July 14, 2014 / 4:04 AM / 4 years ago

Canada wireless cancellation policy boosts cost for basic plans-study

OTTAWA, July 14 (Reuters) - Changes allowing Canadian wireless phone customers to cancel their contracts without penalty after two years have increased the costs of basic plans, while the price of heavy-use plans continued to fall, a study to be released on Monday showed.

The price of mobile services has become a hot political issue, with the Conservative government trying to drive prices down by encouraging smaller companies to challenge the dominance of the Big Three: BCE Inc’s Bell, Rogers Communications Inc and Telus Corp.

Regulators brought in the change as of December 2013, putting an effective end to three-year contracts and aiming to stimulate competition by letting people switch carriers. But for the bottom end, this means higher prices.

The government-commissioned Wall Report showed the monthly charge for basic mobile wireless service rose to C$36 ($34) in 2014 from C$31 in 2013, and C$34 in 2010. High-volume users saw their prices decline to C$80 from C$94 in 2013, and from C$110 in 2010.

“The reduction of contract terms placed upward pressure on service plan prices given there is now a shorter period available to recover the handset subsidies,” said the report, a copy of which was seen by Reuters.

However, it said the main phone companies now introduced alternative no-term “BYOD” or bring-your-own-device plans which can yield a discount of C$10 to C$20 a month.

The study showed prices by companies newly operating in the market were between 10 percent and 49 percent less than the incumbents, and they usually offered higher data allowances.

The Wall Report, which is done annually, introduced a new comparison this year, of international roaming rates to and from the United States available to Canadian and American consumers.

It found the big U.S. players’ roaming call and text rates in Canada were lower than the Canadian incumbents’ rates in the United States, whereas the reverse was true for data - effectively a draw.

But it found that the new entrants in Canada offered far lower roaming rates than the Canadian incumbents, whereas U.S. regional carriers offered either no roaming or very limited roaming in Canada.

$1=$1.07 Canadian Dollars Reporting by Randall Palmer; Editing by Miral Fahmy

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