC Marketplace recently launched an investigation into why Canadians’ cellphone bills are higher than most of the world.

According to Marketplace‘s report, Canada remains one of the most expensive countries in the world for mobile data regardless of what methodology is used to compare wireless affordability.

Marketplace investigation into the cost of telecom services in Canada has found that many of the oft-quoted industry explanations for high wireless prices — costly operating margins and a sparse Canadian population, for example — are insufficient to explain lower prices found in other countries and even between some provinces.

Rewheel, an independent telecom research firm that publishes bi-annual reports on wireless pricing across 50 countries, has ranked Canada among the most expensive countries for mobile data for several years.

Per Rewheel’s latest report from May 2021, wireless customers in Canada pay seven times more for every gigabyte than their counterparts in Australia, 25 times more than Ireland and France, and a whopping 1,000 times more than Finland.

Using Rewheel’s cost-per-gigabyte data, Marketplace made the following estimates: scrolling Instagram for five minutes would cost about half a cent in France, but can cost 20 cents in Canada; downloading a 30-minute long YouTube video would cost eight cents in Ireland and $1.03 in Canada; and downloading an entire season of Netflix’s Wednesday cost about $1.62 in Australia but $10.22 in Canada.

Marketplace went on to highlight several reasons why cell phone bills in Canada are as high as they are, including lacklustre competition in the telecom industry. The majority of the country’s wireless market is occupied by the Big Three (Rogers, Bell, and Telus), with help from their flanker brands that often offer a better value proposition.

Marketplace found that in provinces where there is an additional major regional competitor that wasn’t owned by Rogers, Telus or Bell (or had only recently been acquired), prices offered by the big three were cheaper,” the report noted.

According to the study, the official websites for Rogers, Bell, and Telus all offer relatively cheaper plans in Saskatchewan and Quebec — provinces where local operators Sasktel and Quebecor’s Vidéotron, respectively, compete with lower prices and force the Big Three to slash theirs.

“Canada didn’t used to be one of the most expensive countries when I started measuring about 10 years ago,” said Rewheel managing partner Antonios Drossos. He added that while wireless service has been getting cheaper in Canada, prices are falling much slower than in most other countries.

Furthermore, telecom industry incumbents go out of their way to prevent new players from breaking into the market, said Anthony Lacavera, who founded Wind Mobile in 2008 with hopes of disrupting the status quo with lower prices.

“That was a real threat to Bell, Telus and Rogers and so they went to the wall with the government, lobbying against our entry into the market,” said Lacavera. “I underestimated what a hurricane I was going to be going up against.”

The Big Three, Lacavera claimed, delayed Wind’s entry into the market by over a year, arguing that the company had too much foreign investment. Wind Mobile was ultimately acquired by Shaw Communications and renamed Freedom Mobile.

To make matters worse, Canada’s telecom market is heading towards even more consolidation as Rogers battles opposition from the Competition Bureau and the House of Commons to acquire Shaw, which also runs its own wireless brand, Shaw Mobile.

Canada’s communications pricing problem isn’t limited to mobile wireless, either. According to a federal government-commissioned study from last year, internet prices in Canada are also on the rise, having gone up considerably following the Canadian Radio-Television and Telecommunications Commission (CRTC)’s failure to implement lower wholesale internet rates in 2019.

Update January 17: A CWTA spokesperson reached out to iPhone in Canada to dispute the Rewheel study.

“With respect to price comparison studies, most of these studies are one-dimensional and use flawed methodologies,” said the CWTA spokesperson. “They do not compare similar plans and fail to consider that it simply costs more to build and operate wireless networks in Canada than most other countries.”
“Regarding the quality of price comparison studies see for example [the] paper co-authored by over 20 prominent economists, Adding a Warning Label to Rewheel’s International Price Comparison and Competitiveness Rankings,” added the CWTA.
“For an example of a study that does take into these factors see: A Comparison of the Mobile Wireless Value Proposition, and in particular the ranking results in Table 5 and Table 11, in which Canada is ranked as having the highest value proposition,” said the CWTA, pointing to a study commissioned by the CTIA, which represents the U.S. wireless communications industry.