Last October, I made a genuine attempt at unearthing why Canada holds the dubious distinction of being the world’s most expensive place to own a cellphone. I’ve also written extensively about the need to learn some lessons from Europe and settle the ‘outrageous’ roaming fee debate for good.
All this while, I’ve found comfort in the fact that the reasonable payphone rates in Canada are something to cheer about. Not that I use payphones very often, but it’s always been a fallback option when I’m not carrying my cellphone and I need to reach out to someone.
However, recent reports suggest that economical payphone comfort may be short-lived. In January, Bell Canada and Bell Aliant reached out to the CRTC seeking clearance to double their payphone rates from 50 cents up to $1 and their pay-by-card rates from $1 to $2. While conflicting reports suggest that CRTC is likely to approve the proposed hike and that Bell says it has no plans to increase the payphone fee, I’d rather focus on whether it’s really necessary to do so?
After all, payphones are already a fading technology and such a monstrous rate hike might well be the final nail in the coffin.
In its request to the CRTC, Bell said it needs to increase rates because fewer people are using payphones as cellphones and smartphones proliferate the marketplace. The company says it needs to cover the cost of maintaining payphones and to convert them to accept new one dollar coins coming later this year. However, Bell clarifies that the exact amount of the increase hasn’t been determined yet but it needs the CRTC to adopt a flexible approach to ensure that companies operating in this segment have enough margin to remain in business.
Interesting though, Bell has declined to disclose any information related to the revenue lost and the number of phones decommissioned. Official CRTC data suggests that nearly 28,000 pay phones owned by Canada’s major providers have been removed Canadian streets since 2006. It is believed that average retail revenue per pay phone has declined from $1,148 in 2006 to $860 in 2010.
To put things in perspective, the payphone rates were last revised in 2007, when the CRTC increased the price cap from 25 cents to 50 cents for local calls, and from 50 cents to $1 for plastic card calls.
While such a hike isn’t likely to impact the smartphone frenzy population, it will have a substantial effect on the people living in rural areas who use payphones as part of their daily lives. After all, weren’t the payphones installed for people who can’t afford cellphone or landline service?
The point I’m trying to make – not everybody can afford an iPhone, Android or even a feature phone for that matter. Payphone is the primary telecommunication medium for such people and they’re going to be the hardest hit if the CRTC and providers gang up to force a rate hike. In that context, a rate hike may not be the best policy response on this matter. What do you think?