From the monthly archives: June 2007

A study came out last week provocatively titled Cellphone providers mock us – Canadians are way too polite when it comes to our phone bills.

 

Its first complaint was focused on the $7 that carriers add to the bill under the label of “government fee”. The report claims that a CBC investigation proved that the fee was “simply made up”. I think they’re looking too hard for a controversy here.

 

It’s true that the government does not specifically instruct the carriers to add $7 to the bill. But the government does require them to do a number of things such as maintain towers in (unprofitable) rural areas. If they want to break-out the fee as a separate line item, I’m fine with that. They also break-out the cost of 911. Neither of them are optional and we all know they do this to make the bill palatable to the consumer. There’s nothing specifically wrong with that.

This is much less odious than the “gas surcharges” that a bunch of companies tried to sneak by us (specifically FedEx). Read this excellent piece on Slate.

 

But then the report claims that cell phone users in Canada pay 56% more for the same services as a US subscribers. Now that is something to be upset about.

 

What’s even more upsetting are the data rates Canadian carriers are charging…

Canadian Data Rates

Image from Thomas Purves. Excellent write-up there.

 

  1. The government made a real mistake in 2004 in allowing Rogers to acquire Fido.
  2. Our pricing problems simply won’t get fixed until we get more competitors.
  3. Foreign ownership rules should be relaxed.

 

I can’t help notice the similarities to the situation with domestic Canadian air travel. Your only options are Air Canada and WestJet and they usually match each others’ prices within a dollar. I don’t know if this jives with formal economic principles but it seem clear that if there are only 2 competitors, there is no real downward pressure on prices. When those prices are for services as essential as domestic air travel and cell phones, that’s going to impact the cost of doing business in Canada.