TORONTO — A price drop for Canadian phone and internet services last month has some observers optimistic about the downward trend, but industry watchers say there is still a long way to go when it comes to telecom affordability.
Consumers paid 14.7 per cent less for cellular services in June compared with the same month last year, following an 8.2 per cent decline in May, according to Statistics Canada's latest inflation report released Tuesday.
Overall, the cost of telephone services dropped 11.1 per cent in June from a year ago. Statistics Canada attributed more affordable phone bills to both lower prices for cellular data plans and promotional pricing.
The data aligns with trends that show the costs of telecommunication services in Canada have been declining in recent years, said Gerry Wall, whose company Wall Communications Inc. publishes an annual report comparing Canadian phone and internet prices with those of other countries.
"Technology is allowing improvements in the use of spectrum, in the way that networks are run, in the efficiency of networks and so that's probably a key cause of why prices are coming down," Wall said.
He added that the entry of Quebecor Inc.'s Videotron to the national market through its purchase of Freedom Mobile from Shaw Communications Inc. could accelerate those declines. That move was a requirement of Rogers Communications Inc.'s April acquisition of Shaw imposed to ease competition concerns surrounding the merger.
"Some observers have indicated that they view (the market) as, 'There's some complacency in terms of the price competition,'" said Wall.
"I do think that having a fourth player, which is pretty rare … could lead to some further price decreases."
Prices for internet access services fell 3.2 per cent in June on a year-over-year basis after increasing one per cent in May, according to StatCan. On a month-over-month basis, prices declined five per cent, marking the largest one-month decrease since February 2019.
That was mostly due to promotions in Ontario and lower prices in Quebec, said the federal agency.
“The recent price reductions are the latest in a multi-year trend of declining prices in Canada’s wireless market and are a sign of the ongoing vigorous competition that is occurring in Canada’s wireless market," said Canadian Telecommunications Association spokesman Nick Kyonka in a statement.
He noted a 33.3 per cent drop in cellular service costs over the past three years, according to StatCan data.
Kyonka added the industry is monitoring the effects of Freedom Mobile's new ownership on price trends.
The company announced in May it would offer a $50 monthly plan that includes unlimited calls and texts as well as 40 gigabytes of data. As part of conditions laid out by Industry Minister François-Philippe Champagne in March, Videotron must offer plans that are at least 20 per cent lower than those of its competitors.
But Wall's latest report released in February, which was prepared for Innovation, Science and Economic Development Canada, found Canada still had among the highest prices internationally for cellphone and broadband service in 2022.
"Our rates are still astronomical compared to what people are paying in other countries," said David Soberman, a marketing professor at the University of Toronto's Rotman School of Management.
"Even if we've had a 15 per cent drop in the actual cost that we're paying for mobile telecommunications, it's still significantly higher than is being paid in other countries."
While he said the Rogers-Shaw deal paved the way for Freedom Mobile to emerge as a fourth national carrier with mandated lower pricing, Soberman questioned whether its presence would outweigh the negative effects of increased concentration.
"The industry has been under some severe scrutiny in the last year, especially in the wake of the Rogers-Shaw merger, so I suspect the companies are trying to offer slightly more attractive rates," he said.
"We really haven't increased the number of competitors. It's just been a bit of a rearrangement of the deck chairs, but that might explain why we're seeing somewhat more attractive pricing in terms of mobile phone costs."
Laura Tribe, executive director of OpenMedia, an advocacy organization that promotes internet affordability and accessibility, said many consumers locked into plans aren't feeling financial relief.
"This is an announcement that says somewhere, on average, people are paying less and I think for a lot of users, it's actually quite frustrating to see that when they don't see that reflected in their own bills," said Tribe.
"There's a lot of different lived experiences out there and that's not necessarily reflected in maybe the celebrations of the telecom executives."
While she called the June figures a step in the right direction, Tribe said Canadian telecom prices are still coming down slower than they are in peer countries.
"The average revenue per user is going up for these companies and their profits are still going up," she said. "So I think it's indicative of the fact that it's getting cheaper to provide cellphone services more than we're getting a really great deal or the telecom companies are taking a hit."
This report by The Canadian Press was first published July 19, 2023.
Companies in this story: (TSX:RCI.B, TSX:QBR.B)
Sammy Hudes, The Canadian Press
