Proof That Canada Needs More Competition in Their Wireless Market

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Canada's wireless services are in a state of disarray – prices are going up as Rogers, TELUS and Bell continue to dominate the market while Wind Mobile is a distance fourth while Mobilicity is ready to go under.  There have even been several attempts by the other existing telecom companies to purchase Mobilicity, but Industry Minister Christian Paradis will not hear of it – he is adamant that purchase by an existing company is unacceptable.  Is the government fixing the problem or are they the real problem in not allowing businesses to battle it out in a free market place.

With everybody raising prices and adjusting their plans, across the Big Three carriers, across the many provinces and cities, it is hard to tell if the pricing is equitable.  Basic talk and data plans at all three will run you about $80 a month for 500 MB data.  Thanks to our source and tech blogger Peter Nowak we can see that if you use Bell and live in Manitoba, Quebec or Saskatchewan – you get quite a bargain compared to using Bell in Ontario.

Another blogger, Ben Klass, did some number crunching and found that if you had an unlimited talk and text and 1GB of Data on TELUS  – over the course of a two-year period you would save $720 if you lived in Saskatchewan versus the same plan if you lived in Alberta.  This disparity in costs seems to arise from the fact that the "cheap" provinces have a fourth carrier – SaskTel in Saskatchewan, MTS in Manitoba and Videotron in Quebec.

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This is definitely a strong indicator that if Canada had a "cheaper" carrier across all of its provinces and large cities, pricing might be more equitable across Canada.  Nowak writes:

"If carriers can afford to charge such low rates in Quebec, Manitoba and Saskatchewan without incurring losses, the natural question that arises is: why can't they do so in the other provinces?"

Even though this makes perfect sense there are those like, Jeffrey Church, an economist at the University of Calgary, that believe that three is the natural number – if more players come into the game, he believes profit margins could be squeezed forcing the smaller companies out.  But so far, that has not seemed to have happened where there are four players.

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Everybody agrees there needs to be more competition in Canada's wireless market, but nobody is sure the best path to take.  Even if a strong contender would enter the market, with consumers locked into contracts, it can be hard for it to quickly gain a customer base.  The new consumer protection rules make it a little easier for consumers to switch, making a fourth entry a little more viable.  Some think that the Canadian government should allow foreign competition, but that opens up a completely new set of problems.  Whatever the problems, it certainly seems that somebody is letting down the Canadians when it comes to wireless services.

Please let us know what you think on our Google+ Page about the wireless world in Canada – are you happy with your service and plans – we would love to hear from you.

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