Payment Shock – It’s a term we’re familiar with in the mortgage industry, and it’s in the news again.  But hallelujah, this time it has nothing to do with the mortgage industry.   Nope, payment or bill shock making the news today is about the billing practices of the duopoly which controls all things wireless in Canada.  Here’s the definition of a Duopoly – “situation in which two companies own all or nearly all of the market for a given product or service. A duopoly is the most basic form of oligopoly, a market dominated by a small number of companies.  A duopoly can have the same impact on the market as a monopoly if the two players collude on prices or output. Collusion results in consumers paying higher prices than they would in a truly competitive market”.  

You can decide if the definition fits as it relates to the wireless providers in Canada.  As you’re mulling it over keep this in mind, the OECD (Organization for Economic Co-operation and Development) conducted a survey which concluded that the average Canadian cellphone user is paying among the highest bills in the developed world.  To be exact, the OECD determined that Canada has the third highest wireless rates in the developed world. 

Not surprising neither Rogers nor TELUS agree with the OECD findings; but regulators are causing both companies some indigestion.  Both Rogers and TELUS are regulated by the CRTC (Canadian Radio-Television and Telecommunication Commission) and a new wireless code is being drafted by the CRTC.  The CRTC would like the service providers to automatically suspend certain services once a customer is charged an additional $50 above and beyond their normal monthly plan.  At first blush you may agree with the CRTC position, but keep mind for most of us in the mortgage industry we would exceed the $50 overage by the first Tuesday of every month.  Imagine if you had to call your service providers every time the meter went past $50?  If you think wait times for service is less than satisfactory today, imagine what it would be like if this was implemented?  Rogers and TELUS were summoned to the hill to provide their thoughts and views on the proposed draft.  Suffice to say that neither Rogers nor TELUS said, “we agree with you CRTC, and it’s about damn time you did something about the high cost of wireless fees in Canada.”  They said what you would expect them to say, and why wouldn’t they?  They’re protecting their own turf.   Setting aside the self-interest of the wireless providers in Canada,  the real issue is when regulators want to do right by consumers but the practical application of said efforts may result in even more consumer dissatisfaction.  Regulatory changes or new “codes” being enacted and implemented has a domino effect.  Everyone in the mortgage industry already knows that.

On one hand you can applaud the CRTC for trying to do right by consumers.  Who wouldn’t want to pay less to their wireless provider?  On the other the CRTC’s position is a little bit of a head scratcher as it relates to practicality.  As for the CRTC this might be a case of not seeing the forest from trees.  Instead of expending all this time, energy, money and brain cells on way to protect consumers from price shock, maybe the CRTC is missing the obvious.  Maybe the CRTC should make it easier for new entrants into the Canadian wireless market.  Competition serves consumers well.  Why shouldn’t that apply to the wireless industry in Canada?

Until next time,

Cheers.