« Links From The Backchannel | Main | QotD: How Do You Use Your Mobile Phone? »

April 10, 2007

Canadian Mobile Carriers Come Under Fire

I have long known that the Canadian Mobile phone industry is gouging its customers - even before I owned a cell phone.  Until I moved overseas I never had a need for a mobile phone, and I worked with the fantastic long distance plan offered by Sprint Canada (now defunct after being purchased by Rogers). When I moved to Singapore last January, it was impossible to operate socially without mobile phone (AKA a Handphone in Singapore), and I immediately bought a used, and basic, mobile phone capable of sending/receiving text messages and phone calls. 

The phone was 50 dollars Canadian, and still had 8 months of warranty left.  Here it is worth noting that the rate of cell-phone replacement for the demographic of roughly 14-28 is a new phone every 10 months. I bought a SIM card for the phone for 18 Singapore dollars, which came with 18 dollars of credit, and topped it up roughly every two weeks for another 18 dollars (at the time, 1 singapore dollar was roughly 70 Canadian Cents).  My monthly bills in Singapore were about 30 dollars Canadian - cheap by Canadian standards.  What was fantastic in Singapore though, was that *ANY* incoming call was free, no matter where it originated from.  Additionally, any incoming SMS was also free.  Imagine how happy my family was when I said "call anytime, it's free for me." (in fact, all carriers I know of in Asia and Australasia did not charge for incoming anything, regardless of the time of day).

After living in Singapore my travels to China saw me buy a new SIM card for about 100 Yuan, or 15 Canadian Dollars, which I used in case of emergencies, and was perfect for me. Moving to Australia my plan was a 50 dollar 'cap' from Vodaphone, which gave me 240 dollars of credit I had to use in a month (note: 1 Australian dollar was about 90 Canadian cents).  For 50 dollars I actually received 240 dollars of credit - that is unheard of in Canada.  Where is the bonus for your customers?

I  used my Australian credit aggressively, and I even used my mobile to access a local telephone number to call internationally.  You would be surprised at how hard it is to use 240 dollars worth of credit with only local phone calls and SMS. The return from my journey saw me in a state of flux, in need of a mobile phone, and in search for a carrier.  My dilemma was that there is only ONE GSM carrier in Canada, and it is Rogers (Rogers owns Fido, there is Bell, Telus, and Virgin - who rent lines from Bell - all of which are CDMA networks).  Not only is Rogers the only carrier, but it is impossible to get a 'starter' plan for less than 40/45 dollars a month with all the services fees and levies, unless you are on a pay-as-you-go system.

Customers, with a lack of choice of carriers are being overcharged in a market that has two carriers controlling the market: the essence of a monopoly.  Canadians are pushing for market deregulation to lower their costs.  According to this article in The Globe, "The average cellphone bill is one-third more in Canada than in the United States".  Do you see a problem? I do!

Recent articles in The Globe And Mail note that carriers are not anxious to market deregulation (and the loss of an iron-fisted monopoly), but it is clear that Canadians are getting screwed. Thomas Purves, in a recent article I picked up from my friend Sameer, paints a gruesome picture on the present state of the mobile market in Canada.  In the graph below one can see how outrageous data costs are for Canadians when compared internationally:

Mobile_rates_graph

For many, employers pay for cell-phones and their respective data plans, but end-users are getting creamed. BlogTO, a local Toronto blog, has also posted an article, highlighting that once you are locked into a contract you can not argue with their automated system (and I have heard some horror stories about being charged, a few of them involve myself). In fact, I have blocked all internet access on my phone for fear that I might press the wrong button and get charged exorbitantly for a mistake. I keep track of my bills and rates, paying careful attention to this fantastic RedFlagDeals post highlighting how to get the best bang-for-your-buck with your plan. (log in to view the post). In an age where customers are communicating with each other it is no doubt that we are getting smarter at dealing with these big companies. But will it change?

Sponsored Links

Comments

Since I spend half my days a year in London, I almost started taking the free incoming call premise for granted. That was, until I got my first phone bill from Rogers here this year. Ridiculous!

On my wall are SIM cards from travels and work abroad. Presently I have SIM's from: America, China, Singapore, Australia and the UK (this doesn't include the Rogers SIM in my phone now).

I wish I could port the plans from overseas too. By far Australia and the UK were the best plans (and cheapest!)

Nice rant, and I understand it is a rant, but I do want to point out an error . You said "Customers, with a lack of choice with carries are being overcharged in a market that has two carries controlling the market: the essence of a monopoly."

If there are two suppliers it's NOT a monopoly, a monopoly is a market condition that exists when there is only one seller.

That obvious error aside, you are right, Canadian wireless carriers do gouge the consumer.

I feel the pain. I work for a US-based company and they can't understand why my monthly bills with TELUS Mobility are $250 (on the low end), $350 or even $425. Sure I need to make long-distance calls - even the occassional overseas call - but they are paying a maximum of $125-150 (USD) for packages that offer virtually unlimited use including long-distance within North America.

That's mobile phones. Don't get me started on banking fees, especially ATM charges.

I'll go one better, I still keep the message from Bell on my phone where they threaten to close my account down due to an outstanding amount on my invoice. The total bill from that month was $348 (which in itself was ridiculous) and the outstanding balance was .10c. That lead to me cancelling my home line, Sympatico high speed and satellite connection. I calculated that cost Bell a total of roughly $6K annually in losses from a single individual. Maybe they should rethink their automation process as that was one costly dime.

TOTALLY AGREE!! Before I traveled to Taiwan, I took my cell phone account for granted. I had a Rogers account at about $60/month +++. When I dumped it and moved to Taiwan, I started doing the math and was amazed at how much less it was costing me. My cell phone, which I had purchased in Taipei, was further advanced than any phone on the Canadian market at half the price (a whole other issue) and the rates were amazing. When I came back to Canada I came to realize how much of a "rip" it was to own a cell phone here. I now have a basic Rogers account at about $45/month and everything incoming costs.

It's nice to have a cell here, but I agree completely that it certainly becomes an important life-line when you're living abroad.

Great rant and thanks for pointing it out!

"Nice rant, and I understand it is a rant, but I do want to point out an error . You said "Customers, with a lack of choice with carries are being overcharged in a market that has two carries controlling the market: the essence of a monopoly."

If there are two suppliers it's NOT a monopoly, a monopoly is a market condition that exists when there is only one seller."

Actually, one of the two owns the other one. Rogers bought Fido, so now there is really a single company in charge of GSM in Canada.

to the above poster: not monopoly... but Oligopoly.

You wrote a good article. I wish that there was something we could do to force these carriers to offer what the customers want. The US carriers have had unlimited data plans now for a while now and Canada has nothing of the sort.

Just like the iPhone has revolutionized the cell phone UI, something similar needs to happen to the Canadian wireless market.

The comments to this entry are closed.

Welcome to One Degree

  • OneDegree.ca is one of Canada's leading online publications about digital marketing, online communications and social media -- penned by some of Canada's most insightful and innovative internet marketers. Thank you for visiting!

    OneDegree.ca on Twitter OneDegree.ca on Facebook OneDegree.ca Bookmarks on Delicious OneDegree.ca on YouTube OneDegree.ca on Flickr OneDegree.ca Primary Feed

Subscribe to One Degree

One Degree with FreshGigs.ca

  • FreshGigs.ca is Canada's jobsite dedicated to marketing, creative and business professionals. Search or Post Jobs Today.

read all about it