High cellphone and data charges, long tie-in contracts, unpopular roaming charges, additional fees – every mobile user in Canada is familiar with the complaints the Commissioner for Complaints for Telecommunications Services receives in the thousands each year.
But users should spare a thought for any telecom company trying to break into the market and compete with the Big Three.
In the mid-1990s, the Canadian Radio-television and Telecommunications Commission (CRTC) decided not to regulate the nascent cellular phone industry, which now generates $43 billion annually for the Canadian economy. It would be left to the marketplace to provide services that consumers wanted, the CRTC and federal government decided.
The problem, say critics of Canada's wireless industry, is that with the huge success of three companies under this system, there's little room for competition in Canada.
Rogers Communications (TSX:RCI), Telus (TSX:T) and BCE Inc. (Bell) (TSX:BCE) and their subsidiaries – Fido, Koodo and Virgin Mobile Canada, respectively – own about 92% of all wireless subscriptions in Canada, according to the Canadian Wireless Telecommunications Association.
"We can see, from our prices being higher than others in the industrialized world, [and] things like termination fees and automatic contract renewals, which are highly unpopular, being essentially standardized in Canada – these are a very clear symptom of a lack of competition," said Lindsey Pinto, communications manager for Vancouver digital consumer advocacy group OpenMedia.
According to a 2009 Organization for Economic Co-operation and Development report Canadians pay some of the world's highest cellphone rates.
But Telus spokesman Shawn Hall points to fact that the methodology of that report was challenged and changed, and that a 2011 OECD report put Canada closer to the middle of the pack out of 34 countries (see sidebar).
"That wireless prices are high in Canada is a stubborn myth that is not supported by the majority of independent agencies that conduct international wireless pricing studies," he said. "Canadians enjoy stiff competition for their business in Canada and they have a wide range of options."
Hall said Canada is not unique in having three main players in the mobile space.
Australia, for example, has 29 million subscribers and three national carriers, which own most of the market share.
But Pietro Cordova, COO for WIND Mobile – one of three newcomers trying to get a toehold in Canada's wireless market – said Canadians are forced to put up with conditions that mobile phone subscribers elsewhere in the world don' t have, such as three-year contracts.
He claimed that long-term contracts, a lack of access to wireless spectrum, high roaming charges and incumbents' unwillingness to share their transmitter towers with new players make it hard for companies like WIND to provide any real competition.
University of Ottawa professor Michael Geist, a telecommunications law expert, added that restrictions on foreign investment in the Canadian telecom sector also give incumbents an edge.
"Foreign investment restrictions in the telecom sector protected the incumbents, while the lack of enforceable regulation has left consumers without much protection," Geist said.
But Bell Canada spokeswoman Jacqueline Michelis said WIND doesn't roam on Bell's network "and we don't have any issues with them concerning tower sharing."
WIND has fewer than 600,000 subscribers Canada-wide – about 60,000 of them in B.C. By contrast, Telus has 7.6 million subscribers Canada-wide, Bell 7.6 million and Rogers 9.4 million.
Canadians' frustration with their cellphone contracts has been so profound the CRTC established a separate body – the Commissioner for Complaints for Telecommunications Services – to handle complaints about cellphone and Internet companies, with the bulk of the complaints – nearly 11,000 last year – coming from unhappy cellphone customers.
Telus recently removed some of the irritants, like activation and cancellation fees, and reduced roaming charges and the cost of unlocking phones.
Bell, meanwhile, maintains that Canadian wireless prices are globally competitive.
"They are comparable with those of our international peers and less expensive than the U.S. and France," said Michelis.
Last year, the CRTC announced plans to implement a national code of conduct for the industry – a move prompted by Quebec, Manitoba and Ontario, which, in the absence of national regulations, started crafting their own.
But Cordova said Ottawa and the CRTC need to do more if Canada is to have any real competition.
"It will boil down to how much the government really wants to have competition in this market," he said. "With the rules that we have today, it would be very difficult for anyone to compete."
WIND's parent, VimpelCom, is not a small player. The Amsterdam company is the world's sixth largest mobile phone company.
WIND has plenty of money to invest in Canada.
What it doesn't have is enough spectrum – the airwaves over which networks transmit signals.
"Eighty-five per cent of the spectrum in this country is owned by three companies," Cordova said. "This is unique in the world.
Geist agreed.
"It isn't purely a matter of having the resources – the government must make [spectrum] available and set rules that help facilitate a competitive environment."
