Can cell service in Canada get more expensive?

Business Business | Tech Technology

You’re probably well aware that Canadians pay among the highest cell phone rates in the world. In fact, according to the Organization for Economic Co-operation and Development (OECD), Canada ranked 32 out of the world’s leading 34 industrialized countries for expense of data-only smartphone plans.

This kind of data doesn’t settle very well with most Canadians, and only a few weeks ago, people hoped Verizon would enter the Canadian wireless market and bring prices down. However, that didn’t happen, as Verizon Communications purchased a 45 per cent stake in Verizon Wireless that was owned by UK carrier Vodafone, accounting to $130 billion USD—making it one of the biggest deals in corporate history. Interestingly, Canadian carriers have the third-highest revenue per subscription in the G8 (a group of eight of the world’s largest national economies), and the fourth-highest overall out of the 33 countries covered in a recent OECD report.

The Canadian government has said it’s committed to four wireless carriers in every region of Canada. The government, led by Stephen Harper, planned an auction for a chunk of the Canadian wireless market in January—one in which Rogers, Telus, and Bell are prohibited from bidding. This is being done to attract carriers to operate in the country and help bring down rates for Canadians. But with Verizon no longer interested, it leaves no obvious source of serious competition to the existing big three players.

Rogers, Telus and Bell claim they’ve experienced losses cumulative to $14.7 billion on the capital markets (where long-term debt- or equity-backed securities are bought and sold) since the news broke that Verizon may come to Canada. However, Telus stock rose by $2.43, to $34.75 in noon trading on the Toronto Stock Exchange. Rogers went up $3.06, to $44.65, and Bell’s was up $1.74, to $44.93 (7.5, 7.4 and four per cents, respectively).

Verizon’s decision to do business in Europe is final, and it could cause a rise in wireless costs for Canadians. “Verizon is not going to Canada,” said company CEO Lowell McAdam in an interview with the Bloomberg news service.

According to telecom analyst Iain Grant in an interview with CTV, the prospect of a Canadian Verizon division produced more options for Canadian consumers, with the big three carriers offering data-sharing plans, which were previously unavailable for smartphones and tablets.

It’s unclear who the fourth big player promised to consumers by the government will be. “We are still very concerned about the upcoming auction, because any international giant could come in, even though Verizon has confirmed they will not,” Josh Blair, Telus chief corporate officer, told CTV news. However, one thing is certain: Canadian cell phone rates are too high and more competition would benefit consumers.