Imagine you've just snagged yourself a brand new 128GB iPad Air 2 for $700 at the Apple Store. You couldn't be happier. What a deal! Now imagine you find out that Apple charges only $350 for the exact same model in the province next to yours. Suddenly your great deal doesn't seem so great anymore. Why should you pay twice as much just because of where you live?
Of course, Apple would never do anything that silly or vexing. A pricing policy that discriminates in that way would be completely untenable and a public relations nightmare.
Yet that is exactly what Canada's top telcos have been doing — charging some Canadians between 30 per cent and 100 per cent more for wireless service just because they live in Ontario, British Columbia, Alberta or the Maritimes - and not in Saskatchewan, Manitoba or Quebec.
The fact of this carefully obscured price discrimination has only become more evident since Canada's CRTC-mandated Wireless Code came into full effect on June 3, 2015.
That's when Rogers, Telus and Bell, reacting to the imminent surge of expired subscriber agreements, moved to bring their wireless plan prices into a neat synchrony with each other.
The logical thinking behind this tactic was to make the differences between the telcos so imperceptible in price and offering that their existing subscribers — newly released from their contracts by clauses in the Wireless Code — would be disincentivized to jump from one provider to another.
Under the new wireless ecosystem, a mid-range plan in Ontario with unlimited talk & text and 2GB of data will set you back $90/month, regardless of which of the Big Three you decide to go with. Going with one of their budget brands (Fido, Koodo and Virgin) will get you a similar tier of service for $78/month, minus a feature or two. Bringing your own phone will earn you a $20/month discount with the Big Three plans and $11/month off the budget providers.
All of which is to say that wireless services are now pretty much price-agnostic across the major national providers. And because the plans have been streamlined across the various companies, it's that much easier to see where the real price manipulation is happening. Part of that manipulation has been to gate consumers by region, and keep them unaware of how much more some Canadians are paying than others.
"Canadians pay some of the highest prices for cellphone service in the industrialized world," says Josh Tabish of OpenMedia.ca, a net neutrality and telecommunications advocacy organization that was instrumental in getting Canadians involved in the creation of the Wireless Code. "When it comes to pricing and offerings, we are way behind our international counterparts."
"Rogers, Telus and Bell control over 90 per cent of the wireless market," he adds. "As a result, we can expect the prices to stay as high as they are — unless of course you live in Saskatchewan or Manitoba."
What Tabish is talking about is the strange reality that takes over as you move across certain provincial borders — one in which the telcos suddenly seem to be offering decent wireless plans at reasonable rates.
In Saskatchewan for instance, the telcos don't even offer 2GB plans. Mid-range wireless plans begin at 5GB of data and cost $63/month ($48/month if you bring your own phone). That equates to a 30 percent discount for a superior service offering, just for having an address with Saskatchewan in it.
The extent of this price discrimination is even more pronounced in the upper tier plans. A 10GB unlimited Canada-wide plan will cost you $145/month in Toronto and just $75/month in Saskatoon. That's almost 50 per cent savings for a plan that's identical in every way (coverage, data caps, add-ons) - except for the area code. Saskatchewan's highest tier plans are $15 less than Ontario's mid-range ones and come with five times the data.
So how do Rogers, Bell and Telus justify these pricing models? Well, mostly they don't. They don't seem to feel the need to. Attempts to get comment from the Big Three have gone unanswered.
"When pressed on the subject, the Big Three have tended to hide behind the same old excuses," says Tabish. "They say, 'Canada is such a big country. The population is so spread out. Providing service in dense cities is complicated. We have to invest in infrastructure to meet demand and those costs have to be passed along to the consumer. That's why we have to charge so much.' But those arguments don't really hold up."
Nor do they explain how the telcos can justify charging so much more to one set of users. Any assertion that the inflated fees are a result of the added infrastructure costs, to support dense cities like Toronto, Vancouver and Calgary over less dense ones like Winnipeg and Saskatoon, falter in the light of the unlimited countrywide call and text plans that have finally found their way to Canada.
In short, if roaming charges no longer really exist within Canada, then why is a subscriber from one region of the country being charged more than another? If any caller in the country can connect to any other caller in the country without incurring long distance or roaming charges, why does the size of their wireless bill depend on where they live?
The answer of course is that the Big Three aim to charge as much as they can. But in some provinces, they can't get away with it because they would risk losing business to a fourth competitor.
Saskatchewan, Manitoba and Quebec all have strong local wireless competitors. Sasktel, MTS Mobile and Videotron, respectively, all provide a sufficiently high level of service to pose a threat to market dominance by Rogers, Bell and Telus.
In Ontario, B.C. and Alberta, Wind Mobile does provide more appealing wireless plans than the dominant telcos (including a US/Canada-wide call & text plan with unlimited data for $50/month). But Wind's limited coverage and issues with network reliability within Canada have made them a weak contender against the incumbents so far. As a result, the Big Three have yet to feel the pressure to harmonize.
Artificially fencing the country into tiered pricing corridors has allowed the Big Three to practice a form of price discrimination - a practice generally seen as anti-competitive and even legally censurable - without consequence. It's a kind of Hunger Games approach to business, doling out savings to some districts, while heaping added costs onto others. As long as it's profitable — and goes unchecked — these practices are unlikely to change. So far, Canadian consumers and policy-makers haven't been motivated to force the issue.
But consumers in unfavoured regions should not despair. The plans offered in Saskatchewan and Manitoba prove that the Big Three could be charging Canadians less for their wireless service. The precedent has been set.
With sufficiently vocal consumers and the advocacy of groups like OpenMedia.ca to apply pressure, the telcos and policy-makers could be motivated to end discriminatory pricing, and finally let all Canadians benefit from a better quality, affordable, wireless experience. Now wouldn't that be novel?