Ever been to a party or social gathering and heard someone say they wish they could pay more for their Internet services? Doubt it.
The reality is that Canadians pay some of the highest prices in the world for wireline internet services.
We're told these higher prices are due to our geography and lower population.
It's true that building out networks can be expensive, and Canada’s big telecoms - Bell, Rogers and Telus - expect a return on investment before prices can be lowered. While that was true at one point, the networks are built and have been in operation for years. The focus now is on maintenance, not new construction.
So why aren’t we seeing much relief to our monthly telecom bills? Simply because Canada is lacking competition and there’s no pressure to bring prices down.
Let’s back up. In 2016, the Canadian Radio-television and Telecommunications Commission (CRTC) began studying wholesale rates, the kind that Third-Party Internet Service Providers (ISPs) pay. After three years of using calculations and analysis, the CRTC determined that wholesale rates were too high. In 2019, the commission decided to reduce these rates. That led to phone and cable providers appealing the decision in court.
Due to the appeal process, rates remained in a holding pattern. In 2020, the Federal Court of Appeal ruled the phone and cable providers' arguments were of "dubious merit" and failed to prove that the CRTC had exceeded its powers when it lowered wholesale and broadband rates.
When the appeal went to the Supreme Court of Canada, it was dismissed because of the Federal Court's previous decision. Therefore, the Supreme Court did not hear the case.
The government then went back to the CRTC and asked it to review its decision.
In 2021, after five years of back and forth, with no relief to wholesale rates and market prices continuing to rise year after year, the CRTC determined it had made an error in its decision, and would keep the rates in place as they were set in 2016.
Back to the so-named Third-Party Internet Service Providers (ISPs), the companies that gain access to the existing infrastructure by paying wholesale rates and can provide the same internet service that the “Big Guys” offer but usually at a better price.
The Third-Party ISP model is a way to reduce internet prices.
Digital companies operate at lower costs and provide better pricing for internet services. Full disclosure. Our company is on a mission to address the lack of competition, help users who feel ripped off, and offer a transparent, contract free, non-bundled service. Our position is that more can be done for Canadians, especially for seniors, youth, newcomers to Canada and the families on fixed incomes, these are the groups that suffer when having to pay such high prices for an essential need.
The market often tells us that we need the biggest and best internet plans. That's not always true.
Canada’s telecoms push expensive, high-speed options because they make more money, but that doesn't mean that's what the average user needs.
Bottom line is - driving 100 kms an hour in a Honda versus 100 kms an hour in a Ferrari, gets you to your destination at exactly the same time. You’re still going 100 km an hour. You don’t need a Ferrari internet package to get the job done.
Most people just need good and reliable internet that meets their needs without breaking the bank. It's not about speed, it's about need.
There is some potentially good news on the horizon.
The CRTC has undergone a change at the highest level and is now considering adjusting wholesale rates to encourage more competition. It’s expected Canadians should find out before the end of the year. It’s a positive development, although we are still skeptical given the CRTC's track record over the past six years.
Increasing competition is good news because this usually means better pricing, but what also lives in this space is innovation. Support by the CRTC for more players to enter the market will result in new technology and new ways to better serve the customer. No more waiting on hold and technicians coming to your door, automation will solve problems before the customer has one and self-service models will start to become the norm. This can’t happen today because moving to digital solutions for the big guys means big dollars being spent and they’re certainly not interested in spending that kind of money in the short term.
With Rogers' acquisition of Shaw Cable, the market is left with one less major competitor. Less competition usually means higher prices.
Canadians deserve better.
Jason Speers is the president of Babbl Communications. www.heybabbl.ca is a third-party Internet Service Provider (ISP) based in Richmond.