New Canadian Wireless Policy Pushed Up Basic Wireless Plans, Study Finds

by Istvan Fekete on July 14, 2014

A study obtained by Reuters suggests that while ‘heavy use plans continue to drop, the Canadian wireless policy changes that allow customers to cancel their contract without penalty after two years have pushed the costs of basic plans upwards.

The price of mobile services has become a hot political issue. The Conservatives are trying to drive prices down by artificially creating a competitive wireless landscape, and encouraging wireless startups to challenge the incumbent players of Bell, Rogers and Telus.

You may recall that, since last December, a new wireless code of conduct has become effective, putting an end to three-year contracts with the aim of stimulate competition by allowing users to switch carriers. There was, however, a major drawback to this measure: higher prices for both handsets and monthly fees.

According to the government-commissioned Wall Report, the monthly charge for basic mobile wireless services went up to $36 this year-from $31 in 2013 and 34 in 2010. Additionally, it is worth mentioning that high-volume users saw their monthly charges drop from $94 to $80 in 2013 and from $110 in 2010.

“The reduction of contract terms placed upward pressure on service plan prices given there is now a shorter period available to recover the handset subsidies,” said the report, a copy of which was seen by Reuters.

However, with the introduction of the Bring Your Own Device (BYOD) plans, users can obtain a discount up to $20 per month, allowing users to save up to $240 per year. However, this entails having to purchase a handset outright to avoid carrier subsidy costs.

The study also shows that prices of wireless startups were up to 49% lower than the incumbents, and they also offered higher data allowances. What the study doesn’t mention, however, is that the startups have limited network coverage.

The Wall Report is done on an annual basis, and this year has also included a new comparison – international roaming rates. As it turns out, the big US players’ roaming call and text rates in Canada were lower than the Canadian incumbents’ rates in the US, while wireless startups offered far lower roaming rates.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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