Monday, January 03, 2011

Canada - Consumers have too little choice and pay too much for telecoms services

[winnipeg free press] Consumers are still paying too much and don't have enough choice when it comes to mobile phones, the Internet and cable and satellite TV, says a consumer advocacy group.

"In most services, we lag international models in relation to price and choice," Michael Janigan of the Public Interest Advocacy Centre said Wednesday.

Even though the telecom industry has been deregulated and restructured to allow more competition, it has been a "frustrated" success for consumers, Janigan said in an interview from Ottawa.

"All kinds of benefits were promised to consumers in terms of lower prices and better deals on packages. None of that came to pass," he said.

The wireless industry, a flash point for consumer complaints on billing and contracts, was not spared.

"Wireless seems to be the cash cow of the industry," he said, adding it has been "enormously" profitable to Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T), which have most of the market.

Janigan's report says the average monthly cellphone cost in Canada, including voice, text and data, is $67.50, compared with $59.99 in the United States and $32.40 in the United Kingdom.

He noted that in Europe, there are ceilings on roaming charges when mobile phone users are travelling from country to country.

Telus spokesman Shawn Hall called the report "self-serving mythology."

"The fact is that urban Canadians enjoy the benefits of one of the most competitive telecommunications industries in the world," Hall said from Vancouver.

"Canadians have access to a dozen or more options for their wireless, home phone and Internet services, while rural Canadians are not far behind that."

Competition has reduced prices, Hall added. Telus's broadband Internet service starts at just $22 a month, about half the price of what dial-up service cost 10 years ago. Wireless can start at $20 a month.

He also pointed to a recent Bank of America Merrill Lynch study that said Canadians enjoy among the lowest wireless rates per minute of any developed country — second only to the U.S. and Singapore.

The Public Interest Advocacy Centre, a non-profit organization, doesn't goes as far as recommending more regulations for the telecom industry.

"We're not saying everything has to be regulated in order to get the best price," said Janigan, its executive director and general counsel.

However, establishing fines and a licensing system for all carriers with enforceable codes of conduct would be beneficial.

"...Across the range of telecommunications services, whether it's Internet, wireless, wire line or cable, there's a similar problem," he said. "There are . . . deficits in the competition that exists in that industry, which are not remedied by universal rules or price ceilings."

Despite new wireless companies, the Canadian industry still suffers from concentration, Janigan added.

"What we find is, as we've restructured the industry to put an emphasis on competition, there's still problems associated with the influence of the big incumbent telecos on the entire process."

For example, in cable and satellite TV services, there have been big profits since deregulation of basic service, the cost of which has basically doubled for consumers, Janigan said.

However, he noted that local landline telephone prices have come down because a ceiling was imposed on basic service at the same time that the industry was deregulated to provide more competition.

Janigan's 218-page report, called "Waiting for the Dream, the Consumer brief for Telecom Reform 2010" will be given to the federal government. A copy will also be given to the Canadian Radio-television and Telecommunications Commission.

The federal government is expected to overhaul the Telecom Act, including loosening foreign ownership restrictions.

The Public Industry Advocacy Centre provides legal and research services on behalf of consumer interests, particularly those involving the provision of important public services.

Consumers still not getting benefits promised from industry competition: report

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