The federal government’s decision to scrap a cellphone cost calculator for consumers came after lobbying from large telecom firms, and happened despite Industry Canada defending the calculator as accurate, a news report states.
The revelations come as Ottawa prepares to auction off a new block of wireless spectrum. Consumer advocates have raised concerns the government is planning to set up the auction in such a way that would favour the large telcos and reduce competition in the marketplace.
First put into development in 2007 by then-Industry Minister Maxime Bernier, the calculator project was meant to result in an online tool consumers could use to figure out which cellphone plan was cheapest for their purposes.
But in 2009, then-Industry Minister Tony Clement, who replaced Bernier, declared that the tool was “inaccurate” and scrapped the project.
According to documents obtained by Postmedia under access to information laws, Industry Canada did not agree with that assessment. Records show the department defended the calculator as an “important consumer-education tool.”
The records also show Clement’s decision came after lobbying from Rogers Communications, Telus and the Canadian Wireless Telecommunications Association (CWTA).
The calculator project cost the federal government $1.4 million. In defending the decision to kill it, Clement said the calculator was unfair because it did not include discounts on cellphone rates if a plan is purchased as part of bundled telecom services. This would disadvantage the large telecoms, as those are the companies that offer bundled discounts.
The Public Interest Advocacy Centre (PIAC), which lobbied to have the calculator created, argues there was nothing wrong with the tool.
“It worked fantastically,” PIAC lawyer John Lawford told Postmedia Friday. "It was just like doing comparison shopping on the Internet where you can plug in what you're looking for and it compares everything and brings it up in a list."
This is not the first time it has been suggested corporate lobbying was behind the calculator’s demise; tech law expert Michael Geist made similar allegations two years ago.
The latest news comes as the federal government prepares to auction a new block of cellphone bandwidth that will likely reshape the wireless business in Canada. Consumer advocates fear the government will side with the large telcos in the auction, a move they say could kill cellphone competition in Canada.
The auction of the 700-megahertz band is expected to be announced this spring, and Canada’s big telecoms are in a public battle with new entrants for access to it. The band is nicknamed the “beach front property” of bandwidth for its ability to carry signals a long distance. The new spectrum has the ability to allow cellphone calls in elevators, deep in underground parking lots in big cities and in basements and attics in suburban areas.
Without access to it, Wind Mobile chairman Anthony Lacavera told the Huffington Post, the new wireless entrants in Canada’s market will not be able to survive.
“I could not make a business plan that makes sense without this bandwidth,” he said, a sentiment echoed by Public Mobile vice-president Bruce Kirby last week.
Public Mobile and Wind are hoping the government will create “set-asides” in the auction that would allow smaller carriers to bid without being outbid by large players. Another option for the auction would be “caps” that would limit how much any company can buy.
PIAC released a statement last week suggesting the government is leaning towards caps rather than a set-aside, a move that has the new wireless carriers worried.
Lacavera said the caps would not stop the big telcos from pushing small players out of the market, because every carrier has to buy enough bandwidth to make its share usable, and small players could be priced out of the competition.
“We’re not asking for any handouts,” Lacavera said. “We are prepared to pay full market value. We’re asking for a structure that allows us to get [the bandwidth] in the first place.”
Lacavera suggested that if the new wireless entrants lose out in the auction, they will likely end up being bought out by the dominant telecom players.