Pricing & Investment - Striking the Right Balance to Strengthen Canada’s Telecommunications Sector
As headline inflation hit a 30-year high at the end 2021, the price of cellphone plans is bucking the trend as the cost of other consumer goods and services continue to rise.
In March 2020, the Government committed to reduce the cost of wireless plans by 25% over two years. It measured progress by tracking retail prices every quarter for plans that offer 2GB, 4GB and 6GB of data.
Recently the Federal Government announced it had delivered on its commitment, despite Statistics Canada’s recent Consumer Price Index (CPI) showing that prices of other consumer goods and services continue to rise.
According to the latest data from Statistics Canada, the CPI rose by 4.8% in December and is hovering at an 18-year high. However, the index for Cellular Services declined 0.8% in December 2021. Critically, the index is down 27.4% over 2 years. The chart below showcases the different trajectories.
While prices have continued to fall since 2019, customer usage has increased markedly. Since launching our Rogers Infinite plans in 2019, where customer have unlimited data with no overage fees, the average amount of data used by our customers has more than doubled.
The rapid increase in usage and need for faster and more reliable connectivity requires us to continually invest billions of dollars in our networks.
Over the past 35 years, Rogers has invested over $65 billion in its networks. Last year, Rogers also invested $3.3 billion in 3500 MHz band spectrum, covering 99.4% of the Canadian population, to enhance and accelerate the expansion of the Rogers 5G network. And, as part of Rogers coming together with Shaw, the company will invest $2.5 billion in 5G networks over the next five years across Western Canada.
The investments we have made have enabled us to build a digital infrastructure that has been regarded as one of the best in the world for years. However, 5G has changed the game and we are now at a crossroads.
The global digital economy is evolving at pace and other countries are moving quickly to invest in 5G technology to transform their industries, create jobs, and drive growth.
We can’t afford to fall behind; a world-class digital infrastructure is a pre-requisite for our future economic growth and prosperity. However, it will require generational levels of investment to put this vital infrastructure in place.
It is estimated that our industry needs to spend $26 billion in the next five years to build 5G networks across the country, as the technology is estimated to be significantly more expensive to build than 4G.
This requires network builders with the scale and commitment to invest billions in enhancing and expanding Canada’s networks for decades to come, and a fair and predictable regulatory environment that encourages that investment.
Now is the time to focus on initiatives that drive balanced spectrum policy, support facilities-based competition, and put in place measures that enable the industry’s 5G plans. This action will help to position Canada as leaders in telecommunications and continue to enable the industry to deliver increased value for Canadian consumers.
Charit Katoch, Director, Public Policy