Canada Competition Bureau

New Study Says that Canadians are Paying too Much for Communication Services

March 24, 2015 - Written By Cory McNutt

A new report issued by an Ottawa-based consumer group, the Public Interest Advocacy Centre (PIAC) says that the federal government needs to take action.  It is so bad and Canadians have become so dependent on the internet and wireless services that they will often pay those bills before they pay other essential services.  A survey respondent from the Ottawa-based Shepherds of Good Hope foundation for homelessness said, “Phone (home or cellular) is a necessary service that clients would not cut.  To make up for the expense, they might use food banks, clothing programs and other community resources.  This is hard, though, because clients want to feel normal. They want to be able to go to a store to buy things like everyone else.”

All Canadians are feeling the high cost of communication services, obviously the low-income households feel it the worst and Canadian households spend between $100 and $212 a month.  The low-income homes account for 8 and 15-percent of the populations and they spend an average of 7.6-percent of their total annual expenditures on communications.  This exceeds their spending on clothing, healthcare and education!  The PIAC report says, “Government and regulatory decision-makers have implemented ‘affordability’ policies that have focused on the availability and accessibility of communications services, rather than their true affordability.  Relying solely on competition has not, and likely will not, create the conditions needed to ensure that communications services truly are affordable for low-income Canadians.”

The Canadian government spends a lot of time trying to regulate competition, create pricing that everybody can afford, and police problems, but despite their best efforts, prices do not seem to be going down.  The PIAC has asked for help for the telecom providers but only heard from two.  Rogers has a Connected for Success program to deliver inexpensive broadband to Toronto Community Housing as well as cheaper wireless for the seniors.  SaskTel says that the onus to help the people falls on the government, not the individual companies.

Wall communications did a study in 2014 and looked at bundled packages in eight countries and found that a typical package with home phone, wireless, broadband and TV costs about $182 in Canada.  This is compared to just $93 in France or $102 in the UK.  Canadians also pay the highest in wireless bills – $56 compared to other developed countries where the average is only $40, while over their own border in the US they pay about $50.

The PIAC report says, “Relying solely on competition has not, and likely will not, create the conditions needed to ensure that communications services truly are affordable for low-income Canadians.”  A study called ‘No Consumer Left Behind’ lists five courses of action needed:

The federal government should amend the Telecommunications, Broadcasting and Radiocommunications Acts to include “affordability” under universal service obligations – Affordability in such cases should be calculated against other relevant expenditures to ensure Canadians don’t have to cut spending on other essentials – The requirements should respect consumer control over expenses and choice of services as much as possible – Any government policy or regulatory initiatives for low-income consumers should be designed with affordability in mind – The Canadian Radio-television and Telecommunications Commission should conduct yearly research on the affordability of the four major services: landline, cellphone, internet and television.

It is obvious that something needs to be done to curb communications costs in Canada and you can be sure that the government will keep trying to manipulate the companies into helping cut costs, but that will only go so far.  John Lawford, PIAC’s executive director, is very critical of the CRTC, the federal government and communication providers, says the report is merely a starting point for discussions on exactly what the definition of affordability means to Canada.