Yahoo Finance Five reasons your cellphone bill is so high
Rogers Communications wants to buy Shaw Communications for $20.4-billion or roughly double the cost of my annual cellphone bill.
In a market notorious for high prices compared to other countries around the world, the companies want to join forces to “increase efficiencies” so they can offer lower prices to Canadian consumers. It sounds great in theory, but Canadian cellphone users have been told for decades the reason their prices are high is that there aren’t many competitors in a tightly regulated market.
Here are five reasons your cellphone bill is always higher than you think it should be.
1 - First things first
Let’s understand each other - Canadian cellphone bills ARE higher than almost anywhere else in the world. A recent study from The Markup (a non-profit newsroom dedicated to how corporations use technology to shape society) ranked Canada among the lowest when it came to affordability.
This chart does more to show the situation than mere words, but the report also found Canada had the highest costs per website visit on a mobile device at four cents.
Meanwhile, British service comparison website Cable.co.uk, ranked Canada 209 out of 228 countries for cellphone prices (that’s bad).
2 - Canada is big
Canadian cellphone networks rely on 13,000 towers to transmit signals from phone to phone. That means if you’re making a call from Halifax to Vancouver, you need to skip over hundreds of towers to make your connection to Granny.
The Canadian Wireless Telecommunications Association recently noted that 88.8 per cent of major roads and highways had mobile coverage by the end of 2019, costs of which were borne by the telecommunications companies that sell you your services. Canadian cellphone networks cover two million square kilometres, and the companies that own them are said to spend $2.5-billion a year to keep them running.
They need to sell you a lot of extras - hello, Wifi Assisted Calling for an extra $5 a month - to keep the network consistent.
3 - Little competition
Sure, you may be able to get an off-brand cellphone plan. But most of those carriers are subsidiaries of the big three. This has long irked the Canadian Competition Bureau, which has advocated for new systems put in place to allow independent companies to get in on the action to push down prices.
“Even with the widespread introduction of ‘unlimited’ cell phone plans, more Canadians could save money on their cell phone bills if [large telecoms] faced greater competition from regional carriers,” it wrote.
No movement on that yet.
4 - Foreign investment
Spend a few days in the U.K. and your head will spin with the options available for a new cellphone plan. Some are national, but many of the other biggest carriers are anything but - O2 is Spanish, Vodafone is German.
The last time a large foreign player - Verizon in 2012 - tried to enter Canada the major Canadian players launched an all-out public relations battle that included full-page newspaper advertisements warning the foreign invader would crush even the largest of Canadian players. (Yahoo is owned by Verizon Media, a division of Verizon Communications.)
A year later, Egyptian billionaire Naguib Sawiris left Canada in disgust after his company Orascom tried to buy the Allstream division of Manitoba Telecom Systems for a half-billion dollars. The reason? Regulations.
“The world is big and my money can go anywhere,” Sawiris, said in an interview with Ahram Online. “I am finished with Canada, I tell you.”
5 - Supporting other projects
Telecom networks are the fuel that powers some of Canada’s largest and best-known franchises. Rogers Communications also owns the Toronto Blue Jays and owns 37.5 per cent of Maple Leaf Sport and Entertainment (which owns the Toronto Maple Leafs and Toronto Raptors, among others). It also has a media division that owns local news channels, though it has recently divested its magazine division.
Bell, meanwhile, owns the CTV television network and Bell Radio Network and has been cutting heavily to try and reduce costs. It also holds a big piece of MLSE.
The telecom business is a money maker - these divisions increasingly are not.
