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Critics question Liberals' falling cellphone price claims, budget promises

As the federal government touts measures meant to curb the cost of Canadians' cellphone bills, some say there is a disconnect between what consumers are paying and the rhetoric surrounding price declines.
As the federal government touts measures meant to curb the cost of Canadians' cellphone bills, some say there is a disconnect between what consumers are paying and the rhetoric surrounding price declines. A person silhouetted against the evening sky takes a photo with a smartphone in Philadelphia, Thursday, Dec. 12, 2019. THE CANADIAN PRESS/AP, Matt Rourke

As the federal government touts measures meant to curb the cost of Canadians' cellphone bills, some say there is a disconnect between what consumers are paying and the rhetoric surrounding price declines.

On Thursday, Prime Minister Justin Trudeau drew the ire of social media users when he posted on X, formerly known as Twitter, that "we’ve cut the cost of cellphone plans in half since 2019 — in part by increasing competition."

"Next, we’re going after the junk fees on your phone bill, so you can do things like cancel your plan or switch to a cheaper one with no added charges," Trudeau said.

But the post raised questions, including from consumers saying they don't feel as though they are paying less on their cellphone bills than they were five years ago.

"A show of hands please? Has your phone plan cut itself in half? Mine hasn’t," said X user Ryan Lindley.

"My kingdom for a single person whose cellphone bill has been cut in half since 2019," tweeted Steve Boots.

Trudeau was promoting a plan in last week's federal budget, which said the government would amend the Telecommunications Act to help Canadians switch internet and phone providers. The budget cited Statistics Canada data from December 2023 that showed cellphone plan costs declined by 50 per cent since the same month in 2018.

Industry watchers are somewhat divided on how much stock to put into that StatCan data, which is reported each month as part of its regular consumer price index releases.

Some say it's clear evidence of competition in the marketplace and that consumers are getting more bang for their buck through new offers, such as bigger data packages, international roaming perks, or voice-to-text voicemail services.

"Just because you're paying the same amount of money each month doesn't mean that represents no price decrease," said telecommunications consultant Mark Goldberg, comparing it to "getting a Lamborghini for the price of a Honda Civic from five years ago."

Others argue that while customers are paying less per gigabyte of data, those deals might be influencing people to purchase bigger data buckets than necessary. Cellular services are also often bundled with TV or internet, meaning savings could come at the expense of purchasing more things.

Dwayne Winseck, a professor at Carleton University's School of Journalism and Communication, said it reflects telecoms' ability "to package something up as a benefit when in fact it's not."

"If you look at it per gigabyte of data, prices are absolutely going down, there's no doubt about it," he said.

"But people are getting data that they may, in many cases, not even need and they're having to pay for that whether they need it or not. Ultimately at the end of the day, while per gigabyte, data may be cheaper, who's that good for?"

Shifting metrics

Winseck cited another metric that tells a different story — the average revenue per userreported by cellphone companies.

According to the CRTC, telecoms averaged $67.26 in mobile phone revenues per user during the second quarter of 2023, up from $64.33 in the same quarter of 2016.

"(it) really is, at the end of the day, the key measure here," he said.

While Canada's largest carriers often point to the StatCan data on the declining cost of cellular services, the federal government has previously seemed less inclined to celebrate those numbers unreservedly.

For example, Industry Minister François-Philippe Champagne said in January that "while some progress has been made to lower prices, Canadians still pay too much and see too little competition."

He urged carriers “to seriously consider customers over profits" following reports that some companies planned to raise rates this year.

Michael Geist, the Canada Research Chair in internet and e-commerce law at the University of Ottawa, described a "disconnect in the data" that was evidenced by the response to Trudeau's social media post.

"It is true that the deals measured by StatCan have declined in relative price as the carriers offer larger data buckets, promotions or move more services toward 'optional' ancillary charges," he said by email.

"While that does mean you get cheaper plans, the carriers' own financial data as measured by average revenue per user tells us the reality. Canadians are spending more on wireless services than they did five years ago. Moreover, the concern has long been that Canadian prices are high relative to other countries. That remains the case."

Budget promise questioned

Critics also question commitments in the federal budget meant to help cut telecommunications costs in the future.

The document said that following Ottawa's proposed changes to the Telecommunications Act, carriers "will be prohibited by the CRTC from charging consumers extra fees to switch carriers."

But Goldberg said there are already protections in place that prevent a cellphone company from penalizing customers for changing to a new provider.

Those are contained in the Wireless Code, a mandatory code of conduct created by the CRTC in 2013 that applies to all service providers. The code states that if a customer cancels a contract before the end of the commitment period, the service provider must not charge the customer any fee or penalty other than a potential early cancellation fee.

That early cancellation fee is also not applicable if cancelling service after 24 months.

"Since 2013, there's been no meaningful penalties for early termination of a contract," said Goldberg.

"The only fee that kicks in is if you have an agreement for your service provider to be financing the device and you leave that service provider early, then the remaining balance is due."

Asked whether the government's budget proposal was redundant, a Department of Finance official acknowledged "there are important protections that already exist in the Wireless Code."

"These adjustments may complement or reinforce those protections," said Benoit Mayrand in an email.

"With respect to the specific fees and implementation, Budget 2024 notes that the CRTC will implement these changes following consultation on specific requirements. Confirmation of the precise requirements and changes will follow that process."

This report by The Canadian Press was first published April 22, 2024.

Sammy Hudes, The Canadian Press