The future of Canada’s internet: What’s the key to affordability?
Education
August 31, 2022

The future of Canada’s internet: What’s the key to affordability?

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OpenMedia
Content Partner

Did you know that people in Canada pay some of the highest prices in the world for Internet access? A 2020 report from Finland-based telecom research firm Rewheel found that Telus, Bell, and Rogers rank the top 3 most expensive wireless carriers amongst 168 companies considered in 48 countries around the world1. Our wired Internet isn’t much better: a 2022 study found that out of 135 countries, Canada ranks a dismal 103rd for lifetime broadband affordability2. So why do we have to pay so much?

Low Competition Means High Prices

First and most important is the lack of competition in our market. Bell, Telus, and Rogers together own the vast majority of telecommunications infrastructure in our country3. That concentrated power means that Big Telecom can charge an arm and a leg for basic connectivity services to Internet users like you, and anyone else doing business with them.

Canada’s Competition Bureau has even concluded they collect ‘above normal’ profits from us - though you probably know that already from their eye-watering prices4!

While the Big Three sometimes claim prices are high because of Canada’s size, these explanations simply don’t hold up5. The area the majority of us live in is actually fairly small, and similarly large countries like Australia do not pay comparably high prices. In rural areas, government subsidies are available for service providers to offset the cost of infrastructure6. When there is only one provider available, customers are often stuck with low performance and exorbitant prices without any other options. For example, a rural New Brunswick resident resorted to Starlink Internet, which is operated by satellites, because there were no wired or wireless options in his area that served his remote work needs7. However the cost to set up a satellite connection is hugely expensive; Starlink charges $700 for the cost of the satellite dish and an additional $129-$140 per month for Internet access8. Comparatively, some low-cost providers in urban centres like Montreal have plans that start lower than $40/month — including oxio9!

Is the solution building more network cable everywhere?

It’s an economic truth that having more players in a market forces companies to compete on pricing, service, and innovation — and that’s good for everyday people10. But the extremely high expense of building new telecom infrastructure makes it inefficient for new companies to duplicate our existing infrastructure; even the Big 3 often share their networks, as with Bell and Telus’ wireless network sharing agreement11.

Yet despite happily sharing with each other, the Big 3 aren’t interested in giving anyone else access to our networks at reasonable rates. That’s why many countries ask their telecommunications regulator to step in and grant access to their wired and wireless networks at fair rates. For example, in Australia, the introduction of a national broadband network led to greater competition among service providers and higher-quality connectivity12. The country’s decision to expand their wireless, fibre-optic, and satellite Internet services reduced the digital divide and brought more connectivity to people across the country, especially in rural communities.

What about Canada’s wholesale rates?

In 2019, the Canadian Radio-Television and Telecommunications Commission (CRTC), set fair wholesale rates for wired Internet, and prices fell for many Canadians across the country. But in 2021, the CRTC changed their mind, and abandoned the 2019 rates, instead returning to 2016 interim rates that were intentionally set excessively high — and wired Internet prices have climbed ever since13. By turning their back on the 2019 rates, it became more expensive for independent providers to purchase access to incumbents’ wireline Internet networks for resale. The 2021 decision made our affordability problem even worse, while stalling future positive change. To learn more about wholesale rates, check out OpenMedia’s submission to the CRTC on wholesale rates14.

What about wireless? The current CRTC remains dead set on wireless competition through building more physical networks, even though that’s failed Canadians for decades. Our problem could get even worse if the CRTC approves Rogers’ bid to buy out Shaw, the 4th largest competitor in Canada and a huge innovator in the telecommunications industry. When our choices get narrower, it means the Big 3 can continue to charge whatever they want for their services, leaving us with less choice, more expensive bills, and a loss of innovation.

Change for Canada means change at the CRTC.

Unfortunately, delivering affordable service to Canadians isn’t a job the current CRTC has shown much interest in. Under the leadership of Ian Scott, a former Telus executive and self-described personal friend of Bell CEO Mirko Bibic, the CRTC has issued a rash of anti-consumer decisions that have led to more expensive prices for Canadians over the past few years. In April 2021, Scott’s CRTC rejected introducing MVNOs - small low-cost wireless providers - to Canada in all but the narrowest circumstances, even though MVNOs are proven to lower prices and increase competition in many other countries, such as the United States, the U.K., Japan, and more15,16,17,18,19. Not long after, the CRTC rejected its own wholesale wired Internet rates, forcing small ISPs to raise Internet prices across Canada20.

The CRTC’s disinterest in helping Canadians get affordable services has become so obvious that even the federal government has become concerned: in a new 2022 policy direction, Cabinet clarified that the CRTC must do more to prioritize affordable service, and criticized their lack of urgency in making and executing key decisions that affect Canadians’ Internet access21. But the direction is short on specifics, and without the right leadership in place, is likely to fall on deaf ears.

What do we need in the next CRTC?

Ian Scott’s term as the CRTC’s chair is up in September, and the CRTC is looking for someone new to fill the position.

So how can we be sure the next chair will prioritize good affordable Internet service for ordinary people? We believe the next candidate should be someone who has no ties OR past working relationships with telecom giants like Bell, Rogers, and Telus. Canada can’t afford another chair whose circle of trust is made up of Big Telecom executives.

On the flipside, the CRTC should be looking for someone who has a proven commitment to consumer protection and welfare. There are laws in place to protect you and I as consumers, but it is up to political leaders like the chair of the CRTC to implement those laws. Ideally, that person would also have personal lived experience of what it is like to struggle with telecom service affordability, and the poor service available to rural, remote and Indigenous Canadians.

All in all, we need a CRTC chair who fights for ordinary people and isn’t afraid to ruffle Big Telecom’s feathers by considering policies that have brought real price competition to dozens of other countries. The right person could start changing Canada’s Internet for the better. We’ll know by this fall who has taken on this critical role, and from their background and work history, we’ll have some idea of the policy direction they may take us in.

Whoever steps into the role, the single most impactful thing ordinary people can do is to let our elected representatives know that this issue matters to them a lot. OpenMedia, Acorn and other advocacy organizations provide dozens of opportunities to speak out and be heard each year, through petitions, notification of public consultations, and preparing key point summaries for their communities. These actions have an impact on individual MPs, parliamentary committees, and the decisions cabinet ministers end up making that impact our Internet. Joining one of these advocacy campaigns or contacting your parliamentary representative directly is a great way to have a personal impact22!

Thank you OpenMedia! Changing the way Canadians think about their internet—not as a contract but as a utility—isn’t a challenge we take lightly. And we know you don’t either. Shout out to Matt, Erin and Rosa at OpenMedia for their excellent writing and research. And we can’t forget Danilo for his mad adapting skills.

  1. 4G&5G connectivity competitiveness 2020 Rewheel Research
  2. Canada takes 103rd place in study examining worldwide broadband cost
  3. Rogers, Telus and Bell Appear in Definition of ‘Oligopoly’ on Financial Website • iPhone in Canada Blog
  4. Telecom Notice of Consultation CRTC 2019-57 — Further Comments of the Competition Bureau
  5. Fact-check: Why our sky-high wireless bills don't make sense | OpenMedia
  6. Governments of Canada and Ontario invest over $362 million to bring high-speed internet to Eastern Ontario
  7. Dissatisfied with local internet options, rural N.B. residents turn to satellite service | CBC News
  8. Starlink
  9. 5 Best Montreal Internet Providers - MovingWaldo
  10. Why competition matters
  11. Compare Canadian Mobile Network Coverage
  12. Australia: Freedom on the Net 2021 Country Report
  13. Internet Prices in Canada Have Consistently Gone Up Since CRTC's 2019 Wholesale Rates Ruling: Report
  14. A_OpenMedia_Submission on Petitions to the Governor in Council regarding Telecom Decision CRTC 2021-181, TIPB-002-2021
  15. Setting the record straight: How the CRTC’s decision on MVNOs tanks cheaper cell phone prices | OpenMedia
  16. What Is an MVNO? A Canadian Guide to Small Carriers | WhistleOut
  17. United States Mobile Virtual Network Operator (MVNO) Market - Growth, Trends, and Forecasts (2020 - 2025)
  18. What is an MVNO or Mobile Virtual Network Operator?
  19. The top five markets to watch in the Asia-Pacific MVNO sector - Telecoms.com
  20. Today’s CRTC ruling on wholesale Internet rates most anti-consumer decision on record | OpenMedia
  21. Summary of the Government of Canada’s new proposed policy direction to the CRTC
  22. OpenMedia Campaigns
Picture of article author OpenMedia
OpenMedia
Content Partner

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