Canadian Wireless Price Discrimination

Posted on 21. Feb, 2015 by in Mobile, Technology

Every one who engages in a policy of selling products in any area of Canada at prices lower than those exacted by him elsewhere in Canada is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.

This is Section 50, paragraph 1(b), of the Canadian Competition Act (1985) which outlines what constitutes discriminatory pricing.

The pricing practices of all of the major wireless providers in Canada perpetuate a highly uncompetitive marketplace practices which fall squarely under the definition of discriminatory pricing as defined about in the Competition Act.

By tricking consumers into thinking that their products are segregated by region due to actual differences in in their offerings between regions, the providers are able to selectively limit what prices customers in different regions get to see.

The following chart compares the two very different pricing realities found between Ontario and Manitoba.

Ontario 5GB Manitoba 5GB
Provider Canada-Wide Minutes Price Provider Canada-Wide Minutes Price
Rogers Unlimited $100 Rogers Unlimited $60
Bell Unlimited $100 Bell Unlimited $55
TELUS Unlimited $100 TELUS Unlimited $65
Fido Unlimited $94 Fido Unlimited $55
Virgin Unlimited $94 Virgin Unlimited $55
Koodo Unlimited $94 Koodo Unlimited $55

The plans listed above are the same plans, compared against the same carrier, with the same features, but but offered in different provinces where they can cost almost twice as much.

The excuses used to justify this discrimination are also a complete lie. The following are three of the main considerations related to why there are these tragic differences in wireless prices.

The legality of these plans at different prices in different regions rests on the idea that they are somehow different plans. From a practical standpoint though, they are the same plan. Not only does Robellus (Rogers, Bell, and TELUS) operate a series of nation-wide networks, but all of their customers have access to the full nation-wide network (one of Robellus’ major selling points). From a usage perspective these plans also operate in the same way as callers are categorized based on where the call originated, and not where the number is registered. The only possible differentiator between these plans in different regions would be the difference in phone numbers. This is also not true as customers on any of the carriers have the ability to move to move their plan with them to other parts of the country. When they do so they are able to change their phone number while retaining the same plan. This means that the plan in independent of the phone number, and thus not a differentiating factor. As such, the plans are actually identical in everything but price across the different regions.

The size, population, or population density of a province should, in the case of these national carriers, play no part in the pricing of plans in different regions. This practice punishes customers, who we have established are purchasing the same product, for living where they do. Carriers cannot operate a nationwide network, use it as a feature in their products, and then try and segregate people within the continuous area. Covering different parts of the country of different sizes, with different populations, and different population densities is the cost of doing business when running a nation-wide wireless network. Not only is trying to offload that cost onto consumers in individual regions a bad practice, but it isn’t even the true reason for the difference in cost.

Oddly enough, some people are quite straightforward about competition (or at least the perception of it) being the true reason for there being any difference in price. In Manitoba and Saskatchewan, where you can find some of the lowest wireless prices in Canada, customers have the choice between Robellus and a regional carrier like Sasktel and MTS. These regional carriers have a sizeable portion of the customer base relative to other regional carriers in Canada. More importantly, offer rates well below those traditionally charged by Robellus, forcing Robellus to lower their prices to compete. This competition can also be seen in Quebec where the introduction of Videotron has forced Robellus to lower their prices as well. Robellus is able to keep their prices higher in a province like Ontario where they (and through many smear campaigns, consumers) don’t consider Wind Mobile a viable alternative.

With no reasonable explanation able to differentiate the products we are left with the conclusion that the difference in price is just an accepted form of price discrimination. The problem with this form of price discrimination is that customers are accepting of it.

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