One of the country’s big cellphone providers, Bell, is slashing the price it charges for wireless service for Canadian customers travelling in the United States, a move that will force the other big guys – Rogers and Telus – to lower prices on their plans, analysts say.
The move could also ward off regulators looking closely at managing industry-wide “roaming” prices as part of Ottawa’s bid to bring down wireless prices for consumers.
Bell said Monday its 30-day U.S. travel bundle, which formerly cost $50, will be reduced to $25, for a specified amount of call minutes, texting, Internet usage and other data. For heavy users, an add-on option for additional data and minutes has been cut to $20, down from $40.
Bell’s rate cuts on its most popular U.S. roaming plans are likely to be matched by Telus and Rogers, experts say.
Besides one-upping the competition, the rate cuts may also be aimed at another objective: lowering the risk that the government will step in to set its own roaming prices.
The high prices charged by the carriers to subscribers abroad is a small but very profitable area of their businesses, and for a government eager to show its actively working to lower wireless costs for consumers— as the Harper government has been—roaming is an easy target for attack.
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The CRTC has collected information on roaming costs among Canadian carriers in recent weeks, with speculation it could move to impose its own pricing.
“It’s a preemptive move given that the government’s review is in progress,” Ronald Gruia, a Canadian wireless industry expert at Frost & Sullivan, said. “And it once again reinforces that the government is doing the right thing in looking at all facets of the market to improve competition.”
“Bell’s release is well timed,” Canaccord Genuity’s Ghose said. “In our view the best way to ensure that wireless remains forborne is self-policing by carriers on emotive issues such as international roaming.”
Bell officials said Monday the move was made in response to customers telling the carrier this summer “they want to use their smartphones a lot when they travel, and they want the price to come down.”
The feedback came amid the threat of U.S. wireless giant Verizon entering the Canadian market place at the urging of the federal government. The U.S. carrier said earlier this month it does not intend to launch services in Canada, calling speculation over the prospect “way overblown.”
Read more: Is Verizon’s interest in Canada legit?
Bell’s new U.S. roaming prices come into effect Tuesday, while the Montreal-based carrier said it plans to address rates charged in other countries as well, attempting now to renegotiate wholesale prices it pays to foreign carriers when a Bell subscriber piggybacks on a network abroad.
Percentages vary depending on the quarter, but roaming accounts for about five per cent of wireless revenues at each of the carriers, analysts estimate. U.S. roaming revenues comprise the biggest chunk, with three fifths of all roaming revenue coming from the U.S.
Unfortunately for day-tripping shoppers crossing the border for 24 to 48 hours trips, the rate reductions may not be of much relief – Bell hasn’t adjusted pay-as-you-go rates, so a few emails or phone calls will still add up quickly.
“Bell has not reduced pay as you go rates and we assume that most consumers pay as they go rather than signing up for roaming plans,” Ghose said.
There are cheaper alternatives out there for consumers, including switching to lower cost carriers like Wind Mobile and Mobilicity. Another option is Roam Mobility.
The Vancouver-based startup sells unlimited talk, text and data for $4 a day to Canadian wireless subscribers. The catch: a sim card must be swapped into the phone, which itself must be “unlocked” from its home carrier’s network.
Still, Roam’s founder, Emir Aboulhosn, said the company, which uses T-Mobile’s network in the U.S., is now signing up about 300 customers a day saving them a combined $12 million a month in roaming fees.
The slight advantage Bell has over its chief competitors won’t last long, Aboulhosn added.
“That’s why consumers think there’s collusion between them, it’s because none of them do anything really to innovate.”
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