The IT Nerd

The Canadian Government appears to be going the brute force approach to deal with the fact that wireless carrier bills are insanely high. They’ve put out the following this afternoon. You can find out more via this link to the CBC but here’s the highlights:

• Canada’s big three national wireless providers have two years to cut their 2-6 GB plans for cellphone services by 25 per cent. This would apply only to post-paid plans where consumers already own their devices or purchase a new one at full price.
• If the “big three” don’t do this, the government will introduce regulatory measures to bring about those price cuts.

Here’s my thoughts on this and they can be summed up in four words: Good luck with that.

The Canadian Government has come up with a plan that would only help a handful of people. As in most people get their phones via finance plans with their carrier. I am one of the few people who buy their phones outright. Not only that, I would very surprised if the “big three” obeys the government. Seeing as one of the big three, namely Telus, has threatened a form of retaliation if the Canadian Government tries to mess with with wireless prices. And if the Canadian Government does impose some sort of change, expect that to go to court and be tied up there for years.

Are wireless prices high? Yes. Insanely so. And this needs to be addressed. But this isn’t the way to do it as it really doesn’t solve the core issue. Which is that there’s an oligopoly in the Canadian wireless industry. And this is how you solve it:

The only way to lower cell phone prices for Canadians is to have the Canadian government let in a very large foreign telco or telcos such as Deutsche Telekom or Vodafone, and have them set up shop in Canada. And by set up shop, I mean build their own infrastructure. Now to be clear, I am NOT advocating that the government should bankroll these companies. What I am advocating is that they simply have to open the door and let them walk in and set up shop. The simple act of doing that will see wireless prices drop in this country to levels Canadians have never seen before. Why? Because for the first time there will be real competition in the wireless space. If you don’t believe that this would happen, look at the panic that Verizon caused the “big three” telcos when they were rumored to be expanding into Canada a few years ago. Face it, the “big three” telcos would lose their minds if a big international player were to move in and set up shop in Canada because they know that there is no way on God’s green earth that they could get away with charging Canadians what they currently charge in such an environment.

If the Canadian Government really wants to solve this issue, they should take my advice as that would actually solve the issue. After all, it benefits the many and not the few. And isn’t that what they want?

The CRTC are currently holding public hearings into the state of the mobile wireless market and whether further action is needed to improve choice and affordability for Canadians. And if you’re interested in watching, a live stream is available here. And during these hearings, Bell, Telus, Rogers, and Videotron have argued against MNVO’s being forced upon them. MNVO or Mobile virtual network operator is a wireless communications services provider that does not own the wireless network infrastructure over which it provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently. In this case, it has been suggested by many that this is the way to lower prices for consumers. 

Now, it is no secret that Canadians pay the highest prices in the world for cell phone service. After all, if you can get four bars of fast 4G LTE on your iPhone in a field of goats in rural India for $12 CDN for three months, or you can get almost unlimited LTE wireless service for $2 CDN a day in Australia, then something is seriously wrong with what Canadians pay. But MNVO’s aren’t the way to go to solve that. I say that because we’ve seen a version of this play out with Internet access. While we do have lower prices with providers like Teksavvy, we also have the incumbents and upstart providers like Teksavvy constantly fighting each other with the customer being caught in the middle. For example, Teksavvy recently filed a complaint accusing Bell and Rogers of anti-competitive behavior. Plus Teksavvy in the past has accused incumbents of trying to, for the lack of a better description, screw them over by punting repair requests from them to the back of the line. If you go to the Teksavvy form on DSLReports.com you can see for yourself how open they’ve been in terms of bringing this to light. Take this thread for example where this is mentioned:

At TekSavvy we pride ourselves on delivering excellent customer service and so we are very concerned about the impact that any outages and service delays have on our customers, especially lengthy ones. We want to assure our customers that we have not been taking the situation lightly and have been working diligently to restore service. Since the 15th of August we have been working both directly and through counsel with the network operator to address the service affecting issues and we have also been employing the alternate dispute resolution services of the CRTC, all with a view to reaching the speediest resolution possible for the benefit of our customers. The details of the discussions must remain confidential in order for the various processes to be pursued in the most effective manner, but please rest assured that TekSavvy is fully and proactively engaged in seeking a resolution to the current problems.

The net result of this is that only die hard customers stick with upstart providers like Teksavvy. Some like yours truly switch from upstarts like Teksavvy to incumbents like Rogers (in my case) or Bell just to avoid this. Which is good for the incumbents I suppose. The bottom line is that for an MNVO model to work, everybody has to play nice in the sandbox. Something that I don’t see happening here in Canada. And that’s even before going down the road of whether an MNVO model would actually lower prices or not.

The only way to lower cell phone prices for Canadians is to have the Canadian government let in a very large foreign telco or telcos such as Deutsche Telekom or Vodafone, and have them set up shop in Canada. And by set up shop, I mean build their own infrastructure. Now to be clear, I am NOT advocating that the government should bankroll these companies. What I am advocating is that they simply have to open the door and let them walk in and set up shop. The simple act of doing that will see wireless prices drop in this country to levels Canadians have never seen before. Why? Because for the first time there will be real competition in the wireless space. If you don’t believe that this would happen, look at the panic that Verizon caused the “big three” telcos when they were rumored to be expanding into Canada a few years ago. Face it, the “big three” telcos would lose their minds if a big international player were to move in and set up shop in Canada because they know that there is no way on God’s green earth that they could get away with charging Canadians what they currently charge in such an environment.

So I have a message for Prime Minister Justin Trudeau and his Industry Minister Navdeep Bains. If you’re truly interested in lowering wireless prices for Canadians by the 25% that you promised in the last federal election, dial up the CEO of Deutsche Telekom or dial up the CEO Vodafone. Tell them that Canada is a great place for them to set up shop. Tell them that if they come in and run their own infrastructure, and set their prices at levels that are below what the “big three” telcos charge that they will make truckloads of money because Canadians are crying out for an alternative to the “big three” telcos. Make it clear that you won’t bankroll them, but you will make the business environment favorable to their success. And be very public about it. Then sit back and see what happens next from the “big three” telcos. I think you’ll get the 25% cut that you want, and perhaps more.