House Call with Carol Hughes

Internet and cell costs in Canada are high by global standards

The internet and cell phones are great conveniences that have become integral parts of our daily lives. While we may struggle with connectivity issues in the North, there is little doubt that this technology has transformed our ability to communicate, educate and even amuse ourselves. Despite this, there are still challenges that limit our ability to make use of these technologies to the fullest and the biggest obstacle may be the costs associated with high-speed internet and cellular services.

The fact is that Canadians pay some of the highest prices for mobile wireless and broadband subscriptions in the world. If we are willing to accept that these services are essential, it isn’t a stretch to suggest that they need to be affordable for all. But the case needs to be made in a way that will compel governments to see this as more of a priority.

For decades, federal governments have relied on market forces and competitiveness to determine what Canadians pay for their cell phone and internet every month. Now that these technologies are undeniably integral to our lives, that approach could be revisited. In the last three years Bell, Rogers, and Telus received close to $50 million in subsidies while winning more than $700 million in contracts from the federal government too. To illustrate how big this industry has become, look at the 2017 profits for the top five telecom companies which totaled $7.49 billion with profit margins that reached an astonishing 46.2 percent.

Public money is used for initiatives like the Connect to Innovate Fund which sees the government partnering with telecom companies and local players (such as townships in Algoma-Manitoulin-Kapuskasing) to help bring connectivity to rural and Northern locations. That also means the companies are not absorbing all the risk or costs associated with expanding these services which helps make the case for government intervention to bring Canada’s mobile wireless and broadband costs more into line with global averages.

It’s easy to understand how Canadians, who are paying skyrocketing prices while these companies make billions in profits, are not only frustrated by the high cost of service, but also by the fact that tax dollars are helping these companies at the same time. This is not an argument against government involvement when there is clearly a role for it in expanding these services to reach more people. What is less clear is if there is a role for the government in determining whether the companies are inflating rates beyond a reasonable profit margin, or if there is an appetite for doing so.

Arguments suggesting Canadian prices are appropriate cite geography and population density as defining factors that make Canada’s wireless options more expensive. For comparison’s sake, we can look at Australia which faces the same challenges but also has lower average prices. A study that compared wireless rates in Canada, the UK, Germany, Italy, France, Japan, the US and Australia showed that Australia’s average monthly prices for cell phone plans were consistently cheaper than Canada’s by as much as $37 a month. In addition to that, Australians enjoy faster network and connection speeds.

This has become an issue of affordability and New Democrats are asking the government to take up the challenge and commit to lowering the fees consumers pay. High-speed internet and cellular services have become a necessity for Canadians; despite this, broadband access and wireless services are far from being affordable or reliable in Canada. This isn’t to suggest that telecom companies are misbehaving, but more that they may need a nudge in the right direction so that more Canadians can afford and benefit from this technology that has become so important to our everyday lives.