BUSINESS

Wireless Prices: Canadians Would Pay $419 More Per Year, Industry Group Study Suggests

06/03/2013 04:27 EDT | Updated 11/13/2013 08:28 EST

HuffPost Canada readers got what they most wanted from the CRTC Monday — an effective end to three-year cellphone contracts, in the form of an early escape clause allowing wireless customers to end their contracts after two years.

But they didn’t get something else that wireless customers apparently want: Higher prices for cellphone service.

That’s the implication of a new poll carried out for the main lobby group of Canada’s telecom industry, which shows Canadians willing to pay up to $11.5 billion more for telecom services than they are currently paying.

The study said Canada’s telecom industry generated an $11.5-billion “consumer surplus” in 2011 — meaning consumers would be willing to pay that much more per year for wireless service.

Given that Canada had 27.4 million wireless subscribers in 2011, that works out to an additional $419 more per subscriber per year in wireless costs.

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The survey was carried out for the Canadian Wireless Telecommunications Association (CWTA), the industry’s lobby group, and it seems to go against the general direction of consumer sentiment. Canadians have are among the world's most vocal critics of the wireless rates.

Studies have repeatedly shown Canadians pay more than the global average for telecommunications services. On things such as roaming and data, Canadians face among the highest charges in the world.

In an interview with the Globe and Mail, CWTA president Bernard Lord suggested consumer groups are making too big a deal out of complaints about wireless service.

When I hear these groups, the detractors and the professional complainers, sometimes out there saying: ‘Oh, this is bad, and things are awful,’ somehow they are suggesting that maybe Canadians don’t know what they are doing,” he said. “Canadians are buying the most sophisticated devices... and that’s because they see the value of it.”

Although some of that criticism has been levelled at wireless prices, at least as much criticism has been targeted at the practice of unlimited overage charges for roaming and data — something the CRTC is working put a stop to with its code of conduct. The new rules announced Monday cap monthly data overages at $50, and international roaming charges at $100.

But perhaps the most significant change came to contract lengths. The CRTC announced that consumers will be able to back out of three-year cellphone contracts after two years. That could effectively end the practice of three-year contracts, if wireless companies decide it’s too risky to offer the contracts under the new rules.

In an informal survey last year, eliminating three-year contracts was the single most common demand that HuffPost Canada readers had of the CRTC.

The CWTA was the centre of some controversy recently, when all three of Canada’s small wireless providers quit the group, accusing it of consistently favouring the big players.

All three of those wireless companies — Mobilicity, Public Mobile and Wind Mobile — recently put themselves up for sale. Telus recently purchased Mobilicity for $380 million, giving the B.C.-based telecom giant an additional 300,000 subscribers across the country.

Some analysts interpreted the indie players’ moves to sell themselves as a sign that efforts to establish a fourth major wireless carrier in Canada have failed.

That, in turn, has raised concerns among consumers’ advocates about the future of wireless competition in Canada.