Moving the goalposts

Despite mobile industry prices that have fallen more than 30% over the course of the past summer, Innovation, Science and Industry Minister Navdeep Bains is looking for further reductions of another 25%, warning “If these targets are not met within two years, the Government will take action with other regulatory tools to further increase competition and help reduce prices.”

During last year’s election campaign, the Liberal party promised 25% reductions in mobile prices and it showed sample rate plans of $87.32 for a 5 GB plan and $75.44 for a 2 GB plan. The party promised to bring those rates down to $65.49 and $56.58 (respectively), when elected.

But in an announcement today, Minister Bains said that the January 2020 market prices for a 6 GB plan are $60, and $50 for a 2 GB plan, more than 10% lower than the campaign targets.

Rather than claiming victory, the Minister has announced new targets of a further 25% price reduction over the next two years. The Minister has set a target of $37.50 for the 2 GB mobile plan, more than 50% reduction in the price, when compared to the Liberal’s campaign promise.

In a note to investors earlier in the day, TD Securities Equity Research wrote: “our view is that much of the testimony at the [CRTC’s Wireless Review] hearing proved that pricing in Canada is very reasonable relative to excess geographic and spectrum costs incurred by wireless carriers in Canada. Subsequent to heavy efforts by the government to facilitate competitive tension from facilities-based new entrants in every region, we struggle to see a problem that needs to be fixed.”

We agree. The CRTC is in the midst of its review of mobile services. The intervention in the marketplace smacks of playing a populist political card at the expense of policy leadership.

With billions of dollars in funding needed for 5G network upgrades, rural expansion and targeted connectivity programs for low income households, global capital markets will be looking for more consistency from Canada’s regulatory and policy leaders.

In an environment of already turbulent global capital markets, the last thing Canada should be doing is playing Calvinball with its telecom sector.