Are Canadians Getting Fair Value in Data Plans?

Canada’s government has pulled together telecom leaders to reduce data plan costs. Should more affordable service plans or greater competition be mandated?  

With Canadians paying high prices for cell phone service than their American neighbours, affordable data plans have become a hot-button issue.

According to a WhistleOut report, Canadians may be overcharged by the following amounts when compared to U.S. plans when accounting for the exchange rate.

  • Canadians spend 15-40 percent more on cell phone plans compared to Americans
  • Canadians pay nearly $50 monthly for 2GB plans
  • Americans pay less than $40 monthly for 2GB plans

That reality caused unhappy citizens to press Prime Minister Justin Trudeau to take measures to lower data plans. Movement on the issue began back in September when promises were reportedly made to roll back costs by upwards of 25 percent. Recent Canadian Radio and Telecommunication Commission (CRTC) discussions have brought business leaders from Bell, Telus, Shaw Communications, Cogeco, and Distributel, among others, together to gain consensus about reducing mobile plan costs to consumers. At FuelledNetworks, our experienced IT professionals have been following this cost issue closely to serve our clients best.

Canadian Cell Data Plans Cost High

Big Telecom Worries About Affordability Mandates

The CRTC talks have focused mainly on roaming issues and ways mobile virtual network operators can drive down costs through competition. One of the issues the telecom giants are actively working to avert is a government-mandated affordable plan.

“I can tell you that almost half of our consumers today on the Bell brand as an example are coming on a share plan,” Bell Mobility president Claire Gilles reportedly said. “(Bell’s) share plans today offer a $10 discount in the market. So, if you just take that, it’s easily more than half of all consumers are receiving some form of a promotional discount, just on their service pricing alone, let alone the hardware and various related hardware promotions that go along with that such as gift cards.”

Such marketing gimmicks may not appease the growing discontent that comes with seemingly paying more than other countries. But the cost issue ought not to be considered in a vacuum. There are mitigating factors that everyday Canadian cell phone users may not know.

Are Canadians Getting What They Pay For?

A recently published American study funded by the CRTC indicates that Canadian consumers may not be overcharged after all. Key takeaways published by IT World Canada states that the high cost of plans is equal to the high-value services. While Canada ranked above the U.S. in cost, it also ranked first in data plan value with the Americans in second.

“Out of 1,554 mobile plans offered by 213 mobile operators in 36 countries, Canadian mobile plans cost 4.7 percent lower than other G7 countries and Australia for the same quality of service. Its value proposition bested all other G7 nations,” IT World Canada reportedly states. “When compared to 15 European Union countries and the U.S., Canada ranked 6th in mobile service value proposition. The model for this comparison used some estimated data for the EU countries and assumed they all share important commonalities.”

The commission study hit the nail on the head by pointing out that previous analysis failed to account for nuances such as competitive differences and quality data plans. Purchasing a 2G data plan in one municipality does not necessarily mean access, service, and features, are equal.

“The (previous) studies’ simplistic analytical techniques assume a world where consumers are indifferent to all other competitive differentiators (i.e., monthly service allowance and quality differences) beyond price,” the study states in its abstract. “The price rankings also fail to consider the vast differences between the study countries that affect the building of networks.”

Although Canadian consumers may be getting corresponding value in the data plans, consumer cost appears to be more important than what some believe are inconsequential value differences. A majority of Canadians reportedly favour government-imposed affordable data plans. The recent CRTC talks, however, seem to revolve around increased mobile virtual network operators can competition.

If you own, operate, or are a decision-maker for an Ottawa business, there are ways to lower costs through improved IT efficiencies. Contact FuelledNetworks for a consultation.

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