Pricey cellphone plans and slow connections in rural Canada feel as inevitable and grumble-worthy as miserable winters.
But it doesn’t have to be so, politicians are telling Canadians. Wireless and broadband internet prices — and access to data and the web — have become an important theme of the 2019 election.
New Democratic Party Leader Jagmeet Singh has made affordable plans a rallying cry of his campaign, promising to put a cap on prices. The Green Party of Canada has pledged “reliable, affordable, high-speed internet” for all. The Liberals are fiercely defending their record, pitching it as a meaningful step forward from Stephen Harper’s Conservatives. Meanwhile, Andrew Scheer’s Conservatives are blasting the Liberals’ record, saying their efforts have, if anything, made things worse.
Wondering what to make of it? Here’s what it’s all about.
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Where we stand
Cellphone plan prices have come down
You might not guess it from the campaign tone, but cellphone prices have been on the decline. The Canadian Radio-television and Telecommunications Commission (CRTC), which regulates the sector, found that prices of mobile plans decreased by 28 per cent between 2016 and 2018, according to a recent report.
And additional pressure came after providers like SaskTel and Shaw Communications’ Freedom Mobile — and later Bell, Rogers and Telus — introduced cellphone plans that do not charge overage fees for users who go over their monthly data limits.
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The industry says cheaper plans are evidence of increased competition.
“Thanks to significant, sustained investment from telecommunications providers, Canada enjoys some of the best wireless networks in the world,” said Richard Gilhooley, a Telus spokesperson, adding that this is “in large part” due to two decades of regulators encouraging competition and network investment.
“Strong regional competitors, such as Shaw’s Freedom Mobile, have made substantial investments to improve our networks and better compete,” said Chethan Lakshman, vice-president of external affairs at Shaw. “As a result of these investments, the regional players have offered lower prices and have forced the Big Three to drop their prices.”
Others, though, say the price declines have less to do with increased competition than with worldwide industry trends.
“Wireless prices are coming down just about everywhere,” said Michael Geist, a law professor at the University of Ottawa, where he holds the Canada Research Chair in internet and e-commerce law.
That’s because the big investment push to build out the fourth generation — or 4G — network is over, and telecom companies have more margin to compete by lowering prices and offering more generous service, such as unlimited data plans.
In Canada, if anything, this is happening to a lesser extent and prices remain high when compared to rates available in other countries, Geist said.
While consumer advocates say all Canadians still face steep prices, they argue the cost of staying connected is disproportionately high for low-income families.
Figures from the CRTC show the poorest 20 per cent of households — those making less than $33,000 a year — were spending a whopping nine per cent of their annual income on phone, internet and TV bills as of 2017. That compared to four per cent of income for middle-class Canadians making between $56,000 and $86,000 a year.
Internet and wireless services in rural communities
In general, Canadians living in rural communities pay more for slower and spottier connections. The average household living in a rural area spends nearly $20 more a month than the average urban family on things like mobile, internet and cable bills, according to CRTC data. But data from Canada’s Innovation, Science and Economic Development department shows that while 97 per cent of urban homes have access to high-speed internet, less than 40 per cent do in rural communities. For Indigenous communities, the figure is less than 25 per cent.
And while 99 per cent of Canadians have access to wireless service in their communities, as of the end of 2017, there was no cellphone signal along 14 per cent of major roads and highways, according to government figures.
What each of the major parties is proposing
Liberals: Locked in a dead heat with the Conservatives, Justin Trudeau’s Liberals have promised to bring high-speed broadband internet to all Canadians and help cut both cellphone and internet bills.
During their nearly four years in power, the Liberals say they’ve made inroads on both fronts. In its 2016 budget, the Trudeau government committed $500 million to build new telecommunication infrastructure in 900 rural communities by 2021. In its 2019 election budget, it upped that promise, pledging up to $1.7 billion in new investments over 13 years, including “last-mile” connections to those living in remote areas.
On prices, the Liberals have been arguing that what the country needs is more competition. To do that, Innovation Minister Navdeep Bains in February ordered the CRTC to focus more on affordability and consumer interests.
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In August, the telecoms regulator announced a retroactive cut in the wholesale rates that major telephone and cable companies charge smaller firms like TekSavvy and Distributel to use their infrastructure. In order to foster competition, the current rules mandate that larger firms provide access at regulated rates to smaller internet providers that do not have their own networks.
The rate cut has prompted a fierce backlash from the major telecom companies, who say they face steep costs to build and maintain infrastructure across the second-biggest country on earth. Rogers, Shaw and other major cable operators are seeking an appeal to the CRTC ruling, which they say established “unreasonably low” wholesale rates that will serve as a “powerful disincentive” to further investment in the country’s wireline network. Bell, which said it would be forced to scale back plans to bring high-speed internet to rural communities by 20 per cent, is also appealing the decision.
The government, for its part, argues policies that support competition have already helped bring down prices, with wireless data plans up to 32 per cent lower than the national average in Saskatchewan, Manitoba and Quebec, where competition is stronger.
Reuters has reported the Liberal party is also considering putting a cap on prices as well as extending the mandated wholesale access approach to cellphone service. Earlier this year, the CRTC also said it was looking into whether it should force the major provider to offer more access to smaller wireless competitors without their own infrastructure.
“It is our priority that Canadians have access to good-quality, reliable and affordable cellphone and internet plans — no matter where they live,” a Liberal party spokesperson told Global News in an emailed statement.
Conservatives: The Conservatives have not, so far, made cellphone prices or internet access a major theme of their campaign. They have, however, laid into Trudeau’s track record on the matter, saying his government has accomplished little besides adding layers of regulation.
“The Trudeau Liberals have done nothing, and their heavy-handed regulatory approach will only reduce investment and lead to less service for Canadians,” a Conservative spokesperson said via email.
The party added it would have more to say during the election campaign.
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NDP: The NDP has promised a price cap on cellphone and internet bills based on what consumers pay in the Organisation for Economic Co-operation and Development (OECD), which is made up of 36 countries in Europe, North America and Asia.
The party also wants “true, unlimited data plans,” Singh said, taking apparent aim at the Big Three’s recent move to offer cellphone plans that eliminate overage fees but throttle speeds when users surpass their monthly data limit.
“We want to make sure that there isn’t throttling that we see with the current kind of fake unlimited data plans,” Singh said.
The party also wants to require firms to provide a basic plan for internet and wireless service as well as introduce a consumer bill of rights to end unscrupulous sales practices in the industry.
Singh also told reporters he would be open to considering allowing foreign competitors into the sector, provided “our privacy and security interests are satisfied.”
Greg Burch of the Canadian Wireless Telecommunications Association (CWTA), an industry group, told Global News price caps are “not only unworkable” but “unnecessary.”
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Greens: In its election platform released this week, the Green party said it would direct the CRTC to increase competition in both broadband internet and wireless services and split payments for cellphone devices from those for cellphone service.
The party also said that while it supports the Liberals’ current strategy for bringing high-speed internet to all Canadians, it “has concerns about the introduction of 5G technology and which companies should be involved in delivering this next generation of connectivity.”
Green party Leader Elizabeth May has previously said she would ban China’s Huawei from Canada’s 5G network.
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Building Canada’s 5G network
While Canada tries to plug the holes in its broadband and wireless coverage, there’s another challenge looming on the horizon: the arrival of 5G wireless networks.
That’s the kind of technology that will allow you to download a feature-length film in less than a second — or 20 times faster than it takes today. More importantly, though, some believe 5G — with its hyper speed and superior reliability — will ultimately power the “internet of things,” from steering self-driving cars through traffic to guiding robots performing surgery.
But the widespread adoption of 5G technology faces significant hurdles, including the need to build vast new infrastructure networks and set aside additional spectrum.
The U.S. and China are racing to roll out the infrastructure that can support the technology, which is expected to cost tens of billions of dollars. In Canada, spending on 5G may reach $26 billion between 2020 and 2026, with most of the money coming from the major wireless providers, according to a 2018 study by Accenture.
WATCH: What is 5G? Everything you need to know about the technology
What can Canadians expect?
The University of Ottawa’s Geist believes that tougher regulation to help foster domestic competition is the key to shrinking Canadians’ cellphone and internet bills.
The Liberal government, he said, seemed to realize “midway through their mandate” that it needed to adopt the kind of “confrontational” approach toward the industry that had characterized the Harper era.
“Over the last couple of years, they’ve landed far closer to where the Conservatives were,” he said. “They largely reached the conclusion that, left solely to the market, the kinds of improved competitiveness and better pricing simply wasn’t going to happen.”
Others disagree. Ian Lee, associate professor of management at Carleton University, argues the only thing that would bring true competition to Canada’s telecoms market is the entry of a major foreign player, an opportunity U.S. wireless giant Verizon considered but passed on in 2013.
The idea that Ottawa can foster competition by mandating lower prices is “laughable,” Lee said.
“That’s been discounted and discredited for 300 years.”
If anything, he added, mandating prices will discourage investment in the country’s telecom infrastructure at a crucial moment in the worldwide race for 5G.
“I think going to be revolutionary. It’s going to create industries we cannot even imagine today. But it’s also going to be extraordinarily expensive,” he said. “This decision by the CRTC, unwittingly, I think, is going to send a message that Canada is hostile to investors getting a return on their investment.”
Geist, on the other hand, dismissed concerns that forcing lower prices on Canada’s large telecom providers would meaningfully harm investment.
“For years now, the major telecom companies have been claiming that regulatory involvement — whether retroactive or otherwise — would have an impact on their spending,” he said. “The reality is that there is at least enough competition that if you don’t invest, it’s tough to compete.”
© 2019 Global News, a division of Corus Entertainment Inc.