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'Tone deaf': MPs grill telecom CEOs about wireless prices at committee

The chief executives of Canada's three largest telecom companies stressed that phone and internet prices are coming down during an appearance before MPs on Monday, noting that increased data usage and high spectrum costs may be some reasons Canadians
Executives from major communications companies appeared at the federal industry committee to testify about their prices. A person uses a cellphone in Ottawa on Monday, July 18, 2022. THE CANADIAN PRESS/Sean Kilpatrick

The chief executives of Canada's three largest telecom companies stressed that phone and internet prices are coming down during an appearance before MPs on Monday, noting that increased data usage and high spectrum costs may be some reasons Canadians feel otherwise.

The three CEOs — Rogers Communications Inc.'s Tony Staffieri, BCE Inc.'s Mirko Bibic and Telus Corp.'s Darren Entwistle — appeared virtually at the House of Commons' industry committee meeting.

Committee members voted unanimously last month to summon the trio to testify after a previous invitation to the chief executives resulted in other corporate representatives showing up instead.

The committee is studying the accessibility and affordability of wireless and broadband services — an issue that came to the forefront in January when Rogers confirmed it was raising prices by an average of $5 for some wireless customers not on contract.

Staffieri was pressed on the matter Monday, with Liberal MP Francesco Sorbara suggesting the move was "tone deaf."

"Would you not admit that the timing was not great?" he asked.

Staffieri replied that the price hike only affected customers on legacy plans.

"It was important to us to make sure that these customers had choice," he said.

"With two clicks, they could get onto a plan that was in market and give them the best value for money for their circumstance."

Conservative MP Ryan Williams questioned Bibic and Entwistle on whether Bell and Telus would raise their prices in response to Rogers' move.

Bibic would not say whether Bell plans to follow suit, insisting the company's focus is on lowering costs, while Entwistle said he remained confident Canadians would see price declines but was "not going to talk about price setting in a forum with my two competitors sitting right here."

Some members of the committee have said they are concerned about cellphone and internet prices in Canada, arguing Canadians pay too much for those services.

But the CEOs cited recent Statistics Canada data showing wireless prices have declined 16 per cent in the past year and 47 per cent over the past five years.

"If you just compare in Canada, 2019 to 2024 alone, we're offering in some cases 10 times more data for $40 less a month," said Bibic.

"You can see the massive drop."

Entwistle said that "massive increase in data consumption" partly explains why some Canadians may hold the perception that their telecom service prices have gone up. He said Canadians are "amongst the highest data consumers in the world," which is why the major companies are offering them bigger plans than before.

"If you mathematically cut the cost in half, but the user uses twice as much data as what they did, historically, the cost is going to look the same to the user," he said.

Entwistle added the "missing" element of the conversation pertains to the cost of the physical cellphone itself, which he said can make up nearly half of an overall mobile bill.

"That's an area where we do not control the economics," he said.

"At the end of the day, those economics are determined by the device manufacturers."

The three chief executives also each told the committee that the cost they pay in Canada for wireless spectrum — the electromagnetic frequencies that enable smartphone communications — are among the highest in the world and make it more expensive to operate.

Last November, Canadian wireless companies collectively spent about $2.1 billion on chunks of 5G bandwidth in the federal government’s most recent spectrum auction. At the time, experts said the cost of spectrum incurred by the carriers could lead to higher mobile prices as companies recoup their investments.

Entwistle said that in 2021, spectrum fees accounted for $100 on the annual wireless phone bill of every Canadian.

"That fee reflects the fact that Canadian wireless operators have historically paid the highest prices for spectrum through successive spectrum auctions in the world," he said.

"That is a significant part of our cost base and I would argue it's inconsistent with a policy of trying to improve affordability."

Bibic added that if government-imposed spectrum prices in Canada followed the global average, "every Canadian's wireless bill would be $5 per month lower."

But Conservative MP Rick Perkins suggested the blame also falls on the companies themselves. He said Rogers' quarterly earnings reports frequently "brag about your average revenue per user going up every year."

"That's why Canadians feel they're paying more, because you're charging them more," he said during an exchange with Staffieri.

"Average revenue per user does not equal price," Staffieri replied, noting it is "an accounting metric ... and it includes services that the customer can choose to add on."

"And yours has gone up from $50.75 in 2020, to almost $60 now, in only four years," said Perkins.

This report by The Canadian Press was first published March 18, 2024.

Companies in this story: (TSX:RCI.B, TSX:BCE, TSX:T)

Sammy Hudes, The Canadian Press