Innovation, Science and Industry (ISI) Minister Navdeep Bains said Bell, Telus, and Rogers have to cut prices of mid-range plans by 25 per cent, and will be held accountable by producing quarterly updates that will be made available to the public.
Prime Minister Justin Trudeau said he would cut cell phone bills as an election promise, after which Bains said that reductions will be measured from the time he received his mandate letter after the 2019 election.
In an interview with Yahoo Finance Canada, Bains clarified that carriers are expected to lower prices to the 25 per cent target for plans that offer 2GB to 6GB of data “in the next two years.”
The brands that offer plans in this range are the carriers’ flanker (mid-range) brands that include Bell’s Virgin Mobile, Rogers’ Fido, and Telus’ Koodo.
“We’ve seen price reductions in the high-end plans and low-end plans but in the mid-band space between two and six we have not seen significant price reductions,” Bains said. “We’re targeting that area because the average Canadian uses 2.5GB per month.”
He noted that his ministry reviewed total subscribers of all the carriers and saw that 40 per cent of Canadians are on mid-range plans.
Bains did not say if there would be legislation to implement the 25 per cent reduction.
He did indicate that the government, through Statistics Canada, will provide quarterly updates for “greater transparency” on all the plans from the three carriers so Canadians can “clearly see the progress [of] a company that has made a 25 per cent reduction.”
“This will apply pressure to companies,” he said.
He did not clarify if this was a moving target but said that affordability for Canadians is a topic that will always be considered by the government.
“When it comes to lowering cell phone prices these are areas that are important and we are confident this plan will provide real choices,” he said.
Telus only brand to claim to meet Liberal promise so far
In January, Vancouver-based national carrier Telus began branding specific plans with a “True North Affordability” sticker. The badge, according to the carrier, was to direct customers to plans that meet the Liberals’ target.
The carrier compared plans to a projected plan of action that the Liberals posted during their election campaign.
On its flanker brand Koodo’s website, a package for a family of four would cost $2,760 annually.
With the new pricing plan put forth by Bains, this would now require Koodo to reduce prices for a family of four by $730 annually.
Bains said that the government has a “clear starting point and mechanism” that will require carriers to reduce its prices further.
“We’ve been upfront with the carriers about this,” he said, adding that the department has consistently been speaking with the the three largest companies, Rogers, Bell, and Telus.
Canadians expected to consume nearly 20GB of data when 5G comes
5G, the next generation of wireless networks, has not been made commercially available yet, except in select urban areas. Duncan Stewart, director of technology, media and telecommunications research at Deloitte Canada, said in countries where 5G is available, consumers are tripling their data consumption.
“Data published in November of last year said that 5G subscribers [in South Korea] were using almost 26GB of data per month in September 2019, while LTE subscribers only used 8.3GB, suggesting a more than tripling of data use for those on 5G compared to 4G,” he said in a Twitter direct message.
Equity analysts have also suggested that once 5G rolls out fully, more Canadians will subscribe to unlimited data plans.
Bains said that Canadians will still have the option of cheaper mid-range plans when 5G is implemented.
“Prices have come down for low-end and high-end… [when 5G fully arrives] it will project to 20GB but Canadians will still be provided with an affordable option in the 2 to 6GB space,” he said.
He did not say if the 25 per cent target will change based on consumer behaviours.