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Canada’s Big 3 telecom firms will get 2 years to cut rates by 25 per cent

Big 3 telecom firms will get 2 years to cut rates or face consequences: Bains
Big 3 telecom firms will get 2 years to cut rates or face consequences: Bains

Rogers, Bell and Telus — the three biggest Canadian cellphone companies — will get two years to slash their prices by 25 per cent, or face the consequences.

Innovation Minister Navdeep Bains announced on Thursday after financial markets closed that the government will be changing from yearly to quarterly tracking of wireless pricing in the country with the goal of better tracking the price drops required for cellphone plans offering between two and six GB of data.

READ MORE: Here are some of the best cellphone plans in Canada for 2020

He also said if the Big Three don’t slash their prices, the government will “take action with other regulatory tools to further increase competition and help reduce prices.”

In an interview with Global News on Thursday, Bains said that while the government isn’t looking at levelling fines, it could look at restricting the Big Three’s access to future spectrum auctions that they need in order to expand their networks, and forcing them to let smaller providers piggyback on their networks.

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“If they fail to do so, we will look at additional regulatory measures, like how we deploy future spectrum or mobile virtual network operators as a means to drive more competition, which will help lower prices,” Bains said.

“Spectrum is essential for companies to be able to grow, to provide data to consumers, to connect consumers. It’s what makes a smartphone smart. So this is a very valuable resource and how we deploy that resource will enable the ability for companies to invest and grow going forward.

“If they are unable to meet that 25 per cent commitment in the next two years, we will make sure that we have policies in place that promotes competition and so mobile virtual network operators will use their networks for infrastructure and provide lower-cost data plans to consumers.”

Federal Election 2019: Campaign promises on cell phone bills and internet plans
Federal Election 2019: Campaign promises on cell phone bills and internet plans

Both Bell and Telus expressed disappointment in the measure.

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Bell said it would study the move but said that policies “discouraging investment, including regulating wireless pricing or continuing to deny fair access to spectrum for all competitors, put jobs and innovation at risk in an industry that’s delivering tremendous value to consumers.”

“It’s the worst time to jeopardize our country’s wireless success as carriers look to ramp up investment for the global move to 5G wireless,” a spokesperson said.

A spokesperson for Telus said that it was “extremely disappointing” that the measures were limited to big carriers.

READ MORE: Big Canadian internet providers must now be clear on pricing, contracts: CRTC

“This is yet another punitive action taken by this government against the companies that have built Canada’s global-leading wireless networks — and which are being asked to invest billions of dollars to ensure Canadians can benefit from next generation 5G technology — and all in the name of solving a problem that numerous independent studies have repeatedly proven does not exist,” a spokesperson said.

A spokesperson for Rogers did not directly address the company’s position on the announcement but said in a statement that it operates in a “highly competitive market that continues to deliver more affordability and value, and we always evolve our services to meet the needs of Canadians.”

For years, Canadian cellphone plan prices have been among the highest in the world.

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The Canadian Radio-television and Telecommunications Commission found in 2016 that Canadian paid the highest prices for cellphone plans and the third-highest for broadband internet out of eight industrialized countries, including the U.S., U.K., Australia and France.

A public opinion survey done for the CRTC in January also noted that only half of Canadians are satisfied with their cellphone providers, with costs for data and data overage fees being the top reasons for dissatisfaction.

And despite increasing attention on the need for wireless companies to lower their prices, only eight per cent of Canadians surveyed said they had seen a decrease in what they pay for cellphone service.

Only 15 per cent said they get good value for money from their provider.

While a report on price comparisons done for the government in November 2019 found prices for wireless and internet services had dropped “dramatically” from May to September 2019 across almost all categories of services, Bains said the government wants more action.

It used $50 per month as a baseline current cost for a wireless plan from one of the Big Three providers, and Bains said the government wants to see that drop to closer to $37 per month over the next two years.

Federal Election 2019: Trudeau says Liberals will bring in competition if cell phone companies don’t lower prices
Federal Election 2019: Trudeau says Liberals will bring in competition if cell phone companies don’t lower prices

The move comes after several weeks of study by the CRTC into the question of whether it should force the Big Three to sell access to their networks to smaller players.

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Telus CEO Darren Entwistle threatened last month that the company would slash 5,000 jobs if forced to do so.

Bains said that while he couldn’t speculate on whether the company was bluffing, the government has been very clear it wants to see more investment and believes it has created a tax environment that makes it easier for companies to do so.

READ MORE: Telus sets stage for battle over wireless rate cuts with new pricing pledge

The government made wireless affordability a key pledge after the NDP first raised the idea of forcing a cut in cellphone prices ahead of the fall election.

That idea was quickly adopted by the Liberals even as they have continued to delay making a decision about whether to allow Chinese technology firm Huawei into the construction of the next-generation 5G wireless network.

The Chinese tech firm offers cheaper equipment costs and financing plans than many of its European competitors, in part because it is backed by the Chinese government, experts say.

READ MORE: Most Canadians are wary of Huawei’s role in 5G. Here’s why some firms still favour it

Yet it is also the focus of espionage fears that have led the U.S., Australia and New Zealand to ban the firm’s technology from their 5G networks.

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The U.K. issued a partial restriction earlier this year, saying Huawei equipment would not be used on critical or core parts of its network.

The Canadian government, however, has repeatedly delayed making a decision on whether to bar the company in whole or in part.

National security agencies began a review of the risks in late 2018 and federal officials originally said the results would be released before the 2019 fall election. That timeline came and went, though, with officials saying the results would actually come after the election.

It’s now almost five months since, and the government still hasn’t announced any plans or said when the review will wrap up.

Federal Election 2019: Campaign promises on cell phone bills and internet plans
Federal Election 2019: Campaign promises on cell phone bills and internet plans

Bains did say, though, that the government will set aside roughly one-quarter of the upcoming auction for wireless spectrum for small and regional players in yet another effort to lower prices for consumers.

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The auction for 200 MHz worth of licences on the 3500 MHz spectrum is set to take place on Dec. 15, 2020.

The 3500 MHz spectrum is key to the upcoming rollout of 5G wireless networks.

Bains said the goal of setting aside 50 MHz of the 200 MHz up for grabs is to help level the playing field for smaller providers who can drive down prices.

The move was applauded by Shaw Communications, which owns Freedom Mobile.

“Today’s decision by Minister Bains reflects the success that Freedom Mobile and other regional providers have had in creating truly effective wireless competition across Canada, ” Brad Shaw, CEO of Shaw Communications, said in a statement.