News outlets are making a big fuss over the changes the CRTC has made to wireless regulations. Maybe I’m a cynic, but the changes don’t amount to much. The new rules are:
- Plans are effectively capped at two years (down from three)
- Data overages are capped at $50 a month within Canada and $100 for international roaming
- Carriers must accept requests to unlock a phone after 90 days into a contract and, amusingly, immediately if the phone is purchased outright (This seemed like a given, but apparently our carriers really will try anything to gouge people)
- Carriers must accept phones that are returned within 15 days of purchase (Again, I thought this was par for the course)
- Customers must be allowed to accept or decline changes to their contract (Isn’t this how contracts are supposed to work?)
That all seems reasonable on the surface, but the changes not only do nothing to address the true problem with cell phones in Canada – monthly plan costs – but they will likely make the problem even worse. The “freedom” to switch from one terrible carrier to one of the other terrible carriers every two years instead of three will end up costing us more money.
Smartphones are basically very small computers, with the current crop of high-end smartphones being roughly comparable in power to a good laptop from five years ago (!). That power doesn’t come cheap; a new iPhone 5 costs $700 to buy outright. That means that when you “buy” one through your carrier for $150, the rest of the cost is rolled into the contract.
Most contracts used to last three years, which allowed the carrier to amortize the phone’s cost over a 50% longer period of time than what we have now – meaning (in theory) lower payments, and a lower upfront cost for the phone. Now that people can walk away after two years, carriers must recoup their money much more quickly – either that or they must drastically reduce their profits or actually start competing with each other to increase their market share, neither of which is likely to happen.
Now we’ll be paying even more money that the already laughably high rates we pay compared to other countries, including those in the third world. What are the upsides? Shorter contracts seem like a good thing, except you must still pay for the extortionately high monthly plans even if you don’t have a contract. Without a contract you’re free to shop around, but where? The carriers all collude on price charge basically the same rates as their competitors.
Where does this leave us? Paying more money for an already-overpriced lackluster product, with the ability to cross-shop in an infuriatingly non-competitive marketplace? If anything, these changes will be even more profitable for the carriers. Thanks, CRTC!