A decision by U.S. giant Verizon to no longer try to enter Canada's wireless market may mean Canadians could soon end up paying more on their cellphone bills, say several analysts.

The prospect of Verizon's entry had produced more options for consumers as the country's big three wireless carriers offered new data sharing plans, previously unavailable for smartphones and tablets, telecom analyst Iain Grant said Tuesday.

"If nothing else, even the spectre of Verizon coming here was enough to change pricing in the Canadian market," Grant said.

"Without Verizon, will prices creep up? I think, sadly, the answer is probably yes."

Shares in Rogers, Bell and Telus surged on news that Verizon confirmed that a Canadian entry was "off the table at this point."

Verizon Communications Inc. said Monday it was no longer interested in competing in the Canadian wireless market after announcing it would pay US$130 billion for a 45 per cent stake in Verizon Wireless owned by British cellphone carrier Vodafone.

Grant noted that the three Canadian carriers now allow households to choose the amount of data they want to use and share one monthly data plan, an option Verizon, AT&T and Sprint have been offering for more than year.

"Thanks Verizon. Even just clearing your throat got us better prices for data sharing," said Grant, managing director at the SeaBoard Group.

But analyst Troy Crandall said he doesn't expect Canada's big carriers to bring in price hikes soon. He said the three are competitive and recognize consumers have limits to their monthly telecom budgets.

Crandall said consumers were largely forgotten in the huge publicity campaign against Verizon by Bell, Telus and Rogers.

The telecoms argued that the upcoming auction of wireless spectrum — radio waves needed to operate cellphone networks — favoured foreign competitors and put Canadian incumbents at a disadvantage. The government wanted to increase competition for consumers by having four wireless carriers in each of the country's regions.

"It just seemed like the consumer was an afterthought in the whole fracas," said Crandall, of investment firm MacDougall, MacDougall and MacTier.

"There was never any indication of how blocking Verizon coming into Canada was going to help the consumer."

The deadline for companies to sign up for the wireless spectrum auction in January is Sept. 17 and, with Verizon out of the running, there are no obvious foreign carriers to compete with Rogers (TSX:RCI.B), Telus (TSX:T) and Bell (TSX:BCE).

Industry Minister James Moore's office said there were no plans to delay the auction or change the rules that give foreign bidders access to bid on two blocks of prime 700 megahertz spectrum while the three domestic carriers are held to bidding on one block apiece.

Telus executive Josh Blair said the Vancouver company will continue to push for fair access to spectrum.

"We are still very concerned about the upcoming auction because any international giant could come in, even though Verizon has confirmed they will not," said Blair, Telus' chief corporate officer.

Both analysts said the three large telecom companies have cornered most of the wireless market in Canada, making it more challenging to attract new foreign telecom players.

Crandall said Quebecor could come out a winner in the auction because it won't have to bid against Verizon, potentially lowering its costs. Grant said he isn't convinced that Quebecor's Videotron will want to increase its wireless footprint across the country.

Wind Mobile chairman and CEO Anthony Lacavera said he still wants Wind to become Canada's fourth national carrier, saying the markets where the company operates have brought down prices by 18 per cent.

"Verizon is not and never was needed to build a competitive telecommunications market in Canada," Lacavera said.

Lacavera still owns a 35 per cent take in Wind Mobile and would like to buy back the 65 per cent stake that Dutch-headquartered VimpelCom owns.

The Public Interest Advocacy Centre said it doesn't expect prices to go down.

"I don't see any credible fourth player at the national level and as far as we're concerned, that's where pricing discipline comes from and it's from national competitors," said John Lawford, executive director of the Ottawa-based group.

Lawford said he's not sure other foreign telecom companies will participate in the auction now.

"It really just sends a signal out there to the rest of the world: Please don't come here," he said. "But to(The Canadian Press)."

Loading Slideshow...
  • David Fuller

    <a href="http://www.huffingtonpost.ca/2013/02/21/rick-mercer-telus-stupidest-thing-ever-said_n_2734060.html" target="_blank">"I think a lot of customers don’t want a cap on their monthly cellphone bill."</a> -David Fuller, chief marketing officer for Telus

  • Darren Entwistle

    <a href="http://business.financialpost.com/2013/07/18/telus-darren-entwistle-wireless-spectrum-verizon/?__lsa=0b39-2f11" target="_blank">“There’s going to be a bloodbath, because people are not going to give up on getting that block."</a> -Darren Entwistle, Telus CEO, on what would happen if the government's rules for foreign companies who want to buy Canadian spectrum don't change.

  • Richard Schultz

    <a href="http://www.huffingtonpost.ca/2013/08/20/james-moore-wireless-verizon_n_3784535.html" target="_blank">“It was foolish, stupid, arrogant."</a> -McGill University political scientist Richard Schultz, on a letter from Anthony Fell, Bell Canada’s BCE director, to Stephen Harper.

  • Top-Down Communication

    <a href="http://www.huffingtonpost.ca/2013/08/28/kevin-crull-bell-wireless-debate_n_3830589.html" target="_blank">“Kevin Crull our President wants us to give this report some coverage. It’s a report on phone charges in Canada." </a> -Excerpt from one of the alleged emails sent from senior Bell Media employees obtained by Carleton prof Dwayne Winseck. Winseck says Bell Media's president, Kevin Crull, pressured news directors from other outlets to provide favourable coverage of the CRTC's Wall report.

  • Cruickshank

    <a href="http://fullcomment.nationalpost.com/2013/08/21/full-pundit-call-a-wambulance-for-canadas-wireless-giants/" target="_blank">“Bell, Rogers and Telus … are accountable to Canadians for the airwaves we entrust to them in ways a foreign firm with 100 million customers back home could never be.” </a> -Toronto Star Publisher John Cruickshank on the consequences of Verizon's entry into Canada

  • Ben Klass

    <a href="http://www.huffingtonpost.ca/2013/08/07/verizon-canada-wireless-rules_n_3720880.html" target="_blank">“You suggest that ‘U.S. giants don’t need special help from the Canadian government,’ but that’s exactly how Bell got to where it is today."</a> -Blogger Ben Klass on Bell

  • Telus

    <a href="http://www.huffingtonpost.ca/2013/08/09/stephen-harper-wireless-rules_n_3733569.html" target="_blank">"Given we've invested $100 billion in Canada since 2000, we've earned the equal right to bid on spectrum against a company with the deep pockets of Verizon."</a> - Josh Blair, chief corporate officer of Telus

  • Entwistle

    <a href="http://www.huffingtonpost.ca/2013/08/22/ralph-nader-verizon-canada_n_3794205.html" target="_blank">"I don't think they have a commitment to rural Canada."</a> -Darren Entwistle, Telus CEO, on Verizon

  • James Moore

    <a href="http://www.huffingtonpost.ca/2013/08/20/james-moore-wireless-verizon_n_3784535.html" target="_blank">“Nobody believes that the incumbents want robust aggressive competition."</a> -Industry Minister James Moore on Rogers, Bell and Telus

  • Anthony Lacavera

    <a href="http://windmobileblog.com/2013/08/time-to-separate-myth-and-reality/" target="_blank">"Over the past several weeks Canadians from coast to coast have been treated to a veritable all-you-can-eat buffet of misinformation on the state of the wireless industry."</a> - Anthony Lacavera, CEO of Wind Mobile on the Big Three's campaign

  • NEXT:

    Canadians' Favourite And Least Favourite Cellphone Companies

  • The Top 5- Canada's Favourite Cellphone Companies

  • 5. Mobilicity

  • 4. Public Mobile

  • 3. WIND Mobile

    Pictured: Wind Mobile CEO Anthony Lacavera

  • 2. Virgin Mobile

  • 1. Koodo Mobile

  • The Bottom 5- Canada's Least Favourite Cellphone Companies

  • 5. SaskTel

  • 4. Fido

  • 3. Telus

  • 2. Bell

  • 1. Rogers

  • NEXT:

    What You Need To Know About Wireless Code of Conduct


    How much of the code is new?


    <em>Answer from Marc Choma of the Canadian Wireless Telecommunications Association, the industry lobby group representing incumbent players:</em> A lot of these things are already common practice from carriers, but I think it’s good that consumers, on a national basis, know this and it applies to everybody. It’s going to supercede any provincial legislation and that was our main goal going into this because we were seeing a patchwork of regulations across provinces and it was costing the industry a lot of money to adapt their systems potentially 13 different ways.


    Are there any restrictions in the code that will prevent the cost of two-year contracts going up as a result of the new rules?


    <em>Answer from the CRTC:</em> The CRTC wireless code proceeding did not address pricing, as the Commission had previously determined that there is sufficient competition to protect consumer interests with respect to rates. Service providers are free to determine their rates for service and how much will be charged for phones up front. At the same time, improving consumers’ abilities to switch providers should push service providers to compete on price.


    How will the shorter contract length affect handset costs?


    <em>Answer from Steve Anderson, executive director of OpenMedia.ca, a wireless consumer advocacy group:</em> It’s unclear. There’s no market reason while the cell phone companies would suddenly raise the cost of cellphone service because people are on shorter contracts. So if they do that it’s really just price gouging. They could try and raise upfront handset costs, but the Canadian companies have higher revenue per user than any other telecom companies in the world and other places where we have two-year contracts, the device cost is not higher than it is in Canada, a great example is the U.S. (Pictured: Steve Anderson of OpenMedia)


    <em>Answer from Lawford:</em> It’s call your bluff time. The CRTC is saying “let’s see if it’s true that really your costs are so high and that really you're subsidizing these devices so much, or is it that you’re locking people in so the contract is longer than the usable life of the device?” If we send people back in the market every two years is that going to make competition pick up the slack. If they all go up in lockstep, [then] the Competition Bureau should be looking into what’s going on. Pictured: John Lawford of PIAC


    <em>Answer from Choma of CWTA:</em> Changing the length of the subsidy from three years to two years can actually raise the price of the upfront cost for your device. So before you had the option of putting it over three years and you could get a much lower rate for your phone, but now you’ve only got 24 months to earn that subsidy back. Obviously, carriers are going to have to adapt their business models to comply with that. But we’ll have to wait and see how carriers respond.


    The new rules allow a fully purchased handset to be unlocked immediately or a subsidized handset to be unlocked in 90 days. What effect will this have?


    <em>Answer from Anderson of OpenMedia.ca:</em> Unlocking the phone means it’s easier to switch carriers, easier to go international and use different services that aren’t Canadian, so it makes it more affordable. But I also think that area could have been better, for example they didn’t talk about what the cost of unlocking would be. And even the 90-day part could have been stronger. If I get a contract for a phone I should be able to do what I want with it. <em>Answer from Choma of CWTA:</em> Most carriers already do that now and some of them actually do it before 90 days now.


    Are providers allowed to charge a fee to unlock a phone?


    <em>Answer from CRTC:</em> Yes. Since the CRTC did not examine rates or prices, it is up to the provider to decide on their unlocking fee. However, as of December 2, that rate must be clearly identified in your contract and your critical information summary. <em>Answer from Shawn Hall, Telus spokesman:</em> We already do that – we charge $35 and allow unlocking after 90 days. That covers our costs of providing the service.


    What are the effects of the new rules on people who are not on a contract or already have their phones unlocked? 


    <em>Answer from the CRTC:</em> People not currently on a contract will be covered if they sign a contract after December 2. If they are currently on an indeterminate or month-to-month contract, they will be covered as of December 2. <em>Answer from Marc Choma of the Canadian Wireless Telecommunications Association:</em> Most of the elements of the Code deal with contract services, so the impact on no-contract customers that already own their unlocked phone would be minimal.


    Do the caps mean the carriers will cut off your data or roaming after a certain point?


    <em>Answer from Anderson of OpenMedia.ca:</em> What’s expected is once you hit your limit in data roaming charges, you’ll receive a text message notification asking if you’re okay with that and do you want to continue. <em>Answer from Choma of CWTA:</em> Most carriers already provide notifications when you are approaching your data limit, or provide you with notification that you are roaming and how to purchase roaming packages. With the new code, a customer's data services will be automatically suspended once the customer has reached $50 of usage, unless the customer expressly consents to override the $50 default limit. In the case of international roaming, a customer's service would be suspended after the customer has reached $100 of usage, again, unless the customer expressly consents to override the $100 default limit. <em>Answer from Telus:</em> Currently, Telus caps international data roaming at $200. We send customers a free text message when they hit that point letting them know (after a series of usage notifications starting at 2 MBs), and will only reactivate roaming if they ask us to. <em>Answer from the CRTC:</em> The code doesn’t prescribe how carriers should do it. The way the code is set, there is a maximum amount carriers can charge unless they make specific arrangements with the consumer or the cell user gives consent to continue after a notification is delivered.


    Why did the CRTC decide on two-year contracts, rather than one year, the direction the rest of the world is taking?


    <em>Answer from the CRTC:</em> The Commission looked at what would be best for Canadians. Many jurisdictions feature two-year contracts – we also heard evidence during the hearing that multi-year contracts with subsidized devices allow Canadians to get new, sophisticated devices at a lower upfront cost. <em>Answer from Lawford of PIAC:</em> We’re in Canada, so we’re always behind. They could have done that too, but then they would have almost certainly raised everybody’s rates, at least the cost of a handset quite a bit. I hope that as the two-year contract becomes standard the one-year will become a competitive offering.


    Are the new rules on three-year contracts retroactive? Can I get out of a three-year contract today?


    <em>Answer from CRTC:</em> The rules apply, as of December 2, to all new contracts. In addition, on June 3, 2015, all wireless customers are covered, regardless of when their contract was signed. In practice, that means that if someone signed a contract in May 2013, then on June 3rd 2015, they can cancel without penalty. <em>Answer from Choma of CWTA:</em> With most carriers right now, there isn’t a cancellation fee. If you want to cancel, you just cancel and pay off your device subsidy.


    Can a consumer use the new rules as an argument to fight an "outrageous roaming bill" they receive before they are technically protected?


    <em>Answer from CRTC:</em> Consumers are always free to contact their service provider to contest a bill. The service provider is not obligated to lower the bill simply because new rules are on the horizon. <em>Answer from Choma of CWTA:</em> Yes they could. However, the Commissioner for Complaints for Telecommunications Services (CCTS) is already available for consumers that have billing issues. The CCTS will also be the body responsible for enforcing the new Code. <em>Answer from Lawford of PIAC:</em> No. In the meantime you can go to the CCTS and say the rate being billed wasn’t made clear. The CCTS has a history of knocking those down unless the company can show the customer was made very aware of what was going on.


    If you decide to get out of a three-year contract after 2 years, do you still have to pay fees like the cost of the handset?


    <em>Answer from the CRTC:</em> If you currently have a contract and you want to exit, you will likely be charged a cancellation fee, which is determined by your service provider. Some provinces have rules setting out how these fees must be calculated. Once the code is in force, you will be able to exit after two years without any penalty or fee.


    Sky high billing is the biggest concern in Canada. Why weren't rates per second and per megabyte addressed?


    <em>Answer from CRTC:</em> The CRTC’s wireless code proceeding did not address pricing, as the Commission had previously determined that there is sufficient competition to protect consumer interests with respect to rates. The new rules will enable consumers to make informed decisions and shop around for the best deal that meets their needs. In addition, the rules around bill shock, including caps on data and roaming, will reduce the high bills that some consumers see. <em>Answer from Lawford of PIAC:</em> The code wasn’t intended to reduce rates or touch rates at all. The whole premise behind us even getting any rules was we’re not talking about rates because the CRTC says, "We’re not rate regulating, all we’re doing is putting in standards so everyone is treated relatively fairly." The Commission could regulate rates, but they don’t. But addressing high rates is the next step, so that [question is] onto something.


    Will providers have to show separately the handset cost consumers pay each month?