A little more than a year ago it looked like Verizon was coming to Canada, and the big Canadian telcos were busily slashing prices in preparation for the spectre of some serious competition.
Then Verizon said it wasn’t coming to Canada, and prices started creeping back up.
Let’s rephrase that. Prices didn’t creep up; they soared. According to data from StatsCan, the cost of telephone services, both landline and mobile, shot up 7.6 per cent over the past year.
That’s more than three times the overall 2.1-per-cent rate of inflation, and it’s the largest one-year price spike in more than 30 years, Bloomberg news reports.
Internet users weren’t spared either; StatsCan’s inflation data shows internet access costs shot up 11.3 per cent over the past year.
(But before you decide to make the shift back to snail mail, it’s worth noting that postal services saw costs soar even more — a full 29.2 per cent over the past year.)
The inflation in telecom prices comes as the Harper government pursues an official policy of attracting a fourth major wireless player to compete with Bell, Rogers and Telus, who together have more than 90 per cent of Canada’s telecom subscribers.
Two recent events make such a major fourth player more likely. One, Quebecor-owned Videotron recently snapped up some lucrative wireless spectrum across the country, making it likelier the company will expand to offer wireless services across Canada.
Secondly, upstart player Wind Mobile recently underwent a shift in ownership structure that ensures the company will remain operational in the coming years.
However, not everyone believes the relatively high cost of telecom services in Canada can be fixed with more competition. Some recent studies have suggested that there is a limit to how many wireless companies a market can hold, and they suggest many markets can’t sustain a fourth, profitable wireless company.
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