BUSINESS

Northerners Getting Screwed On Wireless Prices As Badly As On Food

Canadians lose more than $1 billion a year to overage fees, data suggests.

11/17/2017 12:28 EST | Updated 11/17/2017 14:20 EST
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Whitehorse, Yukon. Northern Canadians pay far higher wireless rates than others, data from a new CRTC report finds.

The outrageous prices paid for food in northern Canada are now well-documented, but a new report from Canada's telecom watchdog highlights just how bad of a deal northerners are getting on their cellphone services as well.

Data from the CRTC's 2017 Communications Monitoring Report shows wireless providers are making more money off Canadians than any other people, and northern Canadians face far and away the highest bills of all.

The report also indicated that Canada's telecoms make more money off wireless overage charges than they do on roaming or long distance fees more than $1 billion per year, by one calculation.

On average, Canadian wireless providers earned $64.91 per month off of each subscriber in 2016, the CRTC report found.

According to Swedish telecom consultancy Tefficient, that means Canadians continue to pay the most for wireless services among 32 countries the consultancy surveys.

But northern Canada stood out as having the highest revenue per subscriber $92.86 per month, making northerners the highest-charged group in the highest-charged country.

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The digital divide between Canada's north and the rest of the country has been a source of concern for policymakers for years. The high cost of wireless and broadband acts as an economic barrier, keeping the north from fully joining the rest of the country's economy.

Telecoms serving the north argue their costs are higher: They face the challenge of providing wireless and broadband to a sparse population divided by long distances.

Successive governments have made efforts to bring better telecom access to the north. In its 2016 budget, the federal government committed $500 million over five years to expand broadband internet access to rural and remote communities.

That program is expected to help expand broadband internet service to some 300,000 Canadians, the federal government says.

Overage fees 'a billion-dollar cash grab'


The CRTC's report also said that about six per cent of wireless revenue in Canada comes from overage fees.

According to calculations from University of Ottawa e-commerce law professor Michael Geist, that means Canadians handed over more than $1 billion in wireless overage fees last year.

"By comparison, wireless long distance revenues generated $547 million and roaming revenues hit $960 million," Geist wrote on his blog. "In other words, Canadian wireless carriers make more money from overage charges than from either long distance fees or roaming costs."

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Geist, like some others, has been arguing for years that Canada's high wireless costs are holding back the technology's use in Canada.

He pointed to Tefficient's data, which shows that the higher the revenue made off customers, the less wireless services those customers use. Canada has the highest revenue per user, and among the lowest rates of use.

Tefficient
This chart from Tefficient shows that the higher the prices of wireless service, the less data customers use. Canada has the highest revenue per user of any country, and among the lowest rates of data usage.

Geist noted that several major wireless providers recently increased their overage fees, with both Bell and Rogers effectively hiking their fees by 40 per cent.

"The increases alone are likely to result in hundreds of millions in additional consumer costs," Geist wrote. He described the overage fees as a "billion-dollar cash grab."

The CRTC took on the issue of overage fees as part of its wireless code of conduct, which it introduced in 2013.

Wireless providers can't charge more than $50 in overage fees in any given month, without the express consent of the customer. Companies have the option of cutting off the subscriber once the overage fees hit $50.

But Geist says the high cost of those overage fees is a sign the wireless code's rules are not enough.

"The most obvious solution would be the availability of unlimited wireless data plans, which are commonly found elsewhere," wrote.

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