April 30, 2013
Upgrading Europe’s cell phone market: If they can do it, why can’t we?
More choice leads to price cuts in the Czech Republic
Last week saw a major shake-up in the Czech Republic cell phone market, as service provider Telefonica announced its decision to cut its prices in half.
The decision immediately prompted a similar response from its rivals, with Vodafone also announcing it would be cutting its calling rates, and T-Mobile saying that it would look to release a similar offer in the next few days. This dramatic change suggests that providing more choice to customers will spur incumbents to lower prices in order to keep customers from switching over.
What caused this sudden shift toward better pricing? According to an analyst at Ceska Sporitelna (a Czech savings bank), the price cut is a clear reaction to an auction of wireless assets designed to encourage new independent service providers to start up.
Attempts at creating a similar situation can be seen here in Canada; in 2008 Industry Canada set aside key wireless resources for independent providers, in an effort to bring new options into the cell phone market. It proved successful at first, but this positive move was recently undermined by a pact made between Shaw and Rogers that would put these resources back into the hands of incumbents.
For Canadians to get more choice and lower prices in our cell phone market, Industry Minister Christian Paradis will have to enforce the 2008 rules and make sure these resources remain set aside for independent providers.
UK releases customers from restrive contracts
Meanwhile in the UK, service provider O2 has announced that they will allow their customers to upgrade their devices before their contracts have ended. This means O2 customers can choose to get a new phone without having to pay out the remaining cost of their contract or a hefty termination fee.
How is this possible? Unlike big telecom companies in Canada, O2 clearly separates the cost of the device and the service. This means that customers can pay off the outstanding balance on their phone at any time during their contract, and then start again with a new phone – without having to also deal with unused service charges.
Similarly in Denmark, you can choose to switch providers after a maximum of six months, and simply pay off the cost of the phone itself from your original provider.
O2 recognised the importance of facilitating citizens’ ability to upgrade their devices, noting that, "we want to make it easier for our customers to benefit from the latest technology".
Time to take action
Europe is making strides in improving access to new wireless technologies by reducing prices and increasing choice. But here in Canada, we see big providers taking advantage of Canadians, and making excuses for high prices and minimal choice.
From stating that Canada’s small population just can’t support more than three incumbent providers (debunked here) to spreading erroneous stats about Canadians’ access to leading-edge devices (debunked here), the Big Telecom lobby is pushing back against more choice and positive change for Canadians. That’s why we need to push back and ask our policymakers, if these countries can do it, why can’t Canada?
Take action. Demand choice in Canada’s cell phone market now.