Interesting Article about the Cellular Industry

[7789849803]

Here's an interesting article I just found. It discusses the sorry state of the cellular industry in Canada:

http://www.cbc.ca/news/business/cellphones-crtc-cheap-plans-1.3562679

[kav2001c]

This is an odd discussion and there is no clear answer.

People screamed for more competition, and the government even sold spectrum to new entrants for pennies on the dollar. But then, very few people ever tried the new entrants, even Public Mobile was under 200,000 subscribers.

http://ca.reuters.com/article/technologyNews/idCATRE81622B20120207

Cue price increases and hostile takeovers and we have far less competition today than when we started this. All 3 new entrants died, and 4 regional providers have been swallowed up.

They then tried to force the Wireless Code onto general public with argument that 3 year contracts + free phones prevented most people from trying out new entrants and now we end up saddled with full cost of phone & higher rate plans for 2 year contracts.

Even when carriers offer free services (eg Bell launches BellTV, Public launches Siren) we actually get Canadians who COMPLAIN to government about how unfair it is and we should all pay more to maintain net neutrality. (Yet these same people applaud when US carriers like T-Mobile flaunt the same rules).

I do not know what to make of this industry.

[ckl]

@7789849803

"if they have too much competition (or are forced to lower their priced significantly), they will cease to be profitable"

I quick search yielded that in the third quarter of 2015, Rogers made 1.9 billion in just their wireless division alone. that's just one quarter. They are far from being unprofitable.

http://www.cbc.ca/news/business/rogers-profit-spikes-up-40-1.3283460.

Anyway, I don't have an issue with that. What I have an issue with is their slimy business practices. For example, they make billions in profit each year, and still they tweak their plans so you end up paying more for less. When Netflix started gathering steam, the big 3 lowered their data caps on their internet plans and started throttling Netflix. The throttling has since stopped, but the data caps remained. I used to have 250GB per month, then it went to 160GB. I had to step up a speed tier just to avoid overages - that meant paying more.

System Access fee and huge early cancellation fees. Not much I need to add here.

We all know what happens when one carrier raises rates. The others will follow suit. The only question worth asking is how fast the others will follow. Will it be within a week or a month? It is extremely difficult to prove the existence of collusion but you have to wonder if it is that or the result of an oligopoly.

Then, when the consumer exerts their will, as in the elimination of 3 year contracts, the big 3 punished us by tweaking the 2 year plans so that we end up paying more than the previous 2 year contracts that were offered.

You must have read the change in cable packages to create a new skinny basic package. If you did that and added a few more channels, you might end up paying more than you did when you had all the other worthless channels you didn't watch.

Then there was the spectrum auction. That was the pinnacle of "slimyness." The big 3 spent millions in propaganda advertising that basically said if we don't get what we want (which is the prime bands for 700Mhz), we will have to fire thousands of employees as we will not be competitive anymore. They even setup a website for it.

IMHO, history has shown that this is what you get when you have a handful of publicly traded companies in control of the infrastructure. Be it wireless, cable, railways, electricity, etc. The only way to deal with this is regulated sharing of the infrastructure at wholesale rates. In this case, allows MVNO's to use the infrastructure. We all know what happens when a company tries to do it from scratch (ie. Mobilicity, Wind, etc).

[ckl]

I read this article. Funny thing is that you can do the same thing with Public Mobile. Just get the data only plan 1GB for 90 days, plus Fongo or TextNow and you have a $15/month phone + text plan with 333MB per month for voice calls outside of wifi range. Fongo says it uses about 100MB for 200 minutes so 333MB is about 600 minutes of non-wifi calling. Pretty much the same as the $19 plan they were talking about in the article.

[Korth]

Well, on the plus side, the Big Three do own and operate a surprising variety of little brands which trickle the price hierarchy all the way down to Public Mobile, lol.  So it might indeed be a sort of semi-corrupt oligopoly, but at least it's one where all the crown players are aggressively competitive (and play a little dirty) while racing for the biggest bite of the market pie.

[makkahn28]

Even if that were true, fact is that we do in a sense, need some more, like 6-8, that shouldn't cause the Telecommunication sector in Canada to completely collapse.

CRTC, CCRC, Bureau La'Competition, IC should not be in the books or the pockets of the 3 Big's, they should be fostering unbiased, neutral and fair refereeing of how the telephone sector in Canada functions, as well as adequate competition, and fair fees as well.

If fees went unchecked, soon, we may see a time where only 5-10% or less having services and the rest w/o because it became a luxury more than practical or even essential

Just my opinion

[7789849803]

@sley I don't think it's corruption/cronyism that's at work here. My understanding of the CRTC letting the big 3 keep their networks closed to more MVNOs is that Canada being large & thinly populated, if they have too much competition (or are forced to lower their priced significantly), they will cease to be profitable. This in turn can then create volatility in the industry which can affect the population in ways much worse than high prices.

[sley]

I saw this recently, it's a pity the big 3 carries have the CRTC in their pockets and didn't allow MVNOs took set up shop here in Canada. Plans have only gotten more expensive in the past 5 years since the move to 2 year contacts.