Canada Pressures Wireless Industry to Lower Prices

Kait Bolongaro, Bloomberg News

(EDITORS NOTE: Image was created using a variable planed lens.) The Telus Harbour building stands in Toronto, Ontario, Canada, on Monday, July 9, 2018. Telus Corp. shares rose 1.6 percent, more than any full-day gain since Feb. 21 and more than double Canada's benchmark index. Photographer: Brent Lewin/Bloomberg , Bloomberg

(Bloomberg) -- The Canadian government says it will force the country’s three largest telecommunications companies to cut prices on some wireless services by 25% within two years.

The government’s demand applies to plans sold by Rogers Communications Inc., BCE Inc. and Telus Corp. that offer consumers 2 to 6 gigabytes per month. Almost 40% of Canadians with wireless data have plans in that range, Industry Minister Navdeep Bains said in Toronto.

“To be clear, if our targets are not met within two years, we will take additional action with other regulatory tools to further increase competition and ensure that prices come down,” Bains said, according to remarks prepared for a speech.

Successive governments in Ottawa have tried to reduce wireless prices. For more than a decade, the officials have “set aside” wireless spectrum for the use of new entrants in an attempt to create competition for the three big companies.

But some of the new players have struggled under the weight of the capital investments required to cover a geographically large country that has fewer people than California. A government-commissioned report from 2018 found that Canada had among the most expensive bills when compared to developed countries such as the U.S., U.K. and Japan.

The three biggest companies control 90% of the country’s wireless market, according to the government.

Bains said his department would publish quarterly reports to track their progress toward the 25% price-cutting goal. The government will also set aside spectrum for smaller, regional providers in an upcoming auction of 3500 megahertz spectrum.

“It simply isn’t fair to ask Canadians to pay some of the highest prices in the world to stay connected,” said Bains. “Or that almost any plan in Canada is 20% more expensive than a plan in the U.S.”

Prime Minister Justin Trudeau campaigned in 2019 on 25% cheaper mobile phone and Internet plans as part of an election promise to make life more affordable.

To contact the reporter on this story: Kait Bolongaro in Ottawa at kbolongaro@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Derek Decloet, Chris Fournier