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Pandemic Pains: The Need for Consumer Choice in Phone Plans | Op-Ed

COVID-19 has presented an array of challenges that the government has been compelled to deal with. One of these challenges is how to develop a system to identify people who may have been in contact with someone infected with the Coronavirus.

  • In June, the government announced that it is developing a smartphone app that links Bluetooth technology to Contact Tracing to help diagnose a person who may have COVID-19 sooner.
  • But this technology will not be effective unless every Canadian has access to a smartphone to download the app.

In Short: Having access to a cellphone in Canada may be life-saving, but not all Canadians own a smartphone. As a nation, Canadians pay some of the highest cellphone prices in the world.

  • Though the app is convenient for some, the requirement to own a mobile phone puts others, often the most vulnerable, like seniors and low-income citizens, at risk. 

If the government is developing life-saving technology through the use of a cellphone, it needs to make this technology more affordable and accessible.

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Billion Dollar Bills

In 2017, the total revenues from communications in Canada were over 60 billion dollars.

  • Of that revenue, 74% of the profits came from the monthly phone bills of Canadians.
  • The high prices are in part due to the monopoly of the big five broadcasters: Bell, Telus, Rogers, Shaw and Quebecor.
  • As of 2017, these companies controlled 85% of the market.

This is why the government needs to support consumer choice in Canada, and make life more affordable for Canadians through legislative and regulatory changes.

A Campaign Commitment

The high cost of cellphones is not a new issue for Canadians. During the 2019 election, the Liberal Party included a commitment to reducing phone plans by 25% in their campaign.

Last month, Minister Bains released a statement saying the government has delayed the next stages of 5G development to allow for telecommunication companies to focus on providing essential services to Canadians during the pandemic.

  • The statement ended with a quick nod to the mandate letter and the promises that a report on data plans will be released in July. 

The mandate letter provides the Minister with two options:

  1. Use the 2019 Telecom Policy Directive, which allows smaller companies to rent tower space from major phone companies to increase computation in the marketplace. 
  2. Work with telecom companies and expand mobile virtual network operators (MVNO) in the market.

From a policy perspective, the 2019 directive seeks to “ensure that affordable access to high-quality telecommunications services is available and foster affordability and lower prices, particularly where there is potential for telecommunications service providers to exercise market power.”

Canada Gazette, Part 1, Vol. 153, No. 10.

This policy directive provides the power to expand markets to allow smaller companies to enter the market and provide lower-priced options for consumers. 

Breaking the Barrier for Smaller Providers 

The geographical size of Canada can cause challenges for a new business to enter the cellphone market.

  • Major mobile carriers are hesitant to share their infrastructure, such as cell phone towers, with other providers.
  • But through establishing an MVNO, new providers can access critical infrastructure, develop new phone plans, and provide a greater service to Canadians.

The use of MVNOs is widespread across the world and includes countries such as the United States, the United Kingdom and Australia.

  • Australia, much like Canada, is a country that has a large landmass, a dispersed population and a monopolized market.
  • Unlike Canada, Australian MVNOs are more readily available and offer consumers greater choice.
  • Virgin Mobile entered Australia as the country’s first MVNO in 2000.
  • This increased the competitive nature of MVNOs in what was otherwise a consolidated mobile market.
  • Currently, MVNOs account for 13% of subscribers in Australia.

Canadian stakeholders are divided on the use of MVNOs. The major telecommunication companies are firmly against MVNOs and have actively challenged their use in order to secure their dominance in the Canadian market.

Now, new telecommunication companies are seeking to expand MVNOs to all greater access to cell phone coverage and consumers. 

  • Through expanding MVNOs, smaller companies will be able to “piggyback”, and share the current cell phone infrastructure to provide similar coverage to that of big corporations (Bell, Rogers, Telus and Quebecor).
  • In doing so, the new providers will provide competitive mobile phone plans

As Canadians have more choice for rate plans, it will force companies to adjust their prices to meet the new demand and to retain or attract new customers. Unlike setting a price floor for a basic plan, consumers will allow consumers to choose a plan that best fits their needs.

Cellphones are Lifelines

A 2015 report found that 68% to 94% of female respondents in 11 low-to-middle-income countries reported feeling safer with a mobile phone, or that they would feel safer if they owned one.

A follow-up report found that cost remains the greatest barrier for women to own a phone, as they are often less financially independent than men.

Through having access to a smartphone and a proper plan, women can use their cellphone to talk to a friend or loved one when walking home late at night or through a dangerous area.

  • Women rely on their phone plans to provide the services they need to make the call that they are on, be able to text someone or call 911 if they face any dangers.

In 2009, a Saskatchewan company began providing prepaid phones to women who were fleeing from violence and abuse.

  • These phones provide women who often have nothing, with security and independence.
  • In one case, a woman who recently left her ex-husband was on the streets. She was walking with her baby when her ex-husband attacked them. She was able to get away from him and call 911 on her cellphone. The police were able to use her last GPS location to find her.
  • She is alive today because of access to a cell phone.

Pandemic Predicament

All this being said, why should a government that is in the midst of handling a global pandemic, facing approximately $343.2 billion in debt this fiscal year and yet another ethics investigation care about fulfilling their promise of reducing phone plans by 25%?

  • The answer is simple. Not only is this good politics, but it is also good policy at a time when the government could use a win or two. 

From a political perspective, reducing phone bills would see support from both the NDP and Green Party.

In terms of policy, saving Canadians money will allow for more Canadians to afford a cellphone.

Bottom Line: Having a cell phone lets someone call for help when they have a flat tire, talk to a friend or loved one when they’re walking home late at night, or know if they’ve been in contact with someone who has had COVID.

Allowing more people to have access to smartphones means a better quality of life for many who are struggling and more security for those who are vulnerable. 

With cross-partisan support and an obvious benefit for Canadians, it’s a smart decision for the government to expand MVNOs to allow Canadians access to cheaper phones – and possibly save lives. 

This is a clear victory for the government. But, will they answer the call?