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Telecom experts encourage reduction in cell phone rates, but plead for government's caution

Shruti Shekar
Telecom & Tech Reporter
Canada's Minister of Innovation, Science and Industry Navdeep Bains speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada December 6, 2019. REUTERS/Blair Gable

Some telecom experts welcome the federal government’s campaign promise to reduce cell phone bills by 25 per cent, but caution that clear wording should be used when deciding how it’s measured. 

Navdeep Bains, Minister of Innovation, Science and Economic Development said Wednesday that carriers have to go “above and beyond” the price reductions they have made since 2016, and clarified that the reduction target will be measured from the time he received his mandate letter after the 2019 federal election.

Prime Minister Justin Trudeau said he would cut cell phone bills during the last election, but the party has not provided further details.

John Lawford, executive director and general counsel of the Public Interest Advocacy Centre, told Yahoo Finance Canada he was “pleased with the way” the promise is being handled. 

Lawford said that setting a 25 per cent target was smart because it “puts pressure” on carriers like Rogers, Telus, Bell, and Shaw. However, he said in order for the government to mandate price cuts, they need to explain to carriers how they will measure a price reduction. That could be as simple as creating a service basket, which telecom providers use to differentiate the prices of different services.

There can be several levels within a service basket that include different price rates for usage of a service, and the features and performance of that service.

For example, Lawford said, the annual standard for the price-per-gigabyte should be adjusted based on consumer usage and statistics on what the norm is at the time.

“In telecom, we expect productivity to improve. With every passing year… these guys should be producing better quality each year with no price increase,” Lawford said. “If I [bought] a one-gigabyte plan two years ago, and then today, I buy a one-gigabyte plan well... it’s going to be cheaper. I would normally get a five-gigabyte plan now because I would have upgraded to that amount.”

Anthony Lacavera, former Wind Mobile owner and founder of Globalive Capital said the intention to further reduce prices is good, but he also expressed concern about the target. 

“You can’t just say, we’re going to take 25 per cent off of wireless pricing, because what you’re going to do if you really did that, and you enforced it, is you would be cutting so deeply into the incumbent revenues that they would slow down the 5G rollout.”

According to the CRTC’s Communications Monitoring Report, mobile prices dropped 35 per cent from 2016 to 2018. In June 2019, Rogers was also the first to roll out new unlimited cellphone plan rates starting at $75. Bell and Telus followed shortly after.

Dwayne Winseck, director of the Canadian Media Concentration Research Project, told Yahoo Finance Canada that the best way to accomplish a 25 per cent reduction in costs to consumers would be to create a proper service basket that is clear to understand. 

Winseck recommended comparing Canadian rates with those of providers in other Organisation for Economic Co-operation and Development (OECD) countries. 

The OECD is comprised of 36 countries that collaborate on global issues at national, regional and local levels. Canada is a member.

OpenMedia’s Rodrigo Samayoa applauded the minister’s clarification and said that the only way price reductions will happen is if there is more competition in the country. He expects that it would come from Mobile Virtual Network Operators, wholesale service providers that offer services at cheaper rates. 

“We need to introduce MVNOs and other mechanisms immediately,” he said, adding that the consumer advocacy group is pleased with what the minister has said, but now “it depends on what actions the government takes.”

A hearing on MVNOs will take place in February, during which the CRTC will review whether or not mandating MVNOs is an option to foster competition. 

With files from the Canadian Press