The weak Canadian dollar has been shouldering a lot of blame lately. Everything from $8 cauliflower to a 40% markup (vs. US pricing) on iPhone apps is being pinned on the low Loonie. The Canadian wireless industry, never one to let an excuse for raising prices pass them by, quickly seized on this trend to announce a series of price hikes.
Plenty of analysts aren't buying that excuse, and neither should you. They explain it in complicated analyst jargon, but you don't need to know anything about foreign exchange hedging programs or currency swap options to understand this - with a few clicks on any wireless carrier's website, you can expose their hypocrisy and see why the "weak dollar" line is nonsense.
Go to the "Plans" section on any wireless carrier's website.
Cry about how ridiculous and unaffordable it is for a plan with a reasonable amount of data.
Change your region to a province where actual wireless competition exists, like Manitoba. Look at how magically affordable the plans are despite the “weak Canadian dollar.”
Rage at the injustice.
You read that right - the exact same $95 plan in Ontario is $48 in Manitoba. I use Koodo (a division of Telus) as my example above because their website is the simplest and most straightforward, but you can see this with any of the major carriers. Here's a gallery of pricing for the exact same plans in Ontario vs. Manitoba, courtesy of Bell, Telus, and Rogers:
In fact, prices are significantly lower not just in Manitoba, but also in Saskatchewan, in Quebec, and even a little ways north in Thunder Bay, Ontario. How can they afford such competitive pricing with the Canadian dollar in such a tailspin? Did I miss the news about Quebec moving to the Euro, or Manitoba and Saskatchewan adopting the British Pound? Did Thunder Bay get annexed by Minnesota, forcing it to switch to the US Dollar?
If the Canadian dollar was really to blame, you would see uniform price increases coast to coast, just like you do with cauliflower and Candy Crush Saga, but you don't, because for once it's not the Canadian dollar's fault.
Why are prices so great in Manitoba?
In a word: Competition.
The Big 3 (Rogers, Bell, and Telus) are absolutely allergic to even the hint of competition. It terrifies them so much that they got together and launched an all-out advertising blitz called "Fair For Canada" in 2013, when they heard the tiniest rumour that Verizon might be considering setting up shop here. You can see one of their ridiculous commercials below:
They have good reason to be afraid. Prices are reasonable in Manitoba and other regions because they all have one thing in common: a competitive and robust 4th carrier. Manitoba has MTS, Saskatchewan has SaskTel, Quebec has Videotron, and Thunder Bay has Tbaytel. The Big 3 have to price match, and that's how you end up with a plan in Manitoba for $48 that includes unlimited nationwide talk & text and 5GB of data. These plans are so attractive that there's even a wireless black market that facilitates getting these plans outside of their designated regions.
Ontario doesn't have a competitive 4th carrier, and it's not for lack of trying. In 2008, the government of Canada set aside wireless spectrum exclusively for "new entrants" to try and spur real competition, and out of that deal, we got Mobilicity, Public Mobile, and WIND Mobile. Now, Mobilicity has been absorbed by Rogers following a messy bankruptcy, and Public Mobile was bought by Telus. As of 2016, WIND Mobile is the only new carrier left that isn't owned by one of the Big 3, although its recent sale to Shaw creates a lot of questions about its future.
For now, WIND is alive and kicking. So why don't Rogers, Bell, and Telus see it as a competitive threat in the same vein as MTS or SaskTel?
There are three things that all the regional carriers have that WIND doesn't:
- A robust 4G/LTE network
- Consistently reliable coverage throughout the region that they serve
- Nationwide roaming agreements that allow their customers to use their phones as they normally would even outside their carrier's region, at no additional cost
Unless WIND Mobile can solve those problems, they will never be truly competitive with the Big 3.
If it's not the weak dollar, why are prices going up?
There's only one real reason wireless prices go up, and that's four little letters: ARPU. This stands for Average Revenue Per User - total revenue divided by the number of users - and it's basically the only number investors and shareholders care about. Wireless carriers need ARPU to go up every quarter. This means they need to constantly be moving people to more expensive - or in Big-3-speak, "higher value" - plans, and they'll take any excuse they can to do it. Back in 2013 when the CRTC mandated a switch to 2-year contracts, the Big 3 took this excuse and ran with it to jack up prices by as much as 55%, resulting in a big boost to ARPU. Now that things have normalized, they're looking for the next convenient excuse.
Rogers reported a 1.2% year-over-year decline in Blended ARPU last quarter, which explains why the Big 3 are scrambling to eliminate discounts for customers bringing their own phones, resulting in a price increase on the cheapest plans by as much as $20 a month. It seems that high prices do have an effect on consumer habits, and too many people were taking advantage of the BYOD (bring-your-own-device) discounts by making their existing phones last longer, or buying used phones, lowering ARPU and sending the Big 3 into a panic.
Sounds like prices will just keep increasing. What can we do about it?
Our options are limited, but here are a few ways you can fight back:
1) Call and negotiate
This tactic isn't as effective as it used to be, but there are still some deals to be had. Wait until you're near the end of your contract, then call Bell, Rogers, or Telus (whichever carrier you're with) and let them know you're exploring other options. Don't make a big scene or threaten to cancel - just calmly explain that you're in the market for a new plan, you've been looking at other carriers, and then ask what they can do for a loyal customer such as yourself. It helps if you have the details of a plan someone else has been offered. You can find plenty of resources at Howard Forums, a message board where people share their experiences with their wireless carriers and details about their plans.
2) Sneak onto a regional plan
Speaking of Howard Forums, there's an entire thread over there dedicated to getting that wireless holy grail, the Koodo 5GB $48 Manitoba plan, outside of Manitoba. I don't recommend this because it requires you to jump through a lot of hoops, and Koodo can close the loophole that allows this at any time. They could even force you off the plan, or worse, cancel your service. Still, if you're the risk-taking type, there are ways to make it happen (for now).
3) Check with your employer or union
Corporate plans often come with steep discounts. Check to see if your company has negotiated a deal with any of the carriers, and see if you can get on their negotiated rate plan. If you're a member of a union, they might also have deals negotiated with certain wireless providers. Members of OPSEU, for example, have one of the most attractive plans available to them through Bell, at a discount of nearly 40% off the market rate.
4) Switch to a flanker brand
"Flanker" brands use exactly the same infrastructure and offer exactly the same service (in terms of reception and data speeds) as their parent companies, but at a bit of a discount. At Bell, for example, you can get a plan with unlimited nationwide talk & text and 1GB of data for $80. At Bell-owned Virgin Mobile, you can get exactly the same plan for $60. What you give up for that $20 monthly savings are extra frills like an expanded phone selection and the ability to share data with other people on your account. If those things don't matter to you, go with a flanker and drive that ARPU down! Yes, it all goes to the same company in the end, but you'll still be sending a message that there's a limit to how much you're willing to pay.
It can be difficult to keep track of who owns who, so here's a handy list:
- Bell - Virgin Mobile, Solo
- Telus - Koodo, Public Mobile
- Rogers - Fido, Chatr*, Mobilicity*
5) Switch to WIND Mobile
I know. This is like cutting off your nose to spite your face. Reception is spotty, data is slow, and customer service is bad. I've personally switched to WIND Mobile twice, tried it for a few months, then went crawling back to Telus each time. Then again, there are people I know who are perfectly happy with WIND, so there's no harm in trying it out for a month to see if it'll work for you. It may require a bit of sacrifice, but the only way to truly show the Big 3 that we're not going to put up with their price gouging is to vote with your wallet and stop giving them money.