(Adds reaction from consumer activist group, telecommunications firm)
By Moira Warburton
TORONTO, March 5 (Reuters) - Canada’s three top telecoms companies must lower prices of their mid-range wireless service plans by 25% within two years, or face regulatory action to increase competition, the federal government said on Thursday.
The move aims to fulfill a campaign promise of Prime Minister Justin Trudeau’s Liberal Party to lower the cost of services that Ottawa says are among the highest in the world.
Innovation Minister Navdeep Bains said Bell, a subsidiary of BCE Inc, Rogers Communications and Telus Corp must lower the pricing for midrange wireless plans that include data ranging from 2 gigabytes to 6 gigabytes.
“If they are unable to meet those targets in the next two years we will take additional regulatory measures,” he said in a phone interview.
Ottawa could set aside spectrum for smaller operators and allow more access for Mobile Virtual Network Operators, which lease wireless capacity at wholesale prices and resell it at reduced retail prices.
Telus blasted the move as a “punitive action” and said it would “think very carefully about where our next investment dollars should go”.
Together the three companies control 89.2% of the mobile subscriber market, according to the most recent government data. The big firms argue they have already dropped plan costs significantly even since May.
“Canadians expect prices to go down even further ... we have a mandate from the Canadian public,” said Bains, saying the cost of midrange plans had not really moved.
Canada has among the highest wireless costs of any of the G7 countries, plus Australia, according to the government’s pricing study released on Thursday.
OpenMedia, a non-governmental organization pushing for cheap widespread internet access, said the move was “a band-aid solution to a systemic problem - we lack real choices of providers and plans here.”
The government has set the benchmark prices at C$50 ($37.26) for a 2GB data plan, C$55 for a 4GB plan, and C$60 for a 6GB plan. The 25% reduction will be applied to those figures.
The government will release quarterly reports on plan prices to track the companies’ progress.
Ottawa also released rules for the 3500 MHz spectrum auction, which will open later this year. The frequency is vital for companies operating 5G.
Companies will bid on 200 MHz of the 3500 wavelength, with a portion set aside for smaller firms and those already operating in a given region. Bidding begins on Dec. 15.
$1=1.3403 Canadian dollars Additional reporting by David Ljunggren in Ottawa; Editing by David Gregorio and Grant McCool