March 8, 2013 11:21 am

Debate surrounding Canadian wireless market continues

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TORONTO – Canada’s wireless market is healthy, according to a Scotiabank telecom analyst report, in stark contrast to the report this week by advocacy group OpenMedia citing consumer outrage about Canadian telecom companies.

OpenMedia’s report compiled the “cellphone horror stories” of 2,859 Canadians fed up with high bills and a lack of respect from their wireless providers.

The report, entitled “Time for an Upgrade: Demanding Choice in Canada’s Cell Phone Market,” calls for more competition in the mobile market, highlighting three main areas of concern for Canadian consumers: price gouging, restrictive contracts and disrespectful customer service.

But Scotiabank analyst Jeff Fan’s says in a report that Canada’s wireless market is alive and well and argues that Canadians are paying lower monthly price plans for smartphones than our neighbours to the south.

Fan believes it’s time for regulators to declare victory on the policies adopted five years ago, which helped to facilitate things like tower-sharing between competitors and network roaming, bringing smaller independent providers into the market.

The report cites 10 “common myths” about Canada’s wireless market, leading analysts to believe that the wireless industry in Canada is healthy.

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But the report also brings up key regulatory issues that have been debated in both OpenMedia’s study and in wireless code hearings being held by government bodies.

According to the Scotiabank report, monthly plans for smartphones are less expensive in Canada when compared to those in the U.S. The report also says that the belief that three-year contracts make Canadian plans less attractive is a myth.

OpenMedia’s report stated that many respondents compared the Canadian market to their experience with companies in the U.S. and foreign markets, including complaints that Canadians pay more than Americans for cellphone packages.

But, Fan estimates Canadian smartphone plans are approximately 24 to 27 per cent cheaper than they are in the U.S. and that Canada’s wireless voice prices have dropped 30 per cent since 2008, compared to the U.S. where voice prices have increased by 10 per cent.

The report also deems the trap of three-year contracts a myth.

“Canadian incumbent postpaid churn rates are similar to the US postpaid churn rates of AT&T and Verizon Wireless even though the US does not have three-year contracts,” read the report.

“If the US does not have three-year contracts then one would expect US churn rates to be higher than Canada where there are three-year contracts. We think the churn rates dispel the notion that Canadian wireless subscribers are trapped in three-year plans.”

But the length of contracts was a common complaint from consumers, according to the OpenMedia study.

Thirty-six per cent of those who submitted stories to OpenMedia asked for fair contracts to be a priority, citing that contracts are too long in duration and difficult to terminate.

Carriers are making progress on customer concerns

The three major telecom companies have responded to the OpenMedia report acknowledging that they are aware of their customer concerns and have taken measures to address them.

In statements emailed to Global News Rogers, Bell and Telus noted of changes they have made to their services that they believe will positively affect their customers.

Rogers noted that they are already addressing many of the recommendations raised in the report, alongside some recent changes that include a changed unlocking policy that allows customers to unlock their phones after 90 days if their accounts are in good standing and a flextab program that allows customers to upgrade their phone at any time by paying off the balance of the subsidy received on the device.

A spokesperson for Telus also noted that the company has re-written contracts in plain language to make them easier to understand, eliminated contract cancellation charges in favour of device balance and has gotten rid of device activation fees, among other things.

Additionally, Bell said in their statement to Global News that they have worked to include “all-in” pricing in their advertising, aligned early cancellation fees to standards set by provinces and noted that they have been unlocking devices for customers since 2009.

 

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